The next phase is very exciting, The Recovery Phase. The first part of any recover phase is where Inventory levels start stabilizing and stop increasing. Prices still decline slowly and the amount of transactions (sides) start stabilizing. Well into this phase the inventory level start declining as the amount of transactions (sides) start increasing which stabilize the pricing. A new energy seems to appear. There comes a new excitement in the market and buyers, investors and borrowers start speculating.

Warren Buffet says a great thing. He says, “When people get Greedy, get Fearful. When people get Fearful, then get Greedy”.
People look forward to the Peak phase. This is always exciting. The problem here is this is when most people lose their money and not make it. One makes money when a buyer buys a property not when a seller sells a property. The Peak Phase gets everyone excited and people are scared they are going to lose out on a deal so they rush and buy when all others are rushing and buying. This is a time to watch out and be careful!!!!
Another thing, what is happening in California is probably not happening in Atlanta Georgia. November 2009, the whole of San Diego County had a total of 9,000 listings that were active. Atlanta city itself had over 96,000 active listings. I had a friend from the UK ask me the other, “Kurt, so what is happening in the US housing market right now?” Well, there is not simple answer because it depends on what state and metro area. There are other factors such as employment, population expansion and influx of people. Also, the employment figures are often lagging indicators that determine confidence, demand and ultimate effect the inventory and price points.

The Four Phases: The Trough

When analyzing the market, and the amount of transactions (sides) keep falling and the inventory levels keep climbing, the market begins to enter a new phase, called the “Trough Phase”…Ouch… we do not like this phase do we? Does anyone? No, because the trough is at the bottom and many consumers and professionals cannot even see out of the trough. Some think the sun is not even going to come up again. Some think this is the end of America and its dream. Some think the market will never return to what it was…..and in a way they are right…..but it will bounce back to a peak again but not the way some think it will or thought it would.
The trough phase seems to have all the 3 housing market drivers in a “bad position”. The inventory levels are high, the price points are low and there are few transactions happening. This is not bad for everyone. This is very attractive to investors especially with cash. Many people make their money at this time. They buy Low, lots of inventory and little competition.

The Four Phases: The Correction Phase

The Peak and Corrections Phase

The markets in California started reaching the end of its Peak phase around the middle of 2005. Prices had been climbing and were too high and there was a need for a correction. The market started to move in a direction towards a correction, the second phase. What indicators do we have to alert us of a potential market change? The first sign is when the amount of transactions or “sides” that close stops increasing and begins to stabilize, there a shift that is about to happen. The shift that happens is the market moves from a “Peak” to a “Correction” phase. Prices still are slowly rising but the amount of transactions (sides) stabilize.

As the amount of sides or transactions begins to drop, we see the inventory levels start stabilizing (not declining any more). As this happens we are well into the 1st part of the Correction phases. As we get deeper into the correction phases we will see the Inventory levels keep climbing, the prices still rise slowly but at a lower rate of increase. The amount of transactions keep falling and declining. See the slide below.

All markets go through this phase, not just real estate. This correction phase many know there is a change in the market but many deny the phase change. Many consumers but especially sellers refuse to admit the correction has begun. This is when sellers cannot see the need to price their properties correctly because they think that prices will still rise sharply. The price increase in this phase is far less than the Peak Phase. 2006 in California and a few states such as Nevada, Arizona went through a difficult time. Professional realtors battled to educate their sellers on pricing their properties correctly because of their denial of the market changing . 2007 this became easier and by 2008 there was little denial any longer. As the amount of transactions (sides) keep dropping, the inventory levels start rising even though there are still small price increases

The Four Phases of a Market, the Peak Phase

Understanding the 4 phases of the market cycle, it is important to understand the 3 drivers in the housing market which I shared on Thursday July 23rd 2009. Again, thanks to Alxe Perriello the President and Ceo of Realogy who recently impacted our lives. The 3 drivers are Inventory, Price and amount of Transactions or sides. Just like we experienced in 2003, 2004, and the first part of 2005, Inventory levels were low. Inventory levels normally control the market and are the foundational basis of the market. During a Peak market, low inventories will increase the prices. As prices keep increasing, eventually buyers will not keep on paying prices they cannot afford.

World Chamionship Ironman Triathlon in Kona Hawaii.... The Worlds fittest...watch live on Ironmanlive.com

TEA, Thoughts, Emotions and Activities, They all are a result of each other

Please see this You tube video below

http://www.youtube.com/watch?v=1AA8cd9LHt0

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Linda Wise and myself represented David Romero our CEO and President on the San Diego Union Tribune Chat line on Sign On San Diego
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Shift Happens!!! What Causes a Shift? And KARTARTISMOS!

Did you know that the real estate market contributes 28% of our total economy? Did you know that no matter what market or cycle we are in, the economy and the housing market are always directly related?

The first state to experience a shift from the fast housing market was Florida. This happened in 2004. After many hurricanes hit Florida, insurance rates increased significantly. A $300,000.00 home could cost $7,000.00 per year in rates. More properties came on the market and the inventory of homes increased.

Looking at the slide to the right, the three points, Inventory, Price and Sides have a direct effect on the market. The process normally starts off with inventory and this process circles twice and then just carries on.

Lets look at 2004 and 2005. Inventory levels were low. The lower the inventory the higher the price. When prices rise and keep rising, then the amount of sides (transactions) decrease. When sides decrease, then inventory begins to increase. When inventory increases the prices begin to decrease. When prices begin to decrease, then sides increase. When sides begin to increase then inventory begins to decrease and so this process continues. Basically the law of Supply and Demand.

We are to continue educating ourselves and no where we are. Also, this education needs to help us identify the signs where we are in the market. My next blog, I will look at the 4 phases of the Market Cycle and go into more depth and looking at Inventory, Price and Sides and how they begin to shift and are signs of a change in the market. Before understanding the 4 phases we need to understand the elementary principles of Inventory, Price and Sides.

The Greek word "Kartartismos" which literally means equip, or mend or train. We need to keep on equipping ourselves. The Greek people used this word for fishermen to mend their nets. If we do not mend our nets there will be holes in our nets then the fish will swim through and the other fishing boats will catch that fish. Why should another boat catch that fish? Why should the agent down the road get that listing instead of you.

A big problem in the real estate industry is that we think that we know something and we do not have to keep learning or going through that same topic. Imagine if Capt Sully who landed US Airways flight 1549 on the Hudson river had never kept on going to training? Do you know that Capt Sully keeps on going on the same TRAINING YEAR AFTER YEAR AFTER YEAR? So did his flight crew.....

So what makes us so special in this industry that we do not have to do this?

We need to mend our nets because the market is changing so fast. Technology is changing at a rapid rate and so are consumer demands and expectations.

So my next blog next week will look at the 4 phases of the market cycle.

Can you do me a favor? Can you have the greatest week of your life?

Thanks to Alxe Perriello the President and Ceo of Realogy who has recently impacted so many of the managers of Century 21 Award and Superstars.

Another Phenomenal Day in America

Another Phenomenal Day in America…….

Phenomenal because our nation is slowly moving out of the slump!!!!! May 2009…have we not gained so much ground since 2007? Are we not better off now than in 2008…. Yes…. There is a “Die Hard Optimism” attitude amongst many in sales, well at least the one wanting to go for it!!!!!
Do you remember when Rudy Giuliani was running for The New York Senate after being Major of New York City? Rudy was planning to run against Hilary Clinton…and then what….. he went for a checkup and the doctor told him he has prostate cancer. He was devastated….His dad died from prostate cancer. Rudy spent time alone….. He said to himself , “ How can I be so well yesterday and today be so sick?” oh…then the Die Hard Optimist spirit of Rudy began to arise and he said oh no….yesterday I was so sick, and now today I have the opportunity to get well …..

How many of us react to bad news? Just like the economy…. Those who are Die Hard Optimists refuse to bow down to the stinking thinking.
I was recently with some people and I just sat and listened what they were saying….. I could not believe it… They were talking of how bad our economy is….. I dared not say anything….ok I did say something….. I could not just sit there….why because I had relationship with them….how could I keep my mouth shut!!! Come on, this in not 2008, this is May 2009.
Someone said how San Diego County was approaching the 10% unemployment mark, this is bad!
Ok, I had to speak out. “Well, I come from a country where there is 35 to 40% unemployment, and I can tell you they would love to have the 10% unemployment rate!!!! And anyway, you are welcome to focus on the 10%, but I am going to go for the 90%.....I am sure I will get more done with that focus. We should rejoice and celebrate the 90% and not be sucked in by the 10%.... Why do small things always distract us from the great and big things that are just waiting for us….

Well, to be honest with you, the 10% unemployment rate in San Diego County is not an accurate figure!.. This figure is so far from the truth. They forgot to consider or account for the large military in personnel San Diego. Miramar, the other naval base, oh, what about Camp Pendleton? Did any of these figures include the Illegal immigrant workers in San Diego County and believe me there are thousands of them…..I think I even know some of them…. Experts in this field have recently mentioned to me that San Diego County unemployment is more close to 5.5%...what????? yeah…..well that is if you take into account some of these other factors.

Most of the job losses have to do with construction. The manufacturing sector is doing ok, tourism is ok, the tech industry is doing fine and even the medical research and bio techs are still ok!!!! Well, at least not like Detroit!
Our new construction projects have just about come to a halt. Every $1 spent on new Construction produces another $2 for our local economy, so yes we are affected….. but hey…things will not stay this way!!! Some major condo communities such as Advantage may turn into the largest apartment rental projects. This is all part of our local restoration.
A very interesting study took place. The study looked at all the 90 zip codes in SAN Diego County. 10zip codes out of the 90 zip codes were found with significant foreclosures. The study included looking at tests scores of elementary schools throughout our county. A very interesting statistic was found. The zip codes which had the most foreclosed properties had the lowest elementary test score results. The zip codes with the least amount of foreclosed properties had the highest elementary test score results.
The real estate industry faces many challenges right now, but hey, so did Rudy Giuliani. Washington has been slow to respond to the restrictive Fannie Mae and Freddie Mac occupancy ratios and guidelines regarding lending in projects. When Washington reduces some of these strict requirements we will see a more stable flow in our industry and the market may move more from an investor’s market to the man on the street market.
So we are heading for some great times….yesterday we were sick, and today we have an opportunity to be healthy!!!!! Another Phenomenal Day in America
Watch for my next Blog on “Kartartismos”…to be published soon!!!!!

Rehabilitation...A Time To Take Off!!!

Bloganomics

Rehabilitation

We forget what the word America means….We forget what the word AmeriCAN means….
AmeriCAN means in a merry way, we Can, Yes we can. Soon after I first moved to this nation I witnessed the election with George Bush and Al Gore. Someone said to me “is this not a disgrace that we cannot even chose a president, what does the world think of us?” I said, “let me tell you something, if this happened in Africa or other parts of the world, there would have been civil war and blood shed”

Then the following year September 11th happened…..and then what happened, America stood up, rebuilt and carried on.

Somehow our nation always bounces back!!!!! Well, does it just bounce back, or does it take hard work to get it back? Is it the Spirit of this great nation that causes it to rise again?
And now, this tragedy where literally trillions of dollars have been sucked out of the market by a massive vacuum Hoover Electrolux! In South Africa, Electrolux had a commercial TV ad that said, nothing sucks like an Electrolux!....that is what has happened with our economy…..the subprime mortgage failure and large insurance companies and other financial institutions grabbed an opportunity they had to make a buck, some with greed and little thought into their decisions that resulted in actions which caused bad investments that cause the whole pack of cards to tumble.
In December 2008, about 4 months ago I was involved in a automobile collision where someone got real excited to see my vehicle's rear end. $30,000 damage and the vehicle was totaled. I was taken to hospital, how exciting, my first ever time to ride in an ambulance. I was quite disappointed as I did not here the sirens , perhaps I was not that badly beaten up and less than 1 mile from the hospital….$950 later!!! For 1 mile, $950,....yeah right...... I can fly to San Francisco on Virgin America for $49!!!!

Ok, my car was not worth fixing,..oh no…. if there is 50 to 70% of the Value of the vehicle, the insurance company will total it….. but I was worth fixing….. Medical bills…. Yeah right….The other sausage who rear ended me was NOT An American….. Why, well, not because he did not have a USA Passport, because perhaps he did have one, not because he did not have an American ascent because perhaps he did have one, but because an American is a person who picks up responsibility for the benefits they receive from living in this great country, and pays the price to live in this great nation. In other words someone who pays Insurance on their vehicles…this sausage did not!!!! And also lied about his contact number and his insurance…. So let us understand another definition of an American….pick up responsibility!!!

So my insurance company covering my vehicle decided no rehabilitation should occur, however, my doctor decided that rehabilitation on me was viable. Some things we dump, and other things we rehabilitate.

America is not worth totaling!!!! maybe the Zimbabwe dollar is woorth totalling, not sure.....perhaps our stocks and 401ks are at 50% of their value 2 years ago. Perhaps our home values are 45% of the value they were in 2006, perhaps your income have decreased and your profit on your small business has tanked,.....but there is the American Spirit of rehabilitation that is awaiting and crying out.

Right now, our country faces tremendous challenges. The greatest challenge is the question regarding what do we dump and what do we rehabilitate. The complexity of this situation is far greater than we understand. I believe that certain things we should dump….my car was one of them….however, I was not of the opinion that they dump me!….nor was my doctor. Certain factors and costs need to be considered when making the decision to dump, such as what will it cost to rehabilitate it, what will be the value after it has been rehabilitated and what is the future for that which has been rehabilitated?

It has been vital for our US Congress to make decisions regarding rehabilitating large insurance companies and financial institutions who have experienced a massive collision, a massive rear end from something they never expected and it came right from the back and knocked them down, this thing sneaked up from behind and just crippled them! Dod they look in their mirrors to see what was approaching....not sure? Whether they did or did not, the accident happened...the crash happened. No matter what your theory was of the housing bubble, and all the bubble-ologists who speculated or the Unbelieving Bubble Busters or your theory on the 4 reasons which cause bubbles to burst (1. the out flow of poplulation from a given area, 2. large industries leaving an area, 3. Unemployment Rate increase, 4. a natural catastrophy), the fact is this thing did burst abd splattered all across the globe.

One of the questions is should we rehabilitate AIG and others……? Should they rehabilitate Kurt after his accident? Do we understand the impact of not rehabilitating AIG? So many out there are so fast to criticize whether we should, but none of them tells us the impact on the housing market and the economy if we do not rehabilitate? Can someone give me 3 figures, #1, the cost in Dollars of loss in the stock market if we do not rehabilitate companies such as AIG, 2ndly, what is the length of time it will take to recover without rehabilitation and 3rdly what will be the unemployment rate be in 15 months from now if we do not rehabilitate these large corporations…ok let us add 1 more question, what will the single mom say to her 2 children when she has lost her job and her children are hungry without any food?

Monday March 23rd 2009 the Obama administration launched a new effort to end the paralysis in lending, saying it will team with investors with the goal of buying up a trillion dollars of bad assets from banks that have been reluctant to make loans to consumers and companies.

Inaction or not making a decision would cost us more than making the wrong decision. Even if we do not like what we read or hear or the decisions that are been made, at least some decisions and actions are been taken. Even if one does not like these decisions and if the decisions were the wrong decisions, they are not the end of the world!!!!! No 1 way is the perfect way. The way critics talk is that they know the exact perfect solution….yeah right…..
Rehabilitation never happens fast. There are 2 main aspects to rehabilitation and they both have something in common. Firstly, there is a physical aspect and secondly an emotional aspect. The physical aspect in all rehabilitation requires continues regular effort that has to work through pain. It requires commitment and unpleasantness and demands time. The emotional aspect is how one feels and rethinking what the hell happened and why did it happen and why did I not see this from happening and why did I not do something sooner and everything happened so fast. The emotional side can affect the physical side. Both aspects of rehab, have the mindset factor in common. Our mindset will determine our outcome. If we are not positive, and speak positively and see the dream of recovery and rehabilitation, we are doomed. The stock market is not directed by the news as most people think….it is directed by the interpretation of the news. If we do not give a message in a way that it will be positively interpreted, then, confidence is out of the window…..
Rehabilitation (or reviving the economy) will demand us all to physically offer action, sacrifice and regular effort. Physical therapy is not nice, it is no massage. Pain, discomfort, time, frustration and a giving up of comfort and pleasure so that healing and restoration may occur.

Our nation, our local economy, our national economy and our global economy is in a process of restoration and rehabilitation. Some people will respond and take up the therapy challenge and go to through the therapy….other will not. Some cities will make the right decisions to make the therapy and other s will not. Some nations will and other nations will not. Some nations and cities will just wait for handouts and there greed will over run them. Some individuals will do the same.

My question to myself and to you is, what are you and I doing to be part of this rehabilitation process in our local economy? What message are we giving out? What hope are we providing others? How hard are we working? What are we contributing to our company, our clients and neighbors?

REHABILITATION, means a process and a time to Take Off!!!!! Now is our time to rise, Now is our time to lift up, Now is the time to get up....Now is the time to leave the ground and fly.... a time to Take Off!!!! Wow...what an incredible opportunity we have....we...Are we not the most privileged people to have ever lived on this planet and experience this...wow....!!!

Confidence and Responsibility

Confidence

As our nation goes through tremendous growing pains we are all seeking for a break through. Every industry is seeking creative ways to keep their head above water. The financial and commercial sectors of our economy are desperately relaying on government intervention for stability and confidence.
Monday March 23rd 2009 our stock market reacted sharply, the DOW moving up 497 points. Why? Some say it was news. Well, it is not the news that actually causes markets to react. It is the interpretation of the news that causes it to react. The US Treasury Secretary announced a new plan to absorb much of the so called toxic assets that have frozen much of the financial institutions to respond to needs and demands of the commercial sector. The financial institutions have a responsibility in our economy to supply and meet the needs of the commercial sector. The interpretation of this news has without doubt brought about confidence that our nation and nations around the world are desperately seeking.

I believe that each of us have a responsibility just as the financial institutions do. I have questions for us to consider. What are you and I doing in our industry to positive effect our local economy? How are we interpreting the news? What message are we giving to our micro economy? What are the true conditions of our local market? What do I need to do to get my share of the market? What is moving in my market and at what price point? What is the number 1 objection my clients have right now in this market? Do I only have 1 way to handle these objections or do I have 5 ways to handle these objections effectively? How creative are we in this market to be effective? And.....not only how do you interpret the news, but when you convey the news to your local market and economy, how do your clients and the market interpret it when you convey it?...that is the real test.

Your local economy needs you now. Your local economy is desperately seeking professionals who can interpret news, analysis it and show confidence and hope. 28% of our nations GDP is real estate related. This is a massive percentage of 1 single industry. That is why it has been essential for the federal government to establish a plan to eat up the Toxic assets so that lenders can lend again. This plan does involve private investors as well. So we too better do our part. Whether we like it or not, the real estate industry effects the national and local economies more than we realize.
Don’t you wish you had purchased more property in 1994? Oh yes….. someone would be retiring right now and living off passive income. Ok, not retiring but living a life style of limited financial stress. Many people in 20 years time are going to say if only I had bought property in 2009.We will not see a time like this for a long time. Property prices, stock prices, interest rates and oil prices are at record lows and this will not happen again for many many and many years!!!!!!! Our responsibility is to carry a message of confidence. Just as our federal government has had to step in, so do we as professional have to set in and inject where we can. Now is the time to carry a message of realism of where we stand. It is our job to open up the minds of local economy. Some are blind and cannot see the opportunities right now and we have a responsibility to take the blinds off people who do not have that ability.

One more question, What are the 10 top positive signs in your local economy and real estate market right now?.....and carry that message and use every vehicle possible to convey that…ok another question…… Are you using Youtube to convey your message? Google has indicated that video media has become one of the largest vehicles to carry messages effectively. Are you using these tools and vehicles?

the message is Yes we can, just like they did on flight 1549

A great miracle, January 15th, 2009, when a US Airways Flight 1549 on an Airbus 320 took off from La Guardia New York. All was going well during take off, the aircraft started climbing to new heights......but 90 seconds into flight, 3200 feet altitude and everything changed.....Both engines lost power and thrust and the silence in the cock pit became "shocking" The control tower at La Guardia said they could land back at La Guardia....they also had the choice of landing in New Jersey (according to the control tower.....)but Captain "Sully" knew what it takes to keep an 81,000 pound bird in the air.....thanks but no thanks, we are heading for the Hudson.

He knew that he did not have time. Time was not his friend. The friend he did have was his training, his ability to make decisions and his professional conduct.
Oh yes, it is far more comfortable to land on a runway. Yes , that sounds so much better…let us do that, let us chose the comfortable way…well….the comfortable way does not work in a crash…..Nothing is comfortable when we have no thrust and power. One of the first things that you learn at flight school is don’t land on water, the chances of survival are small…..aircrafts sink fast. They were designed to fly and not float…..
He did not have time think about the decisions he was going to make. He just made them, based on training, experience and his gut. He had enough foundation to base his decisions upon. There is no time for discussion or taking out the manual and the FAQ. He made to make decisions, the right decisions and make them fast.
No power and no thrust demands quick decision making and quick action and response as that bird becomes very heavy and drops fast. The wings cry out for enough air underneath to create sufficient lift. Captain Sully was closely looking at the altitude, speed, vertical speed, rate of descent and keeping the aircraft above stall speed especially before crash landing into the Hudson, even seconds before touch down, the speed was critical to avoid stalling and losing control.
They missed the Washington bridge, no Circle Line boat tours and other vessels on the Hudson landing path…all was clear…..
He brought the aircraft down, landing with the rear first at perfect speed to avoid additional damage and avoiding an uncontrollable plane.
Imagine if Capt “Sully” had made all the right decisions and made them fast and a perfect crash landing if there was one, and then a flight crew opened the back door….they would all be dead, the plane would of sunk. The crew relied on their training and opened the doors in the front and above the wings. The team effort was incredible.
All survived.
All the thrust, power and lift has disapeared in this real estate market. Thrust started disapearing in July 2005. In 2006 thrust decreased incredably. In 2007, no matter how hard we pushed that throttle forward, there was no thrust, the power was gone and no more lift under our wings. In 2008 things began to change and we are ready for 2009. You too can survive this real estate and economy crash….Yes you can, if you make the right decisions, act on them, and work with your team. Our real estate market and the economy has crashed. The market has lost the thrust and the force pushing it forward. We do not have time to sit down and discuss the options we have. Now is not the time for us to choose the comfortable runway to land on. There is no comfortable run way…it is too far for our reach. We lack the thrust to push us there. Now is the time to rely on our past training and get down to basics. Now is not the time to say I do not feel like landing there. It is not the time for feelings. It is not how you feel…..it is the decisions you make and the actions that you take that will result in whether you live or die, whether your business lives or dies.
You are the captain of your business. Now is the time you are called to make the decision and make it fast and make the right decision.
Do you know how cold it was out there, 20 degree air temperature and 32 degree water temperature. What happens when we freeze. We shiver and we cannot communicate. Have you ever eating ice cream too fast? We get a brain freeze.
When we are crashing, we get fearful, we get a brain freeze. Now is the time to work as a team. Now is the time to call on your team members. Now is the time when you need your team players. If 1 of the team had opened the wrong door, no matter how the captain flew that plane, it would not of mattered…they all would of drowned….all…. no matter how you captain your business, if 1 of the teams members mess up, the whole thing could go down. Call on your lenders, Escrow Officers, TC, file auditor, manager, property inspectors, termite inspectors, title reps and to do the right thing.
Do not delay your decisions and actions. If you move too slow, you can stall just like a plane. When a plane stalls, it loses control. That is what happens to us when markets crash. We need to keep enough lift or we lose control. Act upon those things you were taught. Forget about the comfortable landing, it ain’t going to happen.
Now is the time for professionals and good decision makers and great team players….
December the 8th I was in a car accident. It took an hour to get me to a hospital which was less than 1 mile away from the accident scene….It took the emergency services 40 minutes to get 155 flight members to hospital… many great team players made it happen.
The message is Yes you can survive this crash. If you put your mind to it, make the right and fast decisions and work as a team….Yes you can…It is your choice.