By Dawn Dyer, Dyer Sheehan Group, Inc.
Are we standing on the brink of a double dip recession? Or will current monetary policies, which have resulted in the lowest mortgage rates in history, lead to inflationary times ahead? We are living in a climate of unprecedented uncertainty and mixed messages. Each morning I tune into the financial news in an attempt to stay informed about key economic trends and issues. But there seem to be as many opinions as there are prognosticators.
This morning, a chief economist for Bank of America forecasted a high probability of a double dip; while the Oracle of Omaha expressed optimism for the future, and disclosed that he is buying back shares because he thinks that stocks are currently undervalued. With so little clarity, even among the experts, what steps can apartment owners take to prepare their portfolios for whatever the future may bring?
A year ago, the Federal Reserve embarked on a second round of “quantitative easing” (aka QE2), in an attempt to get the money supply to rise. The Fed was trying to create some inflation, as a way to help jump start the economy, and combat the negative effects of the deflation that we have experienced since the crash of 2008.
Many highly educated, brilliant minds had divergent views about the wisdom of this intervention. Most concede that deflation, and the psychological effect of seeing our assets devalued, is really bad for the economy. On the other hand, there was also concern that if QE2 was too successful at pushing money into the system, inflation could shift into hyper drive.
During the first quarter of 2011, the U.S. economy seemed to be gaining momentum and forecasts for the year were decidedly upbeat. There were hopes that we were on the road to recovery. But, as it turned out, the results of QE2 were nominal. Many believe that the action was simply too small to have the desired impact.
Others describe the system as being clogged…rather than re-deploying money through lending, banks are sitting on deposits to shore up their balance sheets; or are unwilling to make loans at historically-low rates. It may also be that there is just too much uncertainty regarding taxation, the federal deficit, health care and other issues, for the policy to be effective. Whatever the reason, as 2011 comes to a close, with the looming threat of financial catastrophe in Europe, and dysfunctional fiscal policies in Washington, the global economy is perched precariously on the edge of a precipice.
At the November session of the Apartment Investor Academy (AIA), noted economist Dr. Bill Watkins will delve into these heady issues in greater detail. We will also explore the implications to real estate markets, and discuss ways to position your investment real estate portfolio to respond to the changing economic climate while maximizing your long-term returns. Please join us on November 2, from 6:00pm-7:30pm in Camarillo. While the AIA is free to attend, reservations are required.
For more information, visit www.dyersheehan.com, or call Emily at (805) 653-8100.
Dyer Sheehan Group, Inc., is Ventura County’s Apartment Expert. Our professional Brokerage & Real Estate Consulting Services enable Clients to Make Informed Investment & Development Decisions by Identifying Opportunities, Solving Problems & Mitigating Risks. All information provided herein is from sources deemed to be reliable, but no guarantee or warranty is stated or implied. Copyright 2011 Dyer Sheehan Group, Inc. DSG’s July 2011 Ventura County Apartment Market Survey is available for purchase on-line at www.dyersheehan.com.