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The housing boom may very well be on its way to a bust. As many of you know from news sources the stock market the last couple weeks has been volatile at best. If you step back from the hype and look at the bigger picture, the last couple weeks have resulted in a $2 trillion loss in value. Some analysts are saying that this is a direct result of the collapsing Chinese market. The problem is, many Americans don’t seem to really understand exactly how this will negatively impact local housing prices. Let me explain.

First you need to understand that China is NOT a trusted trading partner, even though that is what you are told from certain politicians. Make no mistake, China is a trading adversary and they are hell bent on one long term goal, the collapse of the American dollar as the World reserve currency. Secondly, you need to remember, China is a Communist country. I will admit, Communism in China doesn’t look like it did 30 years ago but, make no mistake, it’s Communism none the less. This results in a highly controlled, highly secretive and highly manipulated market place where free market principals, and ideas are distorted and twisted. This means, that when China reports it’s losses or gains, they should always be viewed with a speculative eye and with cautious concern towards its legitimacy. Unfortunately, that’s not how we have been doing things the past 10-15 years and as a result, we have lost our place in the World as the most power economy and therefore, we are now at the mercy of less friendly countries. Let’s all not forget, China holds an enormous amount of American debt and has been countering America’s currency devaluation policies by issuing their own version of Quantitative Easing.

Now, with all that being said, I hope I have made it clear that China is no friend of the United States because, if you can’t agree with me on this point, the rest of this article isn’t going to make much sense to you.

China’s market is in a collapse….a big collapse, no matter what American politicians and Chinese government officials are telling the world. We can see the effects of this collapse very clearly by the crazy ups and downs in our own market. The losses our market is sustaining will negatively impact the revenue streams of Americas largest companies. If they aren’t making gains on the market, they are losing a revenue stream that often times is used for growth of products and services. Essentially, those products and services are sold overseas because American companies are so productive, they have to expand to foreign markets because the American market is heavily penetrated. In other words, if these companies want to continue to grow and make money, they have to open or do business in foreign markets. China is the number 1 buyer of American products and services. This means they purchase more of our stuff than any other country and keep in mind, not only are they the largest buyer of our products and services, they are essentially the last major market. In other words, when China stops buying our products and services, American companies who do business in China are going to feel the hit. So, these American companies taking a double whammy, they lose out on the stock market and then they lose out on the shelf at the store on the street corner.

As we all learned from the collapse of our own market in 2007, when companies start feeling the pinch, they start laying off workers and this is where housing prices will be negatively impacted. Simply put, people without jobs can’t pay mortgages and mortgages that don’t get paid go to foreclosure. Large amounts of foreclosed homes drives down prices and people who can still afford to pay their mortgage end up in negative equity, that means they owe more on their home than it’s worth. Now, that doesn’t seem too bad on the surface because you would think that if you just stayed in the home and could pay the mortgage, market will recover in 5 years or so and you would gain your equity back but, don’t forget, mortgages are bundled together and sold on the market as securities. Those securities are held in peoples retirements, no different than the typical diversified funds you likely have at the company who holds your IRA, 401K or whatever group managed retirement account you may have. Then our stock market takes a massive…..some speculate a death blow.

Let’s not forget, we have China in the wings, waiting for the first sign of unrecoverable weakness and like a thief in the night, they sell off all their American debt but, it’s not like when your bank sells your mortgage debt to another bank and equal or greater value, it’s a short sale of our debt….and a massive one at that, to the tune of billions and billions of dollars. They flood the world market with cheap, inexpensive, dollars and over night, maybe even in the same day, hyperinflation takes control over here in America and just like in Russia a few months ago, people swarm the banks, try to pull their money out, just to realize, local banks don’t have enough cash reserves to cover everyone’s withdrawal and before you know it, social and civil unrest ensues.

I want to be crystal clear here, I am no economist or socio-economic international political expert. I am a self taught, self made man who is trying to read the tea leaves. My opinions are my own and should never be considered financial advice however, it’s not hard for an alert American to look around and see the state of affairs we are in. Not just financially but, socially as well. Our country has been on the wrong track for some time and for some time, we have weathered the storms however, this time it will be different. It will be different because our enemies smell blood in the water. Sure, most Americans are too busy pacifying their children with Ipads, Iphones, I”this” or I”that” to stop and recognize that if they don’t take a more active role in the governance of their country by becoming informed and voting, other less informed, less competent and less liberty loving people will. .

In conclusion, the end of 2015 may result in a poor Christmas earnings for American companies due to international market uncertainty. I believe the direct result of a poor Christmas earning season for American companies will be a wave of layoffs 1^st quarter 2016. The sign that will tell me that this is starting to happen is the weekly jobless claims. If we see these numbers rise above 300K for a sustained period of two weeks or more, we are in trouble and housing markets will collapse 2-6 months later.

Jesus "Jesse" D. Gonzalez Broker / Owner TN Lic # 00300859

Liberty House Realty LLC TN Lic # 00262289

1709 Ridgemere Ct. Hermitage Tn 37076

O#: 615-424-0961

C#: 615-424-0961

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Email: JGonzalez@LHRLLC.com

Alt Email: JGonzalez@RealTracs.com

Web: www.LibertyHouseRealtyLLC.com

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Many REO Realtors who were closing a record number of deals in 2012 may not be able to close that same number of deals, or anything close to it in 2013. This really shouldn't come as a surprise to anyone considering, we have been noticing on dramatic pull back in REO now....for about 6 months or so, This all cumulated for many of us when Fannie Mae decided to fire all of thier outsourcers...or at least, the vast majority of them. None the less, this has many speculators out there talking up the "Rise and Fall of REO" and yes....make no mistake, it is definitely in declined however, let's not forget one, simple, truth. Home sales are directly correlated to jobs. No jobs = REO.

Now, it's true, short sales are playing a much larger role in the default real estate industry...in fact, as the article outlines, they seem to be up....much more than REO. In fact, from what I am hearing in the industry, many of these lenders and participants in "community stabilization" programs are seeing that short sales do a much better job at maintaining home values than REO ever could and as such, are holding back from foreclosing and giving bank directed short salesa much stronger look.

I have heard, the word on the street is, Fannie Mae and HUD are very likely going to be coming out with their own "Pre-Approved Short Sale" .... which isn't anything new however, it will have one dramatic change and that is, it will be bank directed. What that means is, instead of waiting on a homeowner, desperately trying to save their home, holding onto it from either desperation or flat out resolve, banks will hire their REO agent to go out, make contact, discuss options and give the REO agent a "Pre-approved Short Sale".

If you want to read the article, "The Rise and Fall of REO" I referenced it below however, make no mistake people, REO isn't going to fall....untill unemployment falls. These two are one in the same and as long as we stay over 7% unemployment, REO will, at the very least, level out but, it will stay strong.

By the way, for all you agent out there who are just hating the idea of doing a short sale, won't do a short sale or simply think its too much work for the money.....you might want to be changing that attitude because, as Corelogic reports, short sales had a banner year in 2012 and no one expects anything less in 2013.

To learn more about short sales, maybe even attende the industry's only Short Sale Symposium, you need to attend the Short Sale Specialist Symposium at Sea.

Link to: The Rise and Fall of REO

Link to: Short Sale Symposium

It's fall here on earth and time to get the house ready for winter. For some of us the house needs to be ready for cold,and for others maybe only for cool-er or wetter ... Fortunately for us, it is spring on Bizarro World.You remember Bizarro World? From the Superman comics? On Bizarro World,the cubed planet Htrae (Earth backwards), everything is opposite or backwards of what it would be on earth. The people are grossly ugly, they try to break things, lose money in investments, wash with dry dirt - well you get it. And everything they do is considered the right thing to do.

Since it is spring, Bizarro Worlders are trying disrepair their houses in time for the cold weather. I publish their list, perhaps forthe first time in history:

• CO Monitor - break the test button so it can never be pushed.
• Pests - why bother? Let them run free.
• Moss on the roof - perfect! Leave it alone.
• Gutters and downspouts - keep them clogged!
• Boilers - an unsafe safety-relief valve not tested is the best relief valve.
• Furnace - never, ever oil anything.
• What's an HVAC filter? Don't even check for one.
• Caulk nothing, leave gaps, don't eliminate mold or muck.
• Smoke detector - why have them anyway? But break that button too.
• TPR valves - testing is always a bad thing.
• Hose bib - leave on full power at the indoor valve so it freezes.
• Water heater - it is illegal to hook up a hose and drain a little out.
• Toilet - hopefully it rocks on the floor so badly it can't be tightened.
• Septic system - it should be years and years of never pumping it out.
• Private water system - never add pressure to the blue tank.
• Smoke detector battery - remove now! Don't replace!
• Foundation - slope toward the house and don't extend downspouts.
• Wood-burning chimneys - let the creosote build. And build.
• Kitchen inspection - grease should get thick on everything.
• Refrigerator - sweep dirt under it and never vacuum the coils.
• Garage door - should it work at all? Never oil anything.
• Disposal - bones clean it really well. Baking soda and vinegar don't.
• Fire extinguisher - don't bother checking the pressure dial!
• GFI's - those buttons should be stuck and don't do anything anyway.

Well, what do you think of the list? Enjoy! Hopefully it helps. Read it carefully! Keep it in your pocket and pull it out as you walk around the house. It should come in handy. And, as to lists, we all use them and we all need them. And remember, old Preservation Contractors and home inspectors never die. The just grow listless...