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Palm Beach County year over year prices post staggering Oct. increase:

Bottom Line:  The Real-Estate pros I work with in Palm Beach County provided me with October sales information – wow what a month! 

Housing has been my big theme in 2012 but even I didn’t believe we’d be seeing 25% year over year price increases!  That’s right 25% price increases (ok 24.7% but let’s not split hairs).  It’s clear that the hypothesis I’d been laying out continued to hold true in October…  So what’s that hypothesis if you missed it?

  • Uncertainly would lead to more people pulling money out of risk assets (mainly stocks)
  • Money sitting on the sidelines would make its way into real-estate
  • Locally – the influence of season would be felt early as those who had been renting over the past several years would feel compelled to buy with the local market recovering
  • Record low mortgage rates would continue to provide demand for those looking to move up buy

It’s clear that all of those ideas are manifesting themselves in the local real-estate market.  In September the increase was just under 15%.  In one month the increase jumped an additional 10% - that’s you seasonal influence coming into play.  Especially when you consider this:

  • The increase for single family homes was about 16%
  • The increase for condos/townhomes was 46%

So let’s revisit a question I was addressing just last week before this new data.  Is it sustainable?

 

Inside the local real-estate numbers:

Bottom Line:  As extreme as a 25% increase may seem it’s not unrealistic.  How?

  • Despite a 25% year over year avg. price increase locally – 70% of all deals were all cash.  That compares to 74% in September.

So even with an additional 10% in pricing we only saw a 4% drop off in all cash deals.  More importantly – those 70% of homes purchased with cash can’t default.  In 2005 only 11% of all homes were purchased with all cash locally. 

Here is something else to consider.  When a market crashes it typically over corrects.  I’ll use the stock market in this cycle to demonstrate.

  • Peak to bottom the stock market decreased by about 54% (Dow 14,000 to 6400). 
  • From bottom to rebound (March 2009 to March 2010) the increase was 58% (Dow 6400 to Dow 11,000).

It’s clear with yo-yo numbers like those that stocks were over priced before the crash and over sold once the crash in the economy was factored in.  It’s increasingly looking like we’re in the mist of a similar outcome in the local real-estate market.

 

Google has new resource for Veterans looking to start a business:

Bottom Line:  This is cool.  According to USAA magazine (about four months ago), returning vets are at least 30% more likely to go into business for themselves.  The most common way vets are entering the business world?  Franchises the most common reasons they are turning to franchises?  They need a prepackaged opportunity.  If you’re a vet that would like to start a business without going the franchise route Google has a tool to help.

Google has launched VetNet, a resource that helps vets find a career including the tools needed to start a company.  Syracuse University is aiding in teaching online courses for vets and providing additional in person gathering as well.  It’s worth looking into for all vets looking to get into business for themselves.  Click the link below:

http://www.entrepreneur.com/blog/225109

 

Economist outlines his theory on fiscal cliff deal:

Bottom Line:  Cleary we still don’t know what the outcome of the fiscal cliff situation.  Most economic professionals have their own ideas but are reluctant to go on the record with them.  One now has. 

Ben White from Politico is suggesting that a deal will be struck before January 1st and this is his prediction:

  • Top tax rates to rise from 35 to 38%
  • 1 trillion in total estimated tax increases (including the increased top rate)
  • $800 billion in actual proposed cuts (most in defense)
  • Dividend and capitol gains rates rising from 15% to 20%

So Ben reports you decide.  As many are trying to plan based upon the possible outcomes it may be at least a thought starter.

http://www.cnbc.com/id/50027359

 

Average length of time unemployed still rising:

Bottom Line:  Over the past few years I’ve shared the foibles in the traditional Non-farm payroll unemployment:

  • It doesn’t count anyone who isn’t currently on unemployment but is looking for work (currently 2+ million people)
  • It’s doesn’t count those employed part-time but want more
  • It doesn’t factor in the average compensation of replacement employment (typically 66% of the jobs lost

Here’s a stat that furthers the issue at hand with the base unemployment number. The average length of time on unemployment is 40 weeks.  How does that compare with years gone by?

  • In 2009 the avg. length was 29 weeks
  • In 2010 it was 33 weeks
  • In 2011 it was 39 weeks

So in the three years of the “recovery” the average length of time on unemployment is continuing to rise – including still rising in 2012.

http://www.usatoday.com/story/money/business/2012/12/02/jobless-forego-benefits/1735805/