Vacation Finance

Housing Stimulus Solutions: Some Radical Approaches To Consider!

Bob Waun and I met several years ago at the annual Ragatz Conference in San Francisco – the annual “state of the union” on the world of fractional deeded ownership projects around the world.  Since then, Bob’s company, Vacation Finance, has been our go-to source for financing for the second home markets.  He published a book last year titled, “Besting: Better Nesting” which is about the dramatic shift in the real estate needs and desires caused by the Boomer generation – the first wave hitting the beach in 2008.

Here is Bob’s guest editorial to our blog from his Second Home 411 blogsite.  I look forward to your comments and feedback.

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Vacation Finance

2009 Financial Crisis – Depressed: YES! Depression: NO!

Bob Wuan of Vacation Finance  is a fellow real estate writer on the internet.  He is one of the most respected mortgage minds in our industry and I am glad to have him as a friend.  We use the services of his company, Vacation Finance, for our clients needing a loan for purchasing their second and third homes.

Bob Wuan  just published an article today that I wanted all of you to read.  Mind set is still one of the most powerful aspects of our economy.  I welcome your feed back on Bob’s thoughts.

America does seem depressed. Our immediate gratification society is bogged down in a recession that started over 12 months ago, and its starting to irritate us. But it is not (yet) a Great Depression. First, the banking crisis: 31 banks have failed in the last year, only 3 failed in the previous 10 months – an increase of 10 fold. That’s how the media spins it. But when you consider history – 4,500 banks failed in 1990s – 71% of the S&Ls fell in that recession. How is 31 worse than 4,500?

Next, unemployment is at a high for several decades, 7.6%+/-, in fact, this generation has not ever seen unemployment this high. Is it another Great Depression? No. By 1936 unemployment in America had reached 25.6% – it was likely higher since record keeping was less strict back then without social security numbers. In 1979 unemployment was 13.8%, which means the recession of the 1980s was two times worse than today’s. In the 1930s there was no unemployment insurance, when you were out of work, you were out of food. Today many layed off workers get months worth of compensation paid up front, or insurance benefits that replace 30-95% of their wages. Imagine our troubles if the 3.5 million unemployed were truly penniless today like in the 1930s.

Economies are built on a foundation of faith and trust.  When our faith wains, so does our willingness to trust, trade and prosper. Over the last 18 months, we have begun to doubt, we have lost faith in our banking system’s stability – which is the life blood of all commerce. We questioned the bedrock base of our net worth and security in our homes. We have watched the unthinkable plummeting of our our home value – live and in real time with new technology like Zillow.com. Like checking a stock price from our iPhones, we can see if our home value declined over night. It has made each of us wonder “why am I going to work today?” Everything I work for is worth so much less than I had hoped. I earn money to watch if drop in value in my 401k. In the past, we would wait until month end or quarter end for a statement of progress, and depression would only set in after performance disappointed for a few quarters. Today, Americans ride a wave of instant news, instant disappointment and false senses of recovery when the markets (or local home sales) rise daily.

I blame our new ‘mark-to-market’  mind set. Watched constantly, a pot never boils. Criticism of our capital model has often included our inability to look out into the future (like Warren Buffett) and have confidence that we are doing the right things to deliver long term results and wealth. Instead we grade all actions off immediate results. CEOs get bonuses off selling cars today, even if those sales create long term losses due to crazy lease financed terms. Neighborhoods feel wealthier when the property developer sells the model home at an inflated rate to his cousin, and then appraisal reports show a jump in values.

When these games are realized months, quarters or years later, we all feel cheated by the market and the participants and 2008-2009 ‘depressions’ set in. This economic down turn is all mental. It is all about how we ‘feel’ about the economy, the rules, the participants, the future prospects. The facts tell a much different story, slow down yes, but 3.5 million jobs could be recreated quickly in America. Our trust, faith and optimism may take much longer to bounce back, unless we look to the horizon instead of our feet.

What your YOUR thoughts on Bob’s article about the mental aspect of our current economic crisis?  Until next time, your real estate detective is looking at the horizon of the possibilities awaiting all of us.  Until next time… 

Vacation Finance

Economic Meltdown Causes Fear In East Bay Real Estate Community!

No matter how positive and resilient one is, we are in stormy economic times!  However, opportunities abound in the midst of economic hurricane!

I was chatting with my friend, Bob Waun - president of Vacation Finance which headquartered in Michigan,  as we talked about the financial meltdown going on in the credit markets and the stock markets.  He asked if I was afraid for what is next for our real estate businesses in the Bay Area and the Caribbean.  I told him, “Nah…we are still having the time of our life!”  The mantra of a sailor is…, “Do not be fearful!”   And, the definition of FEAR is False Evidence Appearing Real!  If you didn’t know, my favorite condition in sailing is with the gunnels ( side rails on each side of the boat )  in the water and salt water spraying all over me.  You can’t imagine the big grin on my face while I am sailing in those conditions.  However, it is not the time for the faint of heart if you are sailor in stormy seas.  It is the time when experience shows up. 

Both our Bay Area  and Caribbean  real estate businesses are thriving…however it is taking all hands on deck to pull it off.  We are blessed with a great team who only look at the glass half full,  and are committed to creating a GREAT experience for our customers.  Many of our competitors are running down to Starbucks talking about how the sky is falling.  The vacuum they are leaving within our real estate community is amazing, and whoever fills that void today will have a larger market share when the market shifts again – which it will.  In order to make it through these financial times we all need to work together, side by side, realizing storms don’t last forever.  At the end of Bob’s and my conversation he left me with these thoughts.

Faith, beliefs and conviction can be fickle friends when they are tested by panicked masses. “The end is near!”,  seems to be the chant of the crowd across the world today.  But what of substance has changed within our global economy.  Did a world of Fathers change their commitment to feed and clothe their children?  Did Mothers decide that the generic brand cereal would be fine in mass?  Did we stop wanting nice things and suddenly over the weekend decide to settle for less?   What is the shift that causes such a panicked response?  What fundamental changes are causing us to doubt the future?   Purely fear of what “MIGHT” change.  Does that sound rational to you?  

Historians and economists can attest that humans don’t always act rationally in mass,  but as individuals we can still choose to be rational – to act out of faith and conviction not panic.  ”Looking back on it, I was a trader in the pits of the S&P in 1987.  It was the most exciting and profitable stock market opportunity of my lifetime.”,  a friend told me today… Did he notice it at the time?  No.  He said he was scared to death, but he kept at his work of trading stocks in the best way he could.   Life is clearer in the rear view mirror.  Regret is more painful than overcoming fear….

In a storm, it is not time for people to jump ship and swim to safety.  A storm is the time for experienced sailors to do their work and sail through it.  It doesn’t mean we are not afraid.  However, it does require us to not panic – which could cause our ship to go down.  I promise we will all will make it through this economic mess.  We may get wet and a bit wind blown, but working together, we will get to a safe harbor, and live to see another day when we will look back and tell the stories of how we made it through the storms of 2008 and 2009.  Contact me today if you would like some help through your storm.  Until next time…fair winds!!!