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The Problem with Perceived Savings

November 20, 2009

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Much of the savings in the US is Perceived Savings

It used to be when people saved money they put it in a “savings” account and there it would gradually build a little interest and the savings would grow.  There were also Certificates of Deposit, and Bonds, and a few other saving vehicles in which one could put their money and gradually see their “Savings” increase.

Then enter “Investment Savings”.  These are more in the line of what I’m talking about as Perceived Savings.  While the money put into this type of an account is real.  The actual value of the account is not known till the money is taken out of the account.  As long as it is in the account it has no “Real” value.  But we treat it in our minds as if it does.  We think of it as our “Savings”.  But it really is just Perceived as Savings.

Last year when we saw the economy meltdown.  A lot of the Perceived Saving disappeared.  Perceived Wealth turned into Perceived Poverty.

Granted before FDIC the same could happen to savings in a Bank.  But the reason for FDIC is so those dollars in savings are real dollars and guaranteed.  We might not gain much in that kind of a savings account, but we won’t loose money in it.

Why Investment Savings?

Because, while the risks are greater in this kind of an account so are the returns.  (At least that’s the idea).  There is a funny think about this type of an account that is a lot like gambling.  I mean,  we remember the gains in the account on good days and while we suffer through those down days, we tend to forget them quickly.

I’ve observed a few people at the Blackjack Table (I’ve never played myself)  I’ve seen some take $20 and turn it into over $1000.  But before the night was over they needed a ride back to their hotel.  The $1000 was gone along with the original $20.  Did they win a $1000 at Blackjack?  Yes, they did.  Did they loose more than a $1000 at Blackjack?  Yes, they did.

Investment accounts these days are like a wild roller coaster ride.  Up huge one day and down huge the next couple.  Of course if you know when to get out and when to get back in you can make a good return on your “investment”.  However, there are few who can do that consistently.

But back to my main point.  Those invested dollars aren’t real dollars.  Yet we “Plan” our economic future and strategy for the future based on a calculation of future returns in those investment accounts.  The end result for many in the past 5 years, Perceived Savings ended up being Real Poverty.

As long as the perception of the economy was that it was humming along and everyone was making money we were all pretty convince everything would work out in the end.  That no longer holds true.

Investment Savings are Looking Up

Those 401K accounts of 2007 that became 101K accounts last year are mostly back to 201 or 301K accounts for many.  And a sense of Perceived Savings is returning.  Remember, as long as the money is in the account it isn’t really there until we take it out.

Perceived Savings can, and often does lead to misconceptions of our true personal economic situation.

Post Tags: perceived poverty , perceived savings

Tucson Absorption Rate October 2009 – 5.95

November 10, 2009

The absorption rate for Tucson held just under the 6 month mark for October. Now we will see what the next couple of months will bring.

If we remove Green Valley from the mix it comes in at 5.75 months of inventory.  Not sure why Green Valley is in the 13 areas of Tucson in the first place.  But it is.  I might consider removing that area for next year.

Post Tags: Tucson Absorption rates October 2009

Tucson MLS Statistics for October 2009

November 9, 2009

The stats are out for October and the closed transactions for the month were strong.  I’ve asked around about the impact of the First Time home buyer tax credit, but no one tracks this data.  Not the MLS and not our brokerage.  From our experience we know of no one using this tax credit who is a “true” first time home buyer.

I think the reduced inventory, reduced sale price and increased confidence in the economy is driving more buyers into the Tucson market.  Last year during the fall snowbird buying season the economy was in such turmoil and talk of a Great Depression loomed everywhere.  The end result everyone sat on large purchases and expenditures.  The running joke was “Since my 401K is now a 101K I can’t afford to buy a home right now even if I wanted to.”

But a year down the road and the outlook isn’t quite as bleak.  These sales were all recorded before the extended and expanded Tax Credit.

Month over Month

The number of active listings jumped up by a couple hundred in October.  This is a bit of a surprise but even more so when considered against new listings for October 2008.  There were more homes put on the market this October than last.  However,  The closed transactions were much healthier than last year with a recorded 59 more this year than last.

But that’s not the whole story.  Because those transactions are continuing to come in.  There were 1021 for the report, but 1046 are currently in the system.  This means the actual number increased over September by 84 not 59.  These additional transactions made the difference between 6 months inventory and just under 6 months inventory.  A significant difference? No, but why do they post gas as $2.29.999 cents instead of $.230, get the point.

Active and New listings have increased.  This to in rather normal due to the number of people wanting to have their homes on the market for the snowbirds coming to Tucson to look for a new winter (second) home.  And there are those looking to make this their permanent home soon.

Year over Year

Compared to October 08 it is a mixed bag of information.  For Buyers it is pretty much all Good.  For sellers, it isn’t as bad as it might seem.

For Buyers, lower prices, but fewer homes to chose from.  Better interest rates than last year and for first time home buyers up to $8,000 tax credit.  For those buying a primary residence up to $6,500 tax credit.  Active listing increased so you have more to choice.  But be aware, these figures for Average and Median sale price includes a whopping 42% of Short Sale and REO transactions.  Remove these transactions from the data and the Average and Median prices jump up considerably.  Don’t expect to buy a move in ready home in these price ranges.

For Sellers, unless you are in a neighborhood or subdivision with massive Short sale and REO properties you are facing a more realistic pricing situation now than in the past.  Your home never was “worth” what it would have sold for in the past 3 years.  Those were inflated figures,  And the home owners that borrowed against that false equity are the ones in Short Sale and REO now.  Reality is a tough pill to swallow, but if you have owned your home from more than 5 years you should still be able to turn a profit on the sale of your home.

Moving up you will find prices more affordable and probably with a lower interest rate than you were paying before.  Downsizing, you will have some money to put in the bank, because you can buy more home for less now than you could in the past few years.

Sellers are usually buyers also.  Don’t get greedy on the sell side and loose sight of the opportunities you now have on the buy side.  Sometimes we can’t let go of those false high prices of a few years ago.  Do yourself a favor, let go.  Need help doing so, get an appraisal yourself.  It will give you a sense of where your home should be priced in today’s market and provide a basis to potential buyers for your asking price.

For the complete October Statistics report you can find it in the sidebar under Documents.  It is PDF and you can download and save a copy.

If you don’t want to look for it in the sidebar.  Well, here you go: Tucson MLS Statistics Report October 2009

Post Tags: tucson-housing-market-October-2009 , tucson-mls-statistics-October-2009 , Tucson-real-estate-October-2009

Tucson Celtic Festival and Scottish Highland Games 2009

November 7, 2009

This weekend of this festival came before I knew it and I didn’t have a post prepared for this years event.  Then this morning I decided to attend some of the event.  Specifically I wanted to hear the “Brothers” from Australia.  I read in the paper they were performing 4 sessions during the two day event.  This morning I went to the website for the festival and found it a nightmare to navigate and try and find schedules and quick information.  Thus this post.

The Scottish Highland Games

Where:  Rillito Park near River and First

The games run both today and tomorrow.  This schedule I did find rather easily.  Here is the direct link to the Scottish Highland Games 2009.

Fees to attend the Festival and Games

This also wasn’t easily located.  You have to scroll down on this page to find the fee schedule.

In brief:

Parking $2

Entrance for Adults $12  with a can good for the food bank $10

For a complete breakdown of age groups fees check the page mentioned above and scroll down.

Music Schedule for Celtic Festival

This one I couldn’t find at all.  It listed who but not when.  Therefore I decided even at this late date to write this post for those looking online for information on what music will be on stage when. Since it is already Noon, I’ll skip the acts already over.

Post Tags: Tucson-Celtic-Festival , Tucson-Scottish-Highland-Games

Tucson Friday Night November 6, 2009

November 6, 2009

Tucson Firefighters Chili Cook-off

Quick Flickr Slide Show from Today

The firefighters chili cook-off is going on today from 10 am to 10 pm.  It is now about 4 pm.  I was there  from 11:30 to 1 pm.  Talk about a Rocking place.  It was a blast.  I got quite a few photos to post to flickr for everyone to see in a couple of days.  But it isn’t too late to head down there for a lot of fun and loud music which I’m sure you will love.

The food is great and the Firefighters are really putting on a great show.  The booths are every bit as good as last year and the costumes are “Totally Shameless”.

It is held at El Presideo park behind the Pima Country Courthouse.  Grab some cash and ear plugs and join in on the fun this evening.  It isn’t too late.

Post Tags: Cowardly Lion , firefighters in tutus , Tucson Firefighters Chili Cookoff

Tucson MLS – Most Closed Transactions for October Since 2006

November 4, 2009

Tucson MLS 1022 Closed Residential Transactions for October 2009

The number of closed residential transactions for October far exceeded anyone’s expectations.  In October of 2008 there were 846 closed transactions;  in October of 2007 884.  There were no high expectations the number would go above 900 this year.  But as the week progressed the sales blew right through the 900 mark.

Tucson MLS Data Pull

The data was pulled this morning for the October Statistics report.  As usual we expect there to be some late sales entered into the system.  This is pretty common even at $250 a pop.  The number of late entries have slowed since the fine was imposed for missing the deadline to have transactions entered, but it still amounts to between 10 and 20 sales per month.  Yes, that is enough to make a statistical difference.

The number of Short sales and REO transactions make up just over 42% of the total transactions for the month.  This removes even more of these homes from the active inventory.

Tucson Market Trend Indicators

I’ll be looking to see what the number of active listings are going into November.  I’m also interested in the Absorption rate for the various areas of Tucson.  I know it is getting hard to find exactly what buyers are looking for. (I’m not just talking price either)  The number of homes on the market has declined significantly this year.

The fact of a falling inventory seems to have been lost in the media.  It has focused instead on foreclosures and the lack of new construction.  The number of homes available for purchase and move in have been reduced to a point not seen in several years.

The last thing I want to see which is the other indicator of the direction of the market is the number of Pending contracts going into November.

Positive Signs for Tucson Real Estate Market

There are a lot of positive signs in this market and if I were a builder I’d be thinking strongly about getting some new homes ready for purchase.  It looks like there will be buyers in the market going into 2010 and there aren’t a lot of homes ready for them to purchase.

Post Tags: closed transactions up , Inventory down

November 1, 2009 – 85 Degrees in Tucson

November 1, 2009

We had two days of Winter in October.  It got down to 34 degrees one night this past week.  I think it was a little colder than that on our patio.  Don’t ask me how I know, I just do.

I was saying to everyone yesterday (When it was 75 degrees) “We had two days of winter in Tucson and now it’s over.”

Then today it jumped up to 85 so far, but it might make it up to 86 before the afternoon is over.

What about the rest of the week.

Oh, it’s going to be in the mid 80’s all week.

Are the Snowbirds coming to Tucson?

No, they are already here.  How do we know.  There are tell tale signs of the arrival of snowbirds in Tucson.

1. Traffic around town doubles
2. Out of state license plates are everywhere
3. Restaurants are happy again
4. RV Parks are filling up all over town
5. Second home buyers are back in the market
6. Golf courses are filling up

Those are a few of the ways we know the snowbirds are back in Tucson.

Why so early?

There are a couple of reasons:

• The weather has turned cold and two things drive snowbirds to Tucson  cold weather and snow
• This is an off year for elections.

Many people will stay home to vote on elections.  But this year, many either don’t have local elections or they were able to vote absentee.

The weather is Wonderful in Tucson

Every year I say the same thing when it gets to be November.  “This is why we live in Tucson”.  The next 8 months are going to be great.  Shorts, sandals and outdoor eating will fill the schedules and lots of good grilling smells will fill the air.

Tucson Golf Homes

I did mention that golf courses start filling up this time of year.  It is true.  And to make the search easier for those wanting to buy a home on or near a golf course I’ve put together a new set of searches to make it “EASY” to search for golf homes in Tucson.  I’ll be writing some more about this tomorrow, but for those wanting a sneak peek, here is the link to Tucson Golf Homes.

Post Tags: Snowbirds , Tucson-Golf , Tucson-winter