The Problem with Macro-Real Estate

The media has painted the real estate market with one broad stroke, releasing national statistics on a weekly basis. One week, it appears that the problems are just beginning, while the very next they claim that the worst may be over. The problem is that the national market is not a good indicator or what is happening in your hometown. The market is not some untamed animal, but made up of the dreams, hopes and desires of millions of families, not to mention the local economies. What happens in Orange County, California is going to be in stark contrast to what is happening in Detroit, Michigan.

The key to where you should be focused on is what is happening in your "neck of the woods." In Orange County, we have seen a huge increase in the number of buyers looking for new homes. Home sales increased 43.4% compared to the same period last year. At the same time, the median home price fell 40.3% as reported by the California Association of Realtors. The decrease in median price is due to two factors, (1) Distressed property sales have made up to 40% of available home inventory (2) The availability and affordability of mortgage financing is still biased toward properties selling below $417,000.

The GOOD News.

There is evidence out there that a bottom may have formed for real estate. Over the last week, the pending home sales report showed signs of strength by shooting up to a reading of 89, which was unexpected by all market commentators. This is the highest reading since October of last year. It is becoming a seller's market for lower end properties. For instance in Garden Grove, the number of active properties represents only a three to four month supply for properties under $500,000.

The "Subprime Meltdown" that that has been blamed for the real estate problems is slowly going away. The number of Suprime mortgage rate resets has been a foreclosure driver and according to First American CoreLogic, the number of resets should drop dramatically by October. This, coupled with new federal and state laws to protect foreclosure prone homeowners will surely be support for stabilization of the market. With the holiday upon us signaling the end of summer, have a happy and safe Labor Day.

If you have any thoughts or comments, I would love to hear them.

Wishing You Wealth in all its Greatest Forms

Your Friend,

Alex

Tomorrow’s Retirement

The Retirement landscape is changing for millions of Americans and it’s being driven by both employers and the goals of future retirees. If you are currently working and plan to retire in the near future, you may have already seen these changes happening all around you.

It's very likely that the Baby Boomers, Generation X and Generation Y will “retire” later than previous generations. And it’s not only because the age for full Social Security benefits is changing. Retirement is no longer an event, but a process. Rather than an abrupt stop working full time, many have decided to trade in their full time stress for a part time love.

Instead of working for one company for 40 years and collect a company pension that will last forever, it's much more likely that you’ll have 4, 5 or more employers during your lifetime. Instead of being covered by the company pension, you’ll contribute to a 401(k) and if you are lucky receive an employer match on your contributions. Beyond that, it's unlikely that retirement will be years of sitting around...but much more likely an extended vacation before moving back into the work force at a slower pace with reduced hours and more “fulfillment.”

Unless you believe in reincarnation, you only live once. Live passionionately!

Wishing You Wealth in all its Greatest Forms

Alex

Credit Cards Hit You Where it Hurts – In the Wallet

Have you ever walked into a room and felt like they were laughing at you? You walked down the hall, only to hear the laughter, yet as soon as you opened the door, a silence gripped the room. Well, the credit card companies may be laughing at you. Credit has become more expensive for everyone, including the credit card issuers. A peculiar thing occurred this last month. Chase decided to change the date my payments were due from the 28th to 23rd. I don’t keep a balance on my Chase card and pay it off in full on the 25th like clockwork. On the 25th of July, I logged on to pay my balance, only to find out I was assessed a $39.95 late payment fee. The gal on the other end of phone told me that it was within their right to change the terms due to “market conditions.” I asked her to define market conditions, which she declined. Of course, I decided to speak with her manager who told me that since my payment history was great, she would reverse the late fee. I wasn’t happy about the fee, but not because of the dollar amount, but more because this felt like an attempt for the company to improve the bottom line with late fees…and my dollars. My credit history has been very good, but I would bet dimes to donuts that a less qualified borrower wouldn’t have received the favor.

Additionally, this morning when I logged online to review my account I noticed a message stating “Universal Change in Terms.” It amounted to either agreeing with a rate change from being fixed at 15.99% to a variable rate of up to 26.99% plus the Prime Rate or they would close my credit line. A recent study by Consumer Action found that 77% of the 22 major credit companies can change the credit terms – at any time for any reason. Here is a link to the Consumer Action study.

Things are tough out there for a lot of credit card companies and they are passing the buck by using dollars from your wallet. Before signing up for new credit and even with your current credit, be sure to read the fine print. Commit to being informed, it will pay dividends.

Wishing You Wealth in all its Greatest Forms

Alex

Work More, Retire Later?

It’s no surprise that millions of Americans are under prepared for retirement. I get told at least once a week, that they plan to continue working. On paper that sounds like a great idea, but you might be unaware that you may not be ABLE continue working. I am not talking about getting injured or becoming disabled. The landscape is changing and where older employees were once regarded as a company asset, many have now become liabilities. Companies are buying out higher paid employees at an alarming pace in the name of profit. The workforce is changing and becoming ever more competitive. When the economy hits a speed bump like we are experiencing today, the highest paid are encouraged to take the “golden parachute.” It typically means two years of severance pay and a kind letter from Human Resources. No more, no less.

From personal experience, my dad is 63 and even with all the education, certifications, not to mention the years of experience, it was difficult for him to find solid employment. They didn’t tell him to his face, but they are looking for someone younger, less experienced and most importantly… cheaper. High level jobs are being combined with lower level jobs, but compensated at the lower bracket. Here is a recent story on Yahoo that talks about job compression today.

So we have come full circle here. If you don't have enough to retire and you can’t just work longer, what can you do? The simple answer is positive financial choices today that will allow you to enjoy your golden years on your own terms. And if that doesn’t happen, Wal-Mart is always going to need “greeters.”

Wishing You Wealth in all its Greatest Forms

Alex

Financial Enemy #1

With terms from "massive inflation" to "subprime crisis" floating around in the media, it's easy to lose sight of what is really keeping American's from their savings goals. The biggest obstacle is that most people just don't know enough about their financial reality to make any headway. They don't know what they earn, what it costs them to live and they don't know their discretionary income.

It's time to educate yourself. Grab that spiral notebook, you haven't broken out since college days and sit down with your montly bill and statements. Figure out the amount that you have coming in and what your expenses are. Chances are that you will be surprised by how much you spend. Most people are not happy with the picture they see.

This is the foundation to your financial fortress. A financial review can be both practical and enlightening.


Wishing You Wealth in all its Greatest Forms

Alex

Real Estate Review - August 2008

Hello Friends,

Welcome to another edition of The Real Estate Review.

The Numbers Don’t Lie.

For the month of July, Orange County sales are down when compared to last month. The number of completed property transactions decreased by 85 homes (-3.8%) from last month, but are up year over year.

The current total inventory of available properties spanning all price brackets for August 2nd showed 14,501 available homes for sale in July, up by 1,303 (+9%) from last month. This is due to reduced monthly sales and slightly more added inventory.

The total number of properties sold in the month of July amount to 2163, Down by 85 homes (- 3.8%) from last month at an average sale price of $756,000, which was a decrease of $43,254 (-5.4%) from last month. From a longer term perspective, the average sale price for Orange County was Down by $182,139 (-19.4%) for the one year period.

Is this the BOTTOM?

The market for Orange County real estate appears to be slowly regaining its footing. The number of completed property transactions is up from a year ago. A sign of strength can be seen from the shore since bargain buyers are coming off of the sidelines. The price declines are not as steep, and the number of sales increasing slightly. It should be noted that some cities are obviously doing better than others.

For the month of July, there has been more of the same, with stronger competition for properties on the lower end of the price spectrum below $650,000. The bottom line is that there are bargains out there to be had if you are positioned correctly to take advantage of this market.

Wishing You World Class Wealth,
Alex