Some Random Thoughts
Not precisely about real estate, but close maybe. Our local TV stations were once again on the subject of falling real estate values and citing a report of zillow.com to support the story. We happen to be a fan of zillow, in fact spent a great deal of money modifying our web site to give access to their data base. We hope it helps you, but we would like to point out that zillow statistics in macro form, e.g. covering a broad market area, are likely to be accurate, but in small market areas such as Chico, Red Bluff, Orland, Oroville, etc. their micro estimates of value are not entirely reliable and should be used only as a general guide and should be verified. If you are seriously considering selling we urge you to get a comparative market analysis from a reputable broker. (that's not entirely an oxymoron). A good report will provide you with actual recent sales of comparable properties and enough information to provide an informed opinion of your probable sales outcome. Because that outcome is your money we suggest you consider carefully the fees you agree to pay and the service you expect to get. Compare before you list.
If we consider that the money we don't give directly to the government to be our disposable income, then we are seeing a serious dilution in the effectiveness of that income. Fuel prices are high, driven by what amounts to a lack of competition in the production and distribution of fuel. The government has extended it's catering to the farm lobby by enforcing the use of ethanol from corn as an additive in fuel. Now corn prices are at record levels and animal feed costs are off the charts, so our trip to the grocery store is kind of a double whammy, we can barely afford to drive to the store and then can't afford to buy much when we get there. What does this have to do with a real estate blog? Disposable income. At a time when interest rates are good, home prices are becoming realistic and good loan programs abound, people have less disposable income to divert to housing needs. This fuel issue in not going to go away, and it is not just gasoline at issue. Perhaps some of you are also able to remember when locomotives and ships used coal for fuel, and trucks used gas. Mr. Diesel designed an engine that ran very nicely and economically on what was "garbage fuel", diesel oil. Cheap because refining was fairly simple.
Over time the use of coal was replaced by the new "cheap" diesel in locomotives and ships, and the highly refined gasoline was replaced by diesel in trucks. Even the growth of airlines with jet engines use a variation of this "cheap" fuel. Now since everything that is transported uses some variation of diesel fuel it costs almost the same per gallon as gasoline. Since there are very few producers of petroleum products the control of pricing is a very simple matter, and because the cost of entry into the business, building refineries, etc. is prohibitively expensive, here we are. Almost obscene profits for the oil producers, an incredible burden for the consumer and the government piling on with their aid to the farmer by creating a market where market forces did not provide one.
This whole thing is intended to be commentary, not viewing with alarm. Conditions are what they are, and in the business of trying to guide people intelligently in the process of selling, buying, or financing a home, we'll do it as effectively as we know how. I think being aware of some of the larger issues will help our clients understand the problems we face in helping them reach their housing expectations.
As usual, thanks for visiting.
If we consider that the money we don't give directly to the government to be our disposable income, then we are seeing a serious dilution in the effectiveness of that income. Fuel prices are high, driven by what amounts to a lack of competition in the production and distribution of fuel. The government has extended it's catering to the farm lobby by enforcing the use of ethanol from corn as an additive in fuel. Now corn prices are at record levels and animal feed costs are off the charts, so our trip to the grocery store is kind of a double whammy, we can barely afford to drive to the store and then can't afford to buy much when we get there. What does this have to do with a real estate blog? Disposable income. At a time when interest rates are good, home prices are becoming realistic and good loan programs abound, people have less disposable income to divert to housing needs. This fuel issue in not going to go away, and it is not just gasoline at issue. Perhaps some of you are also able to remember when locomotives and ships used coal for fuel, and trucks used gas. Mr. Diesel designed an engine that ran very nicely and economically on what was "garbage fuel", diesel oil. Cheap because refining was fairly simple.
Over time the use of coal was replaced by the new "cheap" diesel in locomotives and ships, and the highly refined gasoline was replaced by diesel in trucks. Even the growth of airlines with jet engines use a variation of this "cheap" fuel. Now since everything that is transported uses some variation of diesel fuel it costs almost the same per gallon as gasoline. Since there are very few producers of petroleum products the control of pricing is a very simple matter, and because the cost of entry into the business, building refineries, etc. is prohibitively expensive, here we are. Almost obscene profits for the oil producers, an incredible burden for the consumer and the government piling on with their aid to the farmer by creating a market where market forces did not provide one.
This whole thing is intended to be commentary, not viewing with alarm. Conditions are what they are, and in the business of trying to guide people intelligently in the process of selling, buying, or financing a home, we'll do it as effectively as we know how. I think being aware of some of the larger issues will help our clients understand the problems we face in helping them reach their housing expectations.
As usual, thanks for visiting.
posted by Douglas Doss | 9:48 PM
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