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March 29th, 2008

Recession Mongering – are we creating it?

I’ve been talking about this on & off over the past several months – the media’s fascination with bad news and making it sound like the bottom has fallen out of the housing market, and now the ecomomy in general. No doubt there is a lot of anxiety and uncertainity about the economy, the hjousing market, unemployment, etc, etc…and some parts of the country have been hard hit in multiple sectors. As quoted in the linked article,

“We’re over-reacting to the recession word,” Dow Chemical Chairman and CEO Andrew Liveris told CNBC. “Lots of people get together and talk to each other and people believe the psychology.”

“It feeds on itself,” says Jim Awad, chairman of JW Stewart Asset Management. “You can’t go home every night and hear this and then go out and hire someone or buy a car.”

“The economy is still sorting itself through,” Liveris told CNBC. “I wouldn’t do the ‘Chicken Little’ thing.”

As I discuss with my real estate clients, we might be bordering on some challenging times, but I also think there are some great signs for a turnaround, or at least a stabilization. Interest rates are low, housing prices in Chicago are stable to decreasing and there are a lot of people looking to buy a home.

Even the federal government is involved in trying to provide some help and relief. The Hope Now proposal is a work in progress that might help. Here’s how it would work:Under this proposal, the government would allocate as much as $20 billion up front. It would use those funds to buy up mortgages from investors in a reverse-auction process, at prices below the face value of the loans. In a reverse auction, sellers compete against one another, slashing prices until a buyer – in this case the government – says yes to a deal. Toread the full story, click here

 On this front, I’m curious, what do you think about the subprime debacle. Post your comments whether you’re for or against federal intervention and to what extent.

I look forward to seeing the responses… 

March 21st, 2008

Privatizing profits…what a concept!

I, along with I’m sure many of you, am very frustrated with the current economy and lending issues. In Chicago, real estate taxes have gone up to keep the city building & growing. The sales tax was increased, again to keep the city building and growing. The city transfer tax on the puschase of real estate was increased to fund the CTA pensions, who is paying this last increase is yet to be determined. How far can a dollar stretch?

Now, with the failing of Bear Stearns (which has been wrestling with this problem for some time), we as a society are bailing them out. Are they failing due to greed?, bad judgement?, bad timing?, or poor management? I’m sure their failure would have a substantial domino affect on many other companies in many industries, but isn’t that the risk/reward of free enterprise?  It seems that financial institutions are able to do business in a no risk envirnoment!

The Fed is trying to help by cutting the rates, but so far it has helped the banks make investment purchases to help shore up their bottm line - important in the scheme of things. Eventually, I suppose, those lower interest rates will trickle over to the consumer that is on the verge of a short sale or foreclosure on their home.

I am hopeful that our government will come up with some plans that will actually help those individual homeowners in their time of need. There are real estate investors and second home owners that have found that their decisions may not have been so sound. As difficult as it may be, I hope the consumer bailout will be able to weed out the investor/second home owner and focus on those whose primary dwelling is at risk.

I suppose my hopes are a little too idealistic, but isn’t that where it starts…?

March 11th, 2008

Proposed Retail tax increase

I thought this was already a done deal, but maybe this will help. It will take effect in November. Call the number below and voice your opinion…are you for or against the proposed new retail tax hike. Whether you live here or enjoy visiting, this will have an impact on your enjoyment of the city, but it will affect the retailers as well. 

CALL 1-312 -603-6400.  press1, then 2, then 2.   It only took about 15 SECONDS to punch in my vote. Who wants to pay 10.25% SALES TAX?  The county is planning the increase for November.  This will have a negative effect on the lives of consumers in Illinois and, obviously, on retail businesses as this will make ours the highest sales tax rate in the country.  Please call- and forward this to your friends. 

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