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.
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9 Comments So Far»
Do you REALLY expect a new administration to save a SUNK ship that was weighed down by “GREED” and still being pushed further into the deep with the same old games, just different strategy ???
Your assessment that acting in the roll of “MatchMaker” was right on!
The uncertainty and the overall mistrust of the government as it reaches far beyond any authority granted by the Constitution of the United States prohibit any long range planning, much less risking credit or cash in an environment where the rules of the game change at the blink of an eye.
Truly a management style one would expect from the stock clerk given the reigns of the corporation over night. Much spending. Rush to judgment. Constant PR and media hype. Pointing of the finger. No accomplishment.
And that is just at my local supermarket!
I’m not really sure why Obama is taking all of the blame for the AIG bailout, Bryan. This bailout was initiated months before he took office.
You’re right - it was initiated during the Bush Administration, and it was a horrible idea at that time, too. That’s why Obama should have known better when he extended the AIG bailout by $30 Billion in March. It was bad policy with Bush. It was bad policy with Obama. Bad policy is bad policy. — Bryan Ellis
In your article, you seem to want to blame him for all of the bad, but give him no credit for the good things that are happening. You can’t have it both ways.
What good things are those you’re referring to? Be sure to point out any clear connections between Obama’s actions and the benefits you want to assign to him, lest your theories be shot down instantly. — – Bryan Ellis
You sound as though you get all your news from “the big fat idiot”. Otherwise you would know that it was the Bush Administration that started the bail out of AIG. It was the Bush Admin that started the bail out of GM and Chrysler, and it was the Bush Admin that started all this “push toward socialism”.
You slam the failure of one of Obama’s program but fail to give him any credit for what looks like an improving overall economy. What about the increase in pending home sales? Can Obama get a little credit for that? You sure give him all the credit for any failures. Your obvious bias against Obama is getting tiresome. Try to be more “fair and balance”. I’m sure you’ve heard that phrase a few times.
To whom do you refer as “the big fat idiot”? I think most mature adults would prefer names rather than childish name-calling. Additionally, you might consider checking your facts. While Bush did the unthinkably stupid thing of beginning government bailouts last year, Obama compounded that foolishness by continuing it. He did, in fact, directly grant a $30 Billion AIG bailout fund in March, well after he’d become President. So don’t do the intellectually simple thing and try to blame the bailouts on Bush. The fact is this: Bad policy is bad policy. It was bad under Bush, it’s bad under Obama. Consistency is something worth adopting if one is to make rational arguments.
As for Obama getting credit… when there is evidence of a relevant relationship between his socialization of industry and changes in the economy, he can have all of the credit he deserves. No such evidence exists presently. No such evidence has ever existed in any country that’s ever tried socialism. — Bryan Ellis
I think “Big Fat Idiot” bares ZERO resemblance to Joe Biden. He may be a little chubby but I hear he is on an Atkins diet.
You may want to give the chief a little credit. employment in the Federal government is up big time.
I’ll admit that I giggled when I read this. But let’s all behave, ok? I think we can have a reasonable discussion without being childish about it. — Bryan Ellis
As pertaining to the identity of the large said person, I’m not going to Rush to comment.Now for Obama’s achievements. 1) He is popular 2) He is poular in spite of his socialistic endeavors.3) He is popular even if our kids will pay for them. People check the history of societies that blindly follow.
I feel that injecting your political views is “childish”. In the first place we all come here to receive the latest real estate info. We surely don’t want to hear from what sounds like a Republican since everyone knows they are incompetent stewards of the government. Someone may think you are also incompetent in other areas (like real estate investment strategy).
Isn’t that the beauty of a free market? If you think my posts are childish, you don’t have to read them anymore, do you? That’s exactly how it ought to be. (That’s an example of freedom, something the current administration is aggressively removing from us on a regular basis.) So be my guest, Marvin. I enjoy having your comments, but your misunderstanding about the purpose of this blog will not prevent me from using it for its highest and best purpose. Besides, thousands of people read this website on a regular basis, so we’re doing something right
— Bryan Ellis
My opinion still remains true that NOW is the time to purchase a owner occupied home.thinking long term, 5 to 7 years, or whenever Free Enterprise returns.
For Commercial property, my focus is on MLOs. Goods and Services will still need to be distributed.
Overall mission is still the same…… to find a need and fill it!
To argue over the politics is to not recognize that they are ALL politicians. Our own gullibility is at fault when we start to trust them too much. Like the old saying goes, “The Lines are our Friends, Stay within the lines”. We, fortunately, have the US Constitution and the Bill of Rights as a guide.
Our elected officials are our “employees”. Treat them as such!
Save the Ooohs and Ahhhs for American Idol!
Thanks for your comments. While I disagree with your opinion about political discourse and the willingness of the government to fall in line with the Constitution and Bill of Rights, I do agree that the only proper way to view investments in the current environment is from a long-term perspective. — Bryan Ellis
Same from the same people, blind following without any information, just lots of feelings and little actual thought.
As for real estate we have a narrow window on good deals right now. Interest rates are still low and because of this it is much easier to cash flow a property and there are lots of REO’s at proper prices out there to buy.
I do not think nor does the data suggest this will last long! The large number of low prices REO’s will last (much longer than anyone would like) but the interest rate won’t! Because of the totally out of control government spending, followed buy the equally out of control borrowing and out of control money printing we will have out of control inflation soon!
As this happens we will lose the good interest rates we now have and the ability to cash flow properties or even sell them to most people. So if one is going to buy now is the time! Obama and his crew are working against us on this and it won’t matter how you view him or his massive spending.
Growing the deficit by 400 percent in only 4 months and having no way of paying it down is making our chief loan officer (China) nervous. They are telling Obama to not print more money and several economist around the world and even Bernake is saying the government has to stop spending like a drunken sailor.
So if you are going to buy then buy now, buy cheap and I mean really cheap, if it is a retail deal you are paying too much. Lock in the low interest rates now as we are going to see them go bye, bye soon enough. Look for ways to work with smaller banks for money and buy from larger banks that are hurting.
Chris B
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