Article By: Jim Porter – October 21, 2022
Consumer sentiment and confidence are low. Fear and anxiety are high.
I was watching the show “American Greed” the other night on CNBC. As I was watching the episode about Nikola Motors and the habitual liar founder and former CEO Trevor Milton, who was ousted after attracting $34 billion from mom-and-pop investors based on a fake hydrogen powered semi-truck, I realized why it is hard to trust that our markets will recover.
There is historical evidence to support a lack of trust.
Gordon Gecko, played by Michael Douglas, said “greed is good” in the 1987 movie “Wall Street,” which was based on true stories about insider trading. Since this movie, we witnessed the savings and loan scandal that cost taxpayers $3.4 billion, Enron, World Com, the Lehman Brother’s bankruptcy, the Great Recession caused by the Wall Street investment bankers and good old Bernie Madoff.
These stories along with others are why we have trust issues with our stock and real estate markets. I wouldn’t be surprised if some people are even scared of T-bills, which are considered among the safest investments since they are backed by the full faith and credit of the United States government.
I mean, come on folks, we all trust the government, right?
It is a good idea to be careful and conservative when spending $650,000 and signing up as a first-time homebuyer with a 3% to 5% down payment and a $4,800 house payment including taxes and insurance, but if the buyer makes $12,000 per month or more and can be approved for a fixed-rate mortgage in a buyer’s market like this, I think it is safe to trust that rates will return to 5% at some point for a refinance.
I also think it is safe to assume the value of the house in 30 years will be a lot more than $650,000 and the rents on homes like this will be a lot more than $4,800. You gotta have faith because like Mark Twain is reported to have said, “Buy land; they aren’t making it anymore.”
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
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