More than”Survival”. Why you need to get ahead of what is Coming!

Morning Folks!!


I live in a town of about 80,000 where there are 20 homes on the market between $10 Million and $25 million. There are also 70 homes between $5M and $10M. Then from $2.5 Million to $5 Million there are another 125 homes. Finally between $1 Million and $2.5 Million there are another 460. It’s even worse than that. Under $1 million has just under 4000 listings.


Yesterday I drove down every street in the city in the primmest of areas. I saw things that I really don’t like. I saw a number of homes in addition to the above that were just vacant and not maintained. Obviously bank owned. No for sale sign either. Dozens and dozens of them. What I saw that disturbed me even more was the observation that in an area where folks really maintain their lawns and plants and trees, they were no longer paying their gardners. It was quite obvious in many homes and many of these are not on the market. YET!
I was truly stunned to see what I saw.


You all know what I have been talking about for the past 18 months or so but this even put me back on my heels. This is disturbing. This is the beginnings of a possible catastrophe.
What is coming in the housing market will affect EVERY homeowner in the country. The market is about to take a plunge the likes of which we have never seen and it will take the GOOD stuff with it.


What is coming will undercut the market in a way nobody has imagined. I am sorry my friends, even your homes are likely to suffer in a way you may not see coming. How much could your home go down? Well that depends. Let’s say you and your neighbor both bought a home worth $750k 3 years ago. Let’s say the bank foreclosed on your neighbor. The banks job is to dump that property asap and get that liability off the books. They really don’t care what they are going to leave behind because it is about to spin out of control regardless. So the house next door that you owe $700k on sells for $350k. What is the value of the home you owe $700k on? Or even $600k? Or $500k. Many will just walk away refusing to throw good money after bad. That will undercut the market even further and the $350k becomes a HIGH WATER mark, not a low water mark. So prices continue to go down.


This all creates further problems that begin to compound themselves as tax collections go way down and then services go with it.
Like I have said for a while, there is this small window of opportunity before the collapse, meltdown and the catastrophe’s that I believe will follow. That window appears to be getting shorter and smaller.


When you filter out the noise and listen to the business people on the front lines with no political agenda, there is no question things are about to get dire. So they can say all day long that the recession is over. I think it is nonsense. If you are in the desert with no water and some schmuck declares the drought over before giving you water to drink, what would you call it?


The numbers prove they are wrong. The numbers prove real pain is coming. The numbers prove that it may be a very long time before we rebound from all this. The numbers don’t lie. Corrupt bean counters do. Stockbrokers do. Bankers do. Everyone with an agenda lies. Numbers have no agenda. They just paint the most VIVID picture and in this case few really want to deal with the reality about to come. They don't do it now and they did not do it last summer. I DID!


If you want to know how this will affect the domain industry, then you can read my interview at DNJournal.com. Not for the faint of heart. I tell it the way I see it.


Have a GREAT Day!


Rick Schwartz




22 thoughts on “More than”Survival”. Why you need to get ahead of what is Coming!

  1. Greg Slaughterbeck

    This hits very close to home for me because I have been inside many bank owned houses immediately after the bank takes control of them. The company that I work for flips houses and also does trash-out work for the banks. I have seen the family pictures left in albums in the garage, the furniture abandoned and childrens’ toys left in bedroom closets. Not because they were evicted in a day but because they had no where to take the items once that had no home. It is very sad to go into some of these homes and see the growth charts of the children in the garage and I have to wonder how dad feels telling the children that they will no longer be living in that home. As for me, I feel for the people that lost their homes but I guess that I work in the right industry at the right time because my business is exploding.

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  2. Tim Davids

    Rick, your looking at the high end only and also you happen to be in an area that was overbuilt before the economy went south.
    I happen to be in real estate school right now in the Chicago area. Yes the highest priced homes are down but the starter/lower priced end of the market is fine. A woman in my class works for a mortgage co. Yes they are forclosing several homes per week but investors buy them up. Homes in the city that will be my sales area are down about 20 percent…they are selling at a decent rate at that price though.
    The overbuilt areas of the country are hurting the most but they should be…greed was driving much of the Florida market to those prices in the first place.

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  3. Tim Davids

    dnclips…good question. Year over year comps for stores is a good one…once those start climbing up it means layoffs will be slowing or stopping. It also means people that were MOT spending are feeling confident enough to buy.
    Example…Starbucks announced about a month ago they will leave open 30-40 stores that were going to be closed due to sales picking up at those stores.

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  4. Rahul

    Not in NYC. Multiple bids on any faily priced property time and again (-10-15% off highs). People are using their replinished stock portfolios to buy homes. Stock are nearly back to where they were pre-Lehman.
    Will it all come crashing down? It should but it won’t.

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  5. UFO

    The DOW is nearly 10,000 were I said it would be by year end back in June/July when it was 8,300.
    We are looking at a 2 speed economy, with the unskilled looking at long run under employment. Obama lama ding dong ;) needs to stop all the offshoring (and actually legislate to bring it back) until the rest of the world equalises its trade position with the US.

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  6. Kevin

    You can forget real estate as a great investment vehicle now. Those days are done. It’s just a home and a place to live like it always should have been instead of the speculation game tens of millions of real estate investors turned residential real estate into artificially.
    It became a ponzi scheme. And it got now what was deserved like all ponzi schemes, collapse. A few who saw the bogus bubble about to burst got out the exit just in the nick of time with oodles of profits, but most people who weren’t even playing the game got burned and burned for good on their property.
    Anyways, I’m more worried about the banks than real estate. I read a report over the weekend in the New York Times that the FDIC is estimating at least 1,000 of the 8,000 banks in the US are going to fail over the next 24 months. That’s 1 out of every 8 banks tanking. The US banking system has $13 Trillion. Do the math and you’ll see there is no way in hell the FDIC is going to be able to cover all those depositors. They’ve only got around $25 Billion in the fund now.
    When gold was in the $300 range I preached like crazy to buy all you can. Now you can see why. The dollar is collapsing just like real estate. Next will be the banks.
    The unemployment rate in urban cities for minority youth is over 50% out of work. For young people of all races it’s 25% unemployed. Some cities are over 20% out of work already. You can’t sustain an economy like this with so many people not earning money. It becomes a domino effect.
    Whatever you do don’t keep all your money in one bank and diversify between large and small banks as well as geographically. Although the FDIC has a $500 emergency credit line with the Fed if all hell ever breaks loose, they will be overwhelmed and it could take months for people to get access to their money again.
    I would strongly recommend gold still, plus collectibles, plus quality domians and online businesses as the safest place to be with your money. Even if real estate stabilizes soon, you will never see that rampant appreciation like in the past. Most consumers now have wrecked credit, minimal cash on hand, a home that is upside down, so there is not enough money nor credit out there to rebuild the real estate market.
    Also, watch out next for the commercial real estate market to dive and the trillions in loans that will be uncollectable soon.

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  7. none

    The gov counterfeited money and gave it to their friends for decades. The ponzi scheme is over and we are left with a giant blackhole vortex. Now, they are counterfeiting more money and giving it to their friends in the name of filling that vortex which is making things worse..biggest theft in the history of earth. The dollar devaluation is underway.

    Reply
  8. Dave Wrixon aka Rubber Duck

    Otherwise, the key to your salvation would seem to be to predict which bubble Bernanke will attempt to create next to compensate for the implosion of the last one. He is increasingly looking like Custer at Little Big Horn.

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  9. Jenny

    Off course the main problem with this is the 4 million IT jobs we have lost to the H1-B and L-1 visa programs. Write your congressperson. It’s not only high tech jobs, I downloaded and cut and pasted some of the desciptions here: BUSINESS ANALYST, ASSISTANT PROFESSOR, OCCUPATIONAL THERAPIST, CIVIL ENGINEER, MATH TEACHER, ACCOUNTANT, MINING ENGINEER II, ASSOCIATE CHIROPRACTOR, SYSTEMS ANALYST, MECHANICAL ENGINEER, DOCTOR, PROGRAMMER ANALYST II, ARCHITECT, QA ANALYST, CATERING SERVICES MANAGER, SENIOR TAX ACCOUNTANT, INTERIOR DESIGNER, MIDDLE SCHOOL TEACHER, MEDICAL TECHNOLOGIST, SENIOR CHEMIST, WELLNESS COORDINATOR, MARINE ENGINEER, KINDERGARTEN TEACHER, HEAD LIBRARIAN, ACUPUNCTURIST, PHARMACIST, FINE ARTIST, WEB DEVELOPER, CLOTH DESIGNER, CONTROLLER, GRAPHIC DESIGNER (ANIMATOR) … Microsoft got many thousands in 2008, here’s a link to see the jobs that we lost http://www.flcdatacenter.com/CaseH1B.aspx

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  10. BullS

    Personally, everything and anything the govt do is a scam and what you read on those websites are full of BS just like my site says
    BullShitWebsites dot com- websites like humans, they provide BS info and always trying to sell you something that you don’t need!

    Reply
  11. Sc

    Anybody that does not believe dramatic change is on the way should listen to Bob Dylan sing”The Times They are a Changing” until they get it.
    Good article and TRAFFIC theme.

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  12. Sc

    P.S. Rick, do any of those $1-5 million houses have a boat dock for a 50′ boat and a decent view? I don’t mind getting a fixer upper.

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  13. william

    Hi Folks we can help each other the internet revenue could save many from BK> we at williamblairpinc have another source of generating revenues. Control your own cash parking and more!! Keep all your revenues!!.Thoughts, WilliamH

    Reply
  14. jefferson city chiropractor

    The company that I work for flips houses and also does trash-out work for the banks. I have seen the family pictures left in albums in the garage, the furniture abandoned and childrens’ toys left in bedroom closets.

    Reply

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