Lately people have been sending me a lot of emails and notes asking me if I think there’s another Great Depression coming, whether or not real estate will lose another huge portion of its value and where do I think all of this is going to stop.

Well I’ve never shied away from giving my perspective on such matters and I think something we should all note is the attitude of the man who is considered the greatest investor of all time – Warren Buffet. As I mentioned before he has purchased $8B in preferred stock. Even more dramatic is that $5B of it went to a financial company (Goldman Sachs).

Not only is he not running scared, he’s running strong with this market – taking ground and improving his position. We all know there are some tough times ahead, and so does Warren. But he demonstrated his ultimate faith in the economy, in the markets and in the fact that now is the time to gain ground and not pull back.

Well done, Mr. Buffet, you’re a good role model for all of us.

It’s a good life!

Brian

At times like this, the one thing you need most is confidence. Do you believe this is a good time to buy? Do you believe in the value of real estate? It’s amazing to me how many real estate agents have asked me should they buy in this market. My answer is typically, “If you don’t have the confidence in the intrinsic value of real estate to purchase for yourself, how can you ask your clients to?”

I’m not asking you to be Pollyanna or to ignore the circumstances but to embrace 100 years of empirical data which shows without questions that if you hold real estate long enough you will see an increase in its value. It’s time to get informed. It’s time to get educated and bring that information to your clients. It’s a great time to be a professional. What your clients need most from you now is a sense of confidence. The credit markets will sort themselves out. Banks need to loan money to make money. Like you and I need air to breathe.

We’re the only industry in the world that when our products are at a deep discount and we’re having our ‘lowest prices in five years’ sale, we get depressed and act like someone just shot our dog!

There are deals to be made. Tell your clients if Warren Buffet’s buying right now, so should you. So be confident in our industry and the market and pass that confidence onto your clients.

It’s a good life!

Brian

I’ve been flooded with emails from people wanting to know are we headed for another Great Depression. Now just to set the record straight, neither the Secretary of the Treasury, nor Warren Buffet are calling me asking me for my input…but I don’t mind providing my understanding of where we currently fit into history.

Panic doesn’t cause depression; bad policy does. Foolish decisions regarding increased taxes, trade tariffs, and monetary policy are what caused the Great Depression. A great read on the subject is a book called The Forgotten Man – A new history of the Great Depression by Amity Shlaes. You’ll see how the 1929 stock market crash did not cause the Depression.

Another great example of how different a time this is to 1929 is that during the Great Depression countries, especially America, were isolationist by nature and tried to enact a win-lose economic policy. Just last week the Fed, European/British and Canadian Central Banks all lowered rates in unison and even though this cut won’t do much to bring up the credit market, it is a radical contrast to what took place during the Depression.

We are obviously in a recession and will be for a time but, as we are already seeing out West, there’s plenty of demand for discounted homes. Many short sales and foreclosures are in multiple bid situations. There’s money to be made in times like this but it requires us to take the emotions of our fears and apprehension and pour it into the diligence of our daily activities to generate leads.

I don’t know about you, but I am keeping my eye on the situation and then putting my head down and getting back to work.

Hope this helps.

It’s a good life!

Brian

Last week I got a chance to go home to Ireland and spend a few days with my mam and dad. My mother is a veritable treasure trove of one liners, quips and homespun wisdom. So in talking about a purchase she'd made in the past, she made a statement that the price of what she purchased was $7K but the cost was $9K. She had automatically calculated the interest and her mindset was the purchase she’d made she referred to as the fully burdened cost.

It hit me like a ton of bricks.

If only I could get all the people I train to think like that. Just imagine if every time you purchased something on credit that you translated the monthly payment – interest included – into the overall price you paid. Not only would this make you think twice about the true cost of what you were buying,  it would also give you a sense of the total expense you’d already committed to. So next time you finance something – which is just fine to do by the way – make sure to count the whole cost in your plan. And if the purchase represents significant value to you, then by all means go ahead and do it.

As mam always says, “Make every penny a prisoner!” In times like these it’s good advice for all of us.

It’s a good life!

Brian