Permafrost Economy

Things are finally thawing out weather-wise. Now it just remains to be seen whether we will see a real thaw in the economy as it relates to job growth. This week will add more data to be digested.

Personally, I would like to clone myself to be able to work 24/7/365. That’s about what it takes these days to keep economic frostbite at bay.

Conditions in the Florida Real Estate “Market”

There are so many different opinions about the state of the real estate market. You know what they say about opinions. Everybody’s got one. There is so much subterfuge by so many people in positions of authority that it is very discouraging when you do not have the experience or expertise to get something done in the real estate market. Try to choose the most reputable sources when forming your own opinions. You want to be able to make an informed decision when you have to.

My opinion on this market is that it should not be considered a market. A market is driven by ready, willing & able buyers & sellers. Not the feds, big banks & Wall Street (even if they are ready, willing & able.) They are not really paying attention to the main street market. Does that mean that you may want to take what these sources are saying seriously or skeptically? Decide for yourself. Right now the big players are “making the market” – if you can call it that. The red-tape is the problem now for smaller, independent investors who do not have staffs of lawyers, accountants & analysts.

Florida was just recovering from nasty hurricane damages in my market area when the financial markets infiltrated & infected the lending business for real estate. We are still living with those consequences, as well as the consequences from an all-too-predictable over-reaction by government.

Florida is slowly & unevenly recovering from the “recession” which officially ended about 5 years ago. We still have not recovered all the information, manufacturing & construction jobs we had before the recession. Trade, transportation & utility jobs are the state’s largest employment sector.

In January, 2014, MGIC’s Economic & Housing Indicators, National Overview for the U.S. “Observations: The U.S. Economy continued to grow at a subpar pace. Even though corporate profit margins improved, both businesses and consumers remain cautious. Looking forward, conditions appear to be right for stronger economic growth in 2014. To start with, the U.S. is on track to add nearly 2.2 million jobs in 2013, as the jobless rate declines. The bipartisan budget agreement may bring more stability, as well as reduce risk of further sequestration. There is a renewed outlook for housing as foreclosure activity fell 24%, existing home sales are up and property values appreciated 4%. First-time and trade-up homebuyers must fill the void left by fewer investor purchases.”

“Housing Market Condition:

Current      STABLE

Short-Term Projection      NO CHANGE”


Current     STABLE

Short-Term Projection     NO CHANGE



Current     SOFT

Short-Term Projection      IMPROVING


Current      SOFT

Short-Term Projection     IMPROVING


Current     SOFT

Short-Term Projection     IMPROVING

(These are Metropolitan Statistical Areas)


Federal Interloping

One must be aware of all the relationships among the US Treasury, the GSEs & the Federal Reserve Bank. Due to the recent changes placing additional charges on borrowers in the residential real estate market for those in judicial foreclosure states does this imply an unequal treatment under the law? Does being a GSE or a congressionally created entity give immunity? This is your government competing with private business on an unequal playing field. Are private businesses (lenders) being held to a different standard?

New Year – New Market

We are currently experiencing major disruptions in all things real estate related, nationally as well as in both Florida & Arizona as we begin 2013. (And more of the same in 2014.) It remains to be seen whether the government’s legislative & executive branch actions taken over the past 5 years will produce different results or more of the same resulting in a lingering malaise. The interactions between laws, regulations & reality in banking, finance & real estate are increasingly looking to me like re-arranging the chairs. It’s work for somebody. But it makes my work increasingly difficult (as other small business people can relate) as a result of not wanting to spend entire days doing nothing but busy work. At some point, real work must be done. That means bringing more chairs (small businesses) into the game. Those who think that everything in life is of a finite amount (as in zero sum game) will continue to rearrange the chairs with no understanding of why things are not changing for the better fast enough.

If you’re into economics, I would recommend George Gilder’s book, POWER & KNOWLEDGE. It’s the explanation that people can feel but can’t put into words. Here they are. I’d recommend that every person running for public office read this book. By the way, I think we are getting more of a “lingering malaise.”