I just returned home from a week in the fabulous city of Toronto. I’ve said this many times, but I truly believe it’s vital to get out of our environment on a regular basis. Visiting another country helps expand your thinking and broadens your horizons. It invigorates you by introducing you to a variety of new experiences…from different foods, different phrases to a different way of looking at the world. Getting out of the country also gives you a great appreciation for the things you enjoy most about your own city, town or neighborhood. And in that leveling of our perspective grow the seeds of contentment.

Right now, with so many people worried about their finances, the market etc. it’s very easy to forget all that we have and all there is to be thankful for.

So, my encouragement to all of you is sometime in the next 12 months, get out and about - as the Canadians say - and go visit a foreign shore. It’ll expand your horizons and be good for what ails you.

It’s a good life!

Brian

Oh, by the way…people have been requesting the fun facts and figures I’ve been talking about recently so they can respond to this market. Feel free to utilize these numbers and maybe together, one client at a time, we can educate the market!

Some facts to know:

• More than 1000 banks closed in 1930 – only 14 U.S. banks have been taken over in 2008
• There are 76 million households in the U.S. that own their home - 24 million of these homes are free and clear
• There are 52 million homes with mortgages - 97.2% of these are not in foreclosure, 93.8% of these homes are current on their payments
  

On a sobering note:

• Over 20% of homeowners with a mortgage owe more than their home is worth
• 40% of all foreclosures are non-owner occupied

How did we get here?

Decade    Homes Sold High    Homes Sold Average

1970’s      3.9 million               3 million
1980’s      4 million                  3.3 million
1990’s      4.9 million               3.9 million
2000’s      7.1 million               5.6 million
Resale numbers – the above does not include new home sales.

Sources: Wall Street Journal / Moody’s Economy.com / RealtyTrac / NAR / Forbes

For some compelling stats on the Canadian market, visit the Economics Publications section on http://www.scotiabank.com

Lately people have been sending me a lot of emails and notes asking me if I think there’s another Great Depression coming, whether or not real estate will lose another huge portion of its value and where do I think all of this is going to stop.

Well I’ve never shied away from giving my perspective on such matters and I think something we should all note is the attitude of the man who is considered the greatest investor of all time – Warren Buffet. As I mentioned before he has purchased $8B in preferred stock. Even more dramatic is that $5B of it went to a financial company (Goldman Sachs).

Not only is he not running scared, he’s running strong with this market – taking ground and improving his position. We all know there are some tough times ahead, and so does Warren. But he demonstrated his ultimate faith in the economy, in the markets and in the fact that now is the time to gain ground and not pull back.

Well done, Mr. Buffet, you’re a good role model for all of us.

It’s a good life!

Brian

I’ve been flooded with emails from people wanting to know are we headed for another Great Depression. Now just to set the record straight, neither the Secretary of the Treasury, nor Warren Buffet are calling me asking me for my input…but I don’t mind providing my understanding of where we currently fit into history.

Panic doesn’t cause depression; bad policy does. Foolish decisions regarding increased taxes, trade tariffs, and monetary policy are what caused the Great Depression. A great read on the subject is a book called The Forgotten Man – A new history of the Great Depression by Amity Shlaes. You’ll see how the 1929 stock market crash did not cause the Depression.

Another great example of how different a time this is to 1929 is that during the Great Depression countries, especially America, were isolationist by nature and tried to enact a win-lose economic policy. Just last week the Fed, European/British and Canadian Central Banks all lowered rates in unison and even though this cut won’t do much to bring up the credit market, it is a radical contrast to what took place during the Depression.

We are obviously in a recession and will be for a time but, as we are already seeing out West, there’s plenty of demand for discounted homes. Many short sales and foreclosures are in multiple bid situations. There’s money to be made in times like this but it requires us to take the emotions of our fears and apprehension and pour it into the diligence of our daily activities to generate leads.

I don’t know about you, but I am keeping my eye on the situation and then putting my head down and getting back to work.

Hope this helps.

It’s a good life!

Brian

If you’ve been following the national news recently regarding the bankruptcy of Lehman Brothers, the stock market getting hit and Fannie and Freddie being taken over by the government, these are all the classics signs of the bottom of a market correction.

Right now, we don’t have so much of a real estate problem as we do a banking one. Prices have mostly stabilized across the country and in the short sale and foreclosure market we’re seeing multiple offers. Although I do believe there are a couple more banks in trouble and there’s not yet a full complement of mortgage products to satisfy all the buyers in the market, trust me that will get sorted out. For thousands of years lending money has been one of the most profitable businesses in the world. Banks make money by lending; not by deposits. So they will figure out ways to package loans and get cash into the hands of consumers. I believe this is the final cleansing process and in the next six months we’ll start to come out on the other side of this.

Make sure your clients don’t get caught in the “cudda shudda wudda” of taking advantage of this market. Make sure all your investor clients are fully aware of all the deals that exist and if there’s any way possible, see if you can pick up one of these real estate deals as part of your own investment strategy. We won’t know what the bottom is until after but I believe it’s pretty close. Keep your head down working hard.

It’s a good life!

Brian

One observation I have of our society at large today is the extraordinary lengths to which people go to avoid pain at all costs. It seems as though any discomfort must be remedied immediately. As markets tighten and the fed rushes to change rates, people feel the pinch and the government sends out billions in rebate checks, and the many borrowers who overextended themselves begin to use their house as an ATM, it can seem like the only solution to search for a bail out.

The real estate business is going through a time of challenge and stress but it’s part of the natural order of things. Prices go up, prices flatten out. There’s no inventory followed by too much of it. I’ve always said it’s a good life; not a great life. Sometimes we have to realize that part of this life requires us to endure discomfort and persevere through tough times, feel fear and all we can do it suck it up, put one foot in front of the other and do the best we can for that day.

Don’t look for someone else to solve your problems. Don’t wait for the market to correct. Don’t expect a government program to bail you out. As you persevere and push through you’ll be strong, better and more resilient on the other side. You’ll have a better business and be more equipped for life.

It’s a good life!

Brian

Have you ever noticed when the Fed cuts rates and there’s such a big deal about it in the media that many times it doesn’t show up in a reduced mortgage rate? The only problem with this is that the typical consumer thinks that the Fed rate and the mortgage rate are the same.

It’s a good thing to always be prepared to let your clients know that the Fed rate is the rate at which banks borrow money; not the rate at which they loan money.

Right now, what the market needs is not another rate cut but a loosening of the mortgage restrictions so that more folks can qualify for a home. But don’t worry…every time the market goes through a correction and banks get scared tightening up their lending criteria they eventually loosen up the purse strings again. It’s a gradual process and not one you’ll particularly notice but trust me, banks need to lend money to make money. So folks with decent credit and a good job who may not have large down payments will be able to get back in the game very soon. The recent legislation to expand the conforming loan amounts will certainly help entry level buyers in the more expensive states.

Once first time buyers can buy, move-up clients can sell and the high end will loosen up as well. This is all a very predictable cycle that’s been happening for over fifty years. Stay the course, build your business…there are plenty of opportunities out there.

It’s a good life!

Brian