John Weidman, Licensed Real Estate Salesperson for Benson Agency Real Estate, located in Oneonta, is the latest Realtor® to receive the President's Award from the Otsego-Delaware Board of Realtors®.
It was awarded to John on Tuesday October 7, 2008 at the Board's quarterly meeting - this time held at the Delhi College Golf Course Restaurant in Delhi, NY.
The President's Award is given to selected Realtor® members of the Otsego-Delaware Board of Realtors® who exemplify superior ethics, practices, and outstanding service to the buying and selling public - the essence of what a Realtor® is all about!
When presented with the award John commented that his buyer/seller clients and customers are the best. One of the many reasons he received this award is because John's customers and clients feel he's the best!
John represents the best qualities of a Realtor® - ethical, professional, knowledgeable, as well as caring for the needs and lives of the people he serves. It is an honor for the Otsego-Delaware Board of Realtors® to present John with this award.
This represents the largest bank failure in U.S. history. Over the previous 9 days WaMu customers withdrew $16.7 billion which caused the bank to fail. Most of the deposits withdrawn were over the FDIC limit of $100,000.
Washington Mutual (WaMu) is the the 13th U.S. bank to fail this year and the ninth to fail since July. WaMu had combined assets of $307 billion and total deposits of $188 billion.
WaMu collapsed as its credit rated plummeted to junk and its stock price tumbled. WaMU stocks declined 95% during the past year. With losses in the amount of $19 billion based upon bad mortgage loans, Washington Mutual puts itself up for sale last week. On September 8th, Kerry Killinger, the long time CEO was replaced with Alan Fishman. Fishman was given a $7.5 million signing bonus and a $1 million salary - not bad for working just a few weeks!
After a few days of bidding on WaMU, JP Morgan Chase & Co. emerged as the buyer with the best offer for a price of $1.9 billion. JP Morgan will not acquire WaMu's liabilities as a result of the sale. JP Morgan is in a very good position as a result of the sale by becoming the biggest U.S. bank, as measured by deposits.
The FDIC brought about the purchase of WaMu by JP Morgan and fortunately did not have to bare the costs of the takeover of the bank's assets. The FDIC noted that this was a major victory.
The failure of WaMU is the latest of what is becoming a long line of failures and bailouts experienced of late with the likes of Lehman Brothers, IndyMac, Bear Stearns (also absorbed by JP Morgan Chase), American International Group (AIG), Merrill Lynch, Fannie Mae, and Freddie Mac.
President Bush on Wednesday evening told Americans and lawmakers that failure to pass the proposed $700 billion financial rescue plan will risk erasing retirement savings, cause increasing home foreclosures and job losses. He said: "Our entire economy is in danger".
In his 12-minute prime-time speech the President said: "Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold". In the last few days President Bush has received a lot of input and feedback from lawmakers about the proposed bailout plan. The stakes are high and the President has had to agree to many changes to the plan brought forth by both conservative and liberal lawmakers. However, President Bush says he draws the line at regulations that would hurt economic growth.
The President urged that the tough-sell and very expensive bailout must be enacted ASAP. He said during his speech: "Ultimately, our country could experience a long and painful recession." "Fellow citizens, we must not let this happen."
Last week the White House and Congress agreed to the bailout. Since that time, there has been widespread criticism of lawmakers for lack of foresight concerning the housing crisis, handling of the economy, as well as the bailout plan itself. Many find the price tag very difficult to digest while others oppose the magnitude of government intervention in the private-sector economy.
Conservative lawmakers find it very difficult to agree to taxpayer money being used to help save businesses that got them in trouble in the first place. Many Democrats have come out in the last few days expressing their distaste for CEOs of failed companies who could be inadvertantly rewarded with generous income, bonus and severance packages.
President Bush stated: "With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all." "These are not normal circumstances."
The L.A. Times Blog ran an article recently titled "Cats on Bank Owned Roof: Bobcats Claim Foreclosed Home" written by David Kelly. It said that bobcats have moved into a foreclosed home in Lake Elsinore, CA.
Neighborhood residents first spotted the felines on August 27th and are having mixed reactions about this home turning into the neighborhood animal park.
I wonder if the bobcats have been properly qualified by a local real estate agent to purchase the home. Good luck foreclosing and evicting these tenants!
Help-U-Sell Real Estate franchise company recently entered Chapter 11 bankruptcy proceedings. An article written by Inman News on August 15, 2008 stated that the company has gone bankrupt in the past. The article also said that the company expects to survive the latest bankruptcy. Apparently, a group of regional Help-U-Sell operators filed an involuntary petition for bankruptcy seeking a judgment of $1.04 million from the company. In return, the parent company filed the Chapter 11 bankruptcy to protect itself.
Help-U-Sell was founded in 1976 and began franchising in the 1980s. It was purchased by Metropolitan Life Benefit Company and expanded into a few hundred franchises prior to going into bankruptcy the first time. In 1997, it was purchased by American Pacific Financial Corp. Help-U-Sell was, in more recent history, one of the fastest growing real estate franchise chains in the country.
The government, over the weekend, has come up with a plan to assist both Fannie Mae and Freddie Mac in the wake of both corporations losing billions of dollars due to the rising number of American homeowners defaulting on their mortgages.
First, the Federal Reserve agreed to allow Fannie Mae and Freddie Mac, both of which are government sponsored entereprises (GSEs), to borrow directly from the fed. This was the same policy the fed extended to securities firms after the Bear Stearns crisis in March of this year. This would give both corporations the necessary liquidity to function uninterrupted as well as continue purchasing and insuring mortgages and expand their operations.
Second, the Administration will ask Congress to authorize the Treasury to lend both GSEs more money beyond their current limits and to buy stock in both companies. Third, the plan calls for the Federal Reserve to play a greater role in overseeing and regulating Fannie Mae and Freddie Mac.
There is no fear of a collapse of either corporation; however, some in the media have been capitalizing on the situation and have been working overtime to spread fear and uncertainty. Last Friday there was talk about the possibility of the two GSEs being nationalized. There was also a lot of buzz about a government bailout. However, the announcement yesterday about the government’s plan is nothing close to either nationalizing or a bailout.
Yet, the actions taken by the government were needed to reduce fears and increase confidence on Wall Street concerning the financial stability of both Fannie Mae and Freddie Mac. Late last week, investors, worried about the losses suffered by both companies, dumped the stocks and thereby caused stock prices of both to plunge to 17-year lows.
Treasury Secretary Henry Paulsen said: “Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies. Their support for the housing market is particularly important as we work through the current housing correction.”
Assistant Treasury Secretary Michelle Davis said: “This is basically a safety net. We do not expect to need to execute on either [the increased Treasury lending or the government stock purchase] immediately.”
While there are critics of the government’s plan, as can be viewed in today’s news, it was important that the Administration, Federal Reserve and Treasury restore calm and confidence to the financial markets and not allow this situation to have a broader impact upon the entire economy. Also, it can't be over-emphasized that such measures greatly assist going forward in helping our housing market and economy to recover and to restore consumer confidence in the real estate market.
Meanwhile on Capitol Hill, there isn’t much calm over this situation. Senator Christopher Dodd (D-Conn.), Chairman of the Senate Banking Committee, sharply criticized the White House by stating: “The administration’s failure to prevent bad lending practices has caused unprecedented hardship in the form of record foreclosures and market turmoil. Now, homeowners across the country and our entire financial system are suffering the consequences.”
I guess we will be debating for a very long time as to where to lay blame for our current situation. Frankly, I don't think any one person, agency, administration can be rightfully blamed. Rather, the problem or cause is systemic in nature. For right now the important thing is to lend strength where needed to ensure stability and to learn from our mistakes by putting measures in place to prevent this from ever happening again.
On Friday 7/11/08, federal regulators took over IndyMac, once one of the nation's leading home lenders.
It was a Pasadena California based thrift with $32 billion in assets. It is the first bank failure in California since 2003. At 3pm yesterday, the Office of Thrift Supervision shut down the bank and transferred it to the FDIC. The bank will reopen on Monday of next week as IndyMac Federal Bank.
IndyMac specialized in Alt-A loans which allowed buyers to borrow with little documentation required.
According to the FDIC, 10,000 IndyMac customers could lose up to $500 million in uninsured deposits. The FDIC said it could cost the Deposit Insurance Fund between $4-8 billion. IndyMac is the fifth bank to fail this year. In the past 15 years the FDIC has taken over 127 banks. It is the largest bank collapse since 1984, when Continental Illinois failed, according to the FDIC. The two most expensive failures were both in 1988 when American Savings and Loan Association in California failed (costing $5.4 billion) and First Republic Bank in Texas (costing $4 billion).
The FDIC will try to sell IndyMac as a complete entity within the next 90 days.
Depositors are insured up to $100,000 on traditional bank accounts. Annuities and mutual funds are not insured at all. Individual Retirement Accounts are insured up to $250,000. Customers with uninsured deposits will get at least half their money back, according to the FDIC.
The big buzz in the news about the housing market on Friday (7/11) concerned the solvency of Fannie Mae and Freddie Mac. Specifically, on Friday the stocks of both companies plummeted to their lowest levels in 17 years and both have sustained huge losses in their loans portfolios - about $11 billion over the past few months. There is great concern that both may be on the financial brink due to the housing market crisis.
Some of the talk in the news was about a government bailout to rescue both companies; however, such talk appears to be premature. Fannie Mae and Freddie Mac, both of which are GSEs (government sponsored enterprises) issued separate statements yesterday saying that their financial position is solid. However, Senator Christopher Dodd indicated that times are tough for both corporations and said that the government was considering an emergency lending program as a possible option to prop up the firms, if necessary. Senator Dodd also said he has discussed this with Treasury Secretary Paulsen and Fed Chairman Ben Bernanke.
So, how severe is the financial picture for both of these companies? Well, Senator Dodd stated on Friday “these institutions are fundamentally sound and strong.” He also said “there is no reason for the kind of [stock market] reaction we’re getting [concerning both companies]. Treasury Secretary Paulsen stated that a bailout of both companies is unlikely despite the concerns and reaction that the stock market is currently having. Paulsen also said that the primary goal remains to support both GSEs in their current form (as opposed to becoming nationalized companies). There are, in fact, several options of assisting both these institutions, when it comes right down to it, prior to any potential scheme for a bailout.
The New York Times on Friday stated that the administration was considering a plan to put both Fannie Mae and Freddie Mac into a conservatorship if their problems worsened. The purpose of such a plan would be to appoint someone to run these institutions and get them out of financial trouble. The accuracy and/or context of the information in this report is not certain.
Yet, Freddie Mac issued a statement that it has options to weather the financial storm. They stated that they could cut the dividend on its stock allowing it retain capital. Fannie Mae also stated that it has access to “ample sources of liquidity”.
The spokeswoman for the Federal Reserve, Michelle Smith, said the central bank is keeping a close watch on the situation. The fed has also said that, as of yesterday, they have not discussed the current situation or different financial backing options with either corporation.
There is a very good possibility that some sort of financial game plan/safety net could be put in place for both Fannie Mae and Freddie Mac sometime within the next few days. If this happens it could indicate that the situation for both GSEs is dire or it could simply mean that a prudent contingency plan is put in place just in case it is needed.
It is extremely unlikely that Fannie Mae and Freddie Mac are on the ropes. However, they are under duress due to the foreclosure of so many loans, the steep decline in their stock price, and the constraining pressure of available capital. Rest assured, the government would never let them go belly-up because they underwrite or outright hold about 50% of all the mortgages in the U.S. Stay tuned for continuing developments on this story in the days ahead.
Factoid: Congress created Fannie Mae (the Federal National Mortgage Association) in 1938 as well as Freddie Mac (the Federal Home Loan Mortgage Corporation) in 1970 to buy mortgages and bundle them into securities for sale to investors in order to create and maintain a stable and affordable housing market in United States.
The Senate overwhelmingly passed legislation that would rescue hundreds of thousands of homeowners avoid foreclosure and help them obtain more affordable, safer mortgage loans.
The plan allows homeowners get loans backed by the Federal Housing Administration (FHA). Banks that agreed to take substantial losses on distressed loans could avoid costly foreclosures and be assured of recovering some of their money under this new law.
The new program would let the FHA insure up to $300 billion in new mortgages and assist about 400,000 homeowners by doing so.
The legislation faces some real hurdles with the House of Representatives planning to rewrite some of the details and the White House threatening to veto the bill without some major changes.
Senator Christopher Dodd, D-Conn., chairman of the Banking Committee stated: "It's not the final stop, but it is a major stop in getting this bill done". Dodd said he is expecting minor revisions to be made to the bill.
The bill allows for a long-sought-after modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac, the government-sponsored mortgage corporations which insure or own about 50% of all mortgages in the United States.
Democrats are divided over important elements of the plan, including limits on loans the FHA may insure and Fannie Mae and Freddie Mac may buy. The Senate measure sets them at $625,000, while a number of House leaders want the cap as high as $730,000.
House leaders also oppose the immediate effective date of the Senate plan, preferring to phase in new regulations for both Fannie Mae and Freddie Mac over a period of six months.
Another area of dispute in the bill is the funding in the Senate measure for buying and fixing foreclosed properties. Many conservative Democrats oppose this measure due to the cost and concern that it would cause the budget deficit to increase unless combined with cuts or tax increases built-in to cover the cost of this measure.
Both Congress and the White House agree in principle on the rescue plan since the goal is to allow the government to backstop new mortgages for struggling homeowners.
Friday, July 4, 2008
Today is the 4th of July. When I think about this day I think of many things. One of those things is the time when our nation was involved in the Civil War, the greatest struggle our people faced since its founding. Abraham Lincoln wrote perhaps the most famous speech in American history, which until the last several years was regularly recited in our public schools; however, unfortunately is seldom known by our citizens today. I post this speech because we should know our past and because our freedom and independence is that precious.
Here is that speech - which is known as the Gettysburg Address:
"Four score and seven years ago our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.
Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.
But, in a larger sense, we can not dedicate -- we can not consecrate -- we can not hallow -- this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain -- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth."
Jack LaLanne was born September 26, 1914, so he is approaching his 94th birthday.
He is best known as the physical fitness and nutrition pioneer, former operator of over 200 health clubs which became Bally Total Fitness in the 1980s, and perhaps the king of juicing.
He has been known to say that it is better to wear out than rust out. He claims that the human body was designed and built to last one hundred and forty years, if properly taken care of and says that history provides some examples of such people.
At age forty-two he set the world's record of 1,033 push-ups in twenty-three minutes.
He says "I eat sensibly, exercise vigorously, take no drugs or alcohol, think positively, and look and feel as young as ever." "The food you eat, the exercise you do, and the thoughts you think all manifest themselves in the way you walk, talk, look and feel" (based on an interview he had with Shelby Loosch; 1988 Globe International, Inc.).
Jack LaLanne says he hasn't been sick since 1936 and says that it is because he gets up at 4 am every morning to lift weights and swim for two hours.
Regarding his eating habits, he says that if man makes it, don't eat it. He says he eats no processed foods, no sugar, consumes no white flour, and no red meats. He says he eats three meals a day but never eats between meals.
Jack LaLanne says he strongly believes in a positive outlook on life. He believes that anything in life is possible if you want it badly enough, and has said so many times. He keeps making new challenges and goals for himself and claims that is what keeps him going. He has said that with proper diet, exercise, and attitude, you can live life to the fullest. He has also said that he can't afford to die because that would ruin his image.
LaLanne tells people that if they want to live longer, look better and feel better they must earn the right to do so, not look back to the good-old-days and to do something now. He tells people not sit on their backsides but instead do 15-20 minutes of exercise 3-4 days each week, as well as to eat right.
On his 70th birthday, he celebrated by swimming a mile in Long Beach harbor with both hands and feet tied, towing seventy boats behind him filled with guests.
In a June 2007 interview, he claimed that for his 95th birthday, he'd like to swim to Santa Catalina Island from the coast of California, a distance of approximately 20 miles. ("A Fitness Icon Keeps His Juices Flowing" by Sally Squires as published in The Washington Post.com on Tuesday, June 12, 2007).
He has been married for 54 years to his wife Elaine (age 81). He has been honored with the lifetime achievement award from the President's Council for Physical Fitness and Sports. On May 28th of 2008, he was inducted into the California Hall of Fame.
Mark Twain once said: "The man who does not read good books has no advantage over the man who cannot read them."
Fact: If you turn off the T.V. and instead study or read for just one hour per day, after 5 years you will have studied for 1,825 hours, the equivalent of about one normal working year involving forty-five 40-hour weeks. Wow! Think of what you could accomplish if you did that!
On Saturday 6/ 21 Habitat for Humanity (HFH) dedicated a home located on Beal Avenue in Sidney. It was a wonderful event. Our very own Jacqlene Rose, past President of HFH of Delaware County is currently the NYSAR Housing Opportunities Foundation Director and she worked with many people to make this dedication possible.
Mariah Baron, a single mother of four children, was the recipient of the new home. The dedication was the culmination of a lot of incredible effort, time and love given by a lot of people. Local people and businesses dedicated substantial time, tools and supplies to help build this home. Habitat’s vision for providing housing to people is a phenomenal act of love and kindness which helps people like Mariah to see their dreams come true. Prior to the “build”, Mariah was a victim of the 2006 flood. As a result, she got by living in a camper trailer with 4 children, three of whom are teenagers.
When Mariah was chosen to become to recipient of the Habitat home on Beal Avenue, this gave her new hope and the ability to overcome great odds. She received extensive encouragement, counseling on homeownership and budgeting, as well as overwhelming support.
Cheryl Mirabito, the current President of HFH gave a short but wonderful speech and presented Mariah with a bible, which is a HFH tradition and does at every dedication. Andy DeForest, the Site Supervisor, spoke about how glad he was to participate in the “build” and see Mariah and her family blessed by it.
Invited to the dedication were Linda Page, NYSAR President and Mike Mendicino, President of NYSAR Housing Opportunities Foundation. Linda mentioned how wonderful it is that Mariah could receive her new home as a result of the loving efforts of HFH. Mike congratulated HFH for a job well done and presented Mariah with a check for $2000 given as a first-time-ever grant to help her with closing costs. Mariah’s pastor was at the dedication and prayed for Mariah, her family and their new home. Also present was Mwata Brown, the HFH of NYS Representative. Michele Stoeger, ODBR Executive Officer, and Ross Gill, President, were also present for the dedication. Steve Rose provided support typical of so many who are actively involved and make a difference yet are not readily seen. Steve also manned the BBQ at the dedication. Thanks Steve, those were awesome hamburgers!
It is very gratifying to see someone blessed by the efforts of so many. When Mariah spoke to everyone about what her new home meant to her, I don’t think there was a dry eye in the audience. When Habitat for Humanity and REALTORS® work together to help people achieve the American dream, there is something very powerful and inwardly very rewarding that happens. We as REALTORS® not only help people buy and sell real estate, we help build lives and dreams!
On June 10th NYSAR sponsored its annual event knows as Lobby Day. On this day every year, REALTORS® throughout New York State converge upon Albany to meet with their legislators to discuss real estate issues and legislation that benefits, as well as hurts our industry, our clients and customers.
This year over 150 REALTORS® spanning from Long Island to Buffalo had their voices heard in Albany. I also attended on behalf of the Otsego-Delaware Board and met with State Senators Seward and Bonacic and Assemblyman Pete Lopez.
I can’t over-emphasis the importance of Lobby Day because of the unity, strength and focus our members provide on a number of very important issues at that time. Over 150 REALTORS® discussed with their legislators the importance of the Commission Escrow Act (which is pending legislation designed to protect your earned but unpaid commissions), Sex Offender Ban (proposed legislation to ban ALL sex offenders from holding or obtaining a real estate license), a call for decreasing real estate taxes (because citizens of NY have the dubious honor of having the highest tax burden per capita in the nation – more than 200% higher than the national average), First Time Home Buyer Savings Account (which would allow a $5000 per individual or $10,000 per couple tax deductible contribution toward the purchase of a first home). These were some of the many issues discussed by concerned REALTORs® on June 10th.
Since Lobby Day, more than half of the members in the Assembly have signed on to the Commission Escrow Act bill which brings the total number of sponsors in that house to 81, our strongest backing yet. On June 11th, the bill moved from the Assembly Judiciary Committee to the Codes Committee. This is very good news and so far this bill has not been stalled in committee.
Concerning the Sex Offender Ban, support increased for this legislation when nearly 500 e-mails from REALTORS® were sent to lawmakers leading up to Lobby Day showing our support for this important bill. These emails were in response to a “Call for Action” NYSAR sent to members. This legislation has since moved from the Assembly Judiciary Committee to the Codes Committee by an overwhelming vote of 19 in favor to 2 opposed. This is a huge victory because the bill has remained stalled in the Judiciary Committee since 2006.
Because of the current housing market and economy, momentum is gaining in Albany for substantive measures to be taken concerning school taxes and property taxes in NY State. With the participation of our members at Lobby Day, there was a clear signal sent to our representatives that REALTORS®, are fed up with ever increasing taxes which only hurt our state’s economic future and our real estate industry.
In prior years I’ve discussed taxes with our area legislators and received only vague assurances of their mutual concerns on this issue. Now, in 2008, there seems to be very widespread support for doing something real to reduce our tax burdens in this state. NYSAR has been faithful for years in trying to get our legislators to deal with soaring taxes. Because of our persistence, as well as the state of our economy, our concerns about high taxes are now being taken very seriously. Please read the article written by The Legislative Gazette dated Monday June 23rd, posted on the blog (http://www.odbr.blogspot.com/) titled “Governor Holds Legislators Feet to Fire Concerning Taxes” for more information about current legislative tax reducing proposals being made in Albany.
During Lobby Day, NYSAR’s President Linda Page had a chance to meet with Jim Tedisco, the highest ranking minority member of the Assembly to discuss the issues that are important to us. Linda also met with Secretary of State Lorraine Cortez-Vazquez who is in charge of the Department of State. As you can tell, events like Lobby Day help us meet with government leaders to get business done.
Every REALTOR® member should do whatever he or she can to help all of us to get things done in Albany. Your help in NYSAR's efforts to secure legislation designed to protect and help our customers and clients is vital . Your RPAC support as well as financial contributions are the reason we are having the successes we are having. Without your financial and moral backing our voice wouldn’t be heard. That’s why your assistance (in terms of financial contributions, response to NYSAR’s “Call to Action” and participation on Lobby Day) is so important. Thanks you for the support you have already given to RPAC and also to me and your RPAC Chairperson to keep you informed of the issues and to go to Albany on your behalf.
Who is Jed Smith? He is The National Association of Realtor's Managing Director of Quantitative Research. He recently posted an excellent podcast on the subject of recession which can be found on NAR's website at http://www.realtor.org/research/research/research_podcast_series.
I consider this to be one of the very best, as well as most important messages I've heard to date from any source anywhere concerning this topic. It is insightful, truthful, and right-to-the-point. It is very important for you, your clients and customers to know this. Please read this transcript and pass it on.
Here it is:
"Hello. This is Jed Smith, Managing Director of Quantitative Research, with the National Association of Realtors in Washington. I’d like to offer a few comments on some of the topics in the economic news in the past few days—particularly as related to how the economic news relates to the concept of a recession.
Today I would like to address some key questions on the recession topic. The purpose of my comments is to explain exactly what a recession is and then put the current economic situation in context.
The economic news has been mixed in recent days. · For example, there is talk of continued credit problems in the financial markets and housing foreclosures, and a glut of unsold new homes.
· There was an announcement Friday morning that the unemployment rate is now up to 5.5 percent.
· There have been reports of weak car sales, particularly as related to pickup trucks and SUVs in the face of rising gas prices. Major automakers have announced cutbacks.
· Finally, you don’t need the news to tell you about rising food and gasoline prices. Gas prices in particular are at the top of everybody’s list of important economic news.
In recent months the economic news has lead to talk of recession—that is, are we in a recession or not, how bad can it get, and what does all of this negative news mean?
The National Bureau of Economic Research defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months, and normally visible in real GDP, real income, employment, industrial production, and wholesale and retail sales. These concepts are usually interpreted as the occurrence of two successive quarters of decline in the real Gross Domestic Product accompanied by an overall slowdown in the economy.
Next, let’s take a look at what actually happens during a recession. In previous recessions, the real Gross Domestic Product has fallen on average about 1.6 percent. Clearly this is not what we want to have happen, and the number is significantly below the positive 3 or so percent economic growth we would normally experience. One major reason that the word recession attracts a lot of attention is our memory—mostly from history books—of the Great Depression. Please note: a 1.6 percent decline in GDP is not the Great Depression. In terms of current conditions, however, we have had positive—although minimal—economic growth this year, and growth in the GDP in excess of 2 percent is forecasted for last two quarters of the year.
Taking a look at Employment, on average non-farm employment has fallen an average of 1.5 percent during previous recessions. In today’s economy, that would be a loss in the neighborhood of over 2 million jobs. This morning the news reported a loss of 49,000 jobs in May, and a year to date loss of 324,000 jobs this year. So far, we are not near a recession. Taking a look at unemployment, unemployment has on average climbed to 7.6 percent during previous recessions. Unemployment was announced on Friday as climbing to 5.5 percent in May. Unemployment is normally in the 4 percent range as people shift jobs in the economy, so we are still not at a recession.
Finally, the average length of a recession has been 11 months, followed by an on average expansion of 64 months. Three of the four recessions since 1980 have been 8 months or less.
So to summarize the characteristics of recessions, it is clear that the economy declines a bit during a recession, and life is less pleasant. However, in no sense are we talking Great Depression, which is an image you might get when you read the newspapers and surf the Internet. Recessions are slowdowns, and there is no growth, and we tighten our belts at bit, and they are unpleasant. In recent years they have ended in 6 to 9 months.
In terms of the current state of the economy, GDP continues to grow, although very slowly. Sales of existing homes seem to be stabilizing or turning up in many local markets. Although the national numbers for real estate declines appear in the news on a continuing basis, we need to remember that all real estate sales are local, and well over half of the markets have increasing sales. Unemployment is a bit higher, but well within historic ranges, and inflation and interest rates are relatively low. What we have is a slowdown in growth, not a recession.
Looking to the future, NAR projections for 2008 and 2009 show positive growth for the next two years. A review of the data suggests that sales of existing homes should start to recover in the third quarter of this year, and that prices will be on an uptrend.
In conclusion, we are exposed to a lot of negative economic news these days in the press, the Internet, and on radio and TV. A lot of this has already impacted the housing markets, which NAR forecasts to recover. The major downsides to the projections are additional surprises from Wall Street, additional major developments in the energy markets, or some type of unknown that hits the economy unexpectedly. Otherwise, the data suggest no recession and a pending recovery in the foreseeable future as government stimulus, increased exports, and continued relatively low interest rates help the economy.
So, we’ve considered what a recession is, that the data don’t yet show one, and that the data indicate a return to a growing economy in the foreseeable future. Thanks for listening. "
6/17/08- A continuous and updated feed of economic & housing research/news straight from NAR is now a permanent component of this blog! You will find it on the front page of this blog located on the right side margin titled " The Latest Economic/Housing Research Headlines from NAR".
This feed of research and news will give you the latest updated info. straight from NAR's economists - including our very own Lawrence Yun - the 5th most accurate Economist according to USA Today!
To view any of the topics provided by this feed simply click on the title for each news item.
The Otsego-Delaware Board of Realtors® June Educational Seminar held on 6/11/08 was a huge success. Terry Watson was this year's featured speaker. Terry was our featured speaker just a few years ago and was back this year by popular demand.
Many agents in the last few weeks told me they were really looking forward to seeing Terry again. 155 REALTOR® members attended the seminar. Terry taught two 3 hour courses. One was called "Working With Consumers - Generation X". The other was called Think Globally - Sell Locally".
One thing about Terry is that he never leaves an audience bored. His presentations today were packed with both tons of truly useful and up-to-date marketing strategies as well as lots of gut-splitting humor.
I'm not kidding when I say that he is definitely the best speaker our board has ever featured in my opinion. He was truly awesome.
Members at the seminar told me that if they only implemented just one or two of his strategies it would benefit them and boost their businesses. I was also told that he offered a number of suggestions that many members had never heard of before.
If you missed seeing Terry at the June seminar, you really missed a rare opportunity. However, if you missed him and are curious to know what he is all about, you can see a few video clips showing this phenomenal man in action at the following page on his website:
www.terrywatson.com/About_Terry/Videos.asp
Also, you may want to check with a agent who attended the seminar to fill you in on what he said - provided they are willing to share what he taught.
An article by The Associated Press recently reported that the economy will do something it hasn't done before: it is expected to go into recession without, at the same time, contracting. That never happened before - at least not since the government began tracking quarterly growth of gross domestic product (GDP) in 1947.
With all the fallout concerning the housing market, stock market, etc., the economy has managed to post growth, albeit anemic, and so far stay out of recession. Though many say we are already in a recession or about to enter into one, it is not a forgone conclusion.
Generally, a recession is measured by a contraction in the economy. By one of the most important measures, it is thought that 2 consecutive quarters (a total of 6 months) of negative growth is the definition for a recession. According to the National Bureau of Economic Research, a recession is "a significant decline in economic activity" lasting more than a few months. It may appear in GDP, income or other measures.
The GDP has actually in the black, instead of the red, this year posting a 0.9 percent rate of growth for the first quarter. Actions by the Federal Reserve in cutting interest rates, along with other measures have greatly helped to keep the economy from tanking.
Two recent surveys — from the National Association for Business Economics and the Fed of Philadelphia — see growth, albeit mild, through 2008.
Hmm! So, while there hasn't been contraction of the economy to date that begs the question - will there be a recession anyway? If so, that would be a unique thing. Stay tuned, we will find out more as time goes on.
Not sure if there is any good real estate news? Think again...
Leon d’Ancona, president of IMS Inc., delivers nothing but good news about real estate. Just take a look at his website (http://www.happyrenews.com/) that lists 2,319 markets in the United States where homes are selling well.
For instance, White Plains NY, homes sold 12.7 percent faster in April than they did in March, and sales of homes in Middletown NY (Orange County), increased by 37.9 percent in April compared with March. The average sale price of homes in Newburgh NY is up 2% in April compared to the prior month.
"The problem with glass-is-half-empty stories is that they have an undue psychological impact on markets that is not borne out by all the facts," says d’Ancona. "We know, because it's our business to know, that there are hundreds of cities and thousands of neighborhoods in the United States right now where the market is very healthy, thank you.”
Inman News reported on 5/30/08 Board members for California MLS, a nonprofit, wholly owned subsidiary of the California Association of Realtors®, will begin the process of reviewing and selecting a vendor to operate a statewide property database that may emerge as the MLS database for Realtors®.
The CALMLS announced that 61 MLSs and local Realtors® groups have sent non-binding letters of intent to participate. California has a total of 70 MLSs.
Realtors® in California will be able to use the statewide database as their primary MLS database or continue to maintain and participate in a separate MLS.
The anticipated launch date for the statewide MLS is sometime either by the end of this year or the first quarter of 2009. The statewide MLS will have uniform rules and brokers as well as agents will be able to access the statewide system by joining a participating Realtor® Association or MLS.
The catalyst for a statewide MLS has been the multiple sets of MLS fees, rules, and forms that members have had to abide by in being members of more than one MLS. The statewide MLS is designed to streamline and simplify this with one set of fees, rules, and forms.
While many Realtors® are positive about the emergence of a statewide MLS, others are fearful of the potential loss of jobs as well as the entrance of outside agents seeking to sell properties in local territories. However, on the positive side, it will also assist brokers who have multiple offices throughout the state. It will also make referrals easier and locating properties in other areas of California a lot easier for participants.
The California Association of Realtors® is a trade association representing more than 185,000 Realtors® statewide.
Additional information about the statewide MLS can be found at http://mlsinput.car.org.
History:
2007 ODBR Secretary,
2004 to 2006 Delaware County Representative,
2006 to Present RPAC Chairperson,
2000 to 2007 Served on Education Committee
