I implore you to read every word of this article. It’s a quick read, and you might be tempted to think it’s not relevant to the real estate business. But if you’ll hang with me, I assure you you’ll see the very clear connection. This is really important information.
There’s been a lot of talk in the main-stream media and other allies of the Obama administration that a “New Normal” has been established, in which 9-10% unemployment and some other undesirable economic measures will be considered typical and acceptable. While this is clearly an attempt to shift responsibility for our foundering economy away from the Obama economic policies that polls show have been roundly rejected by the American public, it would still be unwise to ignore the risks and realities that will result for real estate professionals if these policies continue to be pushed forward through the remaining 2.5 years of Obama’s presidency.
So, here are the most recent pertinent facts, according to Realty Trac  and CNBC’s Realty Check :
- There were 93,000 completed bank repossessions in July – up 9% from last month, and up 6% from a year ago. This is the 2nd worst monthly reading ever.
- Factoring in all of the repossessed properties held by the government lenders and private lenders, there are nearly 600,000 repossessed properties being held by lenders as of right now.
- The National Association of Realtors tells us that 564,000 properties were sold in June. This factors in ALL homes sold, not just foreclosures. Even so, that number is below the number of foreclosures currently “on the books” at our nation’s lenders (600,000)
- New claims for unemployment spiked yet again in the past week, with 484,000 more new claims for unemployment being filed – the highest since February
All of this is bad news, and the big problem that we have right now is that our President – who has more influence on the economy than any other individual person – is primarily concerned with shifting blame to anyone but himself for the damage that’s been done to the economy. The objective evidence is already in – nearly two years into this guy’s presidency, the economy is FAR WORSE than when he took office, and the common expectation at this time is that we’re headed for a double-dip recession… all in the middle of what Obama dubbed “the summer of recovery”.
Do you see any “recovery” going on around you? Unfortunately, there is VERY LITTLE in the way of real recovery anywhere. The only sector that has shown tremendous growth in the past 18 months is GOVERNMENT jobs, and a big backlash against that is boiling over, too. This backlash is highlighted by the recent report from USA Today that concludes: “At a time when workers’ pay and benefits have stagnated, federal employees’ average compensation has grown to more than double what private sector workers earn.” 
That’s right: If you’re not employed by the government, you’d probably be paid TWICE AS MUCH if you were. But there’s not a lick of evidence that government employees are more effective, more productive, better qualified or even more desirable than their privately employed counterparts. They’re simply paid twice as much – at your expense.
This foolishness extends beyond the federal government, too: The recent uproar over insanely high salaries in Los Angeles county (Management analysts being paid $100,00; Political operatives at $150,000; 2 separate mayoral chiefs of staff at $194,000; Robert Rizzon, Bell City Planner – over $800,000) has sparked some serious scrutiny over the rates of pay offered to local and state-level public employees.
Remember, folks: With all due respect to the millions of government employees out there, one must remember: The government produce nothing. With the ever so rare exception, all of the government’s funding – including funding for all of these exorbitant public salaries – comes from one place: Taxes. And those taxes come from your pocket. Where the rubber meets the road, all of the tax money comes from you, whether in the form of individual income taxes, inheritance taxes, gasoline taxes and even corporate taxes that are passed through to you in the price of the goods and services you purchase… so the net effect is that government is doing little more than taking money from your pocket to put it into the pocket of government employees, because the painful truth is that the government is incredibly inefficient in every financial capacity in which it serves.
How does this relate to the real estate business? I’ll tell you in the conclusion to this “Soft Tyranny” article, which will be released tomorrow. But I’ll give you a hint right now: It can all be summed up in one word: “Uncertainty”.
Thank you for reading the Bryan Ellis Real Estate Letter. I’d love to have your comments, questions and feedback – including from those of you who have nothing better to do than blame all of our current problems on past administrations. Let’s get over that childish blameshifting, shall we? Bush was no economic wunderkind and Clinton accelerated the Fannie Mae debacle to an unthinkable degree… but neither of those guys have any real power any more, do they? So keep your eye on the ball, and fire away!