Thursday, December 18, 2008

WOW!! Thats alot of money

I was reading some articles online and ran across one on CNN/Moneys website with the title "U.S. homes lose $2 trillion in value in '08". Wow that is a lot of money and the article goes on to say that there is no end in sight. (Here is the URL to read it yourself ). I began to wonder how much is $2 trillion dollars. It is a massive number, $2,000,000,000,000.00; it 1 million multiplied by 1 million.

The current population of the US is 305,000,000.
We could give every man, woman and child $6557 each.
A US quarter weights 2 oz - 8 trillion quarters weights 1,000,000,000,000 lbs.
1 dollar bill is .oo43 inches thick, 2 trillion dollar bills stacked is 134,000 miles high.

Those are amazing numbers. So remember these figures as you read about the housing crisis and what we lost collective as US homeowners. This relates to a long road to recovery. We (Jeff and I) went through something like this in the middle of 1990 (in California) where home values fell by 40% and it took 11 years to recover their value and that was a mild recession. This recession is so different from the last one with all the financial elements that I expect the recovery to take longer. We as investors and homeowners need to be looking for the long term. We have already adjusted our model.

We no longer look to sell a house to a retail buyer unless we can discount the price to 50 - 60%. The market changes so quickly with the foreclosures down the street that we need that much cushion in the deal. We are working our deals so we can provide owner financing and rent to own deals. We find buyers if we make it easier for them to buy. That is our model whether we are buying REOs from banks or properties from sellers directly. We need to buy and sell creatively with seller financing or private money. So look at your model for buying and selling and change your focus to holding for longer periods of time or deeper discount on sale price. Good luck.

See Ya,

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