Denial or Acceptance

WARNING: If you are weak of heart, or are still drinking the kool-aid, do not read.

August 18, 2008

In September 7, 2006, Mr Nouriel Roubini, an economics professor at NYU, addressed an audience of economics at the International Monetary fund. He announced, that in his opinion, a crisis was brewing.

Back then he warned that the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and ultimately a recession.

He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgaged -backed securities unraveling worldwide.

The audience seemed skeptical, even dismissive!

Today the wonderful world of real estate is filled with professionals who are either in some stage of denial, if not total denial or the others who have accepted the recent market corrections and present market conditions , for what they are.

On one side we have the "The glass is half full" crowd, and on the other side we have " The glass is half empty crowd. The fact is that we still have a "glass."

Those who accept the market, for what it is, will, in my opinion be OK. Those who want to maintain the illusion of" high prices forever" are in for a most rude awakening.

This is a tough, nasty market and the indication is that it is going to get worse before it will begin to cure. Why?

We are not faced with just a housing crisis: we are now also faced with credit card debt; student loan debt; auto loans and commercial real estate debt which may send hundreds of regional banks in receivership of the federal government.

The fact is that "this too shall pass," and that it will take some time!

Forget the over-priced, pie-in-the-sky inventory!

If proprty is over-priced don't place it on the market! Real Estate Agents, I belive, need to learn how to deal only with sellers who can afford to sell. Don't waste time and effort.

Deal with sellers and well qualified buyers who are NOT in denial!

Decades ago when faced with another "nasty real estate market," I asked an old timer for his sage advice.

All is said was" Never argue or try to out run, gravity! Go with the flow and remember that property properly listed, is always half sold!"



Next : A look at the retail real estate market.