SMACKED BY REALITY

With the current economic downturn that seems to be affecting more and more of the countries around the globe I heard it announced this last week that we now have a “global recession,” and not just one in Europe or America. If you’re like me, I’ve been watching lots of the news programs about this as well as programs on the money channels and others trying to understand the current situation. And I also have a number of Meta Reflection readers who send me things.

In observing the cities here in the US that have been most affected by the sub-prime loan market, which has led to the de-valuing of the home market, to defaulting on loans, etc., the markets that have suffered the most where the markets where the home prices were the highest— California, Florida, Los Vegas and most of the major cities.

Denver here in the state of Colorado has suffered from foreclosures and a big drop in housing prices, but only 300 miles away on the other side of the Rocky Mountains, the houses in Denver are still higher than the houses here. And here, in the Grand Valley, housing prices have actually gone up during 2007 and foreclosures are almost unheard of. I have mentioned this frequently this year— when I was in Moscow doing the Wealth Creation Training and in other places where people ask about the economics in the US or where I live.

I encountered this a few years ago when I looked was in Sydney Australia and went out looking at properties. They were so expensive!! And yes, it was a case of “location, location, location.” And yes, only a few miles out of the Central Business District or the first residential areas like Bondi Junction, Queens Park, etc. homes were much less. And even further out, in the Blue Mountains, prices were more like what I was used to.

When I used to conduct trainings in San Diego and San Francisco, I would always check out housing prices. And they always amazed me, my thought always was, “How could anybody afford to buy here?” And I would compare those prices to the prices back home. What would pay for a very small house in San Francisco or Sydney or elsewhere would buy a mansion —a mansion here in Grand Junction. And I mean a mansion —7 bedrooms, 4 or 5 bathrooms, garages for many cars, tennis court, swimming pool, and on and on.

I remember once talking to a real estate agent and holding my hands as if miming a set of scales with “Colorado prices” in one hand and then “big city prices” in the other. “You can’t compare the two!” I was told. “But I do,” I replied, “and I certain can because I am. The same money that I could invest in this that would provide this very small place could buy a mansion back in Colorado.” So when is a house or building or business over-priced? When is it over-valued?

And what if the current de-valuing of houses in many of the big cities is simply a market correction?

When I was at the NLP Conference in London this year, I talked about these things with several people. Among them Charles Faulkner. Now if you don’t know it, Charles has a background in the markets and specifically day trading and has applied NLP to trading in the markets both in his writings and some of the consultation work he does. Charles told me that it has been his opinion that the New York Stock exchange was over-valued after it reached 8500 and so when it hit 13,000 or so he pulled out all of his investments in spite of the hit he had to take on the taxes. But then again, unlike the rest of us who have suffered a 40 percent loss, his loss were minor.

Like the dot.com bust a number of years ago, perhaps that’s what’s happening now world-wide, what has been over-valued is now experiencing a market correction.

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