Good morning to the Easter Season and April Fool’s Day,
A quick thank you to the attendees of our recent seminars: “Tax Avoidance and Deferral Strategies for Highly Appreciated Real Estate.” It was a wonderful way to meet experienced investors, especially those seeking to keep their hard-earned cash fully available for future investments. We will continue to follow-up, always ready to address your questions and keep you updated. If you have questions, please call. We are ready to help.
Looking ahead, the Federal Reserve looks to continue the game plan of former Chairperson Janet Yellen. Here is a most recent update: Another 1/4 % increase in the Federal Funds rates. And, expectation for at least 2 more increases this year. No surprises I have noted from our new Chairman.
Monthly Fun News
1) In 1967 8.1% of households earned more than $100,000, while 53.2% earned between $35,000 and $100,000. Today, 27.7% of the population – inflation adjusted – now earn greater than $100,000 (three times 1967), with 42.1% earning between $35,000 and $100,000. Is the middle class shrinking or is it more American households earning more than ever? It does help to have more women working and receiving better wages.
2) As a percentage of GDP, US household debt is slowly rising. Yet it is 20 percentage points below the “housing-bubble” peak of 100%. Five nations with the highest such debt-to-GDP, are: Switzerland at 130%, Australia at 120%, Canada and Norway at 100%, New Zealand at 95%. It is a pattern, but fortunately these are small nations trying to stimulate their economies.
3) In the past few years, 1.2 Billion more people now have access to electricity. Poverty in China has dropped from 99 Million to 43.4 Million. For the US, our poverty rate has dropped to 12.7 %, with the child poverty rate, down to 15.6 %. Great trend lines.
I want to give credit to Elliot Eisenberg (the Bowtie Economist) and John Mauldin (Mauldin Economics) for many of the fun facts I pass along. The intent of the range of reading I do is to bring you helpful information and perspectives, not always found in the headlines.
Being in the 2nd longest expansion ever, a common concern is when the train might stop. Yet, as carefully pointed out, this expansion is the first experiment with highly modified markets, via QE and resulting rate manipulations. The outcome: Igniting growth while keeping interest rates below what are called “free market” rates. It will be a cause of many books to be written in the future.
Keep calling and keep coming back, as we strive to better grasp our market and understand how it might effect your investing decisions. This sure beats planning in an information vacuum. Call us. Let us help you make better decisions, while knowing all your options.
Now for a bit of our monthly The Good, Bad n’ Ugly:
The Good:
A recap of the 10 Biggest Financial Laws Passed since Dodd-Frank: 1) JOBS Act, 2) Sharing of Privileged information with CFPB, 3) ATM fee disclosures, 4) Homeowner Flood Insurance Affordability Act, 5) Swaps push out, 6) Capital standards for insurers, 7) Tossing CFPB’s arbitration rule, 8) TRIA re-authorization – terrorism, 9) Export – Import Bank Re-authorization 10) Scrapping SEC’s extraction rule. And with good hope even better and more needed changes to coming.
Why good? It speaks to reforms from those in Washington D.C., tasked with watching over the entire US population, not just the political insiders. Right or wrong? Time will show and tell.
The Bad:
Once again – Wells Fargo. They seem unable to stop their antiquated ways of doing business. How bad? Many long time members of the Board of Directors are leaving. Quite something, considering the lucrative financial benefits for people to be on these Boards.
Consider the latest investigation – by the Department of Justice – over their bad actor dealings, after the Equifax data breach. One statement was about how Wells Fargo was easily overwhelmed with requests to replace effected credit cards. Their answer: Simply close the accounts, regardless the risk and damage to credit reports. Wow. Such care and concern. Time for a break-up and sale? Just asking.
The Ugly:
This one caught me by surprise. I had a startling conversation with a friend. Their daughter, who speaks 5 languages and holds a 3.8 GPA, was asked to “Not apply with UC Davis.” Why? Her GPA was too low! Using this sly technique hides any statistical evidence showing defined favoritism for out-of-State and overseas attendees. Once upon a time, when class rooms were not filled, Universities were allowed to expand non-resident applications. What happened to putting the California tax-paying family first, especially our best qualified students ??
In Closing
Our property appreciation rates – our local residential market – continues to exceed historical averages. With this, consider the following realities: 1) The lack of housing supply will not change, as; 2) job growth and an expanding economy continues, along with; 3) over 1/2 of all new jobs being created, are 6 digit incomes, plus; 4) tax reform and deregulations. Combined, they point to increase demand, limited supply, and continued increases in home prices.
As a result, we are receiving an increase in calls-for-action, especially for land purchases and loans for new construction, apartments, and NNN properties. Don’t miss out. Give a call and tap into our many investment tools, knowledge base, and proven lender resources of 30 years.
Preparation is key and our team is ready to help you successfully achieve your dream.
Have a blessed day and Joyful Springtime to all.