Text Box: Ask Dr. Christopher


Text Box: Opinion
Text Box: www.AskDrChristopher.com & Dr. Christopher’s Publishing Copyright © 2008 All Rights Reserved.


Text Box: Recovery is 
for everyone

Life after Money

Part II

Real Estate & Economics

Text Box: Opinion
Text Box: Opinion
Text Box: Opinion
Text Box: Opinion
Text Box: Opinion
Text Box: Opinion


Princess Diana

“In Canada speeding over 200mph is considered stunt driving with accommodating fines”

II. Real Estate

Mimicking a Catastrophe  @ Taco Bell!

89 cents is the new cost of an inside deal. At least that’s what we recently learned from Taco Bell. In their commercial and variations thereof a young man approaches the order taker/cashier who politely says: “May I take your order” He asks for “Denise” The cashier responds that “Denise” is in the back and she again asks: “May I take your order” He states: “I would be more comfortable with Denise.” The rebuffed cashier turns to one side and retreats to the back of the kitchen to seek Denise who hesitantly approaches the counter with a perplexed look. The young man says “Do you remember me? I was in here last week and ordered the five layer burrito” to which she smiles and says “eighty nine cents!” He jumps for joy as the commentator states: “Now everyone can get an inside deal”: The ridicule by imitation is complete. We only wonder how many takes were required for “Denise” our rising starlet to utter her single three word line.

A local restaurant next to a branch of Bank of America and recipient of federal bailout monies recently displayed a full length banner on the front of their building: “Bailout Special: $9.99” We tried it one Saturday evening after church and it consisted of several variations of either three wafer thin pork chops or five fried shrimp each with vegetable and house bread the clincher though was the salad bar which was fresh and delightful although not stocked with the variety of offerings of a choice buffet. The irony not lost on small businesses struggling to survive.


The Late Great Real Estate Orgy!

We witnessed through reality television the mayhem where upon the opening of the market, the brides to be and their entourages charged forward seeking the best gown for around $200.00+. Their loyal followers guarded racks of immaculate dresses and if over run by others grabbed and held back a few gowns for the boss. Eventually with the huge surplus offered in the store as indicated by overhead scanning an isolated camera captures one prized gown reduced to rope strand in a tug of war as two women tussle and fall to the floor to claim it for that special day; and who can forget the images of crowds stampeding into their local Wal-Mart for the chance to pick up a free or hundred dollar television and in at least one case trampling an employee to death.

 The perfect buyer’s storm was realized in the national residential real estate market just after the turn into the first decade of this century. What was not to like as sound bites emitted from Congress that everyone should own a home the great rhetorical inflationary rendition of previous administrations when we remember reading in our history books the campaign for Presidency of Herbert Hoover promoted “a chicken in every pot and a car in every garage. [29] The year of course was 1928. The modern mantra eerily similar to the previous promise the ensuing suffering and displacement of our grandparents, this time though staked on the premise that everyone and we mean everyone should own a home.  Alan Greenspan presided during an extended period of cheap money accompanied by escalating {inflationary} home values and sought to distance his culpability in “Irrational Exuberance” his coinage of the excesses of the stock market in a speech during the 1990’s [62] ;The phrase also the title of a book by one of our favorite economists Robert J. Shiller [61].

Applicants qualified for 100% mortgages with no income or employment verification commonly referred to as liar loans; no down payment required all at historically low rates of interest and did we mention cheap money.  Speculators many of whom were employed in the real estate business snapped up homes far and wide almost all on artificially low interest or adjustable rate mortgages {ARM} with rates set to escalate rapidly in a few years or 30-year notes to reduce their monthly payment by a couple hundred dollars even though the cost to retire the debt might exceed two and one half times the value of the original loan; but not to worry as the popular consensus was to turn and burn or “flip” the homes in as little as thirty days so as to minimize the use of any speculator cash. What was not to like? Buy a home for FREE and flip the house quickly, rake in huge profits and move on to the next contract. We are quite certain that in the quiet stillness of the night visions of sugarplums and untold riches paralleled REM sleep the repetitive dream cycles of the masses. We doubt if anyone except the most disciplined players developed an exit strategy in the event of a decline in this mirage of prosperity. Rather the theme was to acquire more and more properties loading one’s personal balance sheets with so much leverage that any hiccup or pause in the housing market would insure ruination. It did and now with an average of 300,000 new foreclosures per month the misery of this man made theme that everyone should own a home has backfired so badly that the U.S. economy is listing as a result.

Will Healthcare follow Housing into the sewer?

 Mr. President when the perception that real estate was FREE people behaved very badly; what will they do when offered FREE health care?  We can’t save everyone or we will all suffer. Only those that seek the lord will find him. If Almighty God provided us with free will to do as we please should we impose our will on others if we believe it will benefit people who through choice or circumstance make personal decisions not to prioritize owning a personal healthcare policy?  What if we offered them a cash buyout instead to not enroll? 30,000,000 uninsured persons x 1,000.00 equals: $30,000,000,000 or $30b. Every beneficiary could receive an annual stipend per year they remain healthy and don’t access the system or pay with their own cash. At the ten year anniversary they receive a credit in their social security retirement account, if we must pay, let’s reward people for remaining healthy not getting sick.

Is: “Now’s a Great Time to Buy”

The Chant of a Real Estate Cult?

We lifted the following statement from an article regarding the Nation Association of Real Estate Agents: “We remain steadfast in our assertion that real estate is a great business and yes indeed it is a great time to buy. We also remain bullish in our outlook on real estate as an investment. We even believe that with interest rates being so low, that buyer opportunities have never been better.” [1]

Other experts aren’t so sure. Picking bottoms or tops in the stock market can render lethal results to a portfolio especially for retail investors. One real estate expert on television stated that people purchasing homes at what they believe is the bottom of the market are almost always wrong; we sold our home in one day in October of 2007 by pricing it $40,000.00 under market. We paid off the mortgage a second and walked with six figures+. Although my wife wanted to vacate Las Vegas, we opted instead to rent an Executive Home in the Northwest Valley in a sleepy little enclave called Steeple Chase.

My wife left for a church sponsored pilgrimage to Europe a few days later and I completed the move. Upon her return and at my insistence our realtor arrived to show us the home next door. We chatted on the front porch and she informed us the asking price was $999,000.00 but they would probably take $919,000.00 as the current homeowner was unable to afford the payments. We declined with a warning to our gracious agent that she should abstain from adding any more properties to her own portfolio even if she could justify the rental income as we believed the market would continue to correct to the downside. She asked me if I read Barron’s I replied “No” and she departed.

We wanted to view the home for sale as we felt someone was watching us from inside. The alarm was tripped on two occasions prompting a Police response. We thought that maybe a homeless real estate agent with the key codes was living therein. When we toured the home we felt like someone was peering at us from some hidden vantage point.

In July of 2008 we received a phone call from Paula our landlord who informed us that she was declaring bankruptcy and on the advice of her attorney would no longer accept our rent payments. We mailed the July rent anyway via certified mail and she sent it back. Thirty days later we mailed the August rent and she refused to accept it and it too was returned. We informed our sole remaining roommate that he should probably consider other living arrangements; he complied and vacated the premise. By October we were living month to month awaiting a knock on the door after exhausting all attempts to communicate directly with Paula’s bank even though we contacted Ken Lewis then CEO of Bank of America directly and was referred by his office to Countrywide the new affiliate of Bank of America their big brother and savior too!

Around Thanksgiving of 2008 an affluent couple, he an Anesthesiologist and she an Endocrinologist purchased the home next door. We learned that they paid $620,000.00. The knock on our door did not arrive until May of 2009. We learned that the new owners of our residence purchased “blocks of homes” at a time and they paid $320,000.00 for the home we were renting or a three hundred thousand {$300,000.00} differential to what the doctors next door paid six months earlier.

We departed and they sold our rental for $420,000 later in the summer of 2009. A few weeks ago we checked an online real estate site and the home is now estimated to be worth $240,000.00. So the new owners of our previous rental took a bath for $180,000.00 in less than six months. The doctors next door fared even worse losing approx $300,000.00 of vaporized equity in one year. For each of these families and neighbors now was probably not a good time to buy! We listened to Peter Schiff regarding renting versus buying and had saved over $30,000.00 by living rent free until the cows came home; the negative equity of the previous busted owner Paula eaten by third parties and the bank.

B Timing the Real Market is like catching a falling Anvil!

Many references to the Coyote and Roadrunner Cartoon themes have been making their way across the television air waves in recital commentary and even in the halls of congress. We can think of none better than when an anvil falls out of the sky into the hands of the Coyote or worse on his head. The rock ledge he was standing on gives way under the enormous weight and whoosh he disappears a vapor trail the only remnant of his existence. The next view is of his descent down a deep grand canyon like ravine until many miles below a thin wisp of smoke indicates his arrival and subsequent impact at rock bottom. Again we must reference several prominent real estate economists stating that when the general public shops for real estate thinking that “now is a good time to buy” as the market is at or near a bottom they are almost always wrong.

It's always possible that Americans are right, that we've passed the bottom and are on the way up.  If so, however, this would mean remarkable fore sight on the part of the average buyer. Around major changes in market direction (the peak of the housing bubble, for example), there is widespread agreement about what future prices will do--and this consensus is usually 100% wrong. If the consensus is right this time that we've just passed the bottom, therefore, it will be because the average American has suddenly gotten a lot smarter that usual about what the future holds.” [5]

We learned about attempting to time the market from wall street when we bought stock in {WNR} Western Refining at $13.29 and continued accumulating while the stock turned lower, making a final purchase at $9.81 on April 24, 2008. What could go wrong with a refinery of gasoline right? We closed the position on May 13, 2008 liquidating almost the entire portfolio at $7.85. On January 29, 2010 the stock closed at $4.57.  With stocks one can simply push a button and the suffering goes away. With real estate the pain may remain for many years and unlike stock purchases real estate requires as much tender loving care in the form of time and money as a high maintenance relationship.  The typical homeowner may endure an extended losing streak with their home as an “investment” requiring continuous cash infusions while hemorrhaging equity.

         Life After Money Real Estates Economics:


           1   2   3   4   5   6   7   8   9   10   11   12


                                Next Page

 Bon Jovi

 The Circle



Page 1 {2011.04.11 – 2013.12.02}