Jeffrey's Blog

RIP, Mr. Borlaug - A Global Hero We'll Never Meet (and probably wouldn't know if we did)

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 21 Sep 2009 10:30:21 -0500

This fellow probably saved more people than anyone else on earth in the
entire human history.

By proxy, he very likely saved US in the process.

Nobody in America or Europe knew he existed except those who opposed him
long ago, and oppose his effects yet today in the guise of
"environmental causes".

http://online.wsj.com/article/SB10001424052970203917304574411382676924044.html

His long-lasting effects are evidence that some few Nobel Peace Prize
Awardees actually earned the honor for their outcomes, not their
"theories". Unfortunately, examples of his sort are in the minority in
recent times.

During the Depression (the last one, not this one) he worked for the
CCC, one of the many starvation-wages "Gov't Relief" program FDR put in
place after he taxed the employers out of business.

While working in the CCC, Mr. Borlaug learned a lot about people who are
starving, lessons learned from that era were put to use throughout the
rest of his productive life.

He never quite understood why they were starving in the first place, but
was a scientist and an activist of sorts, the causes of humankind's
self-destructive ways weren't his bag.

Lee County Florida, Something's changing in FC/Shrt/Std ratios

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 21 Sep 2009 10:27:35 -0500

Something's changing in FC/Shrt/Std ratios, some regions seeing some relief, others seeing more pain. Lee County's showing more pain (+4%) in the broad view.

South Cape Coral stands out clearly as a "pain center" in this view, North Cape shows a significant "relief center". LA in broad spectrum is beginning to move from painful to somewhat-relieved, with plenty of room for improvement. UEP areas where the future improved show less FC/Shrt %, though that may well be either temporary or my own wishful thinking. The longer view will tell the story more clearly..

INVENTORY vs. DEMAND - it'll end up being the driving force as usual.. "Usual" would be better than the calamity of our recent "Usual", but every day brings a whole new "Normal" these days.

We'll look forward to the newest "Normal" being something we can remember was a good time to be alive. If Mr/s. DEMAND doesn't die, Mr/s. Inventory will require a higher paycheck sooner or later. Mr/s. Inventory has reduced from 11,400 in Nov '08 to 10,800 today against a flood of 14,000 Mr/s Demands, all of whom have found themselves Owners and are spending their Cost Of Living in Lee County now (or their Tenants are).

It'll happen, it's how "IT" goes.

Trans types? Glad you (would have) asked:

Sale Financing By Type
Year:	2007	%

Cash	1235	16.6%
Conv	3787	50.8%
FHA	0	0.0%
VA	0	0.0%
OTHR	294	3.9%
OWNR	52	0.7%
UNK	2080	27.9%

Totals:	7448	100.00%

Year:	2009	%

Cash	9270	64.2%
Conv	3593	24.9%
FHA	767	5.3%
VA	79	0.5%
OTHR	600	4.2%
OWNR	133	0.9%
UNK	1	0.0%

Totals:	14443	100.00%

Lee County Florida: Most recent PDGs

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 21 Sep 2009 10:24:48 -0500

The good news? 1,126 PDG just since 9/1/09.

The not-so-good news? We're probably going to have to learn to fly by OJT.

The nice part? This is when this SHOULD happen in a "balanced" cyclical tourist-driven market. Last year was a shock to many, expected by few, received by all regardless of expectations. It's why we call it "The Fall Season" in my world.

I'd expect these views to bring something like $120k avg / $81k Median as these come to closing (Sale$ vs. PDG @ List$).

MTD September Avg Sale$ is $126k/$85k, with about half of September on the books. That's UP from Aug ($122k/$83k), subject to change without prior notice (lag). :)

The short look-back - PDG since 9/1/09, all Res:

Active: 0 Pending: 1126 Sold: 0 Other: 0 Total: 1126
   Bedrooms Bathrooms Square Feet List Price Selling Price DOM/CDOM
Minimum 1   1.00   600   $4,900      0/0
Average 3   2.12   1,651   $119,583   $0   71/93
Median 3   2.00   1,574   $80,000   $0   28/32
Maximum 6   5.00   5,732   $2,000,000   $0   953/1248

Slightly longer look back (3/1/09 PDG):

Active: 0 Pending: 2907 Sold: 0 Other: 0 Total: 2907
   Bedrooms Bathrooms Square Feet List Price Selling Price DOM/CDOM
Minimum 1   1.00   600   $4,500      0/0
Average 3   2.16   1,687   $124,647   $0   78/103
Median 3   2.00   1,584   $84,900   $0   29/35
Maximum 6   6.00   5,732   $2,000,000   $0   1294/1294
Total Dollar Value           $0

ALL PDG To Date:

Active: 0 Pending: 3002 Sold: 0 Other: 0 Total: 3002
   Bedrooms Bathrooms Square Feet List Price Selling Price DOM/CDOM
Minimum 1   1.00   420   $4,500      0/0
Average 3   2.15   1,684   $128,341   $0   79/104
Median 3   2.00   1,585   $85,000   $0   30/37
Maximum 6   8.00   7,199   $2,000,000   $0   1294/1294
Total Dollar Value           $0

FRB_MoneySuppy_1959-2009_090609 - The Future With Some Disgusting Clarity

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 21 Sep 2009 10:19:46 -0500

So, I was doin' what I do when sleep doesn't happen... I shoulda
knocked myself out instead.

This fresh-off-the presses FRB Report can be found at:

http://www.federalreserve.gov/releases/h3/hist/h3hist1.txt

Double the REAL CASH money supply, fix the Banks, break the rest of the "little people" world by default. The Banks will multiply that cash by at least 10 times, likely borrowed @ 0% and "loaned" to the Treasury through T-Bills @ 2.5+% in 12-120 month laddered terms. The good news in that data? FRB doesn't dare raise the base interest rates while
these run their course, since it would squeeze the Banks all over again.

Note the BANKS still have the majority of the cash injections, but have dropped about $110B of it in TWO MONTHS with no positive results. Don't worry about the Banks, though - they'll be fine no matter what they do next.

Note also only .5T is listed as "Borrowed" - the rest of the gift is
PREFERRED STOCK, so it doesn't have to be listed as debt, just a "liability".

the money supply has went from 1.2 trillion to 1.6 trillion under Mr. Obama's watch. And since it is being handed to the banks, give it a multiplier of 10:1

There are three things that I can see happening:

1. Simple inflation
2. dollar collapse within the next 90 days and spiral into hyper inflation
3. Both of the choices may and probably will occur. Devaluation has already occurred in the now-factual doubling of the base currency, though its "formal" effect is staved off by fear in gov'ts outside our borders as well as inside our borders.

Can this trend go on for long (years) without effect? No

Do those who did it know the effect? Yes - the caving to the GS-built Treasury Chief(s) was a serious mistake, though "The Plan" was not the worst of the possible plans available. That "The Plan" was subterfuge is now historically factual - the REAL plan is now obvious and should be criminally prosecuted for its fraudulent and damaging realities. That won't happen.

Is/was there another way? Yes - GENTLY putting cash in the hands of the consumer and its employers would lessen the effect of a fiscal reset which HAD to happen once the Gov't forced Lenders to lend to those who simply could never repay. The Lenders took full advantage of the requirements, blowing a reduction in profit into a debacle of lost capital never before seen on earth. Pre-WWII Germany came close, but theirs was immediately inflationary without controls in place to stave off our outcome. By the way, Pre-WWII Germany was the BEST example of Keynesian Theory put in motion - it failed beyond belief in record time, bringing Germany to no other choice but expansive MILITARY budgets with the attendant military action to support the whole notion of fiscal expansion by Government spending (Keynes, pure and simple).

Essentially, we've now doubled base money (cash or its real equivalent), which will be multiplied/monetized at today's favored multiple - something like 30+ times. The effect on M2 and the now-unreported M3 will be pure disaster at some date in the future, but they'll stave off the damage as long as THEY NEED US AS CUSTOMERS - not a day beyond.

South America, India and Africa are being groomed for expansion at high speed. This will be a race to the finish line, we're in the lead as "economic serfs" by at least a neck, but losing ground fast against external nations chock-full of new customers for non-US goods.

USEFUL Hard assets and CASH - as always, these last longer than other "investments" in a true Depression. Gold is NOT a useful hard asset unless the bearer can escape to some place where it can be converted to useful currency. FDR knew that, his rendering of gold as ILLEGAL for personal ownership put the kibosh on all the "Hoarders" in June, 1933. History's clear, but few will even take the time to read it, fewer yet would believe that could happen again. NONE of those can say why they think it wouldn't happen, as they all have plans to flee with bags of gold, though they only hold CERTIFICATES which say they "own" some. That'll be darkly humorous if "The Real Crash" comes as it does - "Without Warning", though the bells ring for years prior to its arrival.

Other'n that, I don't know much about it.. I know this: This cannot continue for as long as most believe it might. The lag from action to effect in Government-driven fiscal policy is 9-18 months, can be "deferred" to 24 months at the most.

We're ticking past 10 today (from Oct 2008 - the first BLAST of capital into the vaults of Banks and NOT lent for productive economic support)...

CASH,Suntrust is BLEEDING it at 50% erosion in a single quarter.

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 21 Sep 2009 10:15:59 -0500

In Q2, the ending cash
was $2B against $118B in Deposits..

Banks should be awash in cash (the big ones are, but it's locked down), Suntrust is BLEEDING it at 50% erosion in a single quarter.

I actually thought Friday might be "The Day" for Suntrust, but I don't think Ms. Bair has the money to swallow one that size right now. There are worse smaller Banks by the ton, she seems to be "saving" them by selling them off to mid-sized outfits & taking the hit for the downside for the moment.

Income (Qtrly shows STI has lost $1B YTD by Q2..):
http://www.quote.com/us/stocks/financials.action?sym=STI&page=incst&period=q

Balance Sheet (SCARY Stuff in Q2 vs Q1 Cash). Looks like they
issued/sold $2B in stock in the last Qtr (Add'l Paid in Capital) and
paid off $1B Preferred. They also reduced Performing Loans by $4B and paid down debt similarly (maturing notes, perhaps?). Of all the oddities, the CASH position is the most insane:

http://www.quote.com/us/stocks/financials.action?sym=STI&page=bash&period=q

EOQ3 just a few days out now - national "pundits" already warning of its results, but money is steadily pouring into the stock markets in a reverse of the trend of just a week ago. This might be the first year Q3 takes priority over Q2 in the financial world.

August SFR sales update

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Wed, 01 Oct 2008 17:05:31 -0500

While the rest of the world crashes, we are increasing in sales! This data is a courtesy of one of our Corp Sponsors. All of our Corp Sponsors can be found at http://www.swflreia.com/businessdirectory.html If you are an investor these are the people you should be doing business with. If you have a service to offer investors, you should be a Corp Sponsor of the SWFL REIA Lee County

Lee County SFR Sales August 2008: 710
Lee County SFR Sales August 2007: 424
Active listings Lee County 11567
We absorbed 6% of the Inventory
73 Percent Increase Month over Month in Sales

Lehigh Acres

Lehigh Acres August 2008: 124
Lehigh Acres August 2007: 61
Active Listings Lehigh Acres 2730
We absorbed 5% of the Inventory
103 percent increase Month over Month in Sales

Cape Coral

Cape Coral August 2008: 378
Cape Coral August 2007: 184
Active listings in Cape Coral 4293
We absorbed 9% of the Inventory
105% Increase Month over Month in Sales

Fort Myers

Fort Myers August 2008: 113
Fort Myers August 2007: 132
Active listings Fort Myers 2803
We absorbed 4% of the Inventory

Final Notes

Sales are up Year over Year.
Corp. Sellers still dominate the market.
Lehigh Acres seems to have found pricing desirable to buyers.
The high foreclosure areas are the leading edge of increasing sales due to the inventory available.
Short sales are still not prevalently closing
- 21 SFR closed in 2007
- 98 SFR closed in 2008
  - 5407 Active Short Sale Listings Currently.
North Fort Myers seems to not be affected as much by Foreclosures. East of Slater road looks pretty much the same pre-2005.

Charts and Graphs will be posted later today in the Members section at http:www.swflreia.com Prepared by Cristina Tumbarello, Realtor she can be reached at cristina.tumbarello@yahoo.com

Sept. 2008 Lis Pendens and Foreclosure Update, Lee County Florida

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Wed, 01 Oct 2008 17:03:39 -0500

Sept 2008 Lis Pendens Filings: 2462
Sept 2008 Deeds acquired by foreclosure: 912

Update from the August data: 686 of the Lis Pendens filed had a homestead exemption present

Notes:
·        I was quoted heavily in the Media last month as to the one month drop in filings, the rest of the quote was let's wait till the end of Oct. 08 to call the trend based upon that drop.
·        What Happened to the Fannie and Freddie Lis Pendens filings? They have 2 each? I have double checked my work on this. If I have an error on this I will correct.....
·        We had an early month surge in per day filings with a drop off at the end of the month.
·        Deeds transferred dropped. Expect many of the open cases to be resolved as the Clerk of the Courts is streamlining the process.
·        The trend appears to have not abated. It has bounced up and down from month to month for the last year.
·        If you are looking for hope, the per diem filings trended down as the month went on. From the first two weeks, I was extrapolating a 2800 plus month in filings.

SWFL REIA members have access to a detailed report with counts, charts and graphs in the members section of the website
For membership info Click Here

Complied and analyzed by:
Jeff Tumbarello, Director, SWFL REIA
Got questions? Email me.
Need more info?
You can hire us to perform studies like this at the objects of your choosing.
Email me at jeff@swflreia.com

August SFR sales Lee County Fl

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 22 Sep 2008 16:01:30 -0500

Lee County SFR Sales August 2008: 710
Lee County SFR Sales August 2007: 424
Active listings Lee County 11567
We absorbed 6% of the Inventory
73 Percent Increase Month over Month in Sales

Lehigh Acres

Lehigh Acres August 2008: 124
Lehigh Acres August 2007: 61
Active Listings Lehigh Acres 2730
We absorbed 5% of the Inventory
103 percent increase Month over Month in Sales

Cape Coral

Cape Coral August 2008: 378
Cape Coral August 2007: 184
Active listings in Cape Coral 4293
We absorbed 9% of the Inventory
105% Increase Month over Month in Sales

Fort Myers

Fort Myers August 2008: 113
Fort Myers August 2007: 132
Active listings Fort Myers 2803
We absorbed 4% of the Inventory

Final Notes

Sales are up Year over Year.
Corp. Sellers still dominate the market.
Lehigh Acres seems to have found pricing desirable to buyers.
The high foreclosure areas are the leading edge of increasing sales due to the inventory available.
Short sales are still not prevalently closing
- 21 SFR closed in 2007
- 98 SFR closed in 2008
  - 5407 Active Short Sale Listings Currently.
North Fort Myers seems to not be affected as much by Foreclosures. East of Slater road looks pretty much the same pre-2005.

Charts and Graphs will be posted later today in the Members section at http:www.swflreia.com Prepared by Cristina Tumbarello, Realtor she can be reached at cristina.tumbarello@yahoo.com

FDIC eats another, Treasury getting read to eat 2 elephants

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 22 Sep 2008 16:00:11 -0500

On September 5, 2008, Silver State Bank, Henderson, NV was closed by the Nevada Financial Institutions Division and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

All insured non-brokered deposit accounts have been transferred to Nevada State Bank, Las Vegas, NV ("assuming institution") and will be available immediately. Nevada State Bank entered into a separate agreement to sell the Arizona branches of Silver State Bank to its affiliate National Bank of Arizona. On Monday, the former Silver State Bank locations will reopen as branches of Nevada State Bank in Nevada and as branches of National Bank of Arizona in Arizona.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
http://www.iht.com/articles/2008/09/07/business/fannie.php

The U.S. government's planned takeover of Fannie Mae and Freddie Mac came together hurriedly after advisers poring over the companies' books for the Treasury Department concluded that Freddie's accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter.

The proposal to place both mortgage giants, which own or back $5.3 trillion in mortgages, into a government-run conservatorship also grew out of deep concern among foreign investors that the companies' debt might not be repaid. **meaning we do not not want chinese to sell all those treasury nots because we allowed their money to get lost. I am told but have not verified that some pension funds are deep into Fannie and Freddie as well. JT **

The big question now is whether the U.S. government's move to take over Fannie and Freddie will restore investor confidence in the nation's credit markets, help stabilize the stock market and keep loans flowing to creditworthy borrowers.

Fannie and Freddie, by buying mortgages, provide American banks and other financial institutions with fresh money to make new loans, **(I thought they already had money, ours? :) **) a vital lubricant for the housing and credit markets.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

http://www.bloomberg.com/apps/news?pid=20601087&sid=aMX336c2lWGQ&refer=worldwide

Sept. 7 (Bloomberg) -- Treasury Secretary Henry Paulson decided to take control of Fannie Mae and Freddie Mac after a review found the beleaguered mortgage-finance companies used accounting methods that inflated their capital,**( Sheila Bair seems to be having the same issue, JT)** according to people with knowledge of the decision.

House Financial Services Committee Chairman Barney Frank said in an interview yesterday. The government would make periodic capital injections by buying convertible preferred shares or warrants, ***meaning, we will be paid first if we can not save this thing***

Holders of the companies' common and preferred stock are ``very unlikely to come out of this at all happy,'' and the chief executive officers will be forced out, Frank said. Senior and subordinated debt holders will likely be protected, said other people who were briefed on the plan. ***they will wipe those people out to cover the losses, JT**

Why are we having all of these problems? These guys sold the income for fee's. Now they have to make up for the losses with a fractionalized reserve system in place. If you WERE a share holding in Fannie and Freddie, run along and enjoy the beating. Take note of what got you here.

JT
PS How do you eat an elephant?

August 2008 Lis Pendens and Foreclosure Recap

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 22 Sep 2008 15:59:43 -0500

Number of deeds conveyed by the clerk of the court via foreclosure action 1210 Number of Mortgage related Lis Pendens 2156 The trend is changing. The deeds being conveyed is starting to gain momentum. Notes Lis Pendens Filings • We had a reduction from July to August. The key to watch is the next 2 months • September is the last month of QTR 3. The Filings have showed a pattern of a month increase and a 2 month decrease followed by another increase. Another factor there might be pressure to show an improvement in QTR 4 for Year End numbers. • I would wait to pass judgment on the filings trending down until September and October are in books. • The homestead percentage from July was updated. The Lis Pendens filings where a homestead exception are trending down by percentage. One reason for this is the lenders willingness to work out a modification with HOMEOWNERS Notes Deeds Conveyed • The lenders taking back deeds this month are the primary drivers of REO sales within the Market • Expect more downward price pressure in high foreclosure markets where there is proportionately lower sales activity. IE Lehigh Acres • The count of deeds jumped dramatically. This is due to the court system streaming things a few months back. • The good news is the REO's are what the market wants. • More good news, some lenders are choosing to rent versus sell. • Hat tip to Charlie Green and his staff as well as the judicial side. There does not appear to be a staffing up from recent years. They are handling hugely exponentially growing work load SWFL REIA members have access to an 11 page report with detailed charts and graphs. This available thru our password protected member's pages on http://www.swflreia.com . You can also purchase the report for $19.99 if you are not a member. Email jeff@swflreia.com for more details or call 239 247 5061 For membership info Do you have more Questions? • You can email at jeff@swflreia.com • Or call 239 671 8248 • If you wish to have more in depth data and analyses, please email or call with your requirements to get a quote.

Number one tip I can give a new investor.

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 22 Sep 2008 15:59:17 -0500

Get to know your farm market like the back of your hand. You should have the value pegged. That way you will not work on deals that will not make you money. The key is to quickly kill the bad deals to focus on the right ones. Then when you know your market. How will you get paid? Its really boils down to is the buyer getting a conventional mortgage? If a conventional lender detects a hint of an assignment of contract, the deal is dead. Also, many sellers will not execute a contract with someone who has no intention of really buying the house. That is where a simultaneous closing comes in. I have done a lot of these. They work when the deal is good. The assignment of contracts is kind of last phase stuff. They work in an up swinging market with a dwindling inventory. I do not know many places with that set of trends currently. Most New investors end up trying to become a wholesaler due to credit/capital constraints. The natural Evolution of an investor is:

Landlord
The rehab and flip
Whole the leads (quality leads) that you yourself can not close.
Hard money lender.

The key to making those happen are: SPENDING LESS MONEY THAN YOU MAKE Too many people enter into this game to compensate for lifestyle desires that do not equal their income ability. Until you fix yourself, you will never step up to the next level. In times like this, it's all old school. The old rules work. Number one tip I can give a new investor.

A Basic Understanding of Real Estate Cycles

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 22 Sep 2008 15:58:53 -0500

A Basic Understanding of Real Estate Cycles
I am sharing my own research which, I use for my own selfish reasons I do not hold my self out as an expert. I am just a Real Estate guy, trying to feed his children! In support of the statement above, I will readily change any and all beliefs, I have, when presented with facts, that would prompt me! Civilization rests on change. This change is cyclical in origin. A rhythmic series of extreme changes constitutes a cycle. When a cycle has completed, another cycle is started. The rhythm of the new cycle will be the same as that of the previous cycle. Although the extent or duration may vary You have the... - Seller's Boom - Then the Buyer's Boom Busts do not follow Booms Booms follow Busts The Buyers Side This is driven in the beginning by fear. The beginning of the buyer's side will be quite hazy, to all involved As sales volume mounts and sales prices erode, it turns to despair, then to capitulation on the seller's side On the sellers side The primary driver is greed and optimism This is an easy market This side always has a sharp quick upward value trend This will eclipse the previous value trend, as a sum If you have a ready supply of cheap money A "Mania "may form. What is a Mania? An excessive or unreasonable enthusiasm Historical Examples - Mississippi Company, in the 1700's - The South Sea Company, 1700's - Wall Street Crash of 1929 - Florida land boom of the 1920s - Japanese asset price bubble - The Dutch Tulip Mania's You have to understand that sales volume on the sellers side drives prices up once Inventory is eroding On the buyers side it drives them down. The Market is a pendulum that forever swings between unsustainable optimism Which makes Real estate more expensive And Unjustified Pessimism Which causes Real Estate to be Cheaper The Intelligent Investor is a Realist. Who buys from Pessimists and sells to optimists Boom times are a time for Courage Bust Times are a time for Discipline By doing this you will not be swayed by the swings in the Market In the End.... How you behave is much more important than how the Markets Behave

Lee County Florida The Forclosure Trend hasn't abated

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 22 Sep 2008 15:58:20 -0500

Lee County Lis Pendens for the Month of July 2008, 2467, up 3 percent from the 2,390 foreclosures in June. In July 2007, there were 1,045 foreclosures.

Foreclosures are doing what they're doing, but the good news is that people are buying foreclosures, so at least there is a demand for these.

The 3% rise is a little misleading... June = 21 working days.... Jul =22 working days (4th was holiday) - 4.67% more days to get 'em filed. So the trend stayed the same. .

I am just looking at the Per-Diem Foreclosure filings now. We are going to reach a point where this trends ends. They always do. Then we will have to sell the inventory created. The good news is, the market wants the REO's. They are driving the market. The effect of these foreclosures on the Lenders and the Mortgage holders is tragic. The effect on the buyers of the foreclosures properties is the opposite. These are becoming the affordable HOME, of the working class people of Lee County.Here is the by lender data

BANK OF NEW YORK	224
U S BANK	216
DETUSCHE BANK	209
WELLS FARGO	195
COUNTRYWIDE	125
AURORA	112
CITIBANK	111
INDYMAC	99
HSBC BANK	97
HSBC	97
LA SALLE	92
CHASE	85
FIFTH THIRD BANK	82
WASHINGTON MUTUAL	81
SUNTRUST	77
NATIONAL CITY	68
GMAC	57
WACHOVIA	57
BOA	49
TAYLOR BEAN & WHITAKER	38
JP MORGAN CHASE	32

LEHIGH ACRES 565 CAPE CORAL 846
for more data http://www.swflreia.com/foreclosuredata.html

Why you should become an Empirical Skeptic

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 22 Sep 2008 15:57:47 -0500

First things first, most days I get some sort of prediction from someone about the state of the housing market. I have found that most of these are either driven by an agenda or by emotion. There is too much speculation as to what tomorrow may bring, when today is here, right in front of you. We usually will not know what happened today until tomorrow. So why even focus on tomorrow, when you have today! Use what you learned yesterday. It is often a waste of time and resources to speculate what will happen tomorrow in any sort of detail. With an empirical base of facts and historical references you can deduce a range of outcomes that tomorrow may bring. If are using all of those ranges in your business model, then good for you. If you are using one of those ranges, you are playing roulette. If the range of outcomes is based on anything but empirical facts, then you are playing "Russian" roulette. What is empirical? In economics, "empirical" generally refers to statistical or econometric analysis of numeric data. Other forms of observation-based hypothesis testing are not considered to be "empirics." The use of the adjective empirical, especially in scientific studies using statistics, may also indicate that a particular correlation between two parameters has been found, but that so far, no theory for the mechanism of the connection is known. Below are some thoughts based upon empirical evidence. Plan on, a good portion of the mortgage transactions, (2004 thru 2006) to default. We (SWFL) are at 2003 pricing. So people who bought houses in that time frame...... Most people buy houses, not HOMES. A HOME is the house you can and will pay for as long as it does not break you. People who live in houses well.......... It really boils down to; do you make your decisions from emotions' or logic? For 95 percent of the world it's all emotions. Foreclosure has become quite acceptable. You will be amazed in the coming years (today even) what a bankable loan is. The current generation of bankers gave away the income stream for fee's years ago. We will be seeing these cycles until that business model changes. Would you rather have 4 percent of the loan balance or the interest? Making money on the interest spread of a portfolio is what banking was all about, not fees. This is the aftermath of a mania; we have been doing this since recorded history was born. Watch and learn, so the next one does not bite you. That is about all you really can do. We as people have a predisposition go from greed to fear and vice versa. The speed of the world and pop culture are amplifying these tendencies. Welcome to the aftermath of Fractional Banking on Steroids, AKA CDO, SIV, etc. Pick your financial poison. We really do not know how bad it is because the Fed quit publishing M3 in 2005. It's not pertinent anymore, LOL. What is M3? The different types of money are typically classified as Ms. the number of Ms usually range from M0 (narrowest) to M3 (broadest) but which Ms are actually used depends on the system. The typical layout for each of the Ms is as follows:

M0: Physical currency. A measure of the money supply which combines any liquid or cash assets held within a central bank and the amount of physical currency circulating in the economy. M0 is the most liquid measure of the money supply. It only includes cash or assets that could quickly be converted into currency.
M1: M0 + demand deposits, which are checking accounts. This is used as a measurement for economists trying to quantify the amount of money in circulation. The M1 is a very liquid measure of the money supply, as it contains cash and assets that can quickly be converted to currency.
M2: M1 + time deposits, savings deposits, and non-institutional money-market funds. M2 is a broader classification of money than M1. Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. M2 is a key economic indicator used to forecast inflation.
M3: M2 + large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets. This is the broadest measure of money and is used by economists to estimate the entire supply of money within an economy.

In the end, the worse it gets everywhere else, the better it should become here as the "Refugee Retirees" flee again to our Paradise. Go back thru history, 1991 thru 1993 was a time that lots of people moved to SWFL. So what is going on today? Here is a snapshot of Cape Coral, July 1-23^rd 2007 versus 2008, SFR home sales 2007 · 102 sales · Money in motion 28,968,595 · Average sale 284,006 · Median sale 239,500 2008 · 227 sales · Money in motion 41,136,410 · Average Sale 181,218 · Median sale 142,300 That is a 222 percent increase in the number of SFR Home Sales. The Average sale price is down. That means Cape Coral is affordable again. The money in motion is up. Money in motion defines the market. Title companies, the Government and Insurance companies obtain revenue by money in motion. It certainly looks like you could make some money in Cape Coral. FYI, in a declining market, you should strive to do business below the average price and price per SQFT. Instead of predicting what tomorrows market may be bring.... Yesterday data shows the way. This is encouraging. The world empirically is never as good or as bad as it seems on the streets and in the media. The world is either cyclical by design or maybe the experiment just works better that way. Any input, corrections and suggestions is greatly appreciated.

It is supposed to be summer here

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Mon, 22 Sep 2008 15:56:46 -0500

Summer is supposed to be the slow time here in SWFL

looked up July YOY last night

This is for Cape Coral SFR sales, 7/1 -7/23 07 versus 08 2007 102 sales money in motion 28,968,595 Avg sale 284,006 Median sale 239,500 2008 227 sales Money in motion 41,136,410 Avg Sale 181,218 Median sale 142,300

That is encouraging. The world, empirically, is never as good or as bad, as it seems on the streets and in the media.

The world is cyclical either by design or the experiment just works better that wa

There is something happening in Cape Coral Fl

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Tue, 15 Jul 2008 07:51:05 -0500

There is something happening in the Cape

SFR sales are doing great. These sales are golden; these people will not regret their purchase.

Here are the numbers; judge for yourself

01/01/08 thru 7/14/2008 SFR SOLD

2008 Sold: 1891 AVG $214,833

2007 Sold: 1189 AVG $307,557

2006 Sold: 1804 AVG $331,875

2005 Sold: 2336 AVG $336,146

2004 Sold: 1748 AVG $234,037

2003 Sold: 1236 AVG $200,014

2002 Sold: 806 AVG $182,468

2001 Sold: 638 AVG $162,114

2000 Sold: 576 AVG $142,486

In June 59 percent of the Cape Coral SFR sales were conveyed by a Corporation. The vast majority of those being banks. Rents are starting to creep up. It's not all bad out there. There is a market to do business in, If you choose to find it.

search the MLS for free, like a pro click here -- www.cristina.listingbook.com

If you are prevented in playing in the next phase of the market by the deals you bought in 2003 thru 2005. Please check out below. Its Kevin Jursinski's work. www.deedinreduction.com

Study of June Single Family Sales in Cape Coral and Lehigh

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 13 Jul 2008 11:56:41 -0500

We performed a study of Single Family Sales in Cape Coral and Lehigh. We were provided MLS data from a Corp member. We found some real interesting trends.

Money is in motion. For a segment of the market.
Short Sales are just not happening enough to matter. They remain a clog on the market and are unrealistically priced. We are of the opinion that they are used more for chum for buyers than a sound business model. The failure of short sales has more to do with Banking Guidelines which govern balance sheets. Its not in the bBanks best interst to do a short sales unless the purchase results in a high sellers net than would be obtained thru the REO sale.
Sales Numbers are doing well. In, Cape Coral we came up with 392 Single Family Homes Sold. In. Lehigh Acres, we came up with 129 Sold.
One thing which really jumped out was the percentage of corporate sellers. Lehigh Acres boasted 69 percent of the sales were corporate owned. In the Cape it was 54 percent.
With 17,000 plus foreclosures still working in the system, expect this trend to hold for a bit.

What does all this mean for a Real Estate Investor? Bank Owned Properties is the Place to Focus. The best deals are being bought in the MLS from the banks. If you need help with this, we have several Corporate Sponsors who can help you http://www.swflreia.com/businessdirectory.html

Good Luck and Good Investing!

Illegitimis non carborundum

THE KEY TO MAKING MONEY

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 13 Jul 2008 11:42:31 -0500

THE KEY TO MAKING MONEY IS HAVING A SYSTEM AND A FIRM GRASP OF WHAT YOU ARE TRYING TO DO AND HOW YOU ARE GOING TO DO IT.

here are the concepts involved

1. reacting: tending to react to events and situations rather than initiating or instigating them

In real estate many times we will have to roll with the punches. It's the nature of the beast. The key is not to do that everyday on everything you do

We should strive to be proactive

1. being proactive is about being anticipatory and taking charge of situations.

One thing, which I always do, is to try and understand what just happened, so I can either replicate it or avoid what just happened. Instead of just being happy it's done. The key to success is learning from your mistakes and success. The mistakes teach you more than a success ever will.

So now the challenge, are you reactive or proactive? Which would you like to be?

one thing that almost all successful real estate Investors have done

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 13 Jul 2008 11:39:01 -0500

— Farming an Area or Market Segment in Real Estate

There's one thing that almost all successful real estate Investors have done to develop their business in a specific area or market demographic.

— Farming an Area or Market Segment in Real Estate

This can be a geographic area, Property type or, Price range

A lot of this depends on you and what you want to do

— Farming an Area or Market Segment in Real Estate

Try and find the hot spots

I try and go where the money is

Pioneers come back with arrows in them

Let someone else blaze the path

— They "farm" the area for business

— The term farm implies growing something. That's what you do when you farm a local subdivision. You plant the seeds of future business, nurture them with marketing and then hopefully reap the rewards in Profits.

— Farming

Farming can involve any or all of direct mail, door knocking, postcards, newsletters, email or any other form of advertising. The key to farming an area is to do it with regularity and keep on your message

To start, get in your Car and drive it

Every street

Speak with everyone you can

Realtor, Homeowners, Builders

Mail Man, Police, Fireman

— Farming

Things to focus on

Houses Listed by Realtors

Agents do most of the Mainstream Business

They are the best indicators of what's going on

Log each House and Agent Phone number and price

Go to tax rolls and get the SQFT

— Farming

Things to focus on

2. FSBO's- For Sale By Owners

Log each house

Get a flyer and a price

— Farming

Things to focus on

Overgrown weeds, boarded up houses

Log these in as well

— Farming

Other things to focus on

Foreclosures and Tax Sales

Tax Certificates

New houses being built

New commercial projects

New subdivisions

Each event in the market has a cause and effect

— Farming

Things to focus on

Electronic tools like GPS's are great

www.mapquest.com is free and works great to

Microsoft streets is an affordable program to do this with

emotion has more to do with Real Estate than supply and demand ever will

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 13 Jul 2008 11:37:52 -0500

think emotion has more to do with Real Estate than supply and demand ever will

In 2005 we were buying houses when we should not have been

In 2007 we should be buying houses and we are not why is that....Socioeconomics

I quote

Socioeconomics typically analyze both the social impacts of economic activity and economic impacts of social activity. In many cases, however, socioeconomists focus on the social impact of some sort of economic change. Such changes might include a closing factory, market manipulation, the signing of international trade treaties, new natural gas regulation, etc. Such social effects can be wide-ranging in size, anywhere from local effects on a small community to changes to an entire society.

many times we fool ourselves with numbers, Gaussian "bell curve type" number models were used to predict, the market to keep rolling in 2005

Guess what it did not happen

why...

a change ion the social mood

in 2005 risk was the catch word, now its fear

pop culture has a lot to do with this, they also feed these trends, look at the movies and music

Dark and scary right now, because....that's what we want

we need to stop blaming the "flippers" agents, mortgage broker, builders, its more the times that caught up, than misdeeds

There were plenty of misdeeds to go around though

More quotes of wisdom

Whether market timing is ever a viable investment strategy is controversial. Some may consider market timing to be a form of gambling based on pure chance because they do not believe in the possibility of predicting future financial prices. The efficient market theory suggests that financial prices often exhibit random walk behavior and thus can not be predicted with consistency. Some consider market timing to be sensible in certain situations, such as an apparent bubble. However, because the economy is a complex system that contains many factors, even at times of significant market optimism or pessimism, it often remains difficult, if not impossible, to pre-determine the local maximum or minimum of future prices with any precision; a so-called bubble can last for many years before prices collapse. Likewise, a crash can persist for extended periods; stocks that appear to be "cheap" at a glance can often become much cheaper afterwards before either rebounding at some time in the future or heading toward bankruptcy.

some more to ponder

In finance, the efficient market hypothesis (EMH)Eugene Fama at the University of Chicago Graduate School of Business developed EMH as an academic concept of study through his published Ph.D. thesis in the early 1960s at the same school. asserts that financial markets are "informationally efficient", or that prices on traded assets, e.g., stocks, bonds, or property, already reflect all known information and therefore are unbiased in the sense that they reflect the collective beliefs of all investors about future prospects. Professor

The efficient market hypothesis states that it is not possible to consistently outperform the market by using any information that the market already knows, except through luck. Information or news in the EMH is defined as anything that may affect prices that is unknowable in the present and thus appears randomly in the future.

funny part about most of these quotes, these schools of thought. They come from outside the business world

Those than can do, those that can't teach

I started in Real Estate in the mid 1990’s.

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 13 Jul 2008 11:35:13 -0500

I started in Real Estate in the mid 1990's. It was close to the market we have now. I came in with a fresh perspective, so I did better than most. I did not know we were coming out of a Correction. Which brings me to the purpose of this Blog. During 2001 thru 2003. All we really had to do was close who called us, the market was moving at a decent pace. During 2003 thru 2005. All we really had to do was take orders. The people came in droves wanting houses and mortgages. We forgot how to find them because, they found us. Something to understand is the difference between sales and marketing. We have become to sales focused. Well, to make it in the next few years. We will have to become a marketing focused Industry. What's the difference? Sales are the activities involved in selling products or services in return for money or other compensation. It is an act of completion of a commercial activity. The "deal is closed", means the customer has consented to the proposed product or service by making full or partial payment (as in case of installments) to the seller. Academically, selling is thought of as a part of marketing, however, the two disciplines are completely different. Sales often form a separate grouping in a corporate structure, employing separate specialist operatives known as salespersons (singular: salesperson). Sales are considered by many to be a sort of persuading "art". Contrary to popular belief, the methodological approach of selling refers to a systematic process of repetitive and measurable milestones, by which a salesperson relates his offering of a product or service in return enabling the buyer to achieve his goal in an economic way. Marketing is a societal process that is needed to discern consumers' wants; focusing on a product/service to those wants, and to mould the consumers towards the products/services. Marketing is fundamental to any businesses growth. The marketing teams (Marketers) have the task to create the consumer awareness of the products/services through marketing techniques; if a business does not pay attention to their products/services and their consumers' demographics, the business would not be able to endure longevity. Are you selling to people who do not need or are unable to use your services? Are you marketing to People who can and will need your services?

Bad Housing Predictions of 2007

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 13 Jul 2008 11:34:18 -0500

Quote:

Former Federal Reserve Chairman Alan Greenspan and his successor Ben Bernanke, after reviewing home sales and mortgage rates in fall 2006, were hopeful that the market had bottomed out.
"It may be too soon to say that it's over. It may not be too soon to say that the worst is over," said Greenspan in an October 2006 speech in Richmond, according to press reports.

Quote:

In a November 2006 speech, Bernanke said he saw some "encouraging" signs in recent housing reports.

"Although residential construction continues to sag, some indications suggest that the rate of home purchase may be stabilizing, perhaps in response to modest declines in mortgage interest rates over the past few months and lower prices in some markets," Bernanke said.

Quote:

The laughing stock of all economists, National Association of Realtors Chief Economist Lawrence Yun (following in the footsteps of the former laughing stock of all economists David Lereah) throws in his two cents.

The (National Association of) Realtors expected only a 1 percent drop in the pace of existing home sales, and a 1 percent gain in median prices. Instead, 2007 will likely end with a12.5 percent plunge in the pace of sales, and nearly a 2 percent drop in prices, the first such decline on record.

The group's current forecast for 2008 calls for a 0.5 percent increase in the pace of sales, and a 0.3 percent rebound in prices. But Lawrence Yun, chief economist for the trade group, said that making forecasts is even tougher this year than it was a year ago.

Yun forecasts essentially flat prices in 2008. Yet, he also believes there's at least a one in four chance that prices will fall more than they did this year, and about the same chance that prices could rebound by 3 percent or more.

"I would not be surprised if home sales improves in 2008," he said. "At the same time I can also foresee a circumstance where buyers continue to pull back, the inventory sitting on the market continues to build and it causes prices to go down further."

_________________
"Some people spend an entire lifetime wondering if they made a difference in the world. But, the Marines don't have that problem." -- Ronald Reagan

Déjà vu

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 13 Jul 2008 11:33:44 -0500

It seems like in history we just keep repeating the same things over and over again

http://www.stock-market-crash.net/florida.htm

At this point, almost anybody could invest in Florida, even without much money. Credit was plentiful and soon everybody in Florida was either a real estate investor or a real estate agent. In 1922, the Miami Herald became the heaviest newspaper in the world as a result of its humongous real estate advertisements. People in the North heard about the real estate prices "doubling and tripling", causing a snowball effect. Capital was rapidly pumped into the real estate market. Whole golf communities were developed, such as Temple Terrace. Resorts and retirement communities were developed almost overnight. Mansions were sprawling in every area, as were swimming pools. As always, waterfront property was the most desirable. Florida was seen as a veritable Utopia.

Real estate prices quadrupled in less than one year. An elderly man invested $1,700 in property and by 1925 the property was worth over $300,000! It seemed you could do no wrong by just buying any property in Florida and become a millionaire. By 1925, real estate prices had become so exorbitant that buying land wasn't affordable any longer. New investors failed to arrive and old investors started to sell. Panic arrived, as it always does, and the real estate market crashed. Prices kept moving downwards as heavily indebted investors tried to sell to avoid bankruptcy. In most cases, no buyers arrived, and the investors were bankrupt from the enormous mortgages.

To make matters even worse, a highly destructive hurricane ravaged South Florida in September 1926. The 125 mile an hour winds eventually turned Palm Beach County into swamp lands. After the storm, a huge tidal wave crashed upon the towns of Belle Glade and Moore Haven. Due to these horrible turn of events, over 13,000 homes were destroyed and 415 people died. Additionally, the arrival of the Mediterranean fruit fly obliterated the large citrus industry. It took years for Florida to fully recover, even through the highly prosperous time from 1925 to 1929. Florida was barely affected in the stock market crash of 1929 and the Great Depression, because of its poor financial state from the start.

Déjà vu (French: "already seen"; IPA: English /deɪ�'�'ː vuː/ (help·info), French /de�'a vy/ (help·info); also called paramnesia, from Greek παρα para, "parallel" + μνήμη mn�"m�", "memory") is the experience of feeling sure that one has witnessed or experienced a new situation previously (an individual feels as though an event has already happened or has repeated itself). The term was coined by a French psychic researcher, Émile Boirac (1851-1917) in his book L'Avenir des sciences psychiques (The Future of Psychic Sciences), which expanded upon an essay he wrote while an undergraduate. The experience of déjà vu is usually accompanied by a compelling sense of familiarity, and also a sense of "eeriness", "strangeness", or "weirdness". The "previous" experience is most frequently attributed to a dream, although in some cases there is a firm sense that the experience "genuinely happened" in the past. Déjà vu has been described as "remembering the future."

http://www.rgemonitor.com/blog/roubini/208166/

Hyman Minsky was an American economist who died in 1996. His main contribution to economics was a model of asset bubbles driven by credit cycles. In his view periods of economic and financial stability lead to a lowering of investors' risk aversion and a process of releveraging. Investors start to borrow excessively and push up asset prices excessively high. In this process of releveraging there are three types of investors/borrowers. First, sound or "hedge borrowers" who can meet both interest and principal payments out of their own cash flows. Second, "speculative borrowers" who can only service interest payments out of their cash flows. These speculative borrowers need liquid capital markets that allow them to refinance and roll over their debts as they would not otherwise be able to service the principal of their debts. Finally, there are "Ponzi borrowers" cannot service neither interest or principal payments. They are called "Ponzi borrowers" as they need persistently increasing prices of the assets they invested in to keep on refinancing their debt obligations

"Some people spend an entire lifetime wondering if they made a difference in the world. But, the Marines don't have that problem." -- Ronald Reagan

thought for the day, The empirical method versus scientific method

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 13 Jul 2008 11:32:29 -0500

think this is why many did not see the RE market was going to tumble

I am a numbers geek, I gather data by the GIGABITE, some manually done, some robotic, some gathered by a service

I have learned to stop trying to use the data to confirm my intent or train of thought and to "think" about the data

as RE Pro's we tend to look for what we want to see, that will cause you to follow a trend too long or not long enough

The empirical method is generally characterized by the collection of a large amount of data before much speculation as to their significance. DO you speculate , are you looking for sales trends, or confirming what you already think?

I have posted some references here

According to the Oxford English Dictionary (2nd Edition, 1989), empiric is derived from the ancient Greek for experience, έμπειρία, which is ultimately derived from έυ in + πεἳρα trial, experiment. Therefore, empirical data is information that is derived from the trials and errors of experience. In this way, the empirical method is similar to the experimental method. However, an essential difference is that in an experiment the different "trials" are strictly manipulated so that an inference can be made as to causation of the observed change that results. This contrasts with the empirical method of aggregating naturally occurring data.Adding further confusion is another connotation of empiric. Strict empiricists are those who derive their rules of practice entirely from experience, to the exclusion of philosophical theory.

The OED further states that an empiric is "one who, either in medicine or in other branches of science, relies solely upon observation and experiment" [emphasis added]. In this case, an empiricist can be someone who conducts an experiment but without using a hypothesis to guide the process, i.e., strictly by the trial-and-error method. This is counter to one of the main tenets of the scientific method, that of the hypothetico-deductive method, where the manipulation of the variable in an experiment is dictated by the hypothesis being tested.

Conformation BiasOverview

In psychology and cognitive science, confirmation bias is a tendency to search for or interpret new information in a way that confirms one's preconceptions and avoid information and interpretations which contradict prior beliefs. It is a type of cognitive bias and represents an error of inductive inference, or as a form of selection bias toward confirmation of the hypothesis under study or disconfirmation of an alternative hypothesis.

Confirmation bias is an area of interest in the teaching of critical thinking as the skill is misused if rigorous critical scrutiny is applied only to evidence challenging a preconceived idea but not to evidence supporting the same preconception.^[1]

Among the first to investigate this phenomenon was Peter Cathcart Wason (1960), whose subjects were presented with three numbers (a triple):

and told that triple conforms to a particular rule. They were then asked to discover the rule by generating their own triples and use the feedback they received from the experimenter. Every time the subject generated a triple, the experimenter would indicate whether the triple conformed to the rule (right) or not (wrong). The subjects were told that once they were sure of the correctness of their hypothesized rule, they should announce the rule.

While the actual rule was simply "any ascending sequence", the subjects seemed to have a great deal of difficulty in inducing it, often announcing rules that were far more complex than the correct rule. More interestingly, the subjects seemed to only test "positive" examples, triples that subjects believed would conform to their rule and thus confirm their hypothesis. What the subjects did not do was attempt to falsify their hypotheses by testing triples that they believed would not conform to their rule. Wason referred to this phenomenon as the confirmation bias, whereby subjects systematically seek evidence to confirm rather than to deny their hypotheses.

The confirmation bias was Wason's original explanation for the systematic errors made by subjects in the Wason selection task. In essence, the subjects were only choosing to examine cards that could confirm the given rule rather than disconfirm it. Confirmation bias has been used as a theory for why people believe and maintain pseudoscientific ideas.

Reasons for effect

There are several possible reasons beliefs persevere despite contrary evidence. Embarrassment over having to withdraw a publicly declared belief, for example, or stubbornness or hope. Superstition, religion, worldview or ideology can allow a believer to give a greater weight to some data over other data.

One explanation may lie in the workings of the human sensory system. Human brains and senses are organised in such a manner so as to facilitate rapid evaluation of social situations and others' states of mind. Studies have shown that this behaviour is evident in the choosing of friends and partners ^[6] and houses,^[7] even though it is largely subconscious. Although it can be a very fast process^[8], the initial impression has a lasting effect as a byproduct of the brain's tendency to fill in the gaps of what it perceives and the unwillingness of the believer to admit a mistake.

[edit] Polarization effect

Polarization occurs when mixed or neutral evidence is used to bolster an already established and clearly biased point of view. As a result, people on both sides can move farther apart, or polarize, when they are presented with the same mixed evidence.

In 1979, Lord, Ross and Lepper conducted an experiment to explore what would happen if they presented subjects harboring divergent opinions with the same body of mixed evidence. They hypothesized that each opposing group would use the same pieces of evidence to further support their opinions. The subjects chosen were 24 proponents and 24 opponents of the death penalty. They were given an article about the effectiveness of capital punishment and were asked to evaluate it. Then, the subjects were given detailed research descriptions of the study they had just read, but this time it included procedure, results, prominent criticisms and results shown in a table or graph. They were then asked to evaluate the study, stating how well it was conducted and how convincing the evidence was overall.

The results were congruous with the hypothesis. Students found that studies which supported their pre-existing view were superior to those which contradicted it, in a number of detailed and specific ways. In fact, the studies all described the same experimental procedure but with only the purported result changed.^[9]

Overall, there was a visible increase of attitude polarization. Initial analysis of the experiment shows that proponents and opponents confessed to shifting their attitudes slightly in the direction of the first study they read, but, once subjects read the more detailed study, they returned to their original belief regardless of the evidence provided, pointing to the details that support their viewpoint and disregarding anything that was contrary.

It is not accurate to say that the subjects were trying to view the evidence in a biased manner, but, since the subjects already had such strong opinions about capital punishment their reading of the evidence was colored towards their point of view. Looking at the same piece of evidence, an opponent and proponent would each argue that it supports their own cause, thus pushing their contrary opinions even further into their opposing corners.

Polarization can occur in conjunction with other assimilation biases such as illusory correlation, selective exposure or the primary effects. The normative model for this bias is the neutral evidence principle. Interestingly, a formulated belief can prevail even if the evidence that was used in the initial formation of that belief is entirely negated. ^[10]

Randomness and Real Estate

Jeffrey Tumbarello (South West Florida Real Estate Investment Association) — Sun, 29 Jun 2008 13:07:29 -0500

Many of us fail to realize how random Real Estate is. Real Estate is a random event industry. Much like the stock market, things and trends just emerge from nowhere. To historical students most of these events are part of age old cycles. The length and breadth always change. The cycles for the most part do not. I have been saying for a while. The next part of this cycle for real estate is the stock market and the banking system bending/breaking/snapping. There are many historical references to this, look at the downturns in 1929, 1974, 1979, 1983. We are somewhere in that ballpark.

Things just happen! A lot of success in this industry is being in the right place at the right time. In regards to that, you have to be out playing. It's hard to get lucky on the sidelines. To that extent, are you doing the same things you did before? If one is not happy with the results. Then one should deduce it's time to try something else. I am constantly looking at trends within the market. Here is what I do when one is found, if the trend looks viable, with the assumption of a reasonable entry and chance of success. I go for it. I am doing that as I am writing this. This downturn has/is eating much bigger fish than me. I think my system works!

So.... What does all this mean? Get out! Do something! Meet someone you have not met before. Try something new. What worked in 2002 thru 2006 is a moot point now. You have to see what works today.