Home Price Gains Are Seasonal and Federally Fueled…Bravo Diana!

Once again I want to share these words of wisdom from our friend Diana Glick of CNBC…check this out.

“I’m not a bear, I’m a realist. Let’s get that out first.

Today’s headlines from the folks at S&P/Case Shiller are not untrue, they’re just not the whole picture. Yes, home prices, in most areas (and by no means everywhere) are no longer in freefall. Some local markets have hit bottom, others are falling less precipitously, and still others are showing some strength.

But if we’re going to be forced to spew these national numbers, that the markets seem to crave (for some reason that I generally and specifically don’t understand), then we have to take them with not a grain, but a shaker of salt. The top ten and top twenty market composites that the S&P/CS folks report are off their lows that we saw at the end of 2008 and beginning of 2009. Even the year over year numbers show it.”

Diana goes on to point out…quite intelligently I might add…that the rebounds we are seeing in the real estate markets are results of government intervention, certainly not a bad thing, and most definitely a necessity. But, proper perspective and an understanding of all the facts are key to successful investing.

Read all of Diana Glick’s blog here.

I want to invite my readers to comment back to me…tell me your perspective of this exciting real estate market.

US large-loan bank losses triple to $53 billion

If you have been following our blogs then you probably recall that we have written about the fact that the “next shoe to drop” in our financial crisis will be caused by a collapse (or at least a major decline) in the commercial real estate market.  As financial institutions close and business shrink, the need for office and business space is also shrinking rapidly.  Of course this shrinkage goes hand in hand with rising unemployment which leads to reduced consumer spending and that leads to more retail closures – it’s a vicious cycle!

In support of the belief that our next crash will be commercial real estate, there was an Associated Press article printed in Yahoo Finance last Friday that reported that US large bank loan loses grew from $2.9 billion dollars last year to more than $53 billion this year.  That more then triples the previous record of $19 billion in 2002!

Here is what an analyst for the investment banking firm FBR Capital Markets had to say about this report:  “While we expected a year-over-year increase in problem assets, given the weak economic environment, declining (commercial real estate) values, and previously weak underwriting, we were surprised by the magnitude of the increase.”

We at Market Advisors are continuing to track the current residential foreclosure and REO market and fully expect that we will see a net increase in foreclosures through the first half of 2010.  We also believe that the incredible pressure of adding “large loan” defaults in the commercial arena will just add to the problems for the banks with respect to their over-all “problem assets”.  That should mean more properties for Market Advisors to add to our residential portfolio.

You too can take advantage of this crazy “once-in-a-lifetime” real estate opportunity.  Don’t procrastinate about it too long or…………….!

Paul Davis, Market Advisors

Alt Investing: Putting Your IRA in Real Estate

Excellent article published by Linda Sittenfeld, Senior Producer, for CNBC.com on September 19, 2009. I found this article to have some sage advice for our readers about investing your IRA monies into real estate, or better yet as the article states, into an investment vehicle like Market Advisors Real Estate Fund LP.

The article spells out certain fundamentals and sage advice as to the advantages of putting your retirement dollars to work in an asset class that is easy to understand,such as residential real estate. I especially found the tip on utilizing the ROTH component as a optimum vehicle for best tax advantages as good reading.

CNBC’s article fits well with our “Discover the Solo K broadcast”, featuring Eric Wikstrom of Integrated Wealth Strategies.

Read CNBC’s entire article here.

Ask us how we can help.

Senate Bill Could Weaken the FED

This is an ongoing process and things will change but, hey, I think this is a step in the right direction! You see there are powers that be in our Congress who really believe that the Federal Reserve really has “botched” it with respect to our current economic problems. This could be a good thing and could be one small step toward moving us away from a Central Banking system.

Here’s the opening paragraph of an article by Anne Flaherty, Associated Press, that is reporting on this rather “maverick” action: “WASHINGTON – Consensus is building in the Senate for legislation that would significantly weaken the Federal Reserve by stripping its power to oversee banks and hand that job to a single federal bank regulator”

The article goes on to quote a number of Congressmen as well as Obama staff members, including Timothy Geithner, about the need to reign in the Fed. The actual bill, sponsored by Senate Banking Committee Chairman and Democrat Christopher Dodd, proposes to merge federal prudential oversight into a single regulator. This proposal differs from a plan by President Barack Obama, but Democratic aides say the proposal is gaining traction among Dodd’s colleagues who think the Fed didn’t do enough to prevent the current market crisis.

I for one believe proposals like this are focused on fixing the core problems of our economic crises and aren’t just treating the symptoms. Bravo Senator Dobbs! No one knows what will eventually happen with this bill but even the top Republican on the banking Committee has made no secret of his displeasure with the Federal Reserve. Maybe we’ll actually get consensus here! Check out the article yourself  and see what you think.

Housing Recovery Falters With Waning Govt. Stimulus

Our friend at CNBC, Diana Glick, posted this article on her blog today, and I feel it is important reading for those of you who are active in residential real estate investing. Actually the points being made here by Diana can be applied to all asset classes of investing, including the stock market.

One important aspect of this recession and the “recovery” is that the greatest stimulus is a direct result of government intervention. The “feds” cannot continue stimulus programs indefinitely, and lets face it the budget deficit has exploded to over $1.5 Trillion and counting.

So….how do you ween the economy off of the Government’s “tit”?

I suggest we take serious stock in preparing our portfolios for what may be coming in 2010.

Here is Diana’s blog

Market Advisors Fund Portfolio Value Jumps 25% Since August ‘09

If you have been following our BLOG, or the past 20 issues of our newsletter REO WEEKLY, or tuned into one our WEBCASTS, then you have heard or read repeatedly about our methodology as to how we buy foreclosure properties for our INVESTMENT FUND.

The facts are that our investors have been receiving their monthly cash flow since inception and they are now enjoying a portfolio valuation increase in excess of 25%.

I invite you to read what some of our Investors are saying and inviting you to learn more about MARKET ADVISORS REAL ESTATE FUND LP.

Millions more foreclosures coming & 2 out of 5 working-age Californians jobless

I just spent two action packed days with a group of wonderful people at the PENSCO annual 2-day Symposium in San Francisco.  The theme of this years Symposium – “Stimulate Your Retirement and Rescue Your Savings Now!”  It was a great event with abundant information for everyone’s consumption.  One key piece of information, in particular, that I walked away with was related to our economy, recovery and (you guessed it!) the foreclosure market.  I would say without exception, all of the speakers, sponsors and attendees of this event are of the opinion that we still have a huge foreclosure problem facing us in 2010

Okay, I know you are all saying, Paul when are you going to stop harping about this foreclosure problem!  I’ll be honest with you; if the media and supposed “experts” out there would just be honest with us then I wouldn’t have to keep harping on the issue.  To that end, I came across an article in MSNBC this week that seemed to address the foreclosure problem head on.  The information came out of Reuters and was titled “Treasury: Millions more foreclosures coming – Official says a strong market is crucial for the economy” (check it out here).  The Official they are referring to is Michael Barr the Assistant Secretary of the Treasury for Financial Institutions.

In the article Barr referred to the government’s loan modification program called the Home Affordability Modification Program (HAMP) when he said that “even if HAMP is a total success, we should still expect millions of foreclosures”.  Now that is coming from Treasury itself.  In other words, dig in and brace yourself – we’re still in for a bumpy ride.

Add to that growing unemployment and we still have some work to do before we “bottom out”.  As you also probably know, at Market Advisors we feel strongly that unemployment is a key driver behind foreclosures and until it starts to improve we don’t anticipate a recovery.  As for the current state of unemployment there was an interesting article in the Sacramento Bee this week reporting on a study by a non-profit organization that had some frightening results.

The study by the California Budget Project, a Sacramento-based nonprofit research group, reported that 2 of every 5 Californians of working age are currently out of work.  That is a staggering 40% of the California work-force.  So, who are they including in this incredible number?  Well, they start with those receiving unemployment benefits, add those on welfare, plus those no longer looking for work, add those unwilling to work, and the result is – well, ominous!  Check out the article here and if you want to see that actual report, click here and go right to it.

Challenge: Invest In Social and Environmental Responsibility

I challenge you!…to join me in doing more with your investment dollars.

This is what we are doing:

At Market Advisors we set out to invest in foreclosure homes and put these vacant properties back into service by filling them with families again.  At first we thought we were responsible investors by filling these vacant properties and therefore improving the neighborhood. Really not a very novel idea and certainly at best fundamental to real estate investing.

However,  we at Market Advisors have raised the bar and taken our portfolio strategy to an entirely new level of social and environmental consciousness. We are taking these “dumb” vacant houses and turning them into “smart” model homes for the neighborhoods and communities we are investing in.

How?

Water Conservation… installing water efficient fixtures and re-designing landscape to not only reduce water usage, but significantly eliminate almost 70% of water consumption as compared to a typical home.

Energy Conservation…replacing older windows with new Low E windows, installing new energy efficient appliances, HVAC, and tankless hot water systems, replacing old roofing with efficient designed venting systems, and most importantly, adding solar energy generation to change a “dumb” house into a “smart” house that actually contributes power back to the grid.

Reducing the Carbon Footprint…eliminating emissions from the wood burning fireplace by installing clean burning natural gas and ceramic log system.

All this and more.

I challenge all Investors taking part in this incredible foreclosure market to take this opportunity  to make a difference and take these “dumb” homes and convert them to “smart” homes as examples to the neighborhoods and communities you invest in.

Join Us

Food Stamps Help Cover the Cost of Groceries for 1 in 9 Americans!

As the weeks march on it seems as though there is always important information for us to stay on top of as we progress with building our portfolio of houses.  I guess all of us at Market Advisors need to do our part to keep our followers informed of changes in the economy that can better help them to evaluate what to expect in terms of both short term and long term recovery.

One bit of disturbing news hit the wires this week (Reuters – Sep 3, 2009) that indicates to me that we are still a ways away from starting a genuine “recovery” from this recessionary period.  That news was that the food stamp list soared past 35 million in June and that is a 22% increase over June 2008.  It also represents a new record and this is the seventh straight month that food stamps have set a new record.  Putting this in perspective; now more then one in nine Americans are receiving food stamps!

You might be asking “why do we care!” and that’s a good question.  We care because people don’t go on food stamps unless they are out of work and don’t have any other way to pay for food for their family.  If people were getting new jobs within a few months after being laid off then they wouldn’t go on food stamps.  National unemployment hit a new high in August of 9.7 % and we at Market Advisors don’t believe it will plateau there.

For those of you who have followed our blogs in the past you know that we follow the unemployment numbers because we believe they are a key driver of foreclosures.  Food stamps are part of this overall picture and until we see a turn to the positive of the unemployment numbers and the food stamp numbers we will not see a decline in foreclosures.  Consequently, our investment fund will continue to benefit from low real estate prices for the foreseeable future.  Keep checking in with us as we follow and report on these trends.