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Economic Lessons of the Home Market, and Why Pessimism Seems Right

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About mid-year 2010 I began thinking about how much I was paying for office space compared to the utility I was getting for my money. Spending only two to three days a week in the office and working from home the rest of the time, it seemed time to reevaluate. Fortunately, in August, we bought a beautiful home which has plenty of room to accommodate a home office. Actually, it has over 5,000 square feet of living area, is only five years old, and was bank owned. The best thing about it was the price. At $56 per square foot, even though I wasn't looking for anything that large, it was simply too good to pass up. Therefore, in late October, I decided to move the office to the new home and save the $1,500 per month. This move will allow me to put some of those dollars into other areas, hence the new website and the move to and Net Docs.

In fact, there are so many bank-owned properties out there, I don't know why anyone would look elsewhere. Moreover, there was over eight months of housing inventory the last time I checked and that doesn't include the myriad of foreclosures yet to be put on the market.

This "shadow" market, as it is called, consists of the properties which haven't been listed. When you think about it, if all the lenders put all their distressed properties on the market at the same time, we'd see a housing slump like we've never seen before. And the ripple effect of this could be devastating. Therefore, housing prices will probably remain low and possibly decline even more before any significant rise occurs. This, coupled with unemployment above 9.0% for the 19th straight month, the European contagion and the recent meltdown still in our memory, consumer demand might remain on the low end of the scale for quite some time. Not to be a pessimist or anything, it just doesn't seem that rosy to me.

The last time unemployment remained above 9.0% for this long was in the early 80's. The difference now is that we don't have a cost-cutting, frugal government at the helm. Sure Reagan spent a lot on defense, but he also got GDP going with tax cuts. Even J.F.K was in favor of tax cuts.

Sorry for the rant, but I had to get it off my chest. There, I feel better. Now is your chance to chime in. Call me foolish, but that's the way I see it.

Thanks for reading!


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