Love and Light

The Real Estate Swami wants to wish each of you a happy holiday season.  Here is a short parable to keep in mind during the joyous times.

The holiday season brings much joy and sadness to the world.  The swami tells of a man who had lost his wife, Emma.  She had been his companion for many years.  The holiday season had always been difficult on Emma.  Her parents had often bickered.  Her alcoholic father and stern mother struggled each Christmas and could never put aside their differences in the season of light and joy.

Emma carried her parents’ burden during the holiday season.  She could not experience true joy from the spirit of love and giving to her children, friends or family.  The gloom of past Christmases hung too heavy on her spirit to let her feel love.

Now that Emma was gone, the man still relived his lovely wife’s pain of the holidays. He fervently wished that no misery had ever been a part of his Emma’s life. 

As he sat slowly dissolving into his wife’s sadness, an old friend came by and sat next to the man.  His friend sensed his pain and spoke.

“Does not the pain of others alone give us insight into the depths of our own lives?” said the friend.  “In our moment of anguish, gates barred forever seem to open and let in a flood of light.”

The man reflected on his friend’s words.  The pain of Emma was a sign to him that his life must not be one of despair.  That his gift to her was to absorb her pain and send out love and light to the world.

May you absorb the pain of others during the holiday season and send out love and light.  Happy holidays.

Bank rankings back up Occupy Wall Street claims

By John McGory

The big banks in central Ohio keep getting bigger, according to the recently released Federal Deposit Insurance Corporation (FDIC) 2011 deposit share report.  This concentration of financial power will only continue to hurt real estate and small business expansion, says the Real Estate Swami. 

The top five banks in the Columbus metropolitan area increased market share from 72.28 percent in 2010 to 76.13 percent in 2011.  That is a robust increase considering the third largest bank, PNC, lost over three percent of market share.

Huntington Bank and Chase Bank solidified their number one and two positions.  The two banks combined for a 5.15 percent increase in central Ohio market share.  This came at the expense of PNC, Key Bank and smaller institutions.

Central Ohio banks that increased market share were:  Huntington, Chase, Fifth Third, Nationwide, Park National and Union Savings.  Central Ohio banks that saw a reduction in market share included:  PNC, Key Bank, US Bank, Wesbanco, Delaware County Bank and Heartland.

Here is a chart showing the changes in market share from 2010 to 2011.

               Bank               2010         2011 

1.      Huntington       21.82        24.12

2.      Chase               19.27        22.12

3.      PNC                  16.12        12.99

4.      Fifth Third         8.80          9.44

5.      Nationwide       6.81          7.46

6.      Key Bank           4.37          3.78

7.      Park National   4.19           4.39

8.      US Bank            2.83           2.48

9.      Wesbanco        1.28           1.18

10.   Delaware Cty   1.27           1.11

11.   Heartland         1.10           1.09

12.   Union Savings   .93             1.00

The Real Estate Swami sees that the wailing and gnashing of teeth over large financial institutions bailouts several years ago did not translate into fewer customers for the large banks.  The banks’ higher fees and poor public relations were offset by convenient locations, new apps that young customers want and aggressive advertising that appeals to younger customers.

The Swami does predict that large banks will face increasing pressure to loosen lending practices as we head into 2012.

“The message from the Occupy Wall Street movement is that the rich get richer in the financial and banking industry, while the middle class suffers,” says the Swami.  “The increase in market share profit allows large financial institutions to continue tight-fisted lending policies for home buyers and small businesses. 

“This simmering cauldron of financial discontent may well boil over as we head into the 2012 presidential election,” warns the Swami.

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New County Appraisals: A Snapshot of That Day

The Real Estate Swami sees confusion on many faces of people wondering what to do regarding lower appraisals of their homes by their county auditor.  Homeowners are concerned that the lower value will hurt them if they put their house or condo up for sale in the months or years to come.   

Generally, appraisers are looking at a couple of things:  1) The condition of your house and 2) The sales' price of neighborhood homes in the past three years.  The auditors are making lower appraisals in many circumstances due to the recession and its impact on the real estate market.

Many people will have a good argument if they contest their auditor’s new assessment.  But the Swami reminds homeowners that a lower appraised value will also lower your taxes.  If you plan on selling your home in the next three years, lower taxes are a treasure. 

Your asking price does not have to match the appraiser’s value. What matters is what comparable homes are selling for at the time you put your house on the market.  Remember, an appraisal is only a valuation at a specific moment of time.  They are a snapshot of the day the appraisal took place.

If you put your house up for sale and get a contract, the buyer’s lender will have a new appraisal done.  They will ignore the county’s appraised value and look at the condition of your home and the most recent comps in your neighborhood.  Those factors will determine your home’s appraised value at that specific time. And timing is everything, says the Swami.    

You can look up recent sales in your neighborhood at the county auditor’s web page. Just bring up your home and click on Recent Area Sales. That will give you a good idea on how your house is trending in the neighborhood.  

“Lower taxes are a good thing,” says the Swami.  “Patience and knowledge are keys as the real estate market moves forward.”

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 For more information on central Ohio real estate contact the Real Estate Swami at jrmcgory@gmail.com.
 

Stagflation rears its ugly head!

By John McGory

Stagflation is back.  Stagnant wages and inflation due to increased food and oil prices are combining to create an economy where prices go up while wages remain static.  While 10 percent unemployment figures grab headlines, 90 percent of the workforce lives with the fact that their pay does not go as far as it did a year ago.

The Real Estate Swami says that until wages rise above the rate of inflation, the real estate market will languish. The Swami points to the 1970s and early 1980s as the last time our economy dealt with stagflation.

“Our standard of living continues to erode as the cost of goods and services increase, while wages stand still,” says the Swami.  “Oil price increases in the 1970s during an economic downturn caused a decade of turmoil.  It is unreasonable to think that real estate will flourish in this stagflation environment.”

The hourly earnings of workers in non-supervisory positions have risen by 2.3 percent from July 2010 to last July.  That is a full percentage point below the 20-year average in annual wage increases of 3.3 percent.

In the same time period, the consumer price index increased by 3.6 percent. This means Americans are losing ground in their standard of living. With sustained high unemployment, a growth spike in wages does not seem to be in the cards for the next several years.  The only hope for relief is a significant drop in oil prices, which could decrease consumer prices and stop the slide in the standard of living.

“It is a time of economic retrenchment for all.  While much can be learned from living with less, the huge real estate machine that creates many jobs will remain silent,” remarks the Swami.  “Wealth for the people must be created before sustained prosperity returns.”

The Swami points to the fact that 70 percent of the U.S. economy is derived from consumer spending. If consumers are losing ground to inflation and stagnant wages, fewer products will be consumed.

“Real estate is the biggest item anyone buys.  But we cannot buy if we do not have,” the Swami says.   
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Home Building: A Shaky Future?

By John McGory

With the demise of the home building industry, a fundamental change in how we house people is facing our country.  The Real Estate Swami says the economic meltdown may usher in a new era in how we build and pay for housing in the U.S.

Sales of newly built homes, which peaked at 1.3 million units in 2005, are running at an annual rate of just 298,000 units in 2011 and are on pace to post the lowest count since record keeping began in 1963.  

Home building starts in central Ohio’s seven-county region totaled 600 through July 2011.  In the late 1990s, it was not uncommon to see 600 permits per month in the City of Columbus. 

 This staggering drop in new housing is chasing builders, large and small, out of business.  The Swami says that home building as we know it today may never return

“Central Ohio’s impressive home building industry is but a shell of what it once was,” remarked the Swami.  “In what form it returns when housing is needed is a question not yet answered.”

The Swami says the real estate meltdown shows where home ownership and the new economy have diverged.

He predicts the speed of the new economy will challenge home ownership and 30- or 40-year mortgages.  These challenges include:

1.   Worker skills necessary today may be useless tomorrow.

2.   Middle class jobs are disappearing.

3.   Companies flourish for a short period of time, then wither away. 

4.   Governments struggle to pay their bills and maintain necessary services.

“These are signs of a troubled day-to-day economy,” remarks the Swami.  “How can a home owner sign a 30-year mortgage under such uncertain circumstances?  How can communities afford services for suburban-styled development with this short-term economic mentality?”

The Swami foresees changes such as hybrid ownership/leasing arrangements, larger multi-family housing projects and the halt to sprawling development in rural areas.

“Significant changes in society took place during the last Great Depression.  How we live amongst one another will be one of the major changes we face as this economic malaise slowly comes to an end,” says the Swami.

The Real Estate Swami is brought to you by Web Face, a Columbus communications and marketing company (www.web-face-solutions.com)

A Great Shadow of Burden

By John McGory

“It is said that hope is like the sun, which, as we journey toward it, casts the shadow of our burden behind us.” Samuel Smiles

Real estate continues to have a great shadow of burden in front of it as it struggles to recover.  The Real Estate Swami quotes Standard and Poor’s recent report that shows a shadow inventory of four to five million houses in the U.S.  Shadow inventory are homes either owned by the bank or in some stage of foreclosure.

“What holds us back from a robust real estate market are the many houses owned by the banks.  If they were to release them all at once the real estate market would crumble,” says the Real Estate Swami.  “Slowly they will come off the books and our shadow of burden will be behind us.”

The S & P report shows there has been some improvement this year on whittling down the shadow inventory.  A 52-month supply of houses existed in the first quarter of 2011, dropping to 47 months in the second quarter. 

There is much debate on how long our shadow inventory will slow down the real estate market.  The local economies across our nation will determine how quickly these inventories disappear.  Central Ohio is seeing some strength return to its economy.  Housing sales jumped 23 percent in July.

The Real Estate Swami says to keep an eye on new job creation as a sign on where the central Ohio housing market is heading.

“Many home owners want to sell but are waiting on the sidelines for house prices to increase.  Supply will continue to exceed demand so any increase in price will be gradual.   As our local economy adds new jobs our shadow will shrink as we move toward a rising sun.”

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Don't get lost in the wilderness of opinions

By John McGory

The events of the past few weeks have shown that the American public is fractured and confused.   Contentious negotiations over the deficit, a credit rating reduction and the corresponding stock market roller coaster ride have made many nervous over the direction of our country.

The Real Estate Swami preaches patience for those who have real estate and are considering selling.  He says that getting caught up in the rhetoric of the day is to be lost in the wilderness of opinions.

The swami points to comments made by Fannie Mae Chief Economist Doug Duncan that the U.S. is probably a little more than halfway through a 10-year adjustment period following housing market peaks in 2005 and 2006.  The value of U.S. housing stock has dropped eight trillion dollars since 2006.

“The long–term structural problems with the real estate economy will take time to correct.  Getting distracted by the wrangling in Washington can cause a confused mind,” says the swami.

Central Ohio average sales prices are down 3.5 percent from a year ago.  That indicates that buyers will continue to have the upper hand, says the swami.  Foreclosures have slowed due to banks moving slowly, which means another wave of foreclosed homes will be coming.

The swami warns not to become too passionate when considering your next real estate move.  He points to the words of the Buddha:  “As rain penetrates an improperly shingled roof, so passion overwhelms a confused mind.”
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Are You Afraid?

Sri Swami Sivananda writes in the Conquest of Fear that “Fear is illusionary; it cannot live.  Courage is eternal, it will not die.”

Today’s world of real estate is full of fear. 

Banks call themselves lending institutions, but they fear the lending of money and simply buy Treasury notes. 

Buyers are negative about the future and fear that the economy will not recover.  They sit on the sidelines and stew.

Government fears the collapse of real estate values, so it collects money from its citizens through punitive penalties and fines and claims it is not taxing people.

Owners of homes and businesses fear they are trapped and will not see the fruits of their labor of love.

The Real Estate Swami reminds all that good things come from love.  And what is love but enthusiasm, excitement and peace in your heart.  Those caught up in real estate fear need to meditate on what brings love into their hearts.

Bankers, buyers, governments and owners are all following their false egos.  They fail to envision a world of love so they remain paralyzed with fear.  Our real estate economy will not move forward until each of these entities pushes aside what they fear and pursues what they love instead.  Our world is more beautiful when just one person’s love expands and spreads to every living being.

Sri Swami Sivananda writes:  “Just as a rock on the seashore stands firm and the dashing of the waves does not affect it even a bit, even so a man who is endowed with courage is not affected by the dark perilous waves…He stands adamant in all trying conditions and circumstances and comes out victorious.”

Courage is what we need today in the real estate market.  The waves are crashing upon us.  Courage and an unshakable belief in what we do will conquer fear and false egos and bring us the peace and love we all want.

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Wal-Mart, Westerville and Mass-Produced Urban Life

The Real Estate Swami sees turbulent days ahead for communities as Wal-Mart and other big box retailers move into urban neighborhoods.  Swami’s crystal ball shows many small business owners closing their shop doors in the coming years as a result.

The City of Westerville, Ohio, recently approved the building of a Wal-Mart in an urban neighborhood populated by many small shops.  This is an example of Wal-Mart’s plan to target urban areas since they have saturated the rural landscape.

A 2009 study* by the Center for Urban Research and Learning at Loyola University-Chicago highlighted the impact that urban Wal-Marts have on surrounding businesses.  The study of a Chicago neighborhood showed 82 of 306 area businesses closed their doors within two years of Wal-Mart’s opening.

“The beauty of the recent moon will not hide the pain and suffering many small business and building owners will feel in the coming days.  The vision of jobs, neighborhood vitality and the sense of community will vanish as a new reality sets upon urban neighborhoods,” reveals the Swami.

The Loyola University study shows that the probability of stores closing due to a new urban Wal-Mart falls off 6 percent per mile in all directions.  The types of establishments in danger include electronics, toys, office supplies, hardware, home furnishings and drugs. The report also shows area sales, jobs and taxes as flat or declining.

“The balance of local community is a delicate one,” the Swami says.  “Many desires and needs swirl within our collective spirit to form one face.  Let us meditate on the knowledge that change is constant. The community’s eyes and heart must be open to where the road ahead is leading.”

The Real Estate Swami is a service provided by Web Face, a communications and marketing company.  To find out more about Web Face go to www.web-face-solutions.com

*Davis, J., Merriman, D., Samayoa, L., Flanagan, B., Baiman, R., & Persky, J. (2009). The Impact of an Urban Wal-Mart Store on Area Businesses: An Evaluation of One Chicago Neighborhood's Experience. Chicago: Center for Urban Research and Learning, Loyola University-Chicago.

A Bright Star in Columbus' Future

The Real Estate Swami sees that MSN Real Estate ranks Columbus the 9^th best city in the country to rebuild homeownership.  The Swami perceives this as a bright star in central Ohio’s future. 

The survey ranked mid-to-large-sized cities.  Columbus was the largest city in the top ten, with Scranton-Wilkes-Barre, Pa. at the top.

The Swami’s crystal ball shows this trend to bode well for central Ohio.  Many affordable houses were constructed here in the fifteen years prior to the real estate crash.  Swami sees this stockpile of homes as an eventual benefit to central Ohio as the economy starts to grow.

“The pain of overbuilding is real to many in our community.  But the suffering will end when the jobs begin to return,” reveals the Swami.  “Many communities do not have the available infrastructure in place to accommodate growth.  New housing is not being built.  Communities that have good housing stock in place will be attractive to those who produce jobs.”

Swami believes that man creates his own destiny.  He considers Columbus’ selection as a top place to rebuild homeownership as a blessing.  Our challenge will be to take care of all our brothers and sisters.

“Our region is blessed with gifts including an ample water supply, a strong logistics component and enlightened young workers.  Our strengths can help all of our people blossom.  The region needs to focus more on taking care of its own and then the fruits of our labor will multiply.”

The Real Estate Swami is a service provided by Web Face, a marketing and communications company helping companies and central Ohio grow in responsible ways.  Learn more at www.web-face-solutions.com.

Selling Your Ashram or House

The Real Estate Swami says follow the experts for enlightened  advice on selling your  house.  They will not lead you astray.

Whether a seller is listing a home or an ashram for sale, following certain paths will entice buyers to make an offer.         

            Experts at HGTV have several pointers:

1.  Keep the first impression the best impression. Make sure the curb appeal is welcoming with a well-trimmed lawn, fresh flowers and a clean front door. Make sure the entryway is inviting to visitors and not cluttered with coats and car keys.  The swami says less is more.

2.  Once a house is listed for sale, agree to show it whenever a Realtor calls. Keep it ready to show, with beds made, dishes put away and bathrooms sparkling.

3.  Forget a massive makeover. Do projects that pay off including fresh paint on the walls, clean curtains, updated cabinet handles and fixing leaky faucets.  Spending money will not bring happiness.

4.  Put personal items in storage. The family photos, the knick-knack collections, the sports trophies all need to be boxed up. Once the home is de-personalized, a buyer can imagine living there.  Each soul wants to live in their own home.

5.  Finally, embrace the light. Clean windows, change lampshades, trim the bushes to let in sunshine – if a house is bright and cheery, buyers will be inclined to make an offer.

The swami sees more home sales in the future if sellers follow this path. For more tips on selling a home, see www.hgtv.com/reale-state/10best-kept-secrets-for-selling-a-home/index.html

Swami and the 2011 Real Estate Crystal Ball

As the swami gazes into the real estate crystal ball to determine the future, he sees a very localized central Ohio housing market. Some good areas and some not so good. Here are his guiding visions as you consider your neighborhood.

1.      An overcorrecting market:  Prices may have dropped too much.  If prices are below 2002 levels in your neighborhood improvement may soon occur.

2.      Overdevelopment:  The swami sees too many houses built in some neighborhoods before the crash.  Over supply is a red flag in newer developments.  It may mean prolonged pain.

3.      Jobs, jobs, jobs:  Swami sees new jobs coming.  These areas will see a quickly improving housing market.

4.      Lifestyle: The swami sees people having fun, listening to music and going to farmers’ markets.   Swami sees some neighborhoods with lifestyle attractions for today’s buyers.  Is it walkable? Nearby parks? Fun things to do around the neighborhood?  If yes is the answer to these questions, then swami sees great things ahead.

5.      Responsible government:  Swami sees turmoil ahead for local governments.  Are your local taxes reasonable?  Schools ok?  Sane growth policies that make sense for sustainable growth?  Again, if yes is the answer good things are ahead

The swami sees these trends impacting the market for the foreseeable future.