It may seem hard to believe but the kids are going back to school and football is in the air. Also, as hard as it is to believe amid S&P downgrades, Wall Street turmoil and financial troubles in Europe, the US economy is heading in the right direction, albeit slowly.
Football today requires its players to be athletic “all-rounders”, with excellent muscular endurance, so they can sprint, jump, block and tackle for the full 3 hours of game day. They are also required to have this strength and endurance to avoid injury. Gone are the days of training sessions consisting of little more than running laps, a few sprints followed by some basic ball drills. Today’s game requires players to be high-performance athletes-possessing strength, speed, power, and stamina.
Just as in football, we need to be smarter, stronger and possess more stamina to get our economy and real estate markets working. And by working I mean making us money and dropping unemployment. We must innovate and sell (productivity) our way out of this slump. The main problem is not an economy on the ropes, but a weak recovery plagued by institutional gridlock and changing expectations of whether U.S. policymakers can encourage job creation while managing debt and deficit levels.
Christopher Thornberg of Beacon Economics explains last months financial turmoil well; “the financial markets are shuddering because they weren’t expecting a slow recovery. They were expecting a fast recovery. What you are seeing now has been a correction.” In school, you are taught that this is the reversion to the mean average (ie. slow upward trend). In football, you start talking about it being a building year!
Lawrence Yun, the National Association of Realtors® economist provides some simplicity and clarity to the winning path. He says the United States 3% annual growth in GDP is due to the “simple math of a 1% rise in population and a 2% rise in worker productivity.” Over time, a small boost in GDP growth – due either to faster population growth or increased worker productivity – could have a huge impact on national income, tax revenue, and government debt. If GDP grew at 5% instead of 2%, Yun said, by 2040 the federal government could be netting $11.4 trillion in tax revenue instead of $4.8 trillion, without raising taxes – “more than plentiful to cover just about any government program pay off debt and then some.”
I hate to be the one to tell you this, but things may not be better next week or even the week after. But eventually, they will get better. There is just too much good information out there and real estate in San Diego is in just too good of shape to stay at these levels. The financial, technology, healthcare and education sectors are coming back and are “emerging leaders.” US retail sales rose in June and July. Worldwide, commercial real estate transactions rose 60%. There are fewer loan workouts and more liquidations as buyers return to the market and banks foreclose. On a very positive note, between July 2010 and July 2011, San Diego County gained 20,100 non- farm jobs! San Diego’s median home price in 2010 was $315,000 – 3 years ago you would have killed for a house at that price. I know everything has gone down but to keep this in perspective, why I say this is such a good deal, Louisville, KY has an average home price of $342,000.
Certainly, this is a risky market but if you believe like me the light is still on at the end of the tunnel. This is a time for “athletic” investors to take on vacancy, renovate tired properties and snatch up assets outside of primary markets in order to reap larger profits from their investment dollars. Here are a few tips from the trenches.
1. Buy with Cash – To win deals, buyers with sufficient capital are acquiring with cash and then financing after closing or renovation.
2. Understand lender preferences – You have to understand where the deal fits into the lender universe.
3. Lock in rates – Mortgage rates are at historic lows. If your loan expires in the next 12 months try to lock in now.
Whether it is competing like a football player or studying like a student these are historical times that we will look back upon and say; “I only wish I had…” It is important to prepare today so that tomorrow’s challenges can be opportunities rather than a crisis.
Speaking of school, preparation and tomorrow’s challenges, I am going to give a shameless plug for my wife, Candy who does college counseling. If you are trying to figure out what school for your kids or grandkids, what major, how to get in, do applications or what a FAFSA is, feel free to call her (858-254-2933) or email candy@candyzech.com She’s about half the price of the competition and the first visit is free.
We can’t predict the market but you can control how you react to it. Kinda like football. Hope you enjoy this months story.
What Would Happen If…
We Ran Our Football Teams As We Do Our Classrooms:
Everyone would have the right to equal playing time so that all could develop their athletic skills equally.
Cooperation would be more important than excellence. Competition would be frowned upon.
Since star athletes are already talented, they would not need special coaching or conditioning. They could help teach other athletes since “to teach something is really to learn it.”
We would “coach to the middle.”
We would strive to develop well-rounded athletes. Thus, the star quarterback would take a turn sitting on the bench as a trainer. The student of lower analytical skills would get a turn as the quarterback. The out-of-shape student who hates physical activity would get the opportunity to play running back.
Coaches would be expected to be understanding when jobs, family trips or homework interfered with practice time by adapting game plans to accommodate many multiple interests.
Coaches would be assigned parking lot supervision duty immediately before and after games and during half-time. If athletes had questions about game plans, they could meet with coaches in the parking lot. Coaches would have to plan their plays before or during supervision duty.
Coaches could not demand too much of students lest they create stress or interfere with many other interests and priorities.
If the team had a losing season, new philosophies of coaching would be developed. Each new philosophy would discard all previous philosophies. It would require a two-hour training session and supply the coach with a pocket folder crammed with philosophy and objectives. Coaches could plan their strategies between supervision duties and games.
We Ran Our Classrooms As We Do Our Football Teams:
Teachers would walk into class enthused and fired up with the importance and relevance of what they were teaching.
Students would be in class because they wanted to learn and they would respect the teacher and put all their energy into the class. Class would be more important to them than their jobs or football practice.
Parents would jam the schools asking the teacher how to help their students excel.
Students wouldn’t dare miss class or skip doing homework lest they are dropped from the academic team.
Students would develop a sense of teamwork and cooperation fueled by their love of learning and challenging of each other. Students would take pride in their classes and demand that classmates give their best.
Students would clamor to be “student of the week” or make the honor roll. Other students, teachers, and the community would enthusiastically and supportively be involved in student learning.
We would have rallies and bands and cheerleaders for National Merit Scholars and honor students, and they would not feel uncomfortable about receiving the attention because this would be every student’s dream.
Every night, the 10 o’clock news would devote a full 10-minute segment to education issues and highlights. The morning radio stations would compete for the education audience.
Newspapers would devote several pages (for a whole section) complete with pictures to academic activities.
We would demand excellence in the classroom and teach cooperation and patience on the playing field.
Our society would clamor to build and equip learning facilities because everybody would recognize the value of well –educated citizens to the business community.
