As 2009 closes behind us, we shall enter 2010 with a little more optimism.  There will be a plenty of skepticism to go around and of course we will still worry.  That’s the dynamics of humanity that creates a market.

In meeting with my former colleagues in May 2005, I had said that the market needs a correction.  The year of 2004 was surreal and that if it corrects itself a little bit now, that the fall would be less than if we waited.  What has unfolded was  a slow and steady decline in sales to its final culmination in 2009.  This was undoubtedly one of the toughest years in the real estate community for some time.  However, I do think that the market is leveling off, finding its “trough” so to speak.  This is the point at which I entered the real estate business…1982; almost a recurring act.  I started in 1982 during the depth of the recession, the market only improved from there.  Be advised that the word “improved” was not a cataclysmic event.  As then and most likely now, the improved market is a slow and barely noticeable climb, but up, nonetheless. 

The final straw to the American spirit that let to the recession of 2009, culminated in the 4th quarter of 2008.  The net equity in housing, which is determined by asset value minus mortgage liability, stood at $8.5 trillion in the third quarter of 2008, down from $12.5 trillion at the end of 2005.  The loss of stock and retirement equities plus $4.00 gas put the American people in a tail-spin by the end of 2008 and henceforth 2009 began.

Easy and available credit after 9-11 led to the constant flow of purchase agreements and sales orders in real estate and the construction industry.  The tightening of credit, which I hope will eventually ease some in the future, has led to the further demise of sales and new construction from coast to coast.  I don’t anticipate ever seeing the market days of 2004 for a long time.  The real estate industry and the consumers should adjust to the current state of affairs.  The market we have today, I believe, will be our market for at the least the next year or two…barring any unforseen catastrophes.  After that, it is too hard to see.

Helen Keller was once asked if there was anything worse than losing your eyesight.  She replied, “Oh yes, having eyesight and no vision is much worse.”

The year of 2009 lagged behind 2008 in many of our market sectors.  The American people were shaken to the core.  In trying to define that occurrence, I look to the Consumer Confidence Report.  The Consumer Confidence Index will probably show once completed that 2009 was the lowest year ever recorded.  During the 1982 recession it averaged around 60 points according to my information.  So far for 2009 it averaged approximately 44 points.  So if you find that things might have been  a little slower, quite frankly it’s because consumers were lacking the confidence to spend.  It was quoted and I have it in my blog that the 4th quarter of 2008 and the first quarter of 2009 would be the deepest, darkest days of the recession.  Consumer Confidence was at an all-time low of 25.3 in February.  That’s the lowest number ever recorded since the Index was started in 1967.  It has a ways to go, but keep an eye on it (the CCI).  It tells a lot of the story. 

Going forward, my vision tells me that Alexandria is not going to stop.  Probably not even slow down very much.  If you don’t believe that, just wait.  If you don’t get ahead of the progress, or involved, then you can just watch it and see it unfold.  This town is perfectly poised to take advantage of the new emerging economy.  You can see it…drive 50 miles north, south, east or west and tell me what you do see.  Small towns throughout the Midwest have bit the dust.  Th survivors will be regional centers.  They will attract the schools, shopping centers, hospitals, national retailers, public attractions, JOBS, recreational facilities and much more.  I’m sorry, but I don’t see any hope for the small agricultural towns of yesterday.  Other than bedroom communities because the cost of housing is less, they will probably be a poor place for real estate investing.  They will have a convenience store, maybe a bar, a restaurant, maybe an ag related business…but not much more than that.

I believe that the inventory nationwide will subside and residential construction will be back, with a vengeance.  Nationwide, at the current sales pace, the inventory of unsold new homes would be depleted in 6.7 months.  A forty year low.  Quietly this inventory has been going off the shelves and my beloved liberal news media doesn’t take the time to report this national news fact.  (Read July 29, 2008 and Dec. 7, 2009 blog)

One thing that is most certain is that the markets, the demographics, lifestyles, the economy, housing, jobs and more are changing as we enter another new era.  Have you ever read about Nano Technology?  Well you should, this stuff is awesome!  It has been said that it will change the course of humanity for the next 100 years.  Immense change is coming.

Charles Darwin once wrote, “It is not the strongest of species that survive, nor the most intelligent, but the one most responsive to change.”

Yes, the year of 2009 was difficult in many ways.  However, my young company had an absolute fantastic year in 2009, we contributed in 80 closed sales (4 pending) and will end with a better year than in 2008.   Yes, the real estate market is very much alive in Alexandria, as well as all of us.

One thing that I want to add before I close and that is saving money.  We all used credit more than we should have.  IF there is one thing that you learn from all of these events is that there is NO substitute for savings.  Another element that was abused is homeowner equity.  The best house that I have ever seen is the one that is PAID for.  Preserve and protect your equity, you will need it in the future.  Continue to stockpile your cash, no matter what.  We are consistently sold on the idea of spending.  However, if you save money, you will be light years ahead of those who don’t.  I may suggest a book, “The Richest Man in Babylon” by George Clason.  It’s a simple book, but it teaches one the principles of money.  Understanding the principles is the key.  One last thought, “It takes more energy to retain money than it does to create it”.  The rich know this, the poor do not.

I want to thank those you that supported us in 2009.  This is a fantastic town and fantastic people with a great future.  And when it comes to real estate, be sure to call my team and I.  We are fired up and eager to assist in any way that we can.

Merry Christmas and Happy New Year from all of us at Randy Fischer Real Estate.