August 23, 2008

John Adams July 2008 Atlanta Real Estate Report

Posted in Uncategorized tagged , , , , at 2:21 pm by winterbaserva

John Adams July 2008 Atlanta Real Estate Report
July 28, 2008, 1:15 am

If It Feels Like a Recession, Am I Really In a Recession?
by John Adams
from the Georgia Real Estate Report

It’s all about confidence.

OK, here’s how it works. In the beginning, for whatever reason, consumers don’t feel confident about the economy, so they buy less stuff. Including less houses.

Next, in response to decreased demand, producers lay off people and decrease consumption of raw materials. These unemployed workers have less money to spend, so they buy less and that decreases demand further.

Employed workers become fearful that they might also lose their jobs, so they spend less, decreasing demand.

Investors fear the value of stocks will decrease, so they are less willing to invest in new companies. And the stock market falls overall.

The only problem with this scenario is that unemployment in the US is at an historically low level, around 5% to 6%. So what’s happening?

I am convinced that one of the largest factors striking fear into our hearts is gasoline at $4 per gallon. Never mind the fact that the average American adult only buys around 800 gallons a year, and never mind the fact that gasoline is a relatively small part of most people’s budget.

The fact that we have to stand at the pump and watch that wealth being drained out of our pockets is truly frightening to many people, and it has sucked the confidence out of our economy.

Technically, no, we are not in a recession. We have not even had one, let alone two, consecutive quarters of economic contraction. But is sure feels like it.

The good news is, even if you don’t want to hear it, that the underlying fundamentals of our economy are in pretty good shape. We’ve been through much worse than this before, and no one (except maybe the media) is suggesting that today is the beginning of the end for America.

This is a time when there will be extraordinary opportunities for those who can calm themselves and look for bargains. When Macy’s has a big sale, we go stand in line to buy things. But when the real estate market goes on sale, we moan and groan about how awful things are and sit on our hands hoping for the next big thing to happen.

Those of us who have been in the real estate business for more than a few years have seen all this before. This happened in the 80’s and it happened in the 90’s. And it’s happening again right now. And the outcome will be the same.

In a year or two, we will all be looking back at the summer of 2008 saying that we really should have taken advantage of the weak market when we had the chance.

One of the best opportunities to come before real estate investors, especially in Georgia, is the current flood of homes that have been taken back by banks and mortgage lenders as REO properties.

As we recently saw with IndyMac Bank, when a lending institution makes too many bad loans and has to foreclose on a large number of properties, it can affect the safety and soundness of the institution. To avoid that happening, the lender needs to sell these foreclosed properties, even if they have to sell at a significant loss.

That’s where you and I come in.

Today’s smart real estate investor is searching for quality houses in decent neighborhoods that can be purchased for fifty cents on the dollar or less. And can be counted on to produce a steady stream of rental income for years to come.

The most important thing to remember is that regardless of what happens, people sill must have a place to live. And economists have projected that the metro Atlanta area will be home to an additional three million residents over the next twenty years.

If you can buy clean, decent, affordable housing today at fire sale prices from lenders who must sell regardless of the price, you are creating for yourself a solid foundation for future real estate wealth.

This is exactly the topic we will be examining in detail this weekend on the John Adams Radio Show, Saturday at NOON and Sunday morning at 11 am. Please tune in both shows at 920am WGKA, and call the show at 770-226-0920 or toll free at 1-888-920-2665. You can also hear the show LIVE both days by visiting and clicking on LISTEN LIVE.

I am not suggesting that you quit your day job. Nor am I suggesting you buy a hundred houses between now and Christmas.

But I am suggesting that you consider adding one or two well selected houses to your portfolio between now and the end of the year, and that you lock in long term low interest rate financing that will reward you both now and for years to come.

I challenge you to consider your confidence level. If you are confident in America’s ability to recover as we always have, and you are confident in yourself, now is the time to examine the remarkable buying opportunity that exists today in foreclosed real estate. Yours for Financial Freedom,

John Adams