Your Drop in the Bucket

By John McGory

The Real Estate Swami asks a favor of you.  Answer this simple question:  Are you environmentally friendly?  Most of you will answer yes, as did the swami.  But the swami knows he can be a better steward of the environment. 

The Swami found this list of ten tips to help him keep the environment in mind as he lives his modest life.  He would like to share it with you.

1.  Turn off lights when you are not in a room.  The mind sometimes forgets the little detail of flipping a switch.

2.  Don’t let the water run unnecessarily when brushing teeth and washing dishes.

3.  Upgrade insulation, especially in older homes.

4.  Check for air leaks around windows and doors.

5.  Buy earth friendly cleaning products including laundry detergent.

6.  Buy energy efficient light bulbs.

7.  Use cloth diapers.  A disposable diaper takes 500 years to biodegrade in a landfill.

8.  Unplug appliances when not in use.

9.  Look for Energy Star products.

10.  Recycle.

These are a few ideas that will allow us all to help the environment.   Many of you are already doing these and more.  The Swami begs a thousand pardons from you for not always doing his part for the environment.  He asks to keep the words of Mother Teresa in mind when considering if our small effort at helping the environment is worth it.

“We ourselves feel that what we are doing is just a drop in the bucket.  But the ocean would be less because of that missing drop.”

Everyone’s home is a nicer place if the environment is clean.  If you have questions regarding your home or you know someone who does, send us an email and we will help you find the answers.

John McGory is a central Ohio residential and commercial Realtor.  He is also a partner in Webface, a content marketing company (www.web-face-solutions.com) He can be reached 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.”

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

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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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.