Land of the Free



Everyone is concerned if we have hit the bottom of the housing market. They have become so obsessed with their home value and the marketplace they have lost sight of what is best for them, their family, and the country.

Since the real estate market crashed we have experienced an increase of sales in the residential real estate industry in the past couple years. However, as you may already know this increase was artificially inflated due to the government incentivizing consumers with an $8,000 housing credit. Nonetheless, the majority of what a consumer read in newspapers, watched on TV, and heard from Wall Street speculators was we have hit the bottom and are headed towards a recovery.

It would be unfair to say all newspapers, television stations, and speculators were saying this was true, but the majorities were trying to be positive about the country’s economic situation.
Whether you agree or disagree if the country is/was recovering; the country’s stock and real estate market were improving. On the surface it appeared the housing tax credit did stimulate home sales. That was until earlier this month. In early August the National Association of Realtors stated homes sales for July declined by 27%. This is the largest decrease in over 15 years.

While it seems that is a large decline some analysts believe the 27% is a skewed percentage. Their belief is if the housing credit never existed home sales would have just kept declining slowly over a period of time at a steady rate, thus the large decline would have never happened.

At Mortgage Foreclosure Report we believe the following:
1. The housing tax credit did stimulate the housing market
2. A massive decline was bound to occur after the housing credit expired
3. The 27% is inflated. We agree with the analysts from the note above.

What does all of this mean? To us it does not mean much except the country is in a state of flux and that our markets are driven by what people hear and believe. When we review our countries history and decipher when we were the most successful we decided it was when we produced goods the rest of the world needed. However, over the past several decades we have become a country of consumers and minimal producers. Our belief is the country has become about big business. From our point of view there is nothing wrong with that except these companies are under pressure to turn a profit and have to make their stock values high. Additionally, in our eyes what made this country strong, besides producing goods, was when the small entrepreneur set out to start his/her company. Nevertheless, big corporations have been structured to hit certain profits every quarter and are incentivized through bonuses. Therefore, their main objective is to what is best for the company. Thus, to be a big corporation and to be competitive in the US outsourcing has become an integral part of doing business. Outsourcing, while understandable and smart for a corporation, leads less production in the country which then leads to fewer jobs which then leads to a slowly declining economy. Please do not misunderstand what we are saying in this article. We are for capitalism and free markets, however, at some point as a nation we have to look at what our major companies are doing inside the US and ask how we can fix the declining economy. Yes, it is not a simple answer and yes the markets are more global then they have ever been. But at what point do we say stop. Currently our country is suffering and everyone’s money is tied up in a market place in companies and portfolios we do not understand. So everyone (we do to at MFR) diversifies. So at what point do we say stop. Stop the outsourcing, stop the greed, and stop the investments in derivates and other financial models almost no one understands. When do we stop? Our country is looking for an answer to solve the crisis at hand and the only thing our great nation can come up with is to spend. Spend our way out of it. I say we have to be innovative and produce. I do not know what to produce but produce. Then we can find a healthy balance between production and consumption.

Sorry for the rant, let us digress. We have become a nation of consumers so we are trying to develop methods of how to get out of this recession, double dip recession, depression, or whatever you want to name it. The way consumers get out of recession is to consume. The method results in us having to spend money, however, if you are unemployed or just spending money on necessities then consumption almost becomes nil..

What does this mean to you? In our opinion many people have become tight with their money because they are frightened. This is natural; however, holding onto your money does not help the country either. Spending helps your local marketplace. We believe for the individual/consumer they have to look at their situation and decide on what are smart purchases for you and your family. If you have lost your job then buying a 60 inch plasma television is probably not a smart decision. It probably makes more sense to buy groceries or pay the electrical bill. However, if you are comfortable in your state of life then maybe buying the television is the smart decision.

Therefore, paying attention to speculators, news reporters, and other media outlets is not a reliable way to make your life decisions. Listen to whether the market is up or down or whether the housing industry is up or down does not affect your current situation. It may affect your long-term investments and it may have had an impact on your retirement. However, unless you are willing to stand on the pulpit and preach you have to make smart decisions for you and your family.

Back to the original point of this blog post, how does the decline in the month of July affect a current homeowner struggling to pay their mortgage? It may affect their home value, it may decrease their property taxes, and it may cause markets to decline. However, it does not help the homeowner struggling to pay their mortgage on a month-to-month basis. Do not pay attention to the news all the time. It is good to know where the country stand as a whole, but the banks and government aren’t able to help millions of people out there who have lost their job or are losing their home. You have to look out for your best interest. Sometimes it means lawyering up and foreclosing on your home (i.e. deed in lieu of foreclosure) and sometimes it means getting advice for people who want to help you. Lawyers have a firm understanding what is going on in this market. While yes they are taking advantage of the current times and are prospering off of it. It is in their best interest to help you.

To sum up this crazy article, do what is best for you. Do not listen to all the junk out there because it can consume you. Do not be afraid to ask for help from professionals. You are not alone many people are feeling the heat of the recession. Things will not change till we all stand as one and force change. However, until that opportunity is upon us you have to do what is best for you and your family. Remember you can start change tomorrow. Each one of us has to change ourselves before we can expect others to change around us and there are always opportunities to prosper even in hard times. Just keep working hard and stay the course that best fits you.

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