The Tycoon Report

4 Great Real Estate Recipes for 2009!

Friday, January 2, 2009 | Ethan Roberts

"Hey Ethan, what's the outlook for Real Estate in 2009?"

After a couple of dismal years, many people have recently been asking me this question.  Most want to know if there is any possibility of a rebound in the real estate market in the year ahead.  The other questions I am hearing most often now are:

"Should we sell our home now or wait for prices to go up?" 
"Is 2009 the right time to buy our first home?" 
"Should I refinance now or wait for better rates?"
"Is it too soon for investors to start buying again?"

Now these are some tough questions, and for the most part the answers that I give are going to be related to each person's specific life and economic circumstances.  But since some people assume I have a crystal ball, I figure I can handle them all pretty easily.

Seriously folks, there are so many conflicting forces at work right now in the economy, even with a crystal ball, I would be hard pressed to correctly predict the future.  Oh sure, I could be like one of those CNBC guests who make any old prediction, simply because they know if they're wrong, the public will forget what was said in six months anyway.  And if by chance they get it right with a lucky call, they can boast about it in their marketing for years to come.  But that's just not my style. 

So there will be no egotistical predictions from me today.  However, in the spirit of the holidays, and since I really enjoy cooking for family and friends around this time, I thought I would take a different approach.  Instead of predictions,  I am going to highlight the current market conditions, plus look ahead to what may happen in 2009 by whipping up a few possible "real estate recipes".   I have prepared some very special dishes for all of you, so do let me know which ones you find to be the most tasty!

Why don't we begin by enjoying some nice hot and fresh:


4 cups of declining housing markets
1 cup of much tougher mortgage standards
12 ounces of lousy buyer credit scores
8 ounces of limited buyer savings for down payments
4 ounces of fear of no bottom in sight
3 ounces of unwanted short sales
2 ounces of increasing foreclosures
1 glutted inventory of unsold homes
Sprinkle of extremely negative media coverage
Pinch of negative consumer confidence

Combine the first seven ingredients into large, vacant homes.  Stir until moldy with excessive heat from utility shut offs.   Allow the glutted inventory of homes to rise until almost ready to burst.   If pie still contains a 5 to 1 ratio of home pricing to area income, blend in the last two ingredients and beat well until the pie becomes too distasteful for consumption.

Ugh, that sounds like a recipe for disaster, doesn't it?  Oh well.  Perhaps my next Real Estate recipe will entice you a bit more.



100 large and noisy Hams
1 cup Bank bailout
3 cups Fed Rate Cuts
1 cup Loan Modification Program
1/2 cup Obama election win
2 ounces of Henry Paulson in panic mode
1 ounce George W. Bush in snooze mode
200 million taxpaying turkeys (optional, not necessary to consider)

Combine the first four ingredients and beat your chest like you know what you're doing as you stir the pot.  Separate the Paulson and the Bush modes from the Obama election win.   Ham it up and add spice in front of a TV camera, then make sure that any new ingredient ideas are half baked.  Add the turkeys if desired, or better yet, just throw them some crumbs and they can pay the bill for the whole recipe!

Next, after a tasty meal such as above, how about a dessert that's not too sweet?



Three half pint automotive industry CEOs
6 percent dash of unemployment
Generous portion of credit card defaults
Thousands of lost jobs sent overseas
$50 Billion pounds of Bernard Madoff Ponzi scheme
1 dozen Banks not disclosing how they spent their bailout money

Combine all ingredients and simply chill over the long winter.  Do not attempt to thaw out until after the January inauguration, so that nobody else can take credit for any of your recipes.

So as you can see from the first few recipes, 2009 could be pretty tough for the real estate market.  We still have a myriad of ongoing negative economic forces working against us.  Given that, is there ANY chance of a recipe for improvement?  Well actually, I do see a thin sliver of hope for better times ahead.  Watch carefully, as I toss up a batch of "Optimism Salad".  What, you never heard of that?


3 cups low mortgage interest rates
2 cups 3.5% FHA down payment loans
1 cup FED buying mortgage-backed debt in January
1 recent large increase in mortgage applications
1 recent increase in foreclosure purchases
1 $7500 tax deduction for first time home buyers
1 print and 1 TV media, bored with the real estate bear market, trying to create a buzz with stories about a market turnaround.


Combine all ingredients into large bowl.  Close your eyes and forget that the $7500 is really just a 15 year loan that must be re-paid.  Also disregard that the increase in mortgage applications includes folks who have insufficient equity to be able to refinance and buyers who won't qualify under stricter mortgage standards.   Remember that the media in part created the real estate bubble with shows like "Flip This House", then helped destroy it with daily stories of "when will the bubble burst"?  They are therefore entirely capable of turning public opinion around again, simply to create a new and interesting story.  You know, they will come out with something like,  "Time to buy?  After a three-year decline, Average Joe and Betty's home value is going up again!" 

Now if you still are not inspired by any of these recipes, as a last resort we can simply pretend to be like Dorothy, from the Wizard of Oz.  Forget cooking, and just click your heels together three times and say "there's no place like home, there's no place like home!"






Ethan Roberts
Contributing Editor
The Tycoon Report