So Cal Real Estate News

(7/30/08) Back on April first of this year, while debate was raging on the bill, we wrote a post titled “Major housing breakthrough near?“  It included the following:

It looks like our leaders may finally be setting aside their egos and personal agendas to work together for the common good.

Behind-the-scenes discussions between Congressional leaders and the Bush administration may be about to bear fruit. And that fruit would be a pragmatic Housing Relief Act of 2008 which combines the best ideas from partisans of all stripes to provide both immediate relief and long term reform.

The comments off the record are almost unbelievable: “The collapse of the American housing and lending markets is an impending crisis that compels us to lay aside partisan differences and work together,” one Senate leader has discovered. “Ultimately, we’re all in the same boat, and if it sinks, we all drown!” she continued.

“We need to recognize that we are all on the same team,” according to a key administration figure. “We need to stop acting like the Shaq and Kobe Lakers and start acting like this year’s UCLA Bruins. You don’t see Collison and Love fighting for the ball!”

The details are still being finalized, but they involve major concessions and some unique innovations from both sides of the aisle.

We meant it as an April Fool’s post!

Turned out, the joke was on us, & we’re glad!

While the bill’s far from perfect, it includes a lot of positives, from increased oversight of the mortgage giants Fannie, Freddie, to tax credits for first time buyers for a limited time.

What’s especially significant is the numerous compromises it took to get the bill through Congress.  For example, that first time buyer tax credit ended up being an interest free loan that has to be paid back over fifteen years.  Stimulus for housing now, partial payback for the taxpayers later.

Many housing bears are eager for values to fall more, even if it does ruin the nation’s economy and banking system.  Their hatred for this bill might be evidence they fear it just might work.

We think it’s a step in the right direction.  Maybe several steps.  The bottom of this crash is at least a little closer today than it was yesterday.  On our latest projections post, we increased the probability of a bottom within the next seven months by 5% directly as a result of this bill.  Hopefully, we’re being conservative.  (That post also lists some of the additional beneficial features of the bill.)

Thanks to those leaders in D.C. that finally realized that ultimately, as Americans, we’re all on the same team!

Living in Earthquake Country

(July 29, 2008)  I experienced my first Southern California earthquake as an infant almost two years of age.  It happened at night, and my parents rushed in to check on me.  I guess we California natives just come wired for these things:  I’m told I was perfectly calm, lying in my crib singing “Rock-a-Bye Baby!”

I’ve experienced dozens of earthquakes here in the Los Angeles basin since then.  To me, they’re kind of fun, as long as nobody gets seriously hurt.

While quite a few of those earthquakes provided a real “E-ticket” ride, only a few of them were very significant.

Perhaps most memorable for me was the 1971 San Fernando Valley quake which I rode out on the top floor of UCLA’s Rieber Hall dorm one morning.  As we swayed back and forth seven stories above the gound I quickly figured out that a bookcase over a dorm bed isn’t a real good idea in earthquake country.

We were living in Lakewood when the Norwalk quake struck nearby.  It wasn’t a big one, but it was close enough to knock a lot of things off of shelves and damage a few chimneys and walls.  It struck in the morning as I was about to go out the door for a jog.  I stood in the middle of our kitchen, pushing cabinet doors shut and trying to keep things from raining onto the floor.  Our elementary-school aged daughter did what she had been taught and stood under a doorway, and then called upon me to do likewise.

That Norwalk quake went on for a fairly long time and knocked out the power, but never got real violent.  Still, it panicked one of our friends, who ran out into the middle of her street half-naked.

Earthquake Preparedness:  No time like the present!

Ironically, I had just printed up about 500 “What to do in an Earthquake” flyers to pass out in my “farm.”  (A “listing farm” is a specific neighborhood a Realtor, known as a “farmer,” cultivates with regular flyers, gifts, and notepads.)

So, as soon as I figured out how to get into the vault-type garage when the electricity to the opener’s off, I went on my jog and passed out the flyers as I went.  Back then it took about a week to get a good flyer printed up, so folks wondered where I got the inside tip about the quake.  The response was so good that for a while I just kept an earthquake flyer ready to pass out after the next one.

Maybe “Mother Nature” provides us these modest tremblors to spur us to do the needed preparation should that legendary “Big One” ever hit close to home.  In any case, now’s a good time to check your earthquake preparedness.  Some steps are real easy, and they might not be the ones you’re thinking of, either:

• Do you have comfortable shoes, a blanket, flashlight, some first aid supplies, and an extra half gallon of two of water in the trunk of each car?  (Some granola bars aren’t a bad idea, but lack of water’s a much bigger threat for most of us than lack of food in an emergency.)
• Got a working flashlight and sturdy slippers by every bed in your house?
• Is anyone in your home sleeping next to a bookcase, heavy wall hanging, etc.?
• Does everyone know how and when to shut off the gas and is a shut-off tool or large wrench wired to your gas meter?
• Is your water heater strapping up to current standards?

Additonal Online Information:

California Dept. of Conservation on “What to Do Before, During, and After an Earthquake,” with additional links.

L.A. Fire Dept. Emergency Preparedness Guide

Los Angeles Building Dept. has an pdf file on steps to strengthen your home structurally .

Please feel free to suggest helpful links you might have found by adding your own comment at the end of this post.

How Big a Risk?

I much prefer living with earthquakes than the floods, hurricanes, and tornadoes that plague other regions of the country.  Not to mention the humidity or the cold.  A little preparation goes a long ways to minimizing the risks.

But if you’re going to worry (which is never a good idea), chloresterol, fat, and bad drivers are far bigger risks than earthquakes.  Actually, worry’s a greater threat than an earthquake!

So shake it off and get on with your life!  Right now it’s about 2 p.m. and a blamy 77 degrees with a pleasant breeze, and the Angels have beaten the Red Sox six games in a row.  Why on earth would I ever want to live any place else?

This is the third in a series of of three posts on three listings on the same block that closed escrow earlier this year. The first two are good examples of costly but common seller mistakes. (See “A Tale of Three Listings: The probate seller’s big mistake” and “The “flipper” Realtor who didn’t think.”)

Today we look at the third listing, a good illustration of what’s going on throughout Southern California right now. It shows how we got into this mess and what it takes for homeowners to get out of it.

Meet the Johnsons:

This seller first called us around the first of the year. We’ll call them Mr. and Mrs. Johnson. They had purchased the home in June of 2002 for $275,000 with 20% down. They refinanced two years later for $325,000 and again in 2006 for $338,000.

Refinancing every two years is generally better for the mortgage broker than the homeowner, but these owners were relatively conservative. Not only did they avoid negative amortization loans, they also resisted the temptation to pull out the bulk of their equity. Otherwise, they could easily have owed over twice as much as they did.

When we first met, there were about six home listed within 150 yards of their home, including “short sales” next door and across the street. That sounds like an Inland Empire or ghetto listing, but was actually just an unlucky block in a decent part of Lakewood.

Like most sellers, the Johnsons knew that values were down, but still had unrealistic expectations for their home. Even in normal markets, most sellers tend to overprice their home, giving value to personalized “improvements” that actually are negatives to most buyers, and overlooking negatives they’ve grown accustomed to.

When we prepared for our appointment, we were pleased to see that they still had equity in their home, but it was far less equity than they had expected. However, their personal situation was such that it was a good time for them to move. They wisely chose to let their personal situation guide them in an uncertain market, rather than speculate on when the bottom might come (see “What to do when nobody knows what’s next“).

Getting Ready

Unlike many sellers, they were willing to listen to our recommendation, not just on pricing but also on timing, preparation, and staging (see “How to sell your So Cal home for top dollar in 30 days“):

• Preparation: We suggested adding some flowers in the front, fertilizing the lawn, and repainting the chipped & peeling front porch, and removing posters and repainting the teens’ bedrooms.
• Staging: This was a large home with an unusual floor plan, including a huge master bedroom with some unused space and a small utility room with a half bath.

Partly because the average seller is about 20 - 40 years older than their most likely buyer, most sellers aren’t aware of how visually dependent their buyers are. Verbal suggestions aren’t nearly as effective as properly staging a home.

In this case, we suggested using a bookcase to seclude a part of the master as a semi-private office or retreat. We felt that the utility room with a private half bath should be staged as a bedroom, and offered the use of one of our inflatable twin “instant” beds. This would also enable us to list the home as a four bedroom, two bath rather than a three bedroom with utility room, without potential buyers asking “Where’s the bedroom.”

As almost always, we also recommended removing or relocating some furniture to make the home look larger, as well as eliminating knick-knacks and clutter.

• Timing: Aware of the coming onslaught of foreclosure listings we strongly recommended the Johnsons waste no time getting their home on the market.
• Pricing: Correct staging and preparation would significantly improve the sellers’ bottom line, but locating and closing a qualified buyer using today’s tighter lending standards is often a major challenge.

The first week a home is on the market is the best opportunity to get competing offers.  So it was critical to hit the market with all staging and preparation done, and to hit it at an aggressive price. Our hope was to obtain competing offers within the first two weekends, not only so we would be in a stronger negotiating position, but also so we could focus on the buyer most apt to close the escrow.

• What not to do: Fortunately, the Johnsons called us early in the process of deciding what to do. Not only did that allow us to encourage them to speed up the process to take advantage of early spring activity in a falling market, but it also allowed us to help them focus their preparation efforts on the most productive items.

As is commonly the case, there were several repair items they wanted to fix that we felt would be better left for the physical inspection once we had a buyer. That not only saved time and effort, it also allowed the buyers to pick the repair items that were most important to them.

The Team Effort:

In order to get things moving quickly, we completed the listing paperwork that night, with a target of getting the home on the market in a few weeks, once the work was done. We agreed on a tentative list price, which would be adjusted as needed just prior to putting the home on the market.

We were amazed at how efficiently the Johnsons went to work. The bedrooms were painted and lawn fertilized within a few days. Furniture was moved out, and our “instant bed” was moved in.

There were, however, a few areas where disagreements arose. The master retreat was set up with a desk from the former utility room, but the bookcase screen never made it.

We never fully agreed on pricing, although we were only off by a few thousand dollars. In a challenging market like today’s, accurate pricing from the start is quite important. As with proper staging and preparation before hitting the market, “you never get a second chance at a good first impression.” That’s especially true now that listing information travels at the speed of light over the internet.

Still, it’s the seller’s house, and all we can do is explain our recommendations. We were very fortunate the Johnsons worked so well on preparation, staging, and timing. And we weren’t that far off on pricing, but things might have gone smoother were the initial price just 1% lower.

Our Part:

It’s not just the seller who has to work hard in this market, however. As the Johnsons were preparing the home we began working on our marketing plan into play. We’re constantly looking for and trying out new ideas, and over the last three decades we’ve incorporated quite a few that have proven effective. Selling a home for top dollar fast isn’t rocket science, but it does involve doing lots of little things right. In the Johnson’s case, this included:

• buying the home’s address for the domain for the home’s website & getting a sign printed with the domain. (1234Main.com, for example–much easier to remember than “12J75jKR Wxyz@prudential.yahoo.homes.com or whatever)
• videoing the virtual tour
• photographing, writing & printing the color flyers for inside the house & for the brochure box
• preparing 19 photos for the MLS & adding captions
• recording an audio tour & put up our call-capture “audio tour” sign so we could follow-up with buyers while they were still in front of the house.
• putting up our personalized “for sale” sign with only our cell number on it, so all calls would go to one of us, not some 18-year-old receptionist who’d never seen the house (or an agent taking “floor time” who’d rather sell the buyer his own listing).
• holding open houses with about two dozen strategically placed signs.
• over 400 flyers delivered throughout the tract to neighbors who might have friends or family looking to buy in the neighborhood.
• Bringing our local office through on tour.
• Precisely timing the inputting of the listing into the M.L.S. and onto the internet to maximize the possibility of multiple offers (we’ve actually go this down to not just which day of the week but also what time on that day.) (Sorry–that’s our secret, but we know what works. It changes based on the market anyway.)

The Results:

The good news was, we had an offer within the first two weeks, and were able to negotiate a mutually acceptable price and terms. The “challenge” (we try to avoid words like “bad news” or “problem”) was, the buyer wasn’t as strong as we would like, in terms of qualifying for the loan. They weren’t terrible, probably a little stronger than average. They were even “pre-qualified,” but that really doesn’t mean much if you check out the fine print. They were still weaker than we’d prefer.

So we dragged out the negotiating process a bit, checked with other potential buyers, but nobody else appeared, and that initial burst of activity when a new listing hits was dying down. The home was fairly unique, which also limited our pool of buyers. The seller was firm on their price, so we went with the only buyer we had. In this market, you can be too choosy.

Unfortunately, in these days of ever changing lender requirements, the lender modified the loan requirements during the escrow, if the buyers’ agent is to be believed. (BTW, the buyers’ agent is never to be believed, but there’s only so much a third party can verify. Shoot, even Presidents have been known to lie under oath!)

The buyer really wanted the home, and kept searching for a loan that would work, but after a few weeks we put the home back on the market to see if we could find a stronger buyer. Unfortunately, we were right about the declining market as well as the uniqueness of the home. We couldn’t find another buyer quite as willing to pay top dollar, but after about a month back on the market we did find a buyer who was able to successfully close the sale in less than a month within 2% of the original asking price.

The sellers are now happily moved into their new home and are getting on with their lives in the location that’s right for them. Meanwhile, four of the other six listings on their block have not yet sold, and the other two both eventually sold but for almost 20% below their original asking prices.

Bottom line:

• Sellers today need to be flexible and willing to expend some effort.
• Find an experienced, honest, diligent Realtor (or two) as early as possible.
• Take your agents’ advice very seriously.
• Beware of letting market timing or wishful thinking trump your personal needs.
• Get it right the first time–condition, pricing, staging, marketing & listing agent.

That’s what we think–we’d love to have you add your comments, thoughts, or questions below.

Blair and I have both worked for the same owners our entire careers: Bruce Mulhearn owns the firm, while Clint Roe owns & manages our office. Both were experienced brokers back when I first got my license in 1980.

Bruce and I have climbed Mt. Whitney & skied Mammoth together, usually competing against each other all the way. He’s an enthusiastic optimist, as are most successful entrepreneurs.

Bruce mails out an upbeat letter to all 800+ of his agents about twice a month. This week’s letter is entitled “A Proper Perspective–Past, Present, and Future.” Please understand–we’re not changing our basic market predictions (see “How low will prices go?“). However, we do think Bruce helps put the current downturn in perspective. Here are some excerpts:

The current financial morass is painful; however, it would be wrong to rank it with many of the past 100 years. The problem is we have a cultural rut of pessimism, according to Zachary Karabell of The Wall Street Journal. It drains our collective energy, blinds us to possibilities, and erodes our world leadership.

Consider our current situation:

1. Unemployment: 5%
2. Inflation: 4%
3. Economic Growth: 0.6%
4. Housing has delcined primarily in four states–by approximately 20% We conveniently forget that in these states property values increased over 100% in the previous five years.

Hardly statistics to celebrate, but a far cry from the real crises of the 20th Century.

Consider the Great Depression:

1. From 1929 to 1932 the Dow went from 380.33 to 41.22–a decline of 89%.
2. By 1933 unemployment was 24.9%; after seven years of the New Deal it was still 14.6%
3. 4,000 banks failed in 1933.
4. Not only did millions lose their homes, most of them became homeless and lined up at soup kitchens.

Or compare our current situation to the ’70s and ’80s:

1. 1977 unemployment 8.5%. 1982: almost 10%.
2. From 1973 to 1974 stocks dropped 46%, from 1067 to 560.
3. 14% inflation under Jimmy Carter, with odd & even days to line up for blocks to buy gas–at a higher percentage of consumer spending than today.
4. In 1979 I had over 20 offices and 500 agents; by 1982 I was down to 6 offices with 125 agents–but we survived.

Dave here, interrupting Bruce for a few paragraphs with an “Amen!” This market really isn’t all that bad, at least in terms of sales volume. The slowest market I ever say was in 1990 - 91 during the build-up to George H. W. Bush’s first Iraq war. For months there were virtually no buyers. I took listings off the market.

The Southern California defense bust housing crash of 1991-1995 was also much worse than today’s market, in terms of a slowdown in sales, but not in price declines. I remember a story told back then by Century 21’s CE0: When he flew in to Honolulu for a statewide C-21 rally back then, he was greeted by hundreds of cheering, shouting, horn-tooting, confetti-throwing, gold-coated C-21 agents. In the midst of all the hoopla, he heard a passing businessman remark, “Guess they finally found a buyer.” True story!

Today’s just not that bad! The last listing we took, which went on the M.L.S. just 3 business days ago, had two competing offers within 24 hours, although Blair was still negotiating both of them last time I checked (5803Hayter.com). Likewise, although it took a couple weeks, the listing we took prior to that one also had competing offers, despite being one of those troublesome short sales (AdwenStreet.com). While the strategies we discuss in “How to sell your So Cal home for top dollar in 30 days” will work in almost any market, they work better when more buyers are out there, and that’s the case right now. Now back to Bruce Mulhearn’s thoughts:

There were also tough times during the tech blowout at the end of the century.

Tech stocks dropped from 5,000 to below 2,000. Teal estate has never had that kind of downside. But there was also an upside due to technology, which led to invaluable innovation and welath creation in the USA and around the world. Hundreds of thousands became wealthy.

America has always been marveled at and envied. I believe that 95% of the world still wants to live here. At the start of the 20th Century Britain’s ambassador to the U.S., Lord Bryce, remarked about “the hopefulness of American’s people.”

While there may be strength in America’s self-criticism 100 years later, there is a fine line between self-criticism and defeatism. We need to snap out of our deep pessimism. Our fears put us at a disadvantage in today’s world.

I’ve been to both China and Dubai, where you can feel electricity in the air–the hum of activity, ambition, and sheer optimism about the future. It’s both a strength and a source of energy, even though the Chinese stock market was down almost 50% in the past months, and there have been severe real estate crashes in both Shanghai and the Persian Gulf.

We have a choice in life. We can view our circumstances through grime-encrusted lenses, or with more flexibility about our so-called weaknesses. I’m not suggesting rose-colored glasses, but a need to break this downward spiral. Let’s not have the world declare, “What happened to the American Spirit?”

UPDATE: Katelyn Elizabeth Newman checked was born at 3:16 a.m. Wednesday morning, 5/28, weighing in at 8 lbs 6 oz, 20 inches. Mom, Dad, baby, grandpa Dave & others all tired but doing well. Film or at least photo at 11. Hopefully.

Guess I’m getting a little first-hand help with that whole keeping real estate in perspective thing we’ve been posting about periodically. (See “A Memorial Day perspective on our housing market,” “A little perspective,” or “A little more perspective.”)

Although Blair & I had been expecting his wife & my daughter Beth to go into labor this week with their second child, I was still caught a little off guard when Kaiser checked her in after her weekly check-up this morning.

It’s now over 12 hours since they started the ptosin to induce her, & she might be working on it all night. Meanwhile, after visiting Beth at the hospital, moving cars, & taking care of some preparation work on a new listing this morning, good old “Papa Dave” has been providing day care for Beth’s two year old daughter & her almost two year old cousin.

So that promised “Tale of Three Listings” post is still in my head rather than on this blog. Sorry.

Don’t even have time to post about all the interesting real estate news today, although it’s pretty much what we’ve been predicting all along.

Hopefully we’ll have some posts up shortly. Maybe a baby picture too.

Just more evidence that, regardless of the market’s crazy cycles, life does go on.

And there really are things in life much more important than real estate.

Editorial note: This special Memorial Day post is part of our continuing effort to keep a proper perspective on material things in general and real estate in particular. For others, scroll down to “Categories” in the right hand column & click on “Perspective.” Our promised “Tale of Three Listings” post should be fairly soon, once Beth delivers her baby.

Warning: This post has a spiritual emphasis. You’re free to disagree or skip it but please don’t complain about it. There really is more to life than real estate.

Got up this morning to see my neighbor’s flag up for Memorial Day. Their son-in-law, Dusty, woke up this morning in Iraq.

He’s one of millions of Americans who have risked their lives so you and I could wake up this morning in a free nation. Since the Revolutionary War was fought 230 years ago, hundreds of thousands of America’s best have paid with their lives for things we too often take for granted.

These brave men and women certainly deserve a flag flying in front of every home and business today and a “Moment of Remembrance” as tokens of our gratitude.

A day like today helps keep our current economic woes in perspective, as do the recent tragedies in China, Burma, & Oklahoma. People have lost their children and their homes, & I’m upset about losing a little equity or the price of gas.

Yesterday in church Pastor Chuck spoke about how little regard we should really have for those material things that consume too much of our time. He thought St. John’s description of heavenly streets “paved with gold” helps put material “treasures” in perspective.

Reminded me of an old joke about the multi-billionaire who supposedly talked God into letting him to take some of his wealth with him after he died. When he met St. Peter at the Pearly Gates, he was pulling a huge trunk behind him which he had filled with gold.

“Sorry, you can’t take anything with you,” old St. Pete told the billionaire.

“Actually, I’ve got special permission,” replied the billionaire.

“Sounds fishy to me, but I’ll check it out,” said Peter, picking up his Verizon wireless Voyager [unpaid product placement].

After a minute talking to Central Processing, Peter put down the phone with an amazed look on his face. “I’ve never seen anything like this before, but you’re right–you can bring it in with you. Now I’m curious–would you mind showing me what’s in the trunk?”

Proudly, the wealthy old guy opened up his suitcase to show shining blocks of gold.

Peter looked at it & scratched his head. “Asphalt?”

In America, at least, it’s too easy to sacrifice things that really matter for temporal things that don’t. Many of us live as if money were our God.

Luke 16:13-15 reports an interesting discussion Jesus had with some money-loving fundamentalist religious leaders of his day.

“No servant can serve two masters,” he said, “for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.”

I’ll let Dr. Luke tell what happened next:

The Pharisees, who were lovers of money, heard all these things, and they ridiculed him. And he [Jesus] said to them, “You are those who justify yourselves before men, but God knows your hearts. For what is exalted among men is an abomination in the sight of God.”

Shocking, but true. When it comes to money, “What is exalted among men is an abomination in the sight of God.“

Jesus spent a lot of time teaching those who would listen to value God and people above all, and to trust God to provide our daily needs. (See, for example, Luke 12:13-34, where he really puts it all together.)

Blair and I hope you enjoy your Memorial Day. Put out the flag, spend some time with the family, & maybe take some time to recheck your priorities. With God’s help, we can all live lives that make a difference, and leave this life with more than a trunk full of asphalt.

Today the Wall Street Journal reported that Senate Banking Committee Chairman Christopher Dodd (D., Conn.) and his committee’s ranking Republican, Sen. Richard Shelby of Alabama have reached an “agreement in principal” that could lead to senate approval of their own version of Barny Frank’s $300 billion dollar mortgage relief bill.

You may recall our post ten days ago about Ben Bernanke’s seeming support of such a bill.

While we are supportive of some of the many things included in Frank’s bill, there are huge problems which we hope our Senators are wise enough to correct.

1. It makes no sense to bail out loans that never should have been made and that will ultimately fail regardless of temporary bailouts. There’s plenty of blame to go around for the subprime crisis (see “How we got into this mess“), some goes to borrowers who lied about their income, other to lenders willing to make no down home loans to borrowers with Fico scores so low I wouldn’t have accepted them as renters, let along borrowers. In either case, there’s no sense in putting off the inevitable for borrowers who never should have become homeowners.
2. It makes no sense to reward and encourage irresponsibility. It’s really up to the borrower to read and understand the loan documents, not to just “trust our agent,” who probably hasn’t read them either.
3. Let’s not punish tens of millions of responsible homeowners who are also taxpayers by forcing them to shoulder billions of potential losses to bail out less responsible homeowners.

In fairness, many subprime borrowers were duped by mortgage brokers who were often also real estate agents, eager to make a commissions for both the sale and the loan. I’ve heard tales of some agents employing full time “signers” to supply signatures on loan applications and documents. Many others simply trusted agents who spoke their language to correctly explain the various English documents. The documents are indeed overwhelming. I usually scan loan docs that I sign, but rarely do I read every word of every page.

The other day as Barb & I were out for an evening stroll we passed a home which had recently been foreclosed and then sold. The buyers paid about $200,000 less than the former owners had paid almost three years ago. They had moved in, and we noticed new kitchen cabinets stacked in the garage, no doubt waiting installation.

This was not a subprime loan gone bad, just a case of a buyer who bought at the peak and then decided to accept a job transfer as prices were declining. They picked a really friendly Realtor whose child was on the same soccer team as theirs (see”Top 10 ways NOT to pick a real estate agent“).  The agent allowed them to overprice the home, then chase the market down, then take it off the market and rent it until their considerable equity was gone.

Sad for the borrower, sad for the lender, good for the buyer.  Kind of a cleansing and a fresh start, ultimately for everyone.  Not the end of the world.  Nobody died.  The sun’s still coming up.  Lender and  borrower made their choices and lived with the consequences.  And the American taxpayer didn’t have to bail anyone out.

Worse things could happen.  Rep Frank’s bailout bill, unless modified by the Senate, might be one of them.

Last night Barb, Nate, & I went to see Ben Stein’s new movie, Expelled: No Intelligence Allowed. It’s a wry, stark, and thought-provoking semi-documentary look at how closed-minded our scientific and educational establishment has become about alternatives to neo-Darwinism.

Maybe closed-mindedness is the default setting of humankind. Something we all have to fight against. I see it all the time in the real estate world. Potential sellers call me, supposedly to find out what the current market value is of their home. Often after I review the data and explain my professional opinion, they proceed to tell me how wrong I am.

“OK,” I think. “Why exactly did you ask me to do the research if you already knew the answer?” Actually, it’s simple. They wanted me to confirm what they thought they already knew. Maybe to show the spouse how wrong he/she was. Combination of pride and self-interest. (See reason #1 of “5 reasons NOT to pick a listing agent” for more on this.) “I made up my mind; don’t bother me with the facts.”

Somehow, it seems that this human bent towards closed-mindedness is often more pronounced in those who are in positions of authority. (For examples, consider Washington, D.C., Sacramento, or, most likely, your boss.) Truly successful leaders must fight hard to keep an open mind. Because power and closed-mindedness is a very dangerous combination (see Adolf Hitler, Vietnam War, or sub-prime lending).

Well, according to Ben’s new movie, an extreme version of that sort of closed mindedness has invaded much of the scientific community. Not just “I made up my mind. . . ” but “I made up my mind & yours too!”

Closed mindedness to the point where even mentioning an opposing viewpoint can get a professor fired. Talk about “academic freedom.”

A very thought provoking movie, with a little of Stein’s wry humor thrown in. I highly recommend it. Click here and insert your zip code for showtimes.

And keep an open mind.

(more…)

(4/15/08)  Yesterday’s paper brought an uplifting story that helped put our real estate woes in perspective.

Today’s paper was a little more brutal. “The Next Big Quake: Big One Nearly Certain by 2038,” screamed the Register. The Times was a bit gentler: “Likelier here: the next Big One.”

Fortunately, I try to start each day with a something a little more inspiring. This year I’m reading through Wisdom for Today, a daily devotional by my Pastor, Chuck Smith.

Appropriately enough for April 15th, today’s devotional was taken from the Biblical book of Job.

It’s based on advice the troubled Job received from Eliphaz, a friend who had come to “comfort” Job in his distress. Possibly the oldest book of the Bible, Job could have been written yesterday for today’s California home owners.

Titled “Nothing + Nothing = Nothing,” today’s devotional is taken from Job 15:31, “Let him not trust in futile things, deceiving himself, for futility will be his reward.”

Here’s the first paragraph of “Pastor Chuck’s” thoughts on the passage:

“In his attempt to understand why God had stripped Job of all his possessions, Eliphaz reasoned that Job had foolishly put his trust in those possessions. Though Job had not done so, Eliphaz was right in speaking against the folly of those who are lulled into a deceptive sense of security by their wealth.”

Like maybe thinking Southern California real estate can only go up in value?

Bottom line, even if that were true, you still can’t take it with you!

1,500 years after Job, Jesus put it this way:

“Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.” (Matthew 6:19-21)

I find that last sentence especially interesting. Jesus’ reason for not focusing on material wealth wasn’t so much that “you can’t take it with you,” as that it will distract our hearts from far more important things. Things that are eternal, like our family, our neighbors, our character and God.

Hopefully the last few year’s “shake up” in Southern California real estate values or the coming “shake up” reported in today’s paper will help us all focus more on things that can’t be shaken.