Real Estate Snippets

Read the Media Carefully

The MN REALTOR® Resource Update distributed by e-mail today to subscribed REALTORS® had a great article by Chris Galler, MN REALTORS® Senior Vice President.  Chris' conservative reputation and outspoken opinions have become legend among Minnesota REALTORS®.  Never afraid to forecast doom and gloom, Chris was shouting warnings of a market turn before it ever happened. 

Today, Chris published an article geared to help Minnesota REALTORS® understand the current economic turbulence.  Excellent in its entirety, the article gave a basic explanation of the current situation without inflammatory and hair raising scare tactics.  It helped me to understand another aspect of what is happening in the market today without panicking.

Quotes from Chris' article include the following:

• "The vast majority of people are not in trouble. About 3% of total households are behind on mortgage payments (33% of households have no mortgage) and about 1% eventually go through foreclosure.
  
• Most homes are not mortgaged over their true value. The national number is that home owners have a 71% LTV mortgage on the property (2006).
  
• The foreclosure level of today is very similar to the foreclosure level in 1986 from a national perspective. MN did better that time around."

Doesn't that sound reassuring?

Ah, well, never fear.  Panic can be restored by the third article in the same publication.  Don Smith, Esq., legal counsel for Minnesota REALTORS®, introduced an article on short sale strategies with this sentence:

"The growth of short sales (i.e. circumstance where mortgage debt exceeds the fair market value of the house and necessitates the lender discounting the mortgage to effectuate a sale) has reached epidemic portions [sic] in Minnesota and throughout the country."  (Bold emphasis is mine.)

Here I was feeling a bit relieved reading from Chris Galler that only 1% of mortgages will default, and since only 2/3 of the population even have mortgages, our nation might survive, only to have that hope poppped with Don Smith's frightening words aligning short sales with THE PLAGUE!

Our  words are so powerful and can be so loaded with emotional meaning.  No wonder published works have so much impact!

Safely Showing Houses

Somewhere in the fine print under "real estate agent: job description", there must be a clause that states "whatever it takes".  It's got to be there in the teeny, tiny print. 

Today was a perfect example.  There's a choice when showing houses between safety of one form and safety of another.  Having already locked myself out of a couple houses during showings, my system has been to leave the key in the door rather than bringing it in to lay on a table (The mistakes caused by this action are another story to be told!).  Leaving the key in the door literally leaves the door open for some sick-o to enter the house and accost me and my clients, but the chances of such an encounter seemed slim . . . until today.

It was a cold and rainy day (and not just because Snoopy starts his stories that way).  A real Winnie the Pooh blustery storm moved across St. Paul as my client (also a woman) and I darted in and out of vacant houses.  Huge bolts of lightening split the sky as blobs of water pretending to be rain drops fell.  Mentally I'm wondering what kind of nut would enjoy a job like this.

The final house showed possibility.  In our haste to enter, the door had been left ajar with the key in the deadbolt.  We wandered through the nooks and crannies, checking out where false walls had destroyed the original character and discussing how to reconfigure the bathroom.  Young male voices set us on alert.  They seemed very close, almost in the house.  Could someone be downstairs?

Down the stairs and to the front door we flew (Well, not really.  I'm too old to fly!).  The door was shut and locked.  Hmmmm?   Locked?  I knew I had left the door ajar and unlocked.  What was up?  The key was no longer on the outside and 4 young men were walking and biking down the middle of the street.  Hailing them resulted in denial of seeing anyone take the key, but my gut knew better.  They had the key.  I just knew it.

It mattered not that the house was vacant.  As an agent, it was my responsibility to secure the building when my showing was done (There's that fine print thing.).  A call to the listing agent connected to voice mail.  A call to the showing line created a diversion for those in the call center.  A call to the police produced results.  As the dispatcher and I discussed the problem the same young teens circled their bikes in the road behind my car.  It was dark and drizzly by now but one young man laid his bike down and then disappeared.  When he returned, the group rode off.  My suspicious thought was they had seen my car and changed their minds about entering the house.

Nine long dribbly minutes passed while my windows fogged up.  The police announced their arrival with spot lights canvassing the empty yards.  Normal people were in their houses enjoying TV by this time.  The officers took our report and went to check the front door.  "There's a key in the lock," proclaimed the rescuing knight.  Ahhhh, I thought.  That's why one of the young men got off his bike.  They had returned the key surrepticiously.

Of course, I had mud on my face.  The officers knew all too well the danger I posed to myself and client with my "key on the outside" system.  Thankfully they refrained from lecturing.  The house was secured.  My client and I parted ways.  Maybe, just maybe, I'll need to develop a better system of key control in the future.

The Market Shadow

Like the proverbial groundhog, the financial market has become afraid of its own shadow.  Day by day this last week, new announcements were made of well know and respected financial companies filing bankruptcy, being acquired for pennies on the dollar, being controlled by other entities, or being bailed out by the government.  The list includes big names that those outside of Wall Street recognize.  Names like Merrill Lynch, Lehman Brothers, and AIG are known in many households that don't dabble in the market.

From my perspective there is no denying a recession.  The person on the street is feeling the pinch financially.  Gas price increases have permeated our very lives.  Goods and services of all kinds have been hit with increases as fall out from the gas prices.  As people attempt to survive their pocketbook depletion, service and travel industries are losing business.  The shadow of doom grows larger as the general populace worries about their jobs and pure survival.

A year ago, many real estate agents thought it was just real estate that was taking a hit.  The far reaching effect of careless mortgage loans had not yet fully been realized.  This year many are fearful.  We are experiencing the "biggest realignment of the financial system since the Great Depression"  according to the Associated Press. 

Was it the public fear and rush to withdraw their funds that finally caused the Crash?  Had depositors and stock holders just "stayed in" until the trouble subsided would they have been fine?  If one were to follow the stocks from the time of the Great Depression, some did survive and became strong in future years.

Not being an economist, the almost daily reports of financial stress this last week, have left me reeling!  Have I checked my IRA's or TLH's 401K?  No.  Whether I'm wrong or right, I really don't want to see that market shadow.  Time tends to heal many things and I think I'll wait for the market to heal itself.  The national decisions are out of my hands anyway, so worrying about it is not going to help the decision makers one iota!  In the interim, I think I'll practice my survival skills!  

Economic Ghosts of the Past

In 1929 Black Thursday came, followed by Black Monday and Black Tuesday sending the seemingly stable high prices of the stock market into an equally deep pit.  Like the market crash of 1929 and the subsequent depression, today's troublesome market news was preceded by speculation and excess with a belief that high prices were going to remain stable.  That was not the case in 1929, nor is it the case in today's market.

Bubble blogs preached doom and gloom about the housing market two years ago.  Some scoffed at their negativity.  Fiscal conservatives, however, questioned the inflating prices of goods and services as well as homes.  At some point, economists warned, a ceiling would be reached and the market would reverse itself.  Reverse itself, it did, but with a far wider scope than many expected.

• GMAC Financial closed all 200 of its retail offices with 60% of the cuts all being in the Residential Capital division, 7th largest mortgage lender in the nation.  Total loss $1.86 billion.
• Two months ago Indy Mac, the 2nd largest mortgage lender in the nation, went belly up to the tune of $9 billion.
• The government bailed out Bear Sterns in its merger with JP Morgan Chase with a $29 billion loan.
• Last week the government placed Fannie Mae and Freddie Mac, who jointly held 50% of the nation's $12 trillion worth of mortgages, in conservatorship.   The two companies reported a combined loss last year of $14 billion.
• Retail sales dropped .3 percent in August surprising economists who predicted an increase in retail sales of .4 percent.  It seems the stimulus expected from the refund checks was short lived.
• This weekend Merrill Lynch, the largest brokerage house in the world, sold to Bank of America for roughly $29 per share, down from $50 a share in May, and $80 a share a year ago.
• Today the 158 year old investment house, Lehman Brothers, filed chapter 11 bankruptcy claiming $613 billion in debt due to 100,000 creditors.  It's anticipated most of its business units will be liquidated.

Is it any wonder the Dow Jones fell 300 points today?  And yet Greenspan stated yesterday that there is less than a 50% chance the nation will come through this without a recession?   It sure feels like economic ghosts of our nation's past are visiting again.

St. Paul Drought

From a distance this tree looked like fall colors had begun already.  The closer I got, the sadder the tree looked.  Instead of changing color, the leaves were actually half dead.  The St. Paul area still needs more rain and this poor tree has suffered the effects of our lack of rain.  The precipitation this year is 4.85 inches below the average for St. Paul.  The younger trees and plant life have suffered  from this lack of rainfall resulting in damage like this tree has experienced.

Peace At Last

The barricades are removed.  The trappings have come down.  Traffic has returned to normal.  The helicopters no longer are circling my neighborhood.  Kellogg Avenue is open to the public.  St. Paul residents have come out of hiding and returned to work.  Access is no longer restricted.  Peace and quiet have been restored.  St. Paul has survived the elephant madness!

Ironically local businesses did not all experience a boom in business as they had hoped.  The restriction of traffic, protestors, and tight security discouraged convention goers from wandering too far from the secured area.  Although some restaurants were prepared for an influx of business with extra staff and extra food, they were disappointed.  Tom Reid's, Cosetta's, and Mancini's, all downtown landmarks that normally profit from the Xcel Center traffic, did not benefit from the Republican National Convention as much as they hoped.  Normal traffic was absent because local St. Paul people avoided the congestion by vacationing during the convention.

The residual effects of the Convention may multiple.  St. Paul's facilities and people made a positive impact on delegates to the Convention.  Possibly future business will occur if delegates return as tourists because of this first positive contact with our beautiful city

Despite the business impact, St. Paul as a whole is breathing a sigh of relief.  The elephants have left the building!

Protesters at the RNC

At the supper hour, my walk encompassed the area between Interstate 94, the Minnesota Capitol building, and my house.  Normally these grounds are well groomed and a perfect place to walk and meditate, to unwind from a busy day.  There are memorials, plantings, splendid St. Paul views and benches for contemplation. 

Being oblivious to the protest schedule surrounding the RNC was a mistake.  My pleasant little stroll soon intersected with a bit of unpleasantness.   Helicopter fly overs were driving me nuts.  The longer my walk, the crazier it got.

Police and military personnel were everywhere dressed in riot gear and gas masks.  Media vans were parked by the Capitol building, but there were no protesters visible.  A normal person pays attention to the clues and goes home:  Hueys and news chopper flying overhead creating a din, riot gear, military, news media, small groups with placards face down in the grass, etc.  I, on the other hand, continued my walk into oblivion hoping to get some good pictures of the St. Paul Cathedral.

The police line was intimidating, yet some protesters approached the human barricade and invaded the officers' personal space to stare hatefully.  Another of the crowd loitering behind the protesters was so high he was waiting to be arrested.  He copied his colleague but added a leering smile to his stare.  Only professionalism and training prevented the police from being goaded on that way.

Being sandwiched between 20 some police horses (they're big) and the line of riot gear clad police was unnerving.  I wanted to step behind the police (away from the crazy protesters) but was told I could not.   Even the police bicycle brigade acted as barriers.  The road to the Cathedral was blocked with bulldozers.  All this for a few protesters, most of whom were shouting obscenities and inflammatory words.  The few that I made eye contact with seemed filled with hate. 

The protesters appeared to purposely taunt the cops to step out of line.  The police department deserves a lot of credit . . .  gas masks, batons drawn, tranquilizer or tear gas rifles, mounted police, face shields, hard hats.  Not a pretty site, yet the police performed their duties admirably.  One couldn't pay me enough to stand in any one of their places.

And the protesters.  It was reminiscent of the days of Lennon and Yoko Ono with the long skirts, beads, stringy greasy hair, vegan build, piercings, dreadlocks, filthy jeans, professor types with ill fitting outdated suit jackets covering denim shirts.  No, I have no sympathy for them.  Their cause might be just (I have no idea what their cause was!), but their presentation sucked!

Still 5 hours later the choppers are soaring above.  Thawack, thawack, thawack is the sound of the Hueys.  The little choppers just hum, but the Hueys shake the foundation of the neighborhood. 

Will I be glad when the RNC goes home?  Yea, you betcha!
 

The Elephant Invasion

Normally St. Paul is a ghost town on a Sunday afternoon.  Residents and bicyclists leisurely stroll or ride the streets, but businesses are closed except for a limited few.  This Sunday was different.  It was quite apparent an invasion was coming . . . or maybe it was an elephant circus!  There were military people everywhere, police from all over the state and maybe beyond, unmarked police cars spit shined for the occasion, closed roads with check points for entrance, lanyards with multiple security tags attached, heavily laden back packs, and a few curiosity seekers checking to see how much the invasion had changed our town! 

Sheepishly I admit to being one of the latter.  For a week the heavy military helicopters have circled the air space above my home in their regular route around the Capitol.  Thawonk, thawonk, thawonk is hard to miss when it's right overhead.  The large green choppers were the most unnerving as they sported a full arsenal of weapons.  Day and night they have toured our neighborhood keeping us ever aware that the Republicans are coming!  Biking downtown seemed the sensible thing to do with the number of meters sporting red "No Parking" caps these days although we discovered the bikes were not welcome in some areas that were pedestrian only areas.

All around the Xcel Center check points were operational.  Downtown was alive and full of energy.  Candyland had already been discovered by visitors.  Gift shops were open.  Elephants were all around. Welcome signs and flags were everywhere but not nearly as prolific as the number of security staff.  I wasn't sure if they thought they were incognito or not, but a hearing aid attached to a wire down the collar of the shirt under an FBI type suit is a dead give away.  Only one security guard asked that I not take pictures and they weren't even near the Xcel Center!

It's nearly midnight and the steady hum of the choppers, the additional sirens, and the lighted Capitol all remind me that there's a party in town, the Republican Party!

The Minnesota State Fair

We went on Tuesday . . . $8.00 admission day.  I was worried there would be a bazillion other people fighting for a piece of asphalt on which to stand.  The weather was perfectly sunny and not too hot.  The loving husband took personal time off for the afternoon in an attempt to avoid the crowds.   Amazingly, the crowds were slim on Tuesday despite the discounted entrance fee. 

The fair is a fantastic place to experience sensory overload.   Sights, smells, sounds, and sales all vie for the fair goer's attention.  Almost everything comes on a stick, even some things that shouldn't!  Fat grams and sugar call from every corner.  Sales people hawk their wares. 

Snowflakes surprised me in the creative activities building.  The maker of this quilt had patience beyond imagination to fill a whole quilt with unique snowflakes.  Even though I "snip away at real estate until a snowflake is formed", there's no way I could accomplish this beautiful work.

Tonight the giant ferris wheel rose as the sun went down on the last day of this year's fair.   Once again the Great Minnesota Get Together was just that, a great get-together!