Well as March Madness (basketball) winds to a close we now come face to face with the realities of April and tax time, balanced budgets, employment, and recovery. If you think you are better than our politicians and are confident about cutting costs and or raising taxes, I think you will find the link below fascinating. It is on the New York Time website and is interactive so you can cut or tax or spend. You can even share your solutions with others (send it to your representative.)
You Balance the Federal Budget
We’ve gone from “Extend and Pretend” to “The Rubber Meets the Road.” Commercial note sales (performing & nonperforming), foreclosures, workouts, receiverships and bankruptcies (not necessarily in that order!) are now raining down on us. Unlike the residential meltdown, we’re not hearing about the commercial sector in the daily mainstream news. Warren Buffett in his recent annual letter to shareholders stated that “Our elephant gun has been reloaded and my trigger finger is itchy.” Norm Miller a professor at the University of San Diego’s Burnham Moores Center, recently stated at the Universities Real Estate conference that “contrary to popular opinion, the commercial market should rebound quicker than residential, and now is an excellent time to purchase.” Furthermore, he said, “You’re probably never going to see a market like this in your life.” All of this makes me smile because this kind of news validates that the recovery is in full of force. Now closer to home I will tell you that deal activity is getting better every day since the first of the year. The biggest problem is that it is getting better by inches and we are in a game of miles!
As I have stated many times, job growth is the key to our real estate recovery. Joblessness in San Diego has dipped to 10.1 percent (from 10.3). However, entrepreneurial activity is not well accounted for in these numbers. The Kauffman Index of Entrepreneurial Activity reached its highest point in 14 years in 2009 (these are unincorporated, non-employer based businesses; – or as we would call them “startups” or “mom & pops”.) You see, it would appear that the jobless are employing themselves! Remember that half of all Fortune 500 companies were started during recessionary periods. This uptick in entrepreneurial activity is exciting but the key will be which if any develop into powerful economic forces capable of supporting payroll and thus contributing to substantial job creation.
Lots of these entrepreneurs are working from home offices and those that are in commercial space are finding less need for space because of technology (no file cabinets, less trash, less desk space, more people per office.) I have found that ultimately most people move out from home offices and even with efficiencies people need commercial lease space and thus the cycle starts over again.
While on the subject of technology I have to tell you that now besides being mostly paperless we are not mostly in “the cloud.” Since Microsoft released Service Pack 1 for Windows 7 I think it is safe to make the move (if you haven’t already). I have and am very happy. With all of the technology out there to wade through, Windows, Androids, tablets, social network, servers, and clouds it is important to have a good tech person. I have one such “entrepreneur” that I can recommend: Eric Hammond – SysRx 858-703-4605 eric@sysrx.com. I have yet to break something in the computer and software that he couldn’t fix.
As you prepare to pay your taxes and contemplate whether it is going to be, Heaven in 2011 or are we still knocking at the gates, I want you to remember that it is the superstars that have stayed in the business and worked through the turmoil and get to come out and shine in the end. That’s you, that’s me and the whole team at CDC. Hope you enjoy this month’s story…
Two Americans were shipwrecked on an island. Shortly after they arrived, one of them began screaming and yelling. “We’re going to die!” We have no food. No water. We’re going to die!”
The other calmly found a palm tree to lean against and relax. The first became even more frustrated by the other’s lack of concern. “Don’t you understand? We’re going to die!”
The second American, enjoying the shade of the palm tree responded, “You don’t understand, I’m a Superstar, I made $100,000 a month.”
In exasperation, the first American asked, “What difference does that make? If we have no food or water, what good is your money? We’re going to die!”
The second responded, “You don’t get it. I’m an American who makes $100,000 a month. The IRS will find me.”