economy

I am dropping out. Out of the negative. Tuning in to the positive. Turning on to the idea that the media is not where I want to be.

With apologies to the 1970’s counter culture, I have dropped out of the media quote game. Just like many other people, I like to see my name in the newspaper, and have enjoyed seeing my name in lights many times lately. But stroking my ego is not helping me, my company, the market, or the consumer. I know the local Denver dailies will miss me (not) but there are plenty of other industry professionals that will continue to damage their own business and the market by feeding the media lots of great info that will be printed as negative. Good luck to all.

Please understand that I do not have rose colored glasses. The national economy is hurting, and housing/lending practices are a big piece of why that is true. Residential home sales values have declined 13% since late 2005. Capital market losses are large, and when the dust settles, we may find out just how much capital disappeared.

So having acknowledged the obvious, let us move on. The United States today is a consumer economy. Simplistically, that means the economy functions well if all of us have money and are spending it. Today all of us have less money for a variety of reasons well documented in the media, and therefore we are spending less money. But are things really that bad? I think not, so please consider:

The gross domestic product (GDP) in the second quarter of 2008 was $14,256,500,000 That is up $144,000,000 from the first quarter of 2008. In spite of the negative press, we are still making scads of money. And we are still the largest economy in the world, by a bunch. There has not been a decline in present dollar GDP since WWII.

69.1% of Americans owned homes in the first quarter of 2005. That was the highest percentage of American home owners on record.

68.1% of Americans owned homes at the end of the second quarter of 2008. That is a loss of just ONE PERCENT!

The 1% loss of consumer ownership did not mean a loss of the homes. It just means the ownership of those homes was transferred. To Banks. Or, more specifically, to the Real Estate Owned (REO) Departments of various financial asset organizations. The REO’s will sell those homes (with a reduction in value, or loss of capital) to investors and new homes owners.

According to Realty Trac, which keeps up with these things, 99% of American homes are NOT in foreclosure. They choose not to say it that way, but 99% not having a problem sounds a bit more positive than focusing on the negative.

Home owners that do not need or have to sell at his time are not affected by any losses in value. Losses are realized at time of sale. And some markets across the country are having value increases.

Hang on people, the market will recover.

Written by Larry D. McGee, Denver Realtor - Visit Website Sphere: Related Content