As 2010 draws to a close, we start a new chapter in a matter of days. It appears that the recession of 2008/2009 is formally behind us and the lessons that we learned from that experience are monumental. The old adage, “cash is king” sure rang true. Walking into an economic downturn in one’s life without money in the bank is devastating. So with that, savings rates have increased to near 6% in America, all time highs for this generation. Americans are dumping debt at the rate of ten billion dollars a month, another good thing. As an economy spirals up, all sense seems to be lost on the moment. Until it spirals down do we find out what we did wrong (or maybe did right), in the sense of our own personal economic management. Warren Buffet said it best when addressing the Berkshire Hathaway shareholders at an annual meeting, “you always find out who’s not wearing a swimsuit when the tide goes out”. Well put.

But teaching someone on saving money and managing debt are two things that are not taught in the schools and you will learn them somehow. The best book I ever read about that is “The Richest Man in Babylon” by George Clason. Check it out; it nails the principles of money.

The talk of recovery is senseless. There will not be a recovery as we will not go back to the high debt and low cash position of yesterday. We are about to enter a new economy and the question is; what will the NEW economy look like? Let me know when you figure that out. I believe that the economy of the future will be better than all of those we left behind. There will still be market cycles, time them and you will profit.

In terms of real estate, and more exact…Alexandria real estate, I have my own thoughts and opinions. I think that history will show that 2009/2010 will be the bottom of this market. The data is already starting to show that trend. When the market converted to a Buyers market almost 5 years ago, the buyers have enjoyed a rather healthy feast of the marketplace. They may enjoy the feed for a little while yet, but as all things change, so will this market. The sellers will settle into a reality checkpoint (many listings are still overpriced and should not be offered for sale at prices that cannot be obtained) as is already being done and sales are transpiring. There is still way too much inventory at unrealistic prices and 2011 may finally eliminate this practice. Market Price is Market Price! If sellers do not like the price at this time, DO NOT list your property for sale at the higher price…hoping to get it! We set a record this year for amount of inventory here in Alexandria. When supply reaches unprecedented proportions and sales are flat (or declining), prices go down. That is Economics 101. Listing property at prices that are unobtainable only further erodes your value by saturating the marketplace with inventory. This is known as deflation, and your listing only adds to it. If we were able to eliminate half of the inventory from the marketplace, prices would immediately stabilize. For sellers that are realistic in their expectations, they are finding a price point that this market offers at this time.

On another note, if you drive down Broadway Street (read my blog of December 7th, 2010) you will notice two for rent signs from 3M to Big Ole. I don’t know when I recall that the town was that full up with retail. The Viking Plaza Mall is 100%+ occupied. What does this signal for the marketplace? In talking with Lynn Timm at the Alexandria Building Department, the City of Alexandria had 22 new homes built in 2009 and 29 new homes built in 2010 (we had over 200 in 2003). The building permits declined for a number of years, but it appears that the bottom may have been. If you read my blog of August 17th, you will find Housing Starts in this country since 1959. In that report, you will see that 2009/2010 is the lowest point ever for housing starts. If you believe that it will go lower, then bottom has not yet been reached. If you believe that the market (number of housing starts) will go up from here, then the market has stabilized and is moving upward.

There are a lot of “green shoots” out there (the Dow was over 11,400 this morning, the Ag sector is having it’s glory day…have you checked out corn and soybean prices lately/), real estate and housing will be one of the “green shoots” before long.

I believe that the abyss is behind us, better days are ahead…can you see what the future may look like? What do you see as we Come Around the Bend?

Best Wishes to All of You from All of Us at Randy Fischer Real Estate