The Great Recession 2008-2009 and the present.... REVISED March 2011

The Number 1 Questions that I get asked regarding Real Estate and the Nevada economy in general is the question:
"When are we going to recover?"   Well, I usually say "Its hard to predict, but it may take a few more years." I don't just say this to give an opinion, I say this because of numerous statistical Nevada Data.

Nevada Unemployment... # 1 at 13.6% Nationally!!
Nevada Foreclosure... #1 Nationally!!
Nevada Federal Aid jobless Benefit... 500 Million and Rising!!
Nevada Banckruptcy... #1 Leading the nation in filing!!
Nevada Credit cards... #1 in Leading the nation in credit card deliquency according to Trans Union.
Nevada Divorce Rate... #1 in the Nation!!

Ohh boy.. Atleast where the state I live, we are #1 in something  =(

So many things have gone wrong with the Silver State (Nevada) in the last couple of years.  A few years back, we practically lead the nation in employment and source of increase wealth though Real estate.  Now, as you can see, things have mightily turned around.  1 in 4.5 person in Nevada are either going through Divorce, Banckruptcy, unemployment or foreclosure proceedings; this is the scariest statistics of all. Before, most the homes I list are due to people wanting to upgrade from their current homes.  Not anymore.
Just in Retrospect to Nevadans reading this blog, let me ask you a few questions:


 Are you currently behind in your mortgage payment?
Are you contemplating on short selling your home?
Are you considering Bankruptcy?
Are you fearing of being let go from your Job?
Are you fighting more with your spouses?
Are you having problem paying your credit card bills?


If you said "Yes" to any of these questions, you are not alone.  Just recently in the Reno Gazzette Journal Website, Nevada was voted "the most Stressed State" in the Union.  I have met many people who often blame themselves on why they are in their current lack of money situation.  I usually tell them that what they are going through are very common nowadays. People should not get embarassed if they file for bankruptcy or sell their homes because they could no longer afford the payments; it is just the sign of the times.  Also, Strategic foreclosure (homeowners letting go of properties because of the negative loan balance compared to the market price) are now rampant.  Now, this perspective is brought on because I am in the Real Estate business where the source of the downturn occured.  This perspective may not be shared by other fields of employment, however, as the Nevada statistics show, the perspective are more likely shared by other professions as well.

What is the solution?  Here are a 11 tid bits:

1. Well, TIME. As the old saying goes "what goes down, must come up."

2. The solutions is accepting the situation as what it is. Accept that money is a little bit more elusive than in previous years then work harder and smarter to catch it. Try not to pretend that things are going smoothly, accept the hardship and learn from it. 

3. Talk with your spouse and explain to them why things are not what it used to be and prepare them for the road ahead.

4. I want to say "save for a rainy day" but the fact of the matter is, It is pouring hard our there.  So to this, use your money wisely on the things you necessarily need, and forego on the things that does not contribute to your livelihood. 

5. Try not to think the grass is greener on the other side; the other side may not be that green to begin with.

6. Try not to think you are alone on this; you can talk with close friends and family for support.

7. Keep looking for opportunities; opportunities does not necessarily comes in a form of an hourly job but rather in opportunities that you feel you may excel at.

8.  Stay positive; when your feeling down and crappy  take deep breaths and go out and do something that may relax you until you can re-focus yourself again.

9.  Visit a church or your spiritual guidance counselor.  Trust me, it works.

10. Read motivational books and attend motivational seminars; knowing that there are groups of people who are also searching and wanting to be motivated can refresh and add fire to what you do best.

11. If you want people to be impressed, tell them about your accomplishments. If you want people to
understand, tell them about your mistakes and experiences.  Talk with people you want to connect with and share your failures and experiences with them.  More than likely, they will share theirs and create an emotional bond with you.  Trust me, this is a good thing. 


Well, there are definitely more ways how people can cope during time of stress and distress. But one thing to remember, that no matter how you cope with the situation, always remember the song "Smile" by Nat king Cole:

"Smile though your heart is aching
Smile even though it's breaking
When there are clouds in the sky, you'll get by

If you smile through your fear and sorrow
Smile and maybe tomorrow
You'll see the sun come shining through for you"

 End

The New American Reality.... RENTING!!

Before I go on to part 3 of 3 of my personal experiences in the Real Estate of the Great Recession, let me tell you a story about the state of the homeownership market in Nevada.

A friend of mine (sorry i can't tell you his name), ask me last week if I know many people who opted out to just renting rather than buying.  Since I am in the Real Estate business, the salesman in me would rather say that the market is such a buyers market and people would be crazy to just rent if they can afford to buy.  However,  I did confess that buying and renting at this point in time is largely based on his future plans. 

As the Great Recession devastated the Nevada housing market, many part of the State ( i.e., Las Vegas) have seen homeownership decline to an average of 60% owner occupancy.  Prominent homeowner destination such as Las Vegas during the boom market saw great declines of non-investor related purchases.  In Reno, NV there are census out there that says a 47% owner occupancy. High rates of foreclosures and job unemployment have greatly contributed to the rise of renters.  
Now, its hard to blame the decline of homeownership in Nevada solely on foreclosures and job unemployment, we have to admit that both the southern and northern part of Nevada are very accustomed to transient living.  Many people in the State of Nevada tend to move within 3 to 5 years. We can interpret this in so many ways, however, this is the reality of our Nevada housing market.

Now, how do we turn this around? Well, there are simply no easy answers to this.  However, it thus help if current homeowners be more pro-active in building an active community.  Neighbors meeting neighbors, owners actively participating on homeowner association decisions and providing volunteer work to enhance our parks and school systems etc. Potential Buyers should start jumping off the fence and start picking up vacated homes.  The longer buyers decide to wait for lower price homes, the more likely neighborhood deteriorates and foreclosure occurs.  By the time potential buyers wait for the neighborhood of their choice to hit rock bottom, their might not be a good neighborhood left to live with.  If at all possible, current homeowners should still work with their bank and possibly modify their loan.  I know I will hear arguments to this but I believe we should do all we can to stay in our home and keep our neighborhood from deteriorating due to foreclosures.  I have seen many neighborhoods like this in Reno, and what was once great and beautiful, are now dead grass and broken windows. Neighborhoods like these attracts robbers, juveniles, and rodents. Definitely, not the nicest thing to see.

There are simply no easy answers to turn around the decline of homeownership in Nevada other than Time.  In Time, massive foreclosure will past, lenders will start to lend more, and unemployment will decrease.  But for now, I believe the trend is going towards RENTING, which I call the New American Reality.

THE GOOD O'll TIMES 2003-2007 part 2 of 3...

Short Sales.... What is that??
Foreclosure..... In Nevada?? 
Underwater or Negative home equity....  Probably in Michigan!!
Banckruptcy.... oooohhh mmyyy Gooddd, those guys must have done something wrong!!!

Seriously, back in the good o'll days, none of these occur. Back then, the word "Short Sale" does not even exist.  The words you hear during those times are "New home builder waiting lists, home equity, positive cash flow, 0 down payments, interest only loans, and stated income."  So much have surely changed.  Well lets go back in time on what was going on with myself and friends who are in the real estate business.

In 2003, I was able to buy my first home in the Northwest part of Reno for $175,000 that I sold for $380,00 by June of 2005.  This positive gain on home equity are common occurances. I usually have buyers during those times that bought homes that gain 30,000 more after 3 months.  Many buyers  were snatching as many homes as they can for the purpose of possibly flipping them within 6 months.  Many real estate agents have a monthly commission of atleast $15,000 a month.  The truth of the matter is, I hear other profession grumbling with negative opinions about Realtors that we make too much money without having too much education.  The fact of the matter was, many Real Estate agents saw this as something "Normal."  Nevada Real Estate agents felt that we were suppose to make a minimum of $10,000 a month since we had 4 months of Real Estate School and passed a Real Estate License exam. With Licensees making 10, 15, 25,30 thousand a month, the big boy toys started arriving.  Home purchases upward of $700,000, Boat, Mercedes costing $70,000 or more, BMW's, Ferarri, Lamborghini (in Vegas), camper trailers, and Rolex Watches were common purchases.

  European vacations, All you can eat steak and lobsters, and massive home improvements were very common as well.  In Reno, Home builders would build 20 to 30 homes at a time to meet buyer demands while car dealers are selling Mercedes like they were affordable Hondas. Many Real Estate agents and Mortgage loan officers felt that this will go on forever; and for a while it did.  At this point in time I have already started my own Real Estate Company.  I had 13 agents at the time, and many of them were making over $100,000 a year.  I had a few who made over $250,000 a year.  During those times, I would get lawyer threats from buyers our company represented  because they did not get the home they wanted and lost out on a 10,000 rise of home equity the following month because of too much buyer competition.  I would oversee over 40 company buyer/seller transactions per month and close 99.9% of them.  It was duing those times that I achieved multiple Real Estate sales designations and expertise. I also achieved multiple insurance sales awards in life and property casualty.

I gained so much real estate experience but I was definitely tired when I got home at night.  Money was flowing like river water, but "Real Family" time was a little unsatisfactory.   I was in my late 20s during those times and I had to run a million dollar Real Estate Company and a top producing Farmers Agency with multiple staff.  I felt during those times I was spending too much time at work and less time with my new wife and 1 year old daughter Isabella.  I was definitely bringing home the bacon, but I regret the lack of time I could have spend with them.  As the old saying goes, "too much of something may not be all that good for you."  Well, I'd like to end with this for now, In part 3, I'll write about the Great Recession that occured from 2008 to the present. 

To be continued......

Where Have All The Buyers Gone??

Where have all the Buyers Gone??  Now a days, that is pretty much a question asked by many Realtors. In fairness, not every market suffer from a perceived lack of buyers.  In Reno, Nevada (Yes, I am in the #1 forclosure State), we are slowly witnessing a decline of active buyers looking for homes.  A great deal of explanation to this is the end of the subsidized Firsts Time homeowner tax credit.  This is a government program that enable home buyers to receive a 10% tax credit for a purchase of a home with a maximum amount of $8,000 for the 2009-2010 calendar year.  With a September 30, 2010 deadline, many home contracts that was purchased before April 30, 2010 are now scrambling to complete their transactions.  However, as the July numbers shows, Nevada just suffered a 15 year low in home purchases. We can only hope that succeding monthly data show an increase in home sales. 

Another explanation to the lack of home purchase is that most buyers are waiting if prices will continue to dive down in prices. Well, in my opinion, this could be a self-fulfilling prophecy.  As more buyers wait for prices to drop, more homes are left unsold. With more supply than demand, and banks lowering prices on recently foreclosed homes, prices will certainly drop.  Greed sets in, and market become depressed.  Food for thought, a depressed real estate market is never good for anyone; as we have experienced in the last couple of years with this Great Recession. 
Another explanation why more buyers are riding the fence is that they fear for their own job security and making a huge purchase at the moment is out of the question.  As of September 2010, we have seen a great deal of upswing and downswing of the paper market (stocks, bonds, mutuals).  There has been good news that the retail and the manufacturing sector of our economy are going through positive numbers.  Many people, in my opinion, are willing to spend more on necessities, and smaller priced items.  As the uncertainty continue, we will still see shaky confidence on buyers buying big items such as house.
I do feel that the Real Estate market has gone through its worst time.  however, I also believe that it will still take a few short years before most home buyers will feel a sense of absolute confidence to jump in and buy homes.  My suggestion however is not to follow the lemmings of this world.  When times are tough, that's when we find the greatest deals.  When buyers starts buying, thats when all the great deals are gone.  So, if you are one of the people who have the means to buy a home at this particular point in time, buy now and enjoy your home.