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Ongoing Articles: No Recession, but Deflation? The March '08 UCLA economic report so far is 'right on target....
.... .. Recent Articles: .. Bearish on Housing.... Bullish on Stocks Stock rally, housing folly ... The Schizophrenic FED Gambit The FED rut ..
Analysis of CA Bank Earnings Highly Recommended!
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The UCLA Anderson Forecast Highly Recommended! ... Most Recent Articles: .. The Schizophrenic FED Gambit .. Bearish on Housing, Bullish on Stocks ..
Analysis of California Bank Earnings Highly Recommended!
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. Welcome to the California economic & real estate blog! Home Page
Greetings to you. I've been a real estate broker in the Coachella Valley for 8 years, and in the business of real estate speculation since 1991. I am a graduate of UCLA (1997) Letters and Science, BA Psychology as a transfer from College of the Desert (AA Lib Arts, AS Biology). After college I worked in an entrepreneurial way with real estate marketing in websites and online network building. In addition to standard real estate sales and property management, my focus has been search engine optimization, web content, domain names, and traffic generation. I have never really identified myself as a typical agent, but for the past 8 years I have emphasized the use of the internet in marketing real estate. As housing has turned south, and has effected all of us in a negative way, I now monitor the economy 'ultra' closely to gain a perspective on the "bottom", and to better advise those who might happen by this site online.
I believe that real estate agents in this market should not be saying; "Now is the time to buy a house". I know that real estate as a livelihood creates ethical dilemmas for people in the field. These are trying times: and the agent mantra, like doctors, should always be 'primum non nocere" (do no harm).
I still believe the housing market will recover, but this wont happen until the following events occur:
1. A correction to price levels that can justify housing as an investment, not just the expectation of equitable appreciation. Prices must become attractive for investors to where a rental property can provide a 5% NET profit. We have not seen housing "pencil out" as an investment since the pre boom era of 1999-2000. The current housing market has a 'negative equity expectation'. Prices are too high for a financed single family residence rental property to operate at a profit; and that same property cannot be expected to go up in value once purchased.
2. A measurable 3 month reduction (not just stabilization) of foreclosures. Inventory is still being added, and 'Notice of Defaults' are flooding the classifieds. Therefore, prices will continue to depress.
3. A Quarter to quarter earnings improvement trend by our local California community banks. Local bank Q1 results have been alarmingly way below expectations. Most importantly, there is no indication that these earnings will improve. Estimates for Q2 have no credibility, due to the degree of inaccuracy in the Q1 forecasts. I believe many more losses are looming because of tangents in residential loan to value foundations over the past few years. Forget sub prime: fixed rate loans with 20% down payments made in the last 4 years are now at 0% equity, or worse. That would constitute a threat to entire recent bank loan portfolios. Please see this analysis as it pertains to bank earnings: Analysis of CA Bank Earnings
I will be watching all these factors very closely, and will be posting on this blog as these earnings are released.
Currently, I am very bearish on California in general, which doesn't necessarily fit in the mold of real estate agent "spin". I think rising gas prices will certainly hurt us as a commuter state, and housing prices are still being propped up to support a 'seller and agent network'. Without buyers, the network will fail and prices must come down so more people can afford to buy these homes. Incomes are not increasing to go with inflation, and there are far less qualified buyers than in the boom era. As a result, even if there is a recovery, it wont spike like before, as I fear many people are being led to believe by some agents in the field. Currently, I think there are major bankruptcy threats to the local regional and community banks in the Coachella Valley, San Diego, and areas where retail housing prices are just too high to be supported by the job market. The FED won't be riding in to save the day for these small banks, like they did for Bear Stearns.
I also monitor the national economy and the stock market, measure sentiment, and make predictions. I am an avid investor in the market. I believe the current national economic trends will help us to mark a recovery here in the California market.
Best of luck to you!
Please Email me if you need any further information.
**DISCLAIMER** Not associated with any city, county, civil entity, or government body. No warranties are stated or implied. Use at own risk. External web sites are not endorsed. Users agree to all terms. These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy contained within. These articles are provided for informational purposes only and are not meant to provide investment advice to anyone. Please consult with your professional financial planner for investment advice. Home Page
Written by: The Author
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**ARTICLES**
. ... Q1-Feb 10 '08: - The Perfect Storm of American Economic Downfall Q2- '08: So what do we do now? . .. Q1-Feb 21 '08:- The Counter Intuitive Market Force: But Housing is the Exception Q2- '08: Analysis of CA Bank Earnings . Q1-Feb 21 '08:- The 5% Income Rule Q2- '08: Bearish on Housing.... Bullish on Stocks . ... Q1-Feb 21 '08:- A Compelling Argument for Alternative Investments Q2- '08: Riverside-San Bernardino tops the list... ... Q1-Feb 26 '08: True Market Analysis, or Self Interest? Q2 '08: - Oil and war speculation . ... Q1- '08: No Recession, but Deflation? Q2 '08:- Bank of America & Countrywide: A signal of a housing bottom? . ... 3.17.08: Next for the Economy: The Greatest Bull Run in History? Q2- '08: The Schizophrenic FED Gambit
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DISCLAIMER: Not associated with any city, county, civil entity, or government body. No warranties are stated or implied. Use at own risk. External web sites are not endorsed. Users agree to all terms. These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy contained within. These articles are provided for information purposes only and are not meant to provide investment advice to anyone. Please consult with your professional financial planner for investment advice.
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