The “powers that be” are calling this the “summer of recovery;” don’t we all wish THAT was true!! Home sales dropped 27+ % in July, and June was not much better.  All of us who actually WORK in real estate knew things were slow, and we knew that the statistics would soon reflect our understanding, but the news media kept hyping the so-called “price increases,” intimating that people were paying more for homes. WRONG!! The truth is that higher priced homes had been reduced so much that folks could finally afford them, and decided to sell their current home and move up.  So if I sell my inexpensive home for $300,000, and buy a home that was once $1,000,000 for less than $600,000, did the price of housing go up? Hardly! The price of the higher priced homes came down, and the pricing of the lower-priced homes stabilized.  So what could have been a disaster for all was only a disaster for the sellers of homes. However, stay tuned.  Things are looking up.  Now we have little activity on the lower priced homes, as well, so it’s all equal.  This state of affairs brought to you, of course, courtesy of the US Gummint, which is heartily promising that this will “never happen again.”  I am obviously unhappy about this state of affairs, and evidently I am not alone.  What to do?  Well, it’s like closing the barn after the horse has left, but I WILL NOT VOTE for anyone who was “for” the stimulus package or the bailout. These vehicles benefit one or two groups, but take the money for those benefits from the rest of us.  The regulators failed. The banks failed. The government as a whole failed.  So now what? Well, the good news is that we live in San Diego, not Detroit, and the real estate market here ALWAYS comes back.  When this will be is another matter, and how far it will return is also in question.  However, it will be back, and the silver lining in this extremely dark cloud is that there are many, many excellent values in the market right now.  I just closed a transaction for a client of mine that had a loan on it (originally) of nearly $300,000; the sales price?  $188,000.  The buyer saved over 30%.  I have a home listed now that was once valued at $600,000, according to the comps. It’s listed for $325,000. And so on.  Friends of mine have a luxury home listed in an exclusive area of East County for $675,000. That home was worth $1,500,000 only a few years ago.   So if you are buying, GET WITH THE PROGRAM.   Investors (NOT house flippers) have a like opportunity, and a good buy in the condo market (bring cash!) can yield in the 8-10% return range for cash.  Life is good, if you are buying.  It’s exceedingly unpleasant, if you are selling.

I remember a teacher I once had telling all of us that “status quo” was Latin for the “mess we are in,” and it certainly fits the housing market, and the economy in general.  We may well be in for that least-desired of all events, a “double dip” recession. Many factors contribute to this, of course, but the main one is weak jobs and weak wages.  Most private sector employees, if they can FIND work, must settle for less than they made, by quite a bit.  This is hardly what the “new folks in town” promised when they were elected in 2006, but who’s counting? The only thing that seems to have happened with the economy is that the feds have spent vast amounts of money shoring up the “bigs,” and the rest of us still wonder when we are going to see a return to employment and hopefully financial stability.  I recently read an article (admittedly a bit biased) in which the current administration is called the “Great Jobs Killer.”  See it here: http://www.lvrj.com/opinion/barack-obama–the-great-jobs-killer-97758294.html; now as I said, he’s biased, but this is really pretty much how the small business people in my own area (San Diego) view what is happening.  There are other issues, like the ones mentioned here:   http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html.

I have read with interest the following article, which indicates that a Republican Congressman from New York has attached an amendment to the recently passed FHA reform Act that would prohibit “Strategic Defaulters” from obtaining FHA-guaranteed loans in the future.  I believe that this rider, and its intent, punishes the very people who received (and receive) no relief of any kind under the various bills passed by the US Congress and signed by the President to “solve the national financial crisis.”  Let’s see:1. Banks are too big to fail, and so they get money from us, the taxpayers, to guarantee their loans.2. Companies are too big to fail, so they get money from us, the taxpayers, to prevent their businesses from failing.3. States and municipalities cannot fail, so they get “stimulus money” to support their bloated pension plans.4. Congress cannot fail, so it exempts itself from the same rules that apply to us, the taxpayers.5. The Federal Government cannot fail, so it prints money (through the Federal Reserve), depleting the value of my saved dollars.In the midst of these bailouts, the Congress decides that the taxpayer, who makes a private decision to allow the lender to accept what he’s contracted to do (take the house in exchange for the taxpayer’s debt) is to be PUNISHED??? PLEASE!!! Congress has refused to put teeth into the laws that regulate the Federal Reserve by requiring open and transparent dealing; it has voted to give people who made money selling worthless securities MORE money; it has offered extra cash to folks who’ve refused to honor their basic commitments of fair and honest dealing with all the “little people,” and now the Congress has decided that some of those “little people” are bad and should be punished because they choose to walk away from a deflated asset. Amazing.Now I need to tell you that I haven’t defaulted, and hopefully won’t. But this is  the most short-sighted thing I’ve seen in a long time.Is it any wonder that incumbent Republican Congresspeople and Senators are being defeated in record numbers? And that the “new left” is in the process of being replaced by “common sense money people,” who expect everyone to play by the same rules?Please do not write in defense of this vote. It was stupid and ill-considered.  It passed without opposition, so unless you were not there, you voted “Aye.”Here’s the article:   http://www.dsnews.com/articles/house-republicans-want-penalties-for-strategic-defaulters-2010-06-17

The San Diego Union Tribune is gleefully reporting a rise in real estate prices, and points out that this rise in prices has continued for a number of months.  That’s good. What apparently is lost on the statisticians, though, is the incredible difficulty of closing transactions.  One of my colleagues, who has been selling real estate for nearly 30 years, indicated that this was the “toughest 1st half he’s ever experienced.” The same is true of me, and of many others in my business.  But there are several “ground-level trends” that give me a lot of reason for hope: