Goldman Sachs Makes a Bundle…And so Can You.

Westcoe Realtors, Riverside California…So the big news in today’s financial world is that Goldman Sachs, a major Wall Street investment bank, has reported huge quarterly earnings after recently taking 10 billion dollars (and repaying it back this quarter, by the way) from the Government.  This would have been unimaginable a few months ago, but in less time than it took to make a magical Harry Potter sequel, this company performed it’s own magic and reported quarterly earnings in excess of 2 billion dollars.  Fairly amazing, and it certainly reinforces the old saying “The rich get richer.”

However, on a scale more conducive to normal people like us, if Goldman Sachs can do this in their arena, why can’t we do it in ours?  The answer is….we can.

All of the media reporting today’s quarterly earnings for Goldman Sachs are ultimately touting the basic fact that while most of the other Wall Street investment banks have spent the last 90 days licking their wounds and taking a conservative approach to investing, Goldman Sachs continued to run counter-clockwise to the current thinking and took prudent risks the others were afraid to do.  They maintained a core belief in the financial system, and reacted accordingly…and so can you.

Right now, our housing industry is getting pummeled daily…from almost all sides.  No matter the media outlet (TV, internet, newspaper, magazines), all we still hear more often than not is how depressed the housing market is, how many foreclosures are on the horizon, how many more people lost their jobs, and how we should all run inside and pull the blanket up over our eyes, and in a few years, it will be safe to come out again.  You can believe all that “stuff” if you want…or you can do what Goldman Sachs has done, and find the strength and confidence to do what others are being told to avoid…and that is to buy residential real estate now….not 5 years from now.

Yes, the housing market has taken a huge tumble, but that is down from highly inflated prices that took years to achieve…and now, the prices have fallen so low relative to what they were, that home prices are now really, really attractive.  Interest rates are incredibly low, and the combination of both make this the most opportune time to buy single family housing I have seen in the past 30 years.  Why now?  Two reasons.

First, with 20% down, you can get a nice home in with a total monthly payment that is less than what you can get in rent.  Think about it.  The rent will cover all your monthly payments, and you will still have a little left over to go out to dinner with your family.  In the past, it would either take a much larger amount of cash for the down payment to achieve this…or if you did the 20% down, you would have had to add a large amount of your own cash each month to make the payment.  But not now.  Now, you get the best of both worlds.

Secondly, ask yourself one simple question…”At today’s prices for single family homes, do you think that these homes will be selling for more or less in 5 years?”  You can call this the Goldman Sachs question, because it goes straight to the heart of your belief in American’s passion to live in their own home.  If you believe in most people’s desire to own a home, then you will feel housing has no where to go but up.  If you do not, then purchasing a rental now will scare the heck out of you.  The choice is yours…you can do what everyone else (the media) is telling you, or you can go the route of Goldman Sachs.

In the end, even with all the negativity in the financial world today, there remains a basic human desire to own real estate.  As we have said before, the desire to cut your own grass, paint the walls the wacky color of your choice, and play your music loudly is as a strong pull for Americans.  Therefore, this demand will recede from time to time based upon the normal cycles of real estate, but it will never vanish.  It is simply too strong a pull…which means that what goes down will go up…and if you buy your real estate when it is down in price (like today), you will get the benefit when it goes up.  Just ask the people at Goldman Sachs and their 2 billion profit.

Take care, and as always, let us know if there is any real estate issue you would like to see addressed here.