My Report Today on Savings Rates, Housing Resales and New Construction: Live from Alexandria, MN.

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My Wachovia report from April 3, 2009 said that “the personal saving rate has leapt higher over the past six months to about four percent…the personal saving rate has not been as high as it was at the start of 2009, on a sustained basis, since the 1990’s mid-cycle slowdown.  In fact, the saving rate hovered just barely above zero percent from summer 2005 until mid-2008 at the height of the last expansion and into the first part of the downturn.  Despite the current increase in the saving rate, our view is that America still roundly has a culture biased towards consumption, as opposed to saving, that will continue to guide us through this cycle and beyond.  However, for now, consumers seem suitably spooked  by the current state of the economy to increase their own personal reserves.  The saving rate will likely continue to rise for the next several months driven higher by declines or weak growth in consumption as well as near-term tax relief.  These will at least be partially, but not entirely, offset by weak wage and salary income growth as a result of the turmoil in the nation’s labor market.  While the worst of the outright declines in consumption may be behind us at this point, households may adjust to a new long term equilibrium”.

In their April 17, 2009 report; their current statistics backs up the one that I stated in my July 2008 blog  “The Market Today”.  In the July 2008 blog, I quoted that “if the rate of decline continues, we would be at historic levels of about 300,000 unit  one year from now”.  This is in regards to the new homes built but not sold.  The 4.17.09 Wachovia report said that “Sales of new homes will likely continue to struggle during the first half of 2009 as employment, economic concerns and mortgage market troubles outweigh the improvements in overall affordability we have seen.  Declines in completions and in general building activity mean less supply will be coming to the marketplace.  Inventories may return to the “equilibrium” levels of the late 1990’s by early this summer.   There are a number of powerful incentives to purchase a new home in place today, including builder discounts, tax rebates for first-time home buyers and exceptionally low mortgage rates.  (New Homes for Sale:  February 2009 at 330,000)

Existing Home Resales:  Peaked over 7 million in 2005.   February 2009: 4.72 million.

Another quote from the April 2008 report:  “We estimate just 740,000 housing units will be started in 2010; the average during the 2003-2005 bubble period was 1.95 million units”.

U.S. POPULATION CLOCK (4.20.09 at 15:15GMT)  306,255,531.   The February 19th count was 305,849,952.  The difference was 405,579 in two months.

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Lakehome Sales- Alexandria, MN: Quarter 1, 2009

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I was a little surprised by the sales for the first quarter in the Douglas County Lakehomes closed first quarter compared with 2008.  There were 12 sales in 2008 and 10 in 2009.  The highest priced sale this year so far was $700,000 and those honors go to me:)  Last year it was $625,000 for high sale in 1st quarter.  Average sale price in 2008 was $357,500 and this year it was $344,300.  Overall, my opinion is WOW.  Not bad at all, could be a smoking great year.  If that was the deepest and darkest spot of the recession, bring it onnn! 

The consumer confidence reached an all time low in February of 25.3 on the index.   Presently, it stands at 26.0 and the next read is April 28 at 10am ET.  I always said, let the consumer confidence go to zero.  It can only go up from there.  Maybe the 25.3 will be the bottom.  My records show none lower ever.  That means that the consumer confidence will only get better from here…unless we can possibly find another new bottom.  Let’s hope that ain’t the case.   I’m not complaining, I had 3 house sales for the week:)

I still am not watching the news…and I can’t think of anything that I missed.

Got any comments for me out there?  It gets a little lonely here in cyberspace.

Have a great weekend.  (67 degrees right now)

Statistical information provided by the Greater Alexandria Area Association of Realtors Multiple Listing Service.

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More Good News from Alexandria, MN:)

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Douglas County Hospital named among the Top 100 small hospitals across the nation…WOW!  Read the full article in the Echo Press at www.echopress.com .    Great Story!

Douglas Machine plans to expand scientific research division.  A $1.6 million dollar project…Douglas Scientific, one of it’s divisions, makes a revolutionary fluid dispensing and array tape platform for genetic screening and discovery.  (This is high-tech stuff, good luck Douglas!  Great to have you in our back yard)

Got any more good news, we are Happy to Blog it!  If you want the negative junk, watch your TV.

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Some First Quarter Stats 2009. Alexandria, MN

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In reviewing the sales stats for the Greater Alexandria Area Association of Realtors Multiple Listing Service, I have the following information to share:

In first quarter 2008, there were 53 sales in the residential sector in Douglas County.  14 of them were in January, 21 in February and 18 in March.  Seven sales were REO or Bank Owned representing 13% of the sales.  By price:  11 sales were $0-$100k,  19 sales were $101-$150k,  10 sales were $151-$200k,  10 sales were $201-$300k  and 5 sales were over $300k.

In first quarter 2009, there were 39 sales in the residential sector in Douglas County.   11 of them were in January, 17 in February and 11 in March.  Thirteen sales were REO or Bank Owned representing 33% of the sales.  By price:  17 sales were $0-$100k,  9 sales were $101-$150k, 7 sales were $151-$200k,  4 sales were $201-$300k and 2 sales were over $300k.

Overall, sales were down first quarter 2009, over 2008 by approximately 26%.  The seven sales in 2009 that were $151-$200k , topped at $179,800.  So that means that 33 of the 39 sales in the first quarter were below the $180,000 price tag.

Statistical information provided by the Greater Alexandria Area Association of Realtors Multiple Listing Service.

These statistics however grim, do have a bright spot.  Even though sellers are taking a hit on the chin, it is probably one of the best times to buy real estate I have seen in my career.  The housing affordability index is off the charts with interest rates and prices where they are.  The fear and  paralysis that people have when investing into their future is normal.  Usually, by the time that fear goes away it’s too late to get in on the best deals.   Some refer to that as the “herd mentality”.  To make the most of any market, try to do the opposite of what the rest of the people are doing.   People with money will usually advise you in that direction every time.

Couple of other things, probably that I don’t proclaim to know too much about but:  this Summit Meeting that President Obama is at…that will probably change a lot of things in the future.  One being maybe the dollar’s usual standing as being the top currency in the world.  There may be another one or two that enter that arena.   Keep an eye on China.  Also, our national debt is incredibly high.  If inflation rears it’s ugly head like it did during President Carter…the best and probably the only place to be invested is real estate (especially for us “lay” people).  

Keep a close eye on the horizon, try to predict the future events, get in the crossfire with your investments.  There are books out there that keep you thinking.  I read Megatrends in the early 80’s.  He said that as the world becomes more technically advanced, people would reach out more to connect with other humans.  Hence, cellphones, email, texting, computers…there are more visionairies like this out there.

World Population is going through the roof.  We are no way near ZPG.

U.S. Population is rapidly growing.

The need for food, clothing, shelter, sanitation, clean air, energy…all of this will affect the human race for the next 100 years.   And we haven’t even started to talk about the advent of nano-technology.  It’s going to be an exciting ride…the next century that is.   And don’t forget, it all needs real estate…and turn off the daily news.

I would appreciate some feedback, let me know your thoughts

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