It seems like spring is busting out and baseball training camps promise long warm days ahead. But something feels different about this pending spring. It has a tentative feeling, like we might see a false start. Nothing false about the weight of the world on our new President. He has a fighting chance to do something about the deepening financial and economic troubles we are in. Oddly, some with a soapbox say they want him to fail. Can we afford to fail to get our national and the world’s economy on the right track? I know the season of spring is inevitable, but we will get more cold weather and snow. The impatient among us want results now from the billions or really trillions we are printing and spending to get the economy going again. What drives a person that wishes another to fail? And if our President fails, where does that leave us?
The entire situation seems to fit one word; CONFIDENCE. There is almost no confidence between the people and their government. There is almost no confidence between governmental power brokers with money to hand out and the banks, auto companies and insurance firms that seek that money. There is very little confidence between banks and their prospective borrowers. There seems to be no confidence between banks, so that the old system of overnight lending to balance their books has evaporated into hoarding and refusing to lend to their fellow bankers. So if the word is confidence, what is happening is the lack of confidence. What is it you are confident about right now? In our real estate industry, we see buyers lacking the confidence to purchase, fearful that the price they pay will mean that they cannot resell for that price until the value goes down, then comes back up. That could be years. The purchase of a home is no longer ‘profitable’ if you do not stay in ownership very long. Flipping for a quick profit is almost impossible nowadays. Is that a good thing? Maybe homes should be seen as long term investments, not short term deals.
There are so many stories worth listening to. Some are uplifting and involve courage. Others are full of sadness and loss. You choose what stories to pay attention to. But if you want positive news, you do have to look far and wide to find it. The media knows what sells, so the stories about bankruptcy and unemployment and people losing their homes will take over the front page every time. Can anyone read the Wall Street Journal these days? Add up all the negative stories and you feel you might lose your confidence!
There is a spreadsheet attached to this newsletter. It shows the length of time it would take to sell the current inventory of homes listed for sale. And there has been little fluctuation in those numbers for at least a year. Sales are happening, but we are likely to see a further uptick in inventory as spring brings sellers into an optimistic mood. That means the length of time to sell will increase. Buyers are still hesitant and sales are fairly light relative to the current inventory. What should we do? Should we panic? Should we give up and send the house keys in to the lender and abandon our homes? By no means! What about the total dollar volume of residential sales in our market area’s MLS for the first two months of 2009? That comes to the nice round number of $71,125,278. (*Figures taken from the Santa Fe Association of Realtors, Multiple Listing Service-includes residential land and homes) You could celebrate that fact. It isn’t anything to ignore. The numbers are real. 181 sales make up that total. Someone is doing something. It just isn’t working for everyone right now. Those willing to take the tumble of a severely lower asking price might succeed in selling this year. Those that are holding out to get what they paid are possibly going to fail. It depends on when they purchased, and many other factors I have addressed in previous letters. Some experts warn us to be prepared to adjust to a lower living standard than what we have been used to. We are instructed to get used to doing with less and having less to do things with. Each of us can choose to adjust in the privacy of our homes while we still have them. No doubt the amounts people put into savings (or hide under their mattress) will rise in preparation for the unplanned misfortune or the unforeseen illness. Yet our economy, for so long built on consumer spending (too much it turns out!), cannot possibly recover its former glory while consumer spending is slowing down. So indeed we are entering a new era.
Last month I began by saying “Welcome to the recovery” and we are now maybe 10 or 30 or 50 (your guess is good too) days into said recovery. But it is difficult to measure it, much less feel the swing in momentum. I think we have begun to travel the road toward the future world we will inhabit. Every day we get a clearer picture of what is and is not working. And if we are human, and still strong, and still have hope, we won’t stand for failure and we’ll do whatever we must to move forward. Pick out your own small victory to claim today. I know someone that put in an order for a new car. My neighbor has a new rider mower he can’t wait to use this summer. My wife’s boss just took a trip to the coast to get some sun and relax on the beach. Oh, and I almost forgot; I looked at some websites where I could invest in index funds with no or very low fees. You have to do something with what you have worked so hard to achieve. Sell your experience and write a book. Start a blog and share what you know. Is there anything out there that could possibly make you feel as good as helping someone less fortunate than yourself? If your answer is no, then maybe you haven’t really tried it. The concept might scare you. But your self esteem will grow and you will find yourself proud of how you donated your time and effort to assist someone that really needed help. I read a quote by a very fortunate woman that said, in essence, her pleasure now comes from things that money cannot buy. She is not spending as much and is now volunteering a couple afternoons a week.
As we are but 2 months into this year and as everything is changing rapidly (who really knows how the next 6 to 10 months will unfold?), this month’s letter is a bit shorter than recent editions. That doesn’t mean I have nothing more to day! I have to save something for next month, the end of the 1st quarter! Just follow the money and we will together witness a year we can tell our grandchildren about, if they are still speaking to us when they grow up and take charge.