“Capital Insights” with Jack Kern
- Sep 24, 2008
Sooner or later everyone comes to Rick’s Place…
Woman: What makes saloonkeepers so snobbish?
Banker: Perhaps if you told him I ran the second largest banking house in Amsterdam.
Carl: Second largest? That wouldn’t impress Rick. The leading banker in Amsterdam is now the pastry chef in our kitchen.
Banker: We have something to look forward to.
(c) Casablanca – 1942
The Federal Government is about the embark, one way or another on one of the largest taxpayer led bailouts of the century. I was going to wait to really comment on this until the dust settled because as of today, the Feds haven’t decided what to do or how to manage all of this. I do think several things are pretty clear to me, and will become clear to you regardless of how this all turns out. First, consumers are terrified about their personal finances and jobs right now and bailout or not, they aren’t going to rejoice, run into the streets tossing dollar bills into the air and start bragging about buying houses again. Next, the National Association of Realtors will use this as an excuse to push home purchasing again, despite overwhelming evidence that it wasn’t a good idea for everyone and lastly, apartment renters are probably going to stay put even longer. Recently, the head of a very successful property company told me that this is going to be one of the greatest times in history for apartment ownership. Thinking about it for a while, I agree with that assertion. There just isn’t enough good news on the housing front to justify anything but optimism for apartment rentals. It simply comes down to an inventory issue. Most of the excess inventory, unoccupied houses, and foreclosures are usually located outside of prime apartment investment areas, so usually the professionally managed units win, based on location. Until the levels of employment grow outside of traditional commercial corridors and into far flung suburbs, well located properties are going to continue to see reasonable occupancy levels.
I have heard that many former realtors and brokers are working in restaurants, tending bar and doing other jobs. As for me, well, I’ve always wanted to become a pastry chef…