Talking to an experience real estate investor last week, I heard a pretty good quote from him. He said: "The worst part about falling is seeing the ground coming towards you. Once you hit it, you can assess the damage, get up and make repairs."
That's a pretty good perspective, and it gives us several things to think about.
First, on an individual level, think about how true this is. Until you hit the ground, you have no idea how bad the fall is. You don't know what your injuries are, how quickly you can bounce back up, or what you're going to do next. Yet the fear of falling, that dread of the ground rising to meet our bodies, is sometimes so strong that we never make it to the point of assessment, getting up or mending.
If you've been a real estate investor over the past few years, you've probably stumbled. Maybe the value of your investment properties has declined; maybe the economy has made it more difficult to keep quality tenants; maybe you can't refinance properties you thought you would have by now.
That's OK. It's happened to all of us. Now that we've fallen, though, the scary hard part is over. Now it's time to get up, dust ourselves off and mend what is broken.
This is what gets me thinking about the U.S. government's role in the economic crisis. It's easy to wonder if the powers that be are delaying the inevitable fall, and therefore putting off the dusting off and mending.
Tax credits; the purchase of banks' bad assets; loan modifications; short sale incentives -- don't these all seem to be ways to merely delay the fall? Do we really have any idea how badly off banks are right now? Do we have any idea how many homeowners are REALLY facing foreclosure? Do we know if we've hit kind of a stabilization in home values? If not, are they going to go up or down? How long will interest rates remain this low?
I'm not saying the government was wrong in propping up the housing market in the U.S.; it was probably necessary, and it helped prevent the world economy from collapsing further than it did. But now it seems as though the government and real estate might just be stumbling around, arms around each other, trying to avoid the scary but inevitable fall.
I hope I'm wrong. But if I'm right, then this spring when the Fed stops buying banks' bad mortgage-backed securities, the tax credit expires and interest rates start to rise, then we could finally hit the ground.
That's probably a good thing. It's been coming up toward us for a long time. It might be time to hit it, assess the damage, get up and then start mending.
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