Good news on the real estate front: This morning, the National Association of Realtors report that pending home sales are up 6.7%… this is substantially higher than the concensus expectation of American economists.
This information, in concert with other positive real estate news from last week, brings some positive energy to the real estate market…
…But what’s curious is that today’s good news seems to have had no positive effect on the stock market.
More than ever before, it’s clear to me that the only really safe way to invest in real estate today is to focus on buying cheap! Even better, use your creativity to get “in the middle” of good deals but don’t put your money or credit on the line.
One good way to do that is through a really interesting approach to “Transaction Engineering” / “Deal Matchmaking“. This involves finding good commercial real estate projects and then partnering with a third party funding source so that you can bring all of the parties together and take a nice cut out of the middle. More about this here.
More interesting news – you may have heard about the government’s announcement a few months ago that they would establish an arrangement whereby certain types of companies could get massively high-leverage loans from the government in order to buy distressed real estate in bulk directly from lenders. Called the “Public Private Partnership”, this program was announced with a lot of fanfare from the Obama administration as their great solution to the problem of foreclosed properties.
As is generally the case with overreaching from the government, the plan has failed. This time, the reason is very simple: The companies who are eligible for using this program simply don’t trust the Obama administration. And with good reason: The entire country witnessed the Obama administration’s bailout of AIG, and the subsequent government-led “outrage” over the AIG bonuses, which led to congressional action and a serious threat to “change the rules” of the bailout after the fact.
Sure, AIG should have been wiser about the bonuses they paid. But the point is that the government gave the bailout with no strings attached related to employee compensation, but after the bailout was granted they changed the rules in a truly asinine way. As a result, Obama’s “Public Private Partnership” idea has now gone down in flames, because businesses simply do not trust his administration.
(That’s progress. All of the latest polling shows the American public still loves Obama the person, but they are becoming increasingly skeptical about Obama the politician. His takeover of GM & Chrysler along with his other pushes towards socialism are being viewed with a critical eye from the American public.)
What do you think? There’s an increasing amount of news about positive developments in the real estate market, and there appears to be some public shifting of opinion happening concerning Obama’s push towards socialism as a solution to the current economic challenges.
As always, thanks for reading http://realestate.BryanEllis.com – your thoughts about this article are welcomed in the comments area below.