It seems every news report I watch on TV, hear on NPR or read on-line conflicts with the one before. Last night I was listening to a report that said a survey of the nations economists expected our GDP to be revised upward (as in our economic growth was better than expected) while a survey of everyday folks like you and me felt the numbers would be revised downward. I recently heard an economist representing a large bank stating we were not in a recession and we were not headed for a a recession. Then the next day Fed Chief Bernanke says it looks like we are most certainly headed into a recession. Then this morning I see Bernanke is predicting certain failure for some banks before this economic "lull" (my word not his) is over. Well, shock and awe and bake me a biscuit.
What I hate about economic news is it hardly matches what is going on locally. You know how USA Today has the nations weather each day? It is a good general guide..."cold in the north and hot in the south", but it does not say much about where you are or I am does it? Well I am not an economist so I do not pretend to know what is going on nationally. From where I am sitting things look bad and they are going to get worse before they get better. Let me narrow that down a bit for you. Here in SW Florida we have about 1000 foreclosures on the books with another 10,000 or so in the pipeline ready to hit the market by August. Miami has a 39 months supply of condos listed with another 19,000 to be completed and added to the saturated market this year!! So things are going to get worse before they get better. How much worse and for how long? I don't believe in silver bullets or magic cures but as bad as things are in the economy and real estate market they will get better, they always do. On the bright side, this is a fantastic time to buy that second home you always wanted (assuming you still have that job you have always wanted to quit).Instead of trying to predict a date or number of months when thing will turn around lets focus on what has to happen to bring about a change economically both locally (where ever you are) and nationally. First, many, many people have to look at real estate prices and go "wow, I better buy now while the selection is good and prices are low". Next, people have to feel good about where they are going in life. Listen to your friends and try to figure out how they feel about their future. As people feel better, they will begin to spend and invest again. This will lead to growth and consumption. This will spur a slight increase in demand for housing. Eventually the supply will be short and new homes will have to be built. I know I am not going to win a Nobel Prize for that logic but I like it better than a random date in the future based upon some absurd calculation. My investor (stocks and real estate) friends tell me a bottom is near after multiple waves of drastic price cutting has happened (the consensus is 3 waves of said discounting) and sales prices are a lot less than replacement costs. I am not even sure if we are through the first wave yet. Prices still seem to be too high, that is, higher than replacement costs. With that said, often the proverbial baby is thrown out with the bathwater and great "too good to be true" deals arrive on the market out of fear or some other need for immediate liquidation. It takes guts but these are the gems that must be mined in turbulent times. I hope for the best for our country and my local communtiy. As of now I am planning for the worst and keeping my eyes peeled for that gem deal that got thrown out with the trash