REFLECTIONS FOR THE NEW YEAR
(From the writings of Harold Warbeirn)
Because the world is poor and starving,
Go with bread
Because the world is filled with fear,
Go with courage
Because the world is in despair,
Go with hope
Because the world is living lies,
Go with truth
Because the world is sick with sorrow,
Go with joy
Because the world is weary of wars,
Go with peace
Because the world is seldom fair,
Go with justice
Because the world is under judgment,
Go with mercy
Because the world will die without it,
Go with love.
Friday, December 31, 2010
Thursday, December 30, 2010
Beyond the Decade
What changes do you expect to see this coming decade?
How will technology continue to change?
When will be the last time you will need to sharpen a pencil?
As we start the New Year with a positive outlook, let’s revisit some concepts using our knowledge and values to succeed in 2011:
Have strong Beliefs – know where you are going – have goals
Be an Optimist – be a positive role model - appreciate life
Relentless Preparation – answer the unanticipated, sense of calm with practice
Invest in Others – be a mentor - assist others without expecting anything in return.
Live in a State of Gratitude – 86,400 seconds in a day – how will you use this time?
Act rather than react – take action
Reinvent – do what you do and always have done - differently
How will technology continue to change?
When will be the last time you will need to sharpen a pencil?
As we start the New Year with a positive outlook, let’s revisit some concepts using our knowledge and values to succeed in 2011:
Have strong Beliefs – know where you are going – have goals
Be an Optimist – be a positive role model - appreciate life
Relentless Preparation – answer the unanticipated, sense of calm with practice
Invest in Others – be a mentor - assist others without expecting anything in return.
Live in a State of Gratitude – 86,400 seconds in a day – how will you use this time?
Act rather than react – take action
Reinvent – do what you do and always have done - differently
Wednesday, December 29, 2010
More…. Changes:
The Land Line Telephone
Unknown source: Unless you have a large family and make a lot of local calls, you don't need it anymore. Most people keep it simply because they've always had it. But you are paying double charges for that extra service. All the cell phone companies will let you call customers using the same cell provider for no charge against your minutes.
Soon/now, the new technology with phones/video/internet will replace more than just land lines!
Television
Unknown source: Revenues to the networks are down dramatically. Not just because of the economy. People are watching TV and movies streamed from their computers. And they're playing games and doing lots of other things that take up the time that used to be spent watching TV. Prime time shows have degenerated down to lower than the lowest common denominator. Cable rates are skyrocketing and commercials run about every 4 minutes and 30 seconds.
We are/will be watching shows/movies on our cell phones.
What other changes will we experience in 2011?
Unknown source: Unless you have a large family and make a lot of local calls, you don't need it anymore. Most people keep it simply because they've always had it. But you are paying double charges for that extra service. All the cell phone companies will let you call customers using the same cell provider for no charge against your minutes.
Soon/now, the new technology with phones/video/internet will replace more than just land lines!
Television
Unknown source: Revenues to the networks are down dramatically. Not just because of the economy. People are watching TV and movies streamed from their computers. And they're playing games and doing lots of other things that take up the time that used to be spent watching TV. Prime time shows have degenerated down to lower than the lowest common denominator. Cable rates are skyrocketing and commercials run about every 4 minutes and 30 seconds.
We are/will be watching shows/movies on our cell phones.
What other changes will we experience in 2011?
Tuesday, December 28, 2010
CHANGES ARE COMING
and some changes already here.
Not only are we losing the Greatest Generation but we are experiencing changes to our everyday life.
The following is from an Unknown source:
The Post Office
Get ready to imagine a world without the post office. They are so deeply in financial trouble that there is probably no way to sustain it long term. Email, Fed Ex, and UPS have just about wiped out the minimum revenue needed to keep the post office alive. Most of your mail every day is junk mail and bills. Junk mail has diminished significantly since the Great Recession started.
And bills will not be mailed in the future as companies transform to online payments.
The Check
Britain is already laying the groundwork to do away with checks by 2018. It costs the financial system billions of dollars a year to process checks. Plastic cards and online transactions will lead to the eventual demise of the check. This plays right into the death of the post office. If you never pay your bills by mail and never received them by mail, the post office would absolutely go out of business.
How many checks do you write a month? If you are not paying your bills online, you should at least investigate – easy to do and doesn’t take as much time and “free”.
The Newspaper
The younger generation simply doesn't read the newspaper. They certainly don't subscribe to a daily delivered print edition. That may go the way of the milkman and the laundry man. As for reading the paper online, get ready to pay for it. The rise in mobile Internet devices and e-readers has caused all the newspaper and magazine publishers to form an alliance. They have met with Apple, Amazon, and the major cell phone companies to develop a model for paid subscription services.
How does the USA Today newspaper continue to print when circulation declines daily for metro-papers? The Charlotte Observer has dramatically decreased in size over the past several years. The local community paper seems to be thriving rather than the regional paper.
More changes coming.....
Not only are we losing the Greatest Generation but we are experiencing changes to our everyday life.
The following is from an Unknown source:
The Post Office
Get ready to imagine a world without the post office. They are so deeply in financial trouble that there is probably no way to sustain it long term. Email, Fed Ex, and UPS have just about wiped out the minimum revenue needed to keep the post office alive. Most of your mail every day is junk mail and bills. Junk mail has diminished significantly since the Great Recession started.
And bills will not be mailed in the future as companies transform to online payments.
The Check
Britain is already laying the groundwork to do away with checks by 2018. It costs the financial system billions of dollars a year to process checks. Plastic cards and online transactions will lead to the eventual demise of the check. This plays right into the death of the post office. If you never pay your bills by mail and never received them by mail, the post office would absolutely go out of business.
How many checks do you write a month? If you are not paying your bills online, you should at least investigate – easy to do and doesn’t take as much time and “free”.
The Newspaper
The younger generation simply doesn't read the newspaper. They certainly don't subscribe to a daily delivered print edition. That may go the way of the milkman and the laundry man. As for reading the paper online, get ready to pay for it. The rise in mobile Internet devices and e-readers has caused all the newspaper and magazine publishers to form an alliance. They have met with Apple, Amazon, and the major cell phone companies to develop a model for paid subscription services.
How does the USA Today newspaper continue to print when circulation declines daily for metro-papers? The Charlotte Observer has dramatically decreased in size over the past several years. The local community paper seems to be thriving rather than the regional paper.
More changes coming.....
Monday, December 27, 2010
Changes
Our society will change when The Greatest Generation is no longer around to guide us.
My Dad’s goal is to reach the age of 90. He will reach his goal this month.
He is part of the greatest generation.
He was raised during the depression.
He graduated from the University of Oklahoma with a degree in aeronautical engineering.
His professional career was with one company for 36 years – Boeing.
He graduated with his aeronautical engineering degree on June 1, 1942 and was inducted into the U.S. Air Corps on June 2, 1942 – World War II.
He spent most of his tour on the island of Tinian in the South Pacific.
An island only 3 miles wide and 12 miles long with 100,000 men and hundreds of
B-29’s. Eventually, the Enola Gay launched from Tinian Island and the war soon came to an end.
Talk to a World War II vet; their stories, pride, and patriotism are unparalleled.
As the greatest generation shrinks in numbers, have you passed along their memories to your children?
Have you modeled your values after their values since they made our country great?
The torch always passes to the next generation but if the next generation doesn’t know our history or the sacrifice of our own family members, how will they know what freedom really means?
Are there any true hero’s today?
Who is your hero?
My hero is my Dad.
He is the family patriarch. When he talk’s, you listen. He still has goals. He is concerned about America. He is still sharp and stays current with everyday events.
He has a very large American flag at full mast outside his assisted living apartment door - in a hallway!
I salute you B T Johnson.
More changes posted this week.
My Dad’s goal is to reach the age of 90. He will reach his goal this month.
He is part of the greatest generation.
He was raised during the depression.
He graduated from the University of Oklahoma with a degree in aeronautical engineering.
His professional career was with one company for 36 years – Boeing.
He graduated with his aeronautical engineering degree on June 1, 1942 and was inducted into the U.S. Air Corps on June 2, 1942 – World War II.
He spent most of his tour on the island of Tinian in the South Pacific.
An island only 3 miles wide and 12 miles long with 100,000 men and hundreds of
B-29’s. Eventually, the Enola Gay launched from Tinian Island and the war soon came to an end.
My Grandfather was a Colonel in the US Army Signal Corps during WW I. His memorabilia are in the archives of the Oklahoma State Air Museum. I know this through my Dad as he talks about his childhood, the depression, and the war.
I can’t imagine the sacrifice my parents and grandparents made during those times. I can’t imagine graduating from college one day and the next day be in the military.
Talk to a World War II vet; their stories, pride, and patriotism are unparalleled.
As the greatest generation shrinks in numbers, have you passed along their memories to your children?
Have you modeled your values after their values since they made our country great?
The torch always passes to the next generation but if the next generation doesn’t know our history or the sacrifice of our own family members, how will they know what freedom really means?
Are there any true hero’s today?
Who is your hero?
My hero is my Dad.
He is the family patriarch. When he talk’s, you listen. He still has goals. He is concerned about America. He is still sharp and stays current with everyday events.
He has a very large American flag at full mast outside his assisted living apartment door - in a hallway!
I salute you B T Johnson.
More changes posted this week.
Friday, December 24, 2010
Thursday, December 23, 2010
GDP
GDP
2nd quarter 2009 - 0.7%
3rd quarter 2009 2.2%
4th quarter 2009 5.6%
1st quarter 2010 2.7%
2nd quarter 2010 1.7%
3rd quarter 2010 2.6%
The 3rd quarter GDP has to be welcome sight! The trend from the 4th qt ’09 to 2nd qt. ’10 was down. Many economists were predicting a double dip recession due to these trends and government spending. It would seem the data indicates an improvement in the economy - let's hope the trend continues.
If the shopping crowds are any indication this Christmas, I would expect the GDP to either be flat lined or trend up. There are a lot of shoppers and everyone seems to be carrying a shopping bag. At least for consumer spending, this is a good sign. Let’s hope that the economy continues to improve and the federal government stops spending!
Release dates in 2011
Gross Domestic Product
2010 2011
4th Qt 1st QT 2nd QT 3rd QT
Advance.... January 28 April 28 July 29 October 27
Second..... February 25 May 26 August 26 November 22
Third...... March 25 June 24 September 29 December 22
2nd quarter 2009 - 0.7%
3rd quarter 2009 2.2%
4th quarter 2009 5.6%
1st quarter 2010 2.7%
2nd quarter 2010 1.7%
3rd quarter 2010 2.6%
The 3rd quarter GDP has to be welcome sight! The trend from the 4th qt ’09 to 2nd qt. ’10 was down. Many economists were predicting a double dip recession due to these trends and government spending. It would seem the data indicates an improvement in the economy - let's hope the trend continues.
If the shopping crowds are any indication this Christmas, I would expect the GDP to either be flat lined or trend up. There are a lot of shoppers and everyone seems to be carrying a shopping bag. At least for consumer spending, this is a good sign. Let’s hope that the economy continues to improve and the federal government stops spending!
Release dates in 2011
Gross Domestic Product
2010 2011
4th Qt 1st QT 2nd QT 3rd QT
Advance.... January 28 April 28 July 29 October 27
Second..... February 25 May 26 August 26 November 22
Third...... March 25 June 24 September 29 December 22
Wednesday, December 22, 2010
We Are USA
Population is 308,745,538 as per the 2010 census
Approximately 3,000,000 per year added to our population over the past decade.
How will they work?
When will they play?
What will they shop for?
Where will they live?
Population increase of approximately 1,200,000 is due to immigration.
States with Population Gains: TX, FL, SC, GA, AZ, UT, NV, WA
States with Population Losses: NY, OH, MA, NJ, PA, MI, IL, IA, MO
Changes are here.
Starting Monday and for the next two weeks, I will strive to post “changes” that we have experienced, are experiencing, or will experience.
Approximately 3,000,000 per year added to our population over the past decade.
How will they work?
When will they play?
What will they shop for?
Where will they live?
Population increase of approximately 1,200,000 is due to immigration.
States with Population Gains: TX, FL, SC, GA, AZ, UT, NV, WA
States with Population Losses: NY, OH, MA, NJ, PA, MI, IL, IA, MO
Changes are here.
Starting Monday and for the next two weeks, I will strive to post “changes” that we have experienced, are experiencing, or will experience.
Monday, December 20, 2010
Property Taxes
As 2011 quickly arrives, we can easily say that housing values have declined in 2010. Certainly values are less than the previous two years. We are in a period of leveling off and in some markets, price increases!
As you all know, at all levels of government, our elected officials are having difficulty in generating revenue. Most local governments use property taxes as their primary revenue source in setting their yearly budget. The property tax rate is set yearly by local municipalities. The tax rate and the real estate assessment of a home determine the amount of the real estate tax to be paid by homeowners.
In many locations, the last reassessment took place before the peak or during the peak of the market. It is likely the current real estate value will be less than the previous assessment. Thus, will the real estate tax be lower – most likely not!! The tax rate will most likely be increased to maintain current local government spending levels.
Therefore, homeowners have two chances to ensure local government is not maintaining current spending habits on the backs of homeowners.
1. Reassessments by local government should be challenged if the new assessment value does not reflect the current market value in your area. If the assessment of your home is higher than the last evaluation, their assessment should be challenged and an appeal filed. In most cases, the appeal is a form letter substantiated reasons for you appeal.
2. Become involved in the local government especially at the time of setting the local government budget for the next year. Local government must generate revenue to maintain current spending levels. To achieve this goal with property values declining, politicians will raise the property tax rate.
These challenges are undertaken at two different points in time and their actions will have a direct impact on your own personal household budget. Become an activist for homeowners which currently shoulder the burden of local government spending.
As you all know, at all levels of government, our elected officials are having difficulty in generating revenue. Most local governments use property taxes as their primary revenue source in setting their yearly budget. The property tax rate is set yearly by local municipalities. The tax rate and the real estate assessment of a home determine the amount of the real estate tax to be paid by homeowners.
In many locations, the last reassessment took place before the peak or during the peak of the market. It is likely the current real estate value will be less than the previous assessment. Thus, will the real estate tax be lower – most likely not!! The tax rate will most likely be increased to maintain current local government spending levels.
Therefore, homeowners have two chances to ensure local government is not maintaining current spending habits on the backs of homeowners.
1. Reassessments by local government should be challenged if the new assessment value does not reflect the current market value in your area. If the assessment of your home is higher than the last evaluation, their assessment should be challenged and an appeal filed. In most cases, the appeal is a form letter substantiated reasons for you appeal.
2. Become involved in the local government especially at the time of setting the local government budget for the next year. Local government must generate revenue to maintain current spending levels. To achieve this goal with property values declining, politicians will raise the property tax rate.
These challenges are undertaken at two different points in time and their actions will have a direct impact on your own personal household budget. Become an activist for homeowners which currently shoulder the burden of local government spending.
Wednesday, December 15, 2010
Land Development Studio Class
At the University of North Carolina Charlotte, Civil and Environmental Engineering Department, I will be teaching the Land Development Studio class in the spring. This will be the third semester for this land development class and we have 25 students registered – more than twice the number of students in past classes.
The class is a “studio” format which will require significant work outside of class time. Each component will require autocad work, cost estimating, and a planning board presentation of their design. (I am the Mayor on the Planning Board and the Q & A session is a lot of fun!)
There are three major components and two site planning exercises:
The class is a “studio” format which will require significant work outside of class time. Each component will require autocad work, cost estimating, and a planning board presentation of their design. (I am the Mayor on the Planning Board and the Q & A session is a lot of fun!)
There are three major components and two site planning exercises:
Single Family: The class will be given a 36 acre topo and boundary survey with wetland areas to use in preparing a single family subdivision layout.
Multifamily: A boundary and top survey will be used to prepare a site plan including buildings, parking, access, water, sewer, and drainage facilities.
Mixed Use Project: A 245 acre boundary survey will be used as a base map in preparing a horizontal mixed use land plan.
Commercial Site Plan – as an in-class exercise, the students will prepare a site plan for a small commercial site plan.
Vertical Mixed Use – as an in-class exercise, the students will prepare a site plan for a small vertical mixed use site plan.
Vertical Mixed Use – as an in-class exercise, the students will prepare a site plan for a small vertical mixed use site plan.
There are NO undergraduate land development concentrations in civil engineering at any university other than at UNCC. The Studio class approach allows the students to fully develop their interpersonal skills while working in a team format with strict schedules. They get to use their creative design skills to complement their technical skills.
I have always mentored that I can always find someone to draft, calculate and design. The civil engineer with excellent interpersonal skills and creative thinking will be the generation that produces sustainable land development projects in the future. The land development classes at UNCC allow the students to explore beyond the technical! As UNCC civil engineers are hired by land development engineering firms, developers, and government, they will have less of a learning curve than their peers from other schools.
Monday, December 13, 2010
For your own interest:
The Federal budget includes:
Dept of Ed Annual Budget $47,000,000,000
HUD Annual Budget $44,000,000,000
Homeland Security Annual Budget $43,000,000,000
NET ANNUAL INTEREST on DEBT $209,000,000,000
Dept of Ed Annual Budget $47,000,000,000
HUD Annual Budget $44,000,000,000
Homeland Security Annual Budget $43,000,000,000
NET ANNUAL INTEREST on DEBT $209,000,000,000
For the next several weeks, I will be taking my real estate courses to keep my license active and become a broker. The time to do this necessary work does not leave enough time for much of anything else, including my blog. I will not be posting on a regular basis over the next several weeks.
Friday, December 10, 2010
Gentrification
Over the past year, I have been trying to give “out of the box” thinking concerning how the real estate development industry may change once the economy is back on track. I would like to summarize several of my thoughts:
1. Local governments will be more diligent in directing development patterns that must utilize existing infrastructure facilities i.e. roads, water and sewer.
2. It is only time before the federal government uses incentives for local governments to force the redevelopment or “urban renewal” of existing urban core areas.
3. Vertical mixed use projects will become the norm rather than the exception. If transportation and energy components are included in the plan, the project will receive density credits.
4. Sustainable projects will have to meet certain standards before moving forward through the regulatory process.
5. Local government will use eminent domain more as a development tool by driving the private sector to pre-disposed land uses. It may be partnering of developers with local government as the next stakeholder alliance.
6. Public facilities and services will be limited to urban core areas. Government expanding services or facilities beyond an urban limit will not be common practice.
This is only a short list of thoughts but the result of the above actions may cause urban gentrification. Instead of suburban flight of homebuyers with long commutes, we may experience urban revitalization with families moving closer to employment centers.
Gentrification is the socio-cultural change of an area resulting from people moving back into urban core areas and buying houses in less prosperous areas. Obviously this will displace homeowners and renters from the area due to rising housing costs and rents due to re-development, urban renewal or urban revitalization efforts supported by local government.
Long time residents will be forced to move due to increased property values and real estate taxes. Lower income residents in these areas will be forced to sell and move to a more affordable community. As the influx of middle and upper income wage earners move into neighborhoods experiencing transformation, the gentrification of the community occurs.
$5.00 per gallon of gas, “green” cars, and federal programs may alter local government’s approach to future development patterns. The result, jobs may have to go to where the workers are located rather than the workers moving to where the jobs are located. Or our suburban neighborhoods will transform into an unimaginable condition, over time. An action always has a reaction – what are your thoughts?
1. Local governments will be more diligent in directing development patterns that must utilize existing infrastructure facilities i.e. roads, water and sewer.
2. It is only time before the federal government uses incentives for local governments to force the redevelopment or “urban renewal” of existing urban core areas.
3. Vertical mixed use projects will become the norm rather than the exception. If transportation and energy components are included in the plan, the project will receive density credits.
4. Sustainable projects will have to meet certain standards before moving forward through the regulatory process.
5. Local government will use eminent domain more as a development tool by driving the private sector to pre-disposed land uses. It may be partnering of developers with local government as the next stakeholder alliance.
6. Public facilities and services will be limited to urban core areas. Government expanding services or facilities beyond an urban limit will not be common practice.
This is only a short list of thoughts but the result of the above actions may cause urban gentrification. Instead of suburban flight of homebuyers with long commutes, we may experience urban revitalization with families moving closer to employment centers.
Gentrification is the socio-cultural change of an area resulting from people moving back into urban core areas and buying houses in less prosperous areas. Obviously this will displace homeowners and renters from the area due to rising housing costs and rents due to re-development, urban renewal or urban revitalization efforts supported by local government.
Long time residents will be forced to move due to increased property values and real estate taxes. Lower income residents in these areas will be forced to sell and move to a more affordable community. As the influx of middle and upper income wage earners move into neighborhoods experiencing transformation, the gentrification of the community occurs.
$5.00 per gallon of gas, “green” cars, and federal programs may alter local government’s approach to future development patterns. The result, jobs may have to go to where the workers are located rather than the workers moving to where the jobs are located. Or our suburban neighborhoods will transform into an unimaginable condition, over time. An action always has a reaction – what are your thoughts?
Wednesday, December 8, 2010
Peak of the Week
Wednesday is the peak of the week. It is a good time for us to look back and peek forward. This chart on bank failures certainly shows us the historical approach government has taken and the seemingly slow start of bank investigation thus far?
Remember the ’89-’91 recession triggered primarily by the Savings and Loan failures! It would seem that investigations were initiated almost immediately. Would it not be a good thing to investigate these failures now?
140 banks failed in 2009
143 banks have failed in the first 10 months of 2010!
It is reported that the FDIC deposit-insurance fund is $21 billion in the hole after absorbing the losses from the bank failures.
Remember the ’89-’91 recession triggered primarily by the Savings and Loan failures! It would seem that investigations were initiated almost immediately. Would it not be a good thing to investigate these failures now?
140 banks failed in 2009
143 banks have failed in the first 10 months of 2010!
It is reported that the FDIC deposit-insurance fund is $21 billion in the hole after absorbing the losses from the bank failures.
Tuesday, December 7, 2010
Smart Growth Principles
In previous posts, I have tried to outline what could happen with the real estate development industry as the economy recovers. I do not believe the industry will go back to its old self. We have to think differently and pursue unconventional ideas. A proactive position will provide leadership OR government (at all levels) will dictate how we build, where we build, and what we build. The following smart growth principles may guide our future real estate development patterns.
• Create Range of Housing Opportunities and Choices
• Create Walkable Neighborhoods
• Encourage Community and Stakeholder Collaboration
• Foster Distinctive, Attractive Communities with a Strong Sense of Place
• Make Development Decisions Predictable, Fair and Cost Effective
• Mix Land Uses
• Preserve Open Space, Farmland, Natural Beauty and Critical Environmental Areas
• Provide a Variety of Transportation Choices
• Strengthen and Direct Development Towards Existing Communities
• Take Advantage of Compact Building Design
It doesn’t seem the “Livable Communities” act will make it through the lame duck session. Its future will go with Sen. Dodd as he leaves Washington, DC. This doesn’t mean that government will stop their pursuit of “sustainable” growth policies that will guide our industry into the future.
The “sustainable” real estate development approach may in a significant way direct future development toward the urban core. Jobs, buyers and services will be channeled to urban centers. Urban cores or urban centers will be defined by the availability of existing water and sewer facilities and not by population! I expect local governments will not approve of extending existing facilities beyond urban core areas – simply because they can’t maintain what they own now.
After all, how would your life change if gas went up to $5 per gallon or gas was rationed and your daily commute was sixty miles?
Would you move closer to your work?
Buy a more fuel efficient car?
Find a new job?
Take public transportation?
Car pool?
Retire at age 30 like workers in Europe?
Go on unemployment for three years and hope gas prices go down?
Shifting job centers, housing, services, shopping, and recreation facilities to urban centers will become the norm. This shift in real estate development philosophy and the new reality of higher prices and cost of living will ultimately have a dramatic impact on our urban centers. This week, I will outline one of the impacts.
• Create Range of Housing Opportunities and Choices
• Create Walkable Neighborhoods
• Encourage Community and Stakeholder Collaboration
• Foster Distinctive, Attractive Communities with a Strong Sense of Place
• Make Development Decisions Predictable, Fair and Cost Effective
• Mix Land Uses
• Preserve Open Space, Farmland, Natural Beauty and Critical Environmental Areas
• Provide a Variety of Transportation Choices
• Strengthen and Direct Development Towards Existing Communities
• Take Advantage of Compact Building Design
It doesn’t seem the “Livable Communities” act will make it through the lame duck session. Its future will go with Sen. Dodd as he leaves Washington, DC. This doesn’t mean that government will stop their pursuit of “sustainable” growth policies that will guide our industry into the future.
The “sustainable” real estate development approach may in a significant way direct future development toward the urban core. Jobs, buyers and services will be channeled to urban centers. Urban cores or urban centers will be defined by the availability of existing water and sewer facilities and not by population! I expect local governments will not approve of extending existing facilities beyond urban core areas – simply because they can’t maintain what they own now.
After all, how would your life change if gas went up to $5 per gallon or gas was rationed and your daily commute was sixty miles?
Would you move closer to your work?
Buy a more fuel efficient car?
Find a new job?
Take public transportation?
Car pool?
Retire at age 30 like workers in Europe?
Go on unemployment for three years and hope gas prices go down?
Shifting job centers, housing, services, shopping, and recreation facilities to urban centers will become the norm. This shift in real estate development philosophy and the new reality of higher prices and cost of living will ultimately have a dramatic impact on our urban centers. This week, I will outline one of the impacts.
Monday, December 6, 2010
If not NOW – When?
Why homebuyers should be motivated to buy NOW rather than wait:
Please review the following list of reasons why it is a good time to buy a home. Please include additional reasons if not listed.
1. The supply is high so your negotiating position will not get any better
2. Buyers do not have to make concessions – the right home is available
3. Plenty of homes available in the best locations to raise a family and call it “home”
4. Now is the best time to purchase at the best possible price
5. Buyers can find a mortgage with the best terms
6. Interest rates remain at historical lows but NOT for long
7. Long term appreciation opportunities can be realized
8. Mortgage interest remains a tax deduction
If not NOW – When?
I have been told by first time homebuyers:
They do not want to take on a mortgage because they are afraid of losing their job.
They will not pursue a mortgage because they don’t think they could qualify.
Why the rush? Prices are still coming down, the economy is in the pits, and interest rates have been low for a long period of time. No sense of urgency.
Not so good economic news - almost daily and they lack confidence in things getting better anytime soon.
This recession is very much different from previous housing recessions.
We have to work with homebuyers one at a time and one step at a time.
We have to work with sellers and achieve an “overwhelming” price to differentiate a home from the competition.
Please review the following list of reasons why it is a good time to buy a home. Please include additional reasons if not listed.
2. Buyers do not have to make concessions – the right home is available
3. Plenty of homes available in the best locations to raise a family and call it “home”
4. Now is the best time to purchase at the best possible price
5. Buyers can find a mortgage with the best terms
6. Interest rates remain at historical lows but NOT for long
7. Long term appreciation opportunities can be realized
8. Mortgage interest remains a tax deduction
If not NOW – When?
I have been told by first time homebuyers:
They do not want to take on a mortgage because they are afraid of losing their job.
They will not pursue a mortgage because they don’t think they could qualify.
Why the rush? Prices are still coming down, the economy is in the pits, and interest rates have been low for a long period of time. No sense of urgency.
Not so good economic news - almost daily and they lack confidence in things getting better anytime soon.
This recession is very much different from previous housing recessions.
We have to work with homebuyers one at a time and one step at a time.
We have to work with sellers and achieve an “overwhelming” price to differentiate a home from the competition.
Friday, December 3, 2010
Just for Fun – TV versus Movies
Top 5 salaries in TV and movies (in millions):
TV Movies
1. Oprah $350 Johnny Depp $75
2. Dr. Phil $45 Ben Stiller $53
3. Letterman $40 Tom Hanks $45
4. Simon Cowell $36 Adam Sandler $40
5. Judge Judy $30 Leonardo DiCaprio $28
Just for fun:
Add up the salaries of the top five CEO’s, athletes, TV stars and movie stars and it is approximately:
Their combined salary $1,200,000,000
Salary of ONLY the 5th highest paid Hedge Fund manager $1,300,000,000
Oh, I forgot to add in the top five professor salaries!
The 5th highest paid Hedge Fund manager earns more in ONE DAY than the average US Citizen wage earner makes in ONE YEAR! Would our economic problems be linked in some way to hedge funds? AND Hedge Fund managers fly under the radar???
What is wrong with this picture?
TV Movies
1. Oprah $350 Johnny Depp $75
2. Dr. Phil $45 Ben Stiller $53
3. Letterman $40 Tom Hanks $45
4. Simon Cowell $36 Adam Sandler $40
5. Judge Judy $30 Leonardo DiCaprio $28
Just for fun:
Add up the salaries of the top five CEO’s, athletes, TV stars and movie stars and it is approximately:
Their combined salary $1,200,000,000
Salary of ONLY the 5th highest paid Hedge Fund manager $1,300,000,000
Oh, I forgot to add in the top five professor salaries!
The 5th highest paid Hedge Fund manager earns more in ONE DAY than the average US Citizen wage earner makes in ONE YEAR! Would our economic problems be linked in some way to hedge funds? AND Hedge Fund managers fly under the radar???
What is wrong with this picture?
Thursday, December 2, 2010
Salaries in MILLIONS
Top 5 CEO’s Top 5 Athletes
1. Larry Ellison $84.5 Tiger Woods $110.0
2. Ray Elliott $33.4 Kobe Bryant $45.0
3. Ray Irani $31.4 David Beckham $42.0
4. Mark Hurd $24.2 LeBron James $40.0
5. James Hackett $23.5 Phil Mickelson $40.0
I would guess that you will know each of the athletes listed above and their sport.
However, can you list the companies associated with their CEO?
How about comparing salaries to the highest paid professor by subject:
Note: these salaries are not in millions!
Law $134,146
Engineering $112,679
Business Management $109,919
Computer Science $101,219
Air Transportation $ 99,803
How much does a Hedge Fund manager (refer to previous post) earn per MINUTE?
1. Larry Ellison $84.5 Tiger Woods $110.0
2. Ray Elliott $33.4 Kobe Bryant $45.0
3. Ray Irani $31.4 David Beckham $42.0
4. Mark Hurd $24.2 LeBron James $40.0
5. James Hackett $23.5 Phil Mickelson $40.0
I would guess that you will know each of the athletes listed above and their sport.
However, can you list the companies associated with their CEO?
How about comparing salaries to the highest paid professor by subject:
Note: these salaries are not in millions!
Law $134,146
Engineering $112,679
Business Management $109,919
Computer Science $101,219
Air Transportation $ 99,803
How much does a Hedge Fund manager (refer to previous post) earn per MINUTE?
Wednesday, December 1, 2010
Hedge Funds & Top Paid Managers
From Wikipedia, the free encyclopedia
In most jurisdictions, hedge funds are open only to a limited range of professional or wealthy investors who meet criteria set by regulators, and are accordingly exempted from many of the regulations that govern ordinary investment funds. Investors who pay a performance fee to the fund's investment manager
As the name implies, hedge funds often seek to hedge some of the risks inherent in their investments using a variety of methods, notably short selling and derivatives.
The 25 largest hedge fund managers had $519.7 billion in assets under management as of December 31, 2009. The top five hedge funds are:
JP Morgan Chase ($53.5 billion)
Bridgewater Associates ($43.6 billion)
Paulson & Co. ($32 billion)
Brevan Howard ($27 billion)
Soros Fund Management ($27 billion)
Top Earning Hedge Fund Mangers 2009 NET Compensation
1.David Tepper, Appaloosa Management Est. 2009 personal earnings: $4.0 billion
2. George Soros, Soros Fund Management Est. 2009 personal earnings: $3.3 billion
3. James Simons, Renaissance Technologies Est. 2009 personal earnings: $2.5 billion
4: John Paulson, Paulson & Company Est. 2009 personal earnings: $2.3 billion
5: Steve Cohen, SAC Capital Advisors Est. 2009 personal earnings: $1.4 billion
6. (tie): Carl Icahn, Icahn Capital Est. 2009 personal earnings: $1.3 billion
6. (tie): Edward Lampert, ESL Investments Est. 2009 personal earnings: $1.3 billion
A "lightly" regulated industry pays well doesn't it! In comparison, let’s look at: CEO’s, movie stars, sports, entertainers, etc –tomorrow’s blog post. Oh, by the way, CEO's get alot of attention for how much they earn!
In most jurisdictions, hedge funds are open only to a limited range of professional or wealthy investors who meet criteria set by regulators, and are accordingly exempted from many of the regulations that govern ordinary investment funds. Investors who pay a performance fee to the fund's investment manager
As the name implies, hedge funds often seek to hedge some of the risks inherent in their investments using a variety of methods, notably short selling and derivatives.
The 25 largest hedge fund managers had $519.7 billion in assets under management as of December 31, 2009. The top five hedge funds are:
JP Morgan Chase ($53.5 billion)
Bridgewater Associates ($43.6 billion)
Paulson & Co. ($32 billion)
Brevan Howard ($27 billion)
Soros Fund Management ($27 billion)
Top Earning Hedge Fund Mangers 2009 NET Compensation
1.David Tepper, Appaloosa Management Est. 2009 personal earnings: $4.0 billion
2. George Soros, Soros Fund Management Est. 2009 personal earnings: $3.3 billion
3. James Simons, Renaissance Technologies Est. 2009 personal earnings: $2.5 billion
4: John Paulson, Paulson & Company Est. 2009 personal earnings: $2.3 billion
5: Steve Cohen, SAC Capital Advisors Est. 2009 personal earnings: $1.4 billion
6. (tie): Carl Icahn, Icahn Capital Est. 2009 personal earnings: $1.3 billion
6. (tie): Edward Lampert, ESL Investments Est. 2009 personal earnings: $1.3 billion
A "lightly" regulated industry pays well doesn't it! In comparison, let’s look at: CEO’s, movie stars, sports, entertainers, etc –tomorrow’s blog post. Oh, by the way, CEO's get alot of attention for how much they earn!
Tuesday, November 30, 2010
What is wrong with this Picture?
Average yearly salaries:
US Army $23,000 per year average salary
US Citizen $50,000 per year average salary
Federal Employee $74,000 per year average salary
Member of Congress $174,000 per year average salary
This week, for comparison, I will be posting salaries of the top five Hedge Fund managers, athletes, TV stars, CEO’s and movie stars.
Yesterday, the Administration has indicated that they will impose a freeze on salary increases for the next two years. Although this approach was implemented by most companies two years ago, a hiring freeze was also instituted by most firms. The federal government should also implement a hiring freeze. This move was political and a smoke screen when the spending is not over!!! The safe food legislation is under consideration by Congress in the lame duck session. Oh no, more spending.
Government spending is out of control and they want to reduce the deficit on the backs of the federal employees! Why not cut the salaries of the administration and congress. Congress should pass legislation reducing their salary to $1.00 per year for the next two years.
US Army $23,000 per year average salary
US Citizen $50,000 per year average salary
Federal Employee $74,000 per year average salary
Member of Congress $174,000 per year average salary
This week, for comparison, I will be posting salaries of the top five Hedge Fund managers, athletes, TV stars, CEO’s and movie stars.
Yesterday, the Administration has indicated that they will impose a freeze on salary increases for the next two years. Although this approach was implemented by most companies two years ago, a hiring freeze was also instituted by most firms. The federal government should also implement a hiring freeze. This move was political and a smoke screen when the spending is not over!!! The safe food legislation is under consideration by Congress in the lame duck session. Oh no, more spending.
Government spending is out of control and they want to reduce the deficit on the backs of the federal employees! Why not cut the salaries of the administration and congress. Congress should pass legislation reducing their salary to $1.00 per year for the next two years.
Monday, November 29, 2010
Current State of the Economy
GDP
Advanced Estimate for 1st quarter 2010 3.7%
Final Estimate 1st QT 2010 2.7%
Advanced Estimate for 2nd quarter 2010 2.4%
Current Estimate 2 QT 2010 1.7%
Advanced Estimate for 3rd quarter 2010 2.0%
Second Estimate due 11/23/10 ? 2.5%
Third Estimate due 12/22/10 ?
3rd Qt Second Estimate higher in part because of 8.95 % increase in federal government spending. However, this is a good sign for the economy --- right?
The following are Fed predictions moving forward:
The Economy
The economy will grow only 2.4% to 2.5% in 2010 which is down from their previous forecast of 3% to 3.5%. If the second 3rd QT estimate was reportedly higher, why would the Fed seem pessimistic in their prediction?
In 2011, the Fed expects the economy will expand by 3 % to 3.6 %.
By 2013, the Fed predicts the economy will grow around 4.0%.
Unemployment
The current unemployment rate is 9.6% and the Fed expects will remain relatively constant the balance of the year.
For 2011 they expect the unemployment rate to hover around 9.0% in 2011. This is much higher than their June projection of around 8.5%.
Inflation
The Fed expects prices will rise about 1.5% in 2011. This is not a serious problem. However, if salaries do not keep pace, the 70% of the economy will be affected. However, in previous posts, I tried to make a statement that inflation will be higher than their prediction due to their actions. Only time will tell.
Housing (not a Fed prediction)
Sales of previously owned homes slipped 2.2% in October and housing is heading into a traditionally slow period – the holiday season.
Mortgage rates are slowing trending up
Home prices continue to decline but the % decrease is much slower and prices are starting to increase in some markets!
In 28 major metro areas during October, the housing supply trending lower. Primarily due to the “papergate” foreclosure problems and the banks delaying the foreclosure process.
Housing is now different ---- mortgage rates ↑ Supply of Homes ↓ Home prices ↔
Fannie Mae’s survey:
69% surveyed thought that it is a good time to buy a home
85% surveyed thought it is a bad time to sell a home.
But what happens when foreclosures are again released by the banks? Spring 2011 will be a key turning point for housing – existing and new construction. After the holiday season, the Super Bowl and the “spending season” are over and we enter spring optimism, what will the housing picture look like?
I try to outline thoughts and published data/information for you to judge for yourself. Prepare for the worst and hope for the best!
Advanced Estimate for 1st quarter 2010 3.7%
Final Estimate 1st QT 2010 2.7%
Advanced Estimate for 2nd quarter 2010 2.4%
Current Estimate 2 QT 2010 1.7%
Advanced Estimate for 3rd quarter 2010 2.0%
Second Estimate due 11/23/10 ? 2.5%
Third Estimate due 12/22/10 ?
3rd Qt Second Estimate higher in part because of 8.95 % increase in federal government spending. However, this is a good sign for the economy --- right?
The following are Fed predictions moving forward:
The Economy
The economy will grow only 2.4% to 2.5% in 2010 which is down from their previous forecast of 3% to 3.5%. If the second 3rd QT estimate was reportedly higher, why would the Fed seem pessimistic in their prediction?
In 2011, the Fed expects the economy will expand by 3 % to 3.6 %.
By 2013, the Fed predicts the economy will grow around 4.0%.
Unemployment
The current unemployment rate is 9.6% and the Fed expects will remain relatively constant the balance of the year.
For 2011 they expect the unemployment rate to hover around 9.0% in 2011. This is much higher than their June projection of around 8.5%.
Inflation
The Fed expects prices will rise about 1.5% in 2011. This is not a serious problem. However, if salaries do not keep pace, the 70% of the economy will be affected. However, in previous posts, I tried to make a statement that inflation will be higher than their prediction due to their actions. Only time will tell.
Housing (not a Fed prediction)
Sales of previously owned homes slipped 2.2% in October and housing is heading into a traditionally slow period – the holiday season.
Mortgage rates are slowing trending up
Home prices continue to decline but the % decrease is much slower and prices are starting to increase in some markets!
In 28 major metro areas during October, the housing supply trending lower. Primarily due to the “papergate” foreclosure problems and the banks delaying the foreclosure process.
Housing is now different ---- mortgage rates ↑ Supply of Homes ↓ Home prices ↔
Fannie Mae’s survey:
69% surveyed thought that it is a good time to buy a home
85% surveyed thought it is a bad time to sell a home.
But what happens when foreclosures are again released by the banks? Spring 2011 will be a key turning point for housing – existing and new construction. After the holiday season, the Super Bowl and the “spending season” are over and we enter spring optimism, what will the housing picture look like?
I try to outline thoughts and published data/information for you to judge for yourself. Prepare for the worst and hope for the best!
Wednesday, November 24, 2010
Holiday Weekend!
Happy Thanksgiving!
Invest in others this holiday weekend. Have a safe and Happy Thanksgiving.
Back on Monday - if I survive black Friday!
Invest in others this holiday weekend. Have a safe and Happy Thanksgiving.
Back on Monday - if I survive black Friday!
Tuesday, November 23, 2010
The Time to Sell is Now!
Trying to sell a home elsewhere in order to come to the Carolina’s? That has always presented a challenge for people who want to relocate – even more so today with current market conditions and mortgages sometimes presenting challenges too. One thing is for certain however, and that is that there has never been a more compelling time to go ahead and sell that home.
1. Interest rates are at an all time low.
2. Inventories of properties have never been higher.
3. New construction starts are at an all time low.
4. Shadow inventory of properties foreclosed or short sales are on the upswing offering great opportunities.
5. The Carolinas are not affected with seasonal swings.
Unload now, even if it means accepting pain. It will allow you to reduce carrying costs; reduce repair and maintenance worries; and get a great deal on the swing in your new location.
It’s not always an easy decision, but if you consider the facts, in most instances you’ll find the decision can be anxiety and drama free allowing you and your family to get settled in your new home in the Carolinas much quicker!
1. Interest rates are at an all time low.
2. Inventories of properties have never been higher.
3. New construction starts are at an all time low.
4. Shadow inventory of properties foreclosed or short sales are on the upswing offering great opportunities.
5. The Carolinas are not affected with seasonal swings.
Unload now, even if it means accepting pain. It will allow you to reduce carrying costs; reduce repair and maintenance worries; and get a great deal on the swing in your new location.It’s not always an easy decision, but if you consider the facts, in most instances you’ll find the decision can be anxiety and drama free allowing you and your family to get settled in your new home in the Carolinas much quicker!
Monday, November 22, 2010
Winterize Your Home Now
Here are some main points on winterizing your home:
• Prepare your fireplace by inspecting the damper, storing chopped firewood away from your home, and removing soot and creosote.
• Call an HVAC professional to inspect and clean your furnace. The best piece of advice I can give you is to turn the furnace on and have it inspected before the coldest winter months. The last thing you want is to have a faulty furnace when the temperature starts to plummet.
• Inspect your doors and windows for cracks and exposures. According to EarthWorks Group, the average American home has leaks that amount to a nine-square-foot hole in the wall…that’s a lot of cold air coming into your home during those winter months!
• Clean out gutters and prevent the formation of potential ice dams by removing any debris. Ice dams result in water backing up and freezing in your gutters which can then cause water to seep into your house.
• Drain air conditioner pipes and shut off the AC water valve. If you’ve never experienced a burst pipe during a winter freeze now would not be the time to start. Shutting off the AC water valve and making sure the pipes are drained will save you from many unnecessary headaches this winter.
• If you leave on vacation, leave the heat on at least 55 degrees.
• Prepare an emergency kit of candles, batteries, non-perishable food items, first aid, matches/lighters, and water.
Taking these few steps before the winter weather moves in will help your protect your home and prevent future damage.
• Prepare your fireplace by inspecting the damper, storing chopped firewood away from your home, and removing soot and creosote.
• Call an HVAC professional to inspect and clean your furnace. The best piece of advice I can give you is to turn the furnace on and have it inspected before the coldest winter months. The last thing you want is to have a faulty furnace when the temperature starts to plummet.
• Inspect your doors and windows for cracks and exposures. According to EarthWorks Group, the average American home has leaks that amount to a nine-square-foot hole in the wall…that’s a lot of cold air coming into your home during those winter months!
• Clean out gutters and prevent the formation of potential ice dams by removing any debris. Ice dams result in water backing up and freezing in your gutters which can then cause water to seep into your house.
• Drain air conditioner pipes and shut off the AC water valve. If you’ve never experienced a burst pipe during a winter freeze now would not be the time to start. Shutting off the AC water valve and making sure the pipes are drained will save you from many unnecessary headaches this winter.
• If you leave on vacation, leave the heat on at least 55 degrees.
• Prepare an emergency kit of candles, batteries, non-perishable food items, first aid, matches/lighters, and water.
Taking these few steps before the winter weather moves in will help your protect your home and prevent future damage.
Friday, November 19, 2010
Undergraduate courses on Land Development
At North Carolina University Charlotte, the Civil and Environmental Engineering Department Chair, Dr. David Young, David Naylor and I created a five course land development concentration for the students. The concentration includes Sustainable Design and Stormwater Management and I had the opportunity to create three of the five courses:
Land Development I – this course is an overview of the real estate development industry, the role of the land development engineer and the interconnection of infrastructure elements. This course includes hands-on class exercises including the art of contouring. Students are required to make presentations.
Land Development Design – Uses a base plan with boundary, topography and lot layout to prepare infrastructure designs for roadways, storm drainage, SWM, water and sewer facilities. Students use AutoCad extensively to prepare designs.
Land Development Studio - This course is designed for civil engineering students to “think outside of the box”. There are three main elements. They prepare a single family lot subdivision, a multifamily site plan and a large-scale property land use plan. They will also have in-class exercises preparing a commercial site plan and a mixed use plan. They are required to present their plan in a “mock” Planning Board environment.
UNCC registration started on Monday of this past week. The Land Development Studio class closed within 2-days with 20 undergraduates and 3 graduate students registering for the class. I am looking forward to teaching this class again next semester. The land development concentration program for civil engineering students has been embraced by the students and supported by the Department. This is the first undergraduate civil engineering land development concentration in the nation!!
Land Development I – this course is an overview of the real estate development industry, the role of the land development engineer and the interconnection of infrastructure elements. This course includes hands-on class exercises including the art of contouring. Students are required to make presentations.
Land Development Design – Uses a base plan with boundary, topography and lot layout to prepare infrastructure designs for roadways, storm drainage, SWM, water and sewer facilities. Students use AutoCad extensively to prepare designs.
Land Development Studio - This course is designed for civil engineering students to “think outside of the box”. There are three main elements. They prepare a single family lot subdivision, a multifamily site plan and a large-scale property land use plan. They will also have in-class exercises preparing a commercial site plan and a mixed use plan. They are required to present their plan in a “mock” Planning Board environment.
UNCC registration started on Monday of this past week. The Land Development Studio class closed within 2-days with 20 undergraduates and 3 graduate students registering for the class. I am looking forward to teaching this class again next semester. The land development concentration program for civil engineering students has been embraced by the students and supported by the Department. This is the first undergraduate civil engineering land development concentration in the nation!!
Thursday, November 18, 2010
Inflation or Deflation or Stagflation?
My Summary:
If the economy is based on 70% consumer spending and the bulk of the balance is our national debt - - -
What are the motivating factors for anyone to buy --- ANYTHING?
From Wikipedia, the free encyclopedia
One remedy to a liquidity trap is expanding the money supply via quantitative easing or other techniques in which money is effectively printed to purchase assets, thereby creating inflationary expectations that cause savers to begin spending again. Government stimulus spending and mercantilist policies to stimulate exports and reduce imports are other techniques to stimulate demand
Government is causing inflation to encourage us to spend money?
Without a question, as prices rise and interest rates trend up, people that HAVE TO BUY will purchase. For housing, many will stay where they are due to job insecurity and the lack of confidence in the economy.
Interest rates have never been so low and this has NOT jump started the economy and housing continues to slump.
In the Jimmy Carter days of stagflation, we purchased a home with an 18% interest rate. I was working for a large regional builder/developer and in charge of our housing product design and projects.
We used the phrase “nice but not necessary” in selecting products and features.
Every element of the house was questioned as we achieved a price point that generated sales. Of course the housing market today is much different with foreclosures and short sales. The company survived to build another day because government changed under the leadership of Ronald Reagan.
I really thought the housing market would turn around in late 2011. I am not sure this will happen. By definition the recession ended in 2009. In reality, we are in an inflationary, deflationary and stagflationary period of time. This is an unparalleled circumstance in our history.
I have to reach back to my previous recession days to regenerate solutions that carried the day. As an example:
1. Instead of a compelling price ---- start using the phrase “over whelming” price to generate a sale. Watch what the retailers do this holiday season.
More to come in future posts…….
If the economy is based on 70% consumer spending and the bulk of the balance is our national debt - - -
What are the motivating factors for anyone to buy --- ANYTHING?
From Wikipedia, the free encyclopedia
One remedy to a liquidity trap is expanding the money supply via quantitative easing or other techniques in which money is effectively printed to purchase assets, thereby creating inflationary expectations that cause savers to begin spending again. Government stimulus spending and mercantilist policies to stimulate exports and reduce imports are other techniques to stimulate demand
Government is causing inflation to encourage us to spend money?
Without a question, as prices rise and interest rates trend up, people that HAVE TO BUY will purchase. For housing, many will stay where they are due to job insecurity and the lack of confidence in the economy.
Interest rates have never been so low and this has NOT jump started the economy and housing continues to slump.
In the Jimmy Carter days of stagflation, we purchased a home with an 18% interest rate. I was working for a large regional builder/developer and in charge of our housing product design and projects.
We used the phrase “nice but not necessary” in selecting products and features.
Every element of the house was questioned as we achieved a price point that generated sales. Of course the housing market today is much different with foreclosures and short sales. The company survived to build another day because government changed under the leadership of Ronald Reagan.
I really thought the housing market would turn around in late 2011. I am not sure this will happen. By definition the recession ended in 2009. In reality, we are in an inflationary, deflationary and stagflationary period of time. This is an unparalleled circumstance in our history.
I have to reach back to my previous recession days to regenerate solutions that carried the day. As an example:
1. Instead of a compelling price ---- start using the phrase “over whelming” price to generate a sale. Watch what the retailers do this holiday season.
More to come in future posts…….
Wednesday, November 17, 2010
Inflation – Deflation – Stagflation?
Not being an economist and certainly not following any of the economic “experts”, I wanted to provide information on inflation, deflation and stagflation. It seems by reading the pure definitions that we continue to have mixed signals from government and various interpretations from the experts. Remember, the experts predict and then proven right or wrong several months later after data is compiled for verification.
Here is my take on the economic cycle and where we are headed:
Inflation – the information and data would indicate inflation is on the rise. It seems logical to me that inflation would increase after a long period of low inflation. It is the economic cycle. How high will inflationary pressures go and will we experience hyperinflation is the question.
As an example: flat screen TV’s. There is an oversupply if you believe the media and prices will come down sharply for the holidays. Will you buy a new flat screen TV or will you say “nice but not necessary”?
Deflation - from Wikipedia, the free encyclopedia
“A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price”
Doesn’t this definition represent our housing market? Housing prices continue to drop although less drastic than previous months. The market will be flooded again with foreclosures after the banks work through their own “papergate”.
Stagflation - From Wikipedia, the free encyclopedia
“In economics, stagflation is the situation when both the inflation rate and the unemployment rate are high.”
Inflation is here.
Unemployment remains high at 9.6%. Although I do not track unemployment benefits, I am sure there will be a point in time when the 99 weeks of unemployment benefits run out. And, will those receiving the benefits all of sudden have a job?
Tomorrow’s post will be my summary and predictions (for what it is worth!!)
Here is my take on the economic cycle and where we are headed:
Inflation – the information and data would indicate inflation is on the rise. It seems logical to me that inflation would increase after a long period of low inflation. It is the economic cycle. How high will inflationary pressures go and will we experience hyperinflation is the question.
As an example: flat screen TV’s. There is an oversupply if you believe the media and prices will come down sharply for the holidays. Will you buy a new flat screen TV or will you say “nice but not necessary”?
Deflation - from Wikipedia, the free encyclopedia
“A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price”
Doesn’t this definition represent our housing market? Housing prices continue to drop although less drastic than previous months. The market will be flooded again with foreclosures after the banks work through their own “papergate”.
Stagflation - From Wikipedia, the free encyclopedia
“In economics, stagflation is the situation when both the inflation rate and the unemployment rate are high.”
Inflation is here.
Unemployment remains high at 9.6%. Although I do not track unemployment benefits, I am sure there will be a point in time when the 99 weeks of unemployment benefits run out. And, will those receiving the benefits all of sudden have a job?
Tomorrow’s post will be my summary and predictions (for what it is worth!!)
Tuesday, November 16, 2010
Stagflation
From Wikipedia, the free encyclopedia
“In economics, stagflation is the situation when both the inflation rate and the unemployment rate are high. It is a difficult economic condition for a country, because then inflation and economic stagnation are occurring simultaneously, and until recently no macroeconomic policy had predicted this occurrence.
Economists offer two principal explanations for why stagflation occurs. First, stagflation can result when the productive capacity of an economy is reduced by an unfavorable supply shock, such as an increase in the price of oil for an oil importing country. Such an unfavorable supply shock tends to raise prices at the same time that it slows the economy by making production more costly and less profitable. This type of stagflation presents a policy dilemma because actions that are meant to assist with fighting inflation might worsen economic stagnation and vice versa.
Second, both stagnation and inflation can result from inappropriate macroeconomic policies. For example, central banks can cause inflation by permitting excessive growth of the money supply, and the government can cause stagnation by excessive regulation of goods markets and labor markets, either of these factors can cause stagflation. Excessive growth of the money supply taken to such an extreme that it must be reversed abruptly can clearly be a cause. Both types of explanations are offered in analyses of the global stagflation of the 1970s: it began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a runaway wage-price spiral.”
“In economics, stagflation is the situation when both the inflation rate and the unemployment rate are high. It is a difficult economic condition for a country, because then inflation and economic stagnation are occurring simultaneously, and until recently no macroeconomic policy had predicted this occurrence.
Economists offer two principal explanations for why stagflation occurs. First, stagflation can result when the productive capacity of an economy is reduced by an unfavorable supply shock, such as an increase in the price of oil for an oil importing country. Such an unfavorable supply shock tends to raise prices at the same time that it slows the economy by making production more costly and less profitable. This type of stagflation presents a policy dilemma because actions that are meant to assist with fighting inflation might worsen economic stagnation and vice versa.
Second, both stagnation and inflation can result from inappropriate macroeconomic policies. For example, central banks can cause inflation by permitting excessive growth of the money supply, and the government can cause stagnation by excessive regulation of goods markets and labor markets, either of these factors can cause stagflation. Excessive growth of the money supply taken to such an extreme that it must be reversed abruptly can clearly be a cause. Both types of explanations are offered in analyses of the global stagflation of the 1970s: it began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a runaway wage-price spiral.”
Monday, November 15, 2010
Inflation & Deflation
The following definitions are from Wikipedia. Tomorrow, I will post information on stagflation.
Inflation
From Wikipedia, the free encyclopedia
Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities, as well as to growth in the money supply. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.
Deflation
From Wikipedia, the free encyclopedia
In recent times, as loan terms have grown in length and loan financing (or leveraging) is common among many types of investments, the costs of deflation to borrowers have grown larger. Deflation discourages investment and spending, because there is no reason to risk on future profits when the expectation of profits may be negative and the expectation of future prices is lower. Consequently deflation generally leads to, or is associated with a collapse in aggregate demand. Without the "hidden risk of inflation", it may become more prudent just to hold on to money, and not to spend or invest it.
A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price. Since reductions in general price level are called deflation, a deflationary spiral is when reductions in price lead to a vicious circle, where a problem exacerbates its own cause.
Seasonal FuturesCharts.com provided the following graphs.
Inflation
From Wikipedia, the free encyclopedia
Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities, as well as to growth in the money supply. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.
Deflation
From Wikipedia, the free encyclopedia
In recent times, as loan terms have grown in length and loan financing (or leveraging) is common among many types of investments, the costs of deflation to borrowers have grown larger. Deflation discourages investment and spending, because there is no reason to risk on future profits when the expectation of profits may be negative and the expectation of future prices is lower. Consequently deflation generally leads to, or is associated with a collapse in aggregate demand. Without the "hidden risk of inflation", it may become more prudent just to hold on to money, and not to spend or invest it.
A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price. Since reductions in general price level are called deflation, a deflationary spiral is when reductions in price lead to a vicious circle, where a problem exacerbates its own cause.
Seasonal FuturesCharts.com provided the following graphs.
SUGAR
COFFEE
Thursday, November 11, 2010
Wednesday, November 10, 2010
Real Life Case Study on Health Care Reform
BlueCross BlueShield of NC is raising our health insurance premium by 26%!!
When we asked why and wanted to change some of the provisions of our plan, we were provided with the following explanation:
“If you like your health plan, you can keep it” --- we were told this on many occasions.
The Affordable Care Act of 2010 included a “grandfathering’ clause. Has nothing to do with age but allows you to keep your current plan and be exempt from SOME of the new health care provisions.
It is clear to me that the new health care provisions as outlined by BlueCross BlueShield will increase costs but a “grandfathered” plan will be exempt as the new provisions are phased in from 2010 – 2014.
If you change your health care plan in any of following ways, your plan will no longer be protected under the “grandfather” status:
Reality: Current monthly cost of $681 will increase to next year’s rate of $858.
We want to increase our deductible to lower the monthly cost but this will result in a loss of the “grandfather” status which will result in an increase of health care costs. It seems to me the health care reform law, at least for my family, only increases my monthly cost without an improvement in health care.
Oh by the way, what about your health care plans?
When we asked why and wanted to change some of the provisions of our plan, we were provided with the following explanation:
“If you like your health plan, you can keep it” --- we were told this on many occasions.
The Affordable Care Act of 2010 included a “grandfathering’ clause. Has nothing to do with age but allows you to keep your current plan and be exempt from SOME of the new health care provisions.
It is clear to me that the new health care provisions as outlined by BlueCross BlueShield will increase costs but a “grandfathered” plan will be exempt as the new provisions are phased in from 2010 – 2014.
If you change your health care plan in any of following ways, your plan will no longer be protected under the “grandfather” status:
- Elimination of benefits to diagnose or treat a particular condition
- Any increase in cost-sharing percentage requirements --- coinsurance
- Increase in fixed-amount cost-sharing requirements (deductibles, out-of-pocket limits or copayments)
- Employer contributions reduced by more than 5%
- Any decrease in the dollar amount of the overall annual limit
BlueCross BlueShield cites the Administration as predicting that by 2013, only 55% of large employers and 34% of small employers will maintain grandfathered plans. As a sole proprietor, we must evaluate the monthly cost, “grandfather” provisions, and health status while GUESSING what Congress will do about the new health care legislation.
Oh by the way, what about your health care plans?
Tuesday, November 9, 2010
Inflation is Already Here!
Posted Nov 7th 2010 11:10AM by Connie Madon at BloggingStocks
www.bloggingstocks.com/bloggers/connie-madon
“Bernanke claims that inflation is below the Fed's 2% target. That's hogwash! Sure if you use the "core" CPI, which leaves out food and energy, that may be the case. Not to worry.”
“But tons of inflation have already been created. Look at these commodity prices and say there's no inflation:
• Gold is at an all-time high, with the December futures at $1,397.70 per ounce.
• Silver is at a 30-year high, with December futures at $26.748 per ounce.
• The December U.S. dollar futures are at 76.69, down from 89.11.
• Cotton is at an all-time high. Price increases are being passed on to consumers.
• Sugar is at a 30-year high. Soon there will be price increases in sugar products.
• Oil is trading at $86.65 per barrel, pushing $90.
• Gasoline is already $3.00 per gallon, with $4.00 gasoline on the way.
• The grain markets are exploding. December wheat is at $7.28 per bushel, corn is at $5.87 per bushel and soybeans are at $12.84 per bushel. “
In my opinion, inflation is here and will continue. Will the Fed be able to manage inflation or will it be runaway inflation? Are you prepared?
As an example: How would $5.00/gal gas change your daily life?
www.bloggingstocks.com/bloggers/connie-madon
“Bernanke claims that inflation is below the Fed's 2% target. That's hogwash! Sure if you use the "core" CPI, which leaves out food and energy, that may be the case. Not to worry.”
“But tons of inflation have already been created. Look at these commodity prices and say there's no inflation:
• Gold is at an all-time high, with the December futures at $1,397.70 per ounce.
• Silver is at a 30-year high, with December futures at $26.748 per ounce.
• The December U.S. dollar futures are at 76.69, down from 89.11.
• Cotton is at an all-time high. Price increases are being passed on to consumers.
• Sugar is at a 30-year high. Soon there will be price increases in sugar products.
• Oil is trading at $86.65 per barrel, pushing $90.
• Gasoline is already $3.00 per gallon, with $4.00 gasoline on the way.
• The grain markets are exploding. December wheat is at $7.28 per bushel, corn is at $5.87 per bushel and soybeans are at $12.84 per bushel. “
In my opinion, inflation is here and will continue. Will the Fed be able to manage inflation or will it be runaway inflation? Are you prepared?
As an example: How would $5.00/gal gas change your daily life?
I-10 in LA (Sept 2010)
Monday, November 8, 2010
Relocation Stats
2010 relocation statistics are indicative of the lack of jobs and the inability of job seekers to sell their homes. I find the statistics very interesting. From 2001 - 2009, the annual average percentage of job seekers relocating is significantly different from the previous two decades. In 1986 and 1993, the spike in percentage most likely is a result of coming out of recessions. Should we expect a similar spike in relocation's once jobs return? The question is, however, will jobs return before housing prices recover? My guess is YES. Also, if we experience an increase in inflation --- which includes gas prices, where jobs are located will become an important issue for job seekers.
Friday, November 5, 2010
The Federal Reserve & Inflation
$600,000,000,000 - just a small accounting error on my part!!
Will this be enough to trigger inflation? Prepare for the worst and hope for the best.
Will this be enough to trigger inflation? Prepare for the worst and hope for the best.
Thursday, November 4, 2010
The Small Business Jobs Act Signed
The recently signed legislation is intended to provide more funding for small businesses and cut their taxes. $30 billion dollars has been allocated for small business loans.
I applied for an SBA loan in 2000 as a sole proprietor and obtained funds to buy an office and equipment. It worked and it is time to try again!
In the bill, there are provisions which may be of benefit to your business. Deductions will be treated differently and tax credit provisions may also help you.
The new law also allows cell phones to be expensed at their full cost if certain conditions are met.
Setting up your business takes money. This new law allows start-up expenses to be deducted up to $10,000. These provisions are a positive change but will it make a difference if a sole proprietor has to compete with a newly defined small business?
I applied for an SBA loan in 2000 as a sole proprietor and obtained funds to buy an office and equipment. It worked and it is time to try again!
In the bill, there are provisions which may be of benefit to your business. Deductions will be treated differently and tax credit provisions may also help you.
The new law also allows cell phones to be expensed at their full cost if certain conditions are met.
Setting up your business takes money. This new law allows start-up expenses to be deducted up to $10,000. These provisions are a positive change but will it make a difference if a sole proprietor has to compete with a newly defined small business?
Wednesday, November 3, 2010
Election Results
I am not one to predict and regardless of our opinions on the election outcome, how will the federal government now govern for “We the People”?
Repeal, amend, veto and gridlock OR
Working to create jobs and getting our economy back on track. The new Congress starts in January 2011 and based on the process, we will not see immediate significant changes and results will lag --- perhaps by the third or fourth quarter, 2011, we will see positive movement in the economy. I will continue to watch and report housing trends.
As housing goes so goes the economy.
Repeal, amend, veto and gridlock OR
Working to create jobs and getting our economy back on track. The new Congress starts in January 2011 and based on the process, we will not see immediate significant changes and results will lag --- perhaps by the third or fourth quarter, 2011, we will see positive movement in the economy. I will continue to watch and report housing trends.
As housing goes so goes the economy.
Tuesday, November 2, 2010
ELECTION DAY
Isn’t our election day becoming more like American Idol every year? Some people now have a certain amount of time to vote as many times as they can!
Did you VOTE today?
GOOD LUCK AMERICA!
Did you VOTE today?
GOOD LUCK AMERICA!
Monday, November 1, 2010
The Economy
GDP
2nd quarter 2009 -0.7%
3rd quarter 2009 2.2%
4th quarter 2009 5.6%
Advanced Estimate for 1st quarter 2010 3.7%
Final Estimate 1 QT 2010 2.7%
Advanced Estimate for 2nd quarter 2010 2.4%
Current Estimate 2 QT 2010 1.7%
Advanced Estimate for 3rd quarter 2010 2.0%
Second Estimate due 11/23/10 ?
Third Estimate due 12/22/10 ?
I look at trends and it seems that from the advanced GDP estimates to the final estimate, the estimate of growth rate decreases as more data becomes available. Also notice that the advanced estimate also seems to be on a downward trend.
I will post the third quarter data in Nov and Dec.
Thursday, October 28, 2010
Home Prices Yr over Yr Changes
Although I am not an advocate of comparing changes in prices from month to month or from year to year but we need to be aware of trends. The following is from the Standard & Poor’s/Case Sheller index showing the year-to-year housing price changes for the top 20 metro areas. It is good to see that there are metro areas showing a positive price change. Without the benefit of further research, I would conclude the positive changes in Los Angeles, San Francisco and San Diego may be due to dwindling supplies. And in Washington DC – well it is the federal government!
The price reduction year over year in most areas has slowed, hit bottom and gradually turning positive. This may signal the best time ever to buy – especially with mortgage rates around 4%!
Metro Area 1-year Price Change (%)
Atlanta -2.0
Boston +1.5
Charlotte -3.4
Chicago -2.9
Cleveland -0.4
Dallas -1.7
Denver -1.2
Detroit -0.1
Las Vegas -4.5
Los Angeles +5.4
Miami -1.0
Minneapolis +2.9
New York +0.1
Phoenix +0.4
Portland -2.3
San Diego +6.9
San Francisco +7.8
Seattle -2.4
Tampa -4.1
Washington DC +4.8
The price reduction year over year in most areas has slowed, hit bottom and gradually turning positive. This may signal the best time ever to buy – especially with mortgage rates around 4%!
Metro Area 1-year Price Change (%)
Atlanta -2.0
Boston +1.5
Charlotte -3.4
Chicago -2.9
Cleveland -0.4
Dallas -1.7
Denver -1.2
Detroit -0.1
Las Vegas -4.5
Los Angeles +5.4
Miami -1.0
Minneapolis +2.9
New York +0.1
Phoenix +0.4
Portland -2.3
San Diego +6.9
San Francisco +7.8
Seattle -2.4
Tampa -4.1
Washington DC +4.8
Wednesday, October 27, 2010
Robo-Signing and the Foreclosure Scandal
Robo-signing is a new word coming from the Foreclosure Scandal that has found its way into our everyday lives. So, what does robo-signing mean exactly?
Upon initial review of the information robo-signing looked to be a result of the huge number of foreclosure documents that needed to be approved and signed off on.
It seems that many people thought these were qualified individuals who were overwhelmed with the amount of paperwork they needed to complete to have a foreclosure proceeding move forward.
Now, in some recent developments, it seems as though another component of robo-signing took place. As the servicers of the lenders tried to keep up with the paperwork they started to hire employees who did not have the correct mortgage background.
How can someone who does not have an understanding of basic mortgage terms and practices be expected to appropriately review foreclosure documents?
Many States have joined in on this to help consumers. As stated in my previous posts, this scandal will slide foreclosures into 2011 which will have a significant impact on the housing recovery. So goes housing – so goes the economy!
Financial institutions continue to play havoc with our economy. If you remember, the 1991 housing recession was caused in part by the collapse of the Savings & Loan industry due to toxic real estate loans. The federal government should have recreated the RTC (Resolution trust Corporation) which was formed in the early ‘90’s to deposit all of the failed real estate loans under a single receivership. It worked then but not now?
Tuesday, October 26, 2010
Charlotte Housing Market - 3rd QT.
The following charts illustrate the housing inventory for Charlotte, NC and surrounding towns. Compare the data to your market. As you know every market is different and submarkets may not be consistent with adjacent towns. As an example, the inventory in the Lake Norman area is still not good but better than other submarkets. Ask your real estate agent for similar statistics for your market and use this guide to determine price trends for your area.
Monday, October 25, 2010
Charlotte Housing Market in September 2010
Every month, Carolina Multiple Listing Service releases the Charlotte region’s monthly statistics.
Below please find Carolina Multiple Listing Statistics from September 2003 through September 2010. Look for trends rather than year to year comparisons.
In September 2010, Charlotte’s housing market experienced historically low levels of activity in:
New Listings (4043)
Pending Contracts (1658)
Closed Transactions (1658)
These activity levels are well below any September between 2003 and 2009.
Low pending sales means that there are were only 1658 people that chose to buy a home last month, as compared to ~3400 buyers each September in the peak years of 2004 and 2005. That’s 50% less buyers in 2010 than the peak years of 2004 and 2005 and 30% less buyers than 2003.
On average, homes are selling at 88% of list price. Listing prices are as high as they were in 2007-08 and closed prices are still down in the 2003-05 range. This significant List to Sales Price disparity is probably due to the increased level of foreclosure and distressed sales in our market.
According to the Business Journal, “In the 3rd quarter, foreclosures were up 34% year over year in Charlotte.”
On October 15th, a Business Week article stated, “Homes in the foreclosure process sold at an average 27 percent discount in the first quarter as almost a third of all U.S. transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.”
Below please find Carolina Multiple Listing Statistics from September 2003 through September 2010. Look for trends rather than year to year comparisons.
In September 2010, Charlotte’s housing market experienced historically low levels of activity in:
New Listings (4043)
Pending Contracts (1658)
Closed Transactions (1658)
These activity levels are well below any September between 2003 and 2009.
Low pending sales means that there are were only 1658 people that chose to buy a home last month, as compared to ~3400 buyers each September in the peak years of 2004 and 2005. That’s 50% less buyers in 2010 than the peak years of 2004 and 2005 and 30% less buyers than 2003.
On average, homes are selling at 88% of list price. Listing prices are as high as they were in 2007-08 and closed prices are still down in the 2003-05 range. This significant List to Sales Price disparity is probably due to the increased level of foreclosure and distressed sales in our market.
According to the Business Journal, “In the 3rd quarter, foreclosures were up 34% year over year in Charlotte.”
On October 15th, a Business Week article stated, “Homes in the foreclosure process sold at an average 27 percent discount in the first quarter as almost a third of all U.S. transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.”
Thursday, October 21, 2010
SBA redefines “Small Business”
Effective November 5, 2010, the criteria defining what constitutes a Small Business will change. The criteria will be expanded to include companies with less than 200 employees. Also, the annual receipt cap has been increased to $35,500,000.
The SBA predicts this easy rule change will add about 20,000 additional companies eligible for SBA loans. This will also help these companies with Federal contracts.
It is estimated that small business create about 65% of all new jobs (not this recession, however) and employ 50% of the private-sector workforce.
So why redefine the criteria defining a small business. Politics!
Do you consider revenue of $35,500,000 per year a SMALL business? Since banks are not lending money, the SBA wants to widen the net and show that the federal government will loan money!
Why would a small business of this size seek government money --- to expand and hire more workers or have better access and improve their ability to win federal contracts?
The SBA predicts this easy rule change will add about 20,000 additional companies eligible for SBA loans. This will also help these companies with Federal contracts.
It is estimated that small business create about 65% of all new jobs (not this recession, however) and employ 50% of the private-sector workforce.
So why redefine the criteria defining a small business. Politics!
Do you consider revenue of $35,500,000 per year a SMALL business? Since banks are not lending money, the SBA wants to widen the net and show that the federal government will loan money!
Why would a small business of this size seek government money --- to expand and hire more workers or have better access and improve their ability to win federal contracts?
Subscribe to:
Posts (Atom)
