Sunday, April 5, 2009

California Leads...

There is an axiom in our nation that says California leads the nation into economic hell as well as economic heaven simply due to its size of consumption of goods and services. And it is also said that residential housing leads an economy into hell or heaven.

The housing market in California started its decline in mid-2006 with an apparent peaking by late 2008 and early 2009. I speak to real estate agents all the time and I'm told that transaction rates are dramatically increasing from Southern California to Northern California. I know in my own backyard that the housing market in the Roseville/Rocklin area has seen dramatic increases in activity. In fact in my neighborhood track of some 60 upscale homes, there is not one home for sale. And in a neighborhood just down the street with probably 300 homes, there is not one for sale.

Given the Sacramento housing market was one of the hardest hit in California I see this as a great sign of good things to come. As the housing market takes shape and forms a solid bottom consumer confidence increases and home equity begins to grow again. With this folks start to eat out more often and restaurant sales increase. We're already seeing the restaurant sales increasing across the state. But I'm cautiously optimistic about these signs as the tax refunds could be driving a major portion of this increase - amazing what happens to an economy when the government gives the people back some of their own hard earned money! Oh, that's right the old ways don't work any more according to our politicians of today.

Nevertheless, the signs are finally looking good and the smart buyer will start his move soon otherwise they will miss these low priced asset sales and low earning multiples.

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1 comment:

Mary Wynn said...

I personally know quite a few people in the restaurant industry and March was a much better month for them than January and February. Now our job is to get things moving and shaking where we can. I think the end of this year will tell us alot. It seems inpossible to hae another 4th quarter like 2008. Love you letters.
Mary Wynn
Bremerton, WA