In the 60s, Sonny & Cher (before Sonny crashed into a tree while skiing) had a big hit with the song “And The Beat Goes On”–or something like that. Now, in real estate, 2008, a good song title might be “And The Debate Goes On!”

The “debate” is whether or not this is or isn’t a good time to invest in real estate. There are those who argue that real estate is always a good investment (see “Gone With The Wind” Chapter 6, page 147, paragraph 4, sentence 7, Scarlett’s dad to Scarlett : “There is always the land, Scarlett.”) And, as we know, in the end, it was the land that Scarlett returned to after the South got the s–t kicked out of it by the North (okay, I’m from New York, so I am partial to this version of reality..which happens also to be …well…reality!)

Now, the cool thing about fictional characters is–they are fictional. They don’t really have to feed their families or save for retirement or worry about paying for their kids’ education. Heck, all Scarlett had to do was hope that Rhett would come back one day and wisk her away to an even better chunk of real estate.

Time To Get Real. This Ain’t No Novel

That’s right. This is the real world. No authors to help us along our way by dreaming up another chapter or another character to save the day.

In the real world, a bad investment–and, yes, there is a Santa and, yes, there are real bad real estate deals–can actually hurt you. The point being, if you are going to invest in real estate in the current climate, you had better do your homework and know what you are up against.

The economic picture is bleak and seemingly getting bleaker each day.

Just this week, The National Association of Realtors said sales of existing single-family homes tumbled last month by 2 percent,while the median price of a home declined 7.7 percent from a year before.

Yes, there are pockets in the country where this is not the case. But, that is the exception and most certainly not the rule.

What began as a subprime mortgage crisis has ignited an economic fire burning around the world and devastating all sorts of different businesses…from banks, to brokers, to airlines (three of the biggest U.S. airlines this week reported large quarterly losses pegged to soaring fuel costs), to automakers, to newspapers, to broadcasting, to resorts, to …..well, you get the idea.

No one…no one…really knows where this recessionary train is taking us and how many stops there might be till we get to the terminal?

Conventional wisdom…not so wise

The “conventional wisdom” is to buy real estate when there are bargins to be had. And, under normal times, this makes total sense. But, the point is—these are far from “normal” times.

When times are not “normal”–so-called conventional wisdom gets tossed out the window.

This is not to say that no one should invest in real estate at this time. Someone has to. But, as I said before, this is NOT the time to learn on the job.

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Tags: and the beat goes on, gone with the wind, home prices, median home prices, national association of realtors, real estate investing, Real Estate Market, recession, sonny & cher, subprime mortgage crisis

It is amazing, by any standards, just how bad things have gotten on the economic front because of what was, at first, a crisis in the subprime mortgage market.

Of course, conditions had to be right (or wrong, in this case) for the subprime match to ignite such an enormous world-wide blaze, but, it has, and the figures out just this week prove that to be the case.

Yes, there are areas of the U.S.–mostly smaller metro areas–where the real estate market is not that bleak—-yet! But, if you look hard at the facts and figures to follow, you will have no option but to come to the conclusion that even these areas will soon feel the fury of a global, U.S. caused, economic meltdown.

Ready?

Here goes.

From bad to real bad

A national home price index just released shows a record collapse in home prices for the last quarter of 2007–down 8.9 percent. This is the largest drop in the entire 20 year history, says Reuters, of the S&P/Case -Shiller U.S. National Home Price Index.

“The composite index of 10 of the largest metropolitan areas fell 2.3 percent in December versus November and tumbled 9.8 percent year-over-year, which set a new record.”

17 of the largest 20 metro areas posted annual declines–while the remaining three showed either flat or moderate growth.

In case you are wondering, Miami is the worst—home prices there crashing at an annual rate of 17.5 percent!

We’re not through, yet!

No wonder that Consumer confidence has gone down the toilet, too. (Presumably a toilet in a home whose value has dropped!)

The Conference Board in New York reports consumer confidence has gone down “significantly,” says an Associated Press dispatch.

The Board found the lowest reading on its index since 2003 and tells how consumers are feeling about the state of the American economy. No surprise that they don’t feel all that good right about now.

Now, ready for some REALLY bad news? Of course you are.

Inflation is back! Big time, too.

Inflation at the wholesale level climbed last month…and that means the annual inflation rate took its fastest leap in some 25 years!

Rising food, energy and medical costs mostly to blame here.

Last month, the Labor Department says, wholesale prices went up a full percentage point–twice what apparently had been anticipated. For the year, that brought the inflation level to 7.5 percent.

We’re not done just yet. Hang in there.

I did mention the increase in medical costs, right? Well, the cost of keeping you and your family healthy is expected to double by 2017 with the federal government expecting that one in every $5 spent by then will be for medical care! Nice if you happen to own a hospital.

Oh, and one more thing. In January, the number of homes that faced foreclosure skyrocketed 57 percent from the previous year. Let’s say that again: 57 percent!

So far, all the talk of helping those who are about to be booted from their homes seems to be just that, talk. What is needed is real action.

Other pressures

Of course, all of this was not caused solely by the subprime mortgage mess . . . China and India are flexing their economic muscles as never before and that is exerting an enormous pull on the world’s economy, changing the landscape even as you read this.

But, make no mistake about it, the subprime crisis is largely responsible. It exposed the greed and, perhaps, criminal actions of banks and other lending institutions throughout the U.S., Asia and Europe.

And now, the piper MUST be paid…with inflated Euros and devalued U.S. dollars no doubt!

Tags: consumer confidence, Economy, Foreclosures, inflation, money, subprime, subprime mortgage crisis

A little noted report last month deserves a much closer review. It concludes that the subprime mortgage crisis is causing African-Americans to “experience the greatest loss of wealth in U.S. history.”

The report is from United for a Fair Economy and is called “Foreclosed–The State of the Dream 2008.”

According to the report, American blacks stand to lose some $213 billion because of the subprime crisis.

The report says that mortgage lenders have targeted the poor–in particular blacks–with high cost loans that they can’t afford.

Federal statistics quoted by the report appear to show that African-Americans are “more than three times more likely to have subprime loans.”

55% of blacks have high cost loans of different types compared with about 17 % of white homeowners.

The co-author of the report, Dedrick Muhammad, with the Institute for Policy Studies, in an interview, told “Democracy Now” that it is clear “that the subprime industry was focusing on the weak of our society and was trying to take advantage of people…”

Muhammad says that private companies are actually taking away “the little wealth that African Americans and Latinos have been able to develop over these last thirty, forty years.”

Tags: african-americans, black, blacks, Foreclosures, high cost loans, subprime, subprime mortgage crisis