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Economy

How’s the Economy? Check Your Underwear

by Richard Warren | September 21, 2009

underweareconomyThere are a multitude of economic indicators to use as a barometer of the economy. Many are extremely complex, while others are fairly simple. One of the more unusual ones actually seems to make a lot of sense. Look at your underwear drawer!

I was recently reading an article in the Washington Post (article) and assumed that it must have been a slow news day. The reporter was talking about how consumer confidence can be gauged by the underwear you keep. It seems that there is even a Men’s Underwear Index (MUI), and former Federal Reserve Chairman Alan Greenspan sees it as a credible means of tracking consumer sentiment.

Replenishment Item

The theory behind the index is that men will replace their underwear as it wears out. However, when times are tough they will wait longer than usual before purchasing a replacement. So when money is tight the sales of boxers and briefs are in the toilet. When people feel better about the economy again you will see the sales rise.

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Commentary

The Perfect Storm Continues for Real Estate and the Economy

by Peter Giardini | September 15, 2009

I am sure you recall the movie some time back entitled The Perfect Storm?  It was a great movie, about the interaction of several storms meeting up to create one giant storm.  For an old Navy guy and licensed Coast Guard captain… it scared the hell out of me!

perfect storm housing, real estate, economy

Throughout the past several years we have been experiencing this same situation – first with the housing market, and then starting at this time last year, with our financial markets: The perfect storm of over priced homes, rampant speculation, poor lending practices, and I am sure more then a little fraud.  Every one of the previously mentioned occurrences contributed to a complete crash and the current recession we are still in.

In a previous article written for BiggerPockets, I shared a graph that showed how Option ARMs are the next part of the storm to materialize.  You can revisit that chart by heading over to this link…

In spite of the recent good news regarding sales (increasing in most areas) and prices (declining at a slower rate, again in most areas) we are about to experience the second wave… kind of like we are in the eye of the storm… and the backside is barreling down on us.

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Commentary

A “New World Order” May NOT Be Good For Real Estate Industry

by Charles Feldman | September 9, 2009

real estate bailout mortgageAn article out of the McClatchy Newspapers group caught my eye today…in particular some numbers that may not bode well for a robust real estate industry recovery any time soon.

Bailout and Regulation Nation

The article, about how a new financial world order has emerged out of the wreckage of the sub-prime mortgage fueled disaster that exploded one year ago this week, explains why it may take many years to climb back even half way up that economic ladder most of us fell down from last September.

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Commentary

Home Prices “Turn Corner;” While Light At End Of Real Estate Tunnel Blinds Us!

by Charles Feldman | September 4, 2009

What’s that ahead? Is it….a corner? Is it…..THE corner? Are we about to turn it?
God, I hate cliches. But such is the case with a freshly minted Reuters dispatch headlined : “U.S. home prices turning the corner, up in 2010.”

I’m not sure if this differs from earlier reports that we were seeing the light at the end of the tunnel?

Actually, I sort of wonder whether the corner we are about to turn is right before we enter the tunnel, at whose end there is said to now be a light, or directly after we leave the tunnel, in which case ,wouldn’t that light at the end of it make it damn hard to see the freaking corner we are supposed to be turning?

Ok…this might be an academic question…but someone needed to raise it and it might as well be me.

Now, back to that corner we are turning.

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Commentary

Building Value vs. the Bubble Mentality

by Brendan O'Brien | August 25, 2009
United States housing bubble
Image via Wikipedia

One of my favorite economics bloggers, Megan McArdle, wrote a post recently on the Washington, DC real estate market, extended to the state of the market overall. It appears to her that the single-family residential market has bottomed out, while multifamily still has a way to go.

Megan also posed the question of when, and if, a boom will begin again. Possibly, in her view, there won’t be a boom. After all, the last nationwide (really, worldwide) boom was driven by a couple of unusual factors: historically low interest rates, and a big, competitive market for subprime loans.

Megan is one of the smartest economic bloggers, and a lot of what she wrote here makes sense. Still, the post bugged me, because it focused on macro-economics, which is not the world in which most of us live.

We know that real estate investing success comes from a million factors, only one of which is the boom-bubble-bust cycle. Outsiders don’t see a lot of difference between real estate investing and stock market investing, but there is a huge difference. In stock market investing, there are really only three factors:

  1. You decide which stock or mutual fund to buy
  2. You decided when to buy it (what price)
  3. You decided when to sell it (what price).

All those apply, in a sense, to real estate investing. You have to decide what and where to buy, pick one or more properties at what seems to be an appropriate price, and figure out when to offer them for sale, at what price. But there are also these factors:

Price Factors Exclusive to Real Estate

  1. What can you do to cut ongoing costs?
  2. How are you going to treat the tenants?
  3. How can you renovate the property to make it worth more?
  4. What can you add to the property to increase the income it generates?

You can probably think of a few more. The point is that in between the buying and the selling, most stock market investing is essentially passive. Once you own it, you’re waiting for the right time to sell it. You really have no say over how the company is run.

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Commentary

Free Houses and Keeping Your Rental Property Rented?

by Tom Koziol | August 14, 2009
Pomerode
Image via Wikipedia

Those are the words I entered into a search engine because I was interested in obtaining a house for free. I could not think of any other way to find one so I resorted to the Internet. If you want to try it, be prepared for some slapstick findings.

I tell you this upfront so you won’t be disappointed with what pops up on your computer. I went to one site where the person was selling a book on “free houses” but failed to put even one buy button on the sales page.

His idea sounded plausible but seeing this huge faux pas I assumed his material was less than worthless. I don’t know that for sure since I couldn’t buy his book to read, because he doesn’t allow anyone to buy it.

I did find a budding entrepreneur who offered free homes to anyone who agreed to abide by some, what I consider, draconian conditions. They weren’t very clear on the extent of the freeness, ie, I couldn’t tell if the offered homes were really free and clear to anyone who did abide by the conditions because all they mentioned were the conditions.

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Commentary

Which Cities are the Best to Invest in Real Estate?

by Ryan Moeller | August 7, 2009

Should you follow everyone and invest in the hot appreciating markets the media and everyone talks about?

The media has a much different approach in that they look at hot markets speculatively as ones that will appreciate, our approach is much different. I previously wrote on the topic where to invest and identified many smaller cities, the Midwest and OH as areas that hit on all 4 of my criteria: Little chance of depreciation, lots of available deals, low competition, multiple exit strategies.

Here I will identify specific cities that have an oversupply of opportunity for savvy investors, using the PMI U.S. Market Risk Index that I talked about in that previous post.

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Housing

Where to Invest in Real Estate?

by Ryan Moeller | July 29, 2009

When it comes to finding great real estate deals, I am a firm believer that you can find deals in any market and any time. But what is the probability that you can cherry pick from many home run deals have little competition and multiple exit strategies?

To identify markets to invest it is recommended to have not 1 or 2 of the following, but all 4:
Little chance of depreciation, lots of available deals, low competition, multiple exit strategies.

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Commercial Real Estate

Commercial Tenants in the Driver’s Seat

by Brendan O'Brien | July 18, 2009

Nine years ago, my employer (a software company in Burlington, Mass.) was nearing the end of the 10-year lease term for its headquarters building.  This was just about the time that the software industry was beginning to decline, for two reasons: all of the Y2K bugs had been resolved, and investor money was no longer [...]

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Commentary

Berlin, Boston and the Great Equalizer

by Brendan O'Brien | June 14, 2009

Image by The Library of Congress via Flickr

A few years back, my good friend Matt had a job offer to work at a company in Caribou, Maine. Caribou fits its name pretty well – it is the northernmost city in Maine, and actual caribou (that is, reindeer) used to live around there. Caribou [...]

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Real Estate

Here Comes the $8,000 New Home

by Brendan O'Brien | May 30, 2009

Image via Wikipedia

Remember the company that created the $2,000 new car?  Tata Group of India has unveiled its newest brilliant innovation – the $8,000 new home.
The bad news is, Tata won’t be bringing its $8,000 homes to the United States any time soon.  Shubh Griha, the company’s new housing development, is located in Boisar, about [...]

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Real Estate

Swine Flu & The Housing Crisis: A “Perfect Storm”

by Charles Feldman | April 28, 2009

Image by pixelfrenzy via Flickr

It’s always something!
Just when there are some small (real small) signs that the U.S. economy may be on the mend, a new, never before seen type of swine flu is making the rounds from California, to Texas, to New York, to the U.K., to Spain and, of course, Mexico.
So far, [...]

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Economy

Obama’s Making Home Affordable Plan Update

by Steve Heideman | April 20, 2009

Secretary of Housing and Urban Development Sean Donovan was on Bloomberg this morning discussing the state of housing and the Obama Making Home Affordable Plan. There are some signs that the program is starting to work.”I think we have a good balance of carrots and sticks” said Donovan when asked about banks and servicers working [...]

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Landlord Tenant

Be Proactive with Undemanding Tenants

by Brendan O'Brien | April 18, 2009

Image by TheTruthAbout… via Flickr

So you’ve got five residential tenants.  Joe consistently pays late.   Christine got in a fight with her boyfriend and kept everybody awake on Christmas Eve.  Alex leaves his trash out in the halls.  Richard calls you around the clock to complain – about the other tenants, but also about the traffic [...]

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Real Estate

Home Builders Unite: Pulte Homes buys Centex for $1.3B

by Joshua Dorkin | April 8, 2009

In a sure sign that in order to survive the hobbled housing market you must take chances and make drastic moves, two of the largest home builders are going to be merging. According to the Washington Business Journal:
Pulte Homes Inc. has agreed to buy fellow homebuilder Centex Corp. in a stock swap valued at [...]

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