Friday’s Weekend Column
About a Minnesota Man Exploring Life in the South

Canned Goods and Ammunition
by James Glaser
April 10, 2009

I was talking to a real estate agent today, and she told me that now is the time to buy. She said we have finally hit bottom, and prices are going to start up again. It sounded good, but real estate agents are in sales, and "hitting bottom" was the pitch she is using this week. I don't blame her, home sales and commercial real estate sales are as low as car sales. Times are tough all over, especially here in North Florida, and people say whatever they have to so they can get by.

A guy stopped by my studio and told me that he was trying to refinance his home, but he got laid off this week, so the refinance fell through. The following is what Barack Obama is saying about real estate.

WASHINGTON (AP) — President Barack Obama says millions of Americans can save money by refinancing their homes and taking advantage of record low rates on fixed mortgages.
Speaking at the White House, Obama on Thursday emphasized that that average rates on 30-year fixed-rate mortgages have dropped to 4.78 percent. That is the lowest rate on record.
Said the president: ''People can really take advantage of this.''

That refinancing is all fine and good for people that are doing well. However, there are something like 13 million people who have lost their jobs. No refinancing for them. Add to that another 10 million who are underemployed, working part time. No refinancing for them either. Then there are the millions of Americans who have already been foreclosed on. Well, they now have nothing to refinance.

Low interest rates are great for those Americans who are doing well, but I'll tell you who makes out the most—the Banks, of course. They don't lower interest rates out of the goodness of their hearts. They do it to make money. Think about "origination fees" on every refinance. Think about all the points paid to get that lower interest rate, closing costs, and who knows what other hidden fees they stack on.

Banks were getting hit hard because nobody was buying new homes. Well, now with millions of people refinancing, and with each refinance, the bank takes in a few thousand or more, we are talking about billions of dollars in profits for doing some paper work.

So, I wonder where we are as a country. I think we are in the same place we were last year at this time, right in the middle of an economic collapse. Yes, Banks are announcing new profits, but those profits are coming form a flood of refinanced loans. New houses are not selling. Tens of thousands are losing their jobs every day, millions are out of work, and I can tell you art sales are way down, too.

So, what do we do? Do we buy a house? If we have one, do we refinance? How about jumping back into the stock market or start buying gold? I don't know, but I think the best advice I have heard in the last couple of months is to buy canned goods and ammunition.

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