Notes From My Journal

The Rental Market Today vs. 2007

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On April 16, 2007, I wrote this in my journal:  Rents are expected to go up in 2007. This would be the third year in a row. The rise is projected to be 5% this year for a 14% total rise since 2004, a report by Marcus & Millichap said. That compares to a 4% increase in pay. Over the same period, adjusted for inflation. Marcus & Millichap says this situation will make housing more difficult to find, especially in the coastal cities.  They predict the trend will continue for another three years. From 2000 to 2004 landlords couldn’t raise rents, USA Today said, because tenants were leaving to buy houses or condos. To feed that buying frenzy, about 300,000 apartments were converted to condos for sale in the past 3 years. Now, even with 92,000 new rental units this year, the stock is still too little to meet the rising demand. New York City is one of the worst. There rents have increased 7% in the last year. The national median rent will be $943 a month, which is 60% of the median mortgage payment of $1,566. Renters will get a break in Miami, Las Vegas and San Diego, where investors bought up thousands of condos hoping to flip them. Since the market faltered, many of those investors will need to drop rents to help them pay expenses or will be forced to sell them at steep discounts.

That was then.

This is now…

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Miscellaneous Essays

Obama Versus Romney Who Will Win? And Does It Matter?

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Over the past several weeks, readers have expressed their interest in the upcoming presidential election and its impact on America’s future. More particularly, many readers see this election as a contest between freedom and capitalism and some newfangled version of socialism… and they are worried that if Obama wins, they will become a lot poorer.

Well, here’s what I think. As far as your financial future is concerned, it doesn’t matter who is elected. Despite differences in ideology and rhetoric, our next president will take essentially the same path in terms of “saving” the economy.

I’m not saying that there is no difference between the candidates’ economic views. Obama wants to redistribute wealth. Romney wants to diminish social spending. But neither of them will make much long-term headway at realizing their ambitions. What they will succeed at is what both Republicans and Democrats have been doing nonstop since World War II: expanding the federal government by increasing its debt.

I’m not an economist. In analyzing our country’s economic policies, I take a businessman’s perspective. Businesses have many goals, some altruistic and some selfish, but they are all ruled by the logic of the balance sheet. Without a positive balance sheet, no business can last.

The Economy Is Out of Control

Our economy, I’m sure we can agree, is in ruins, and our federal government has unprecedented levels of debt. On top of our outstanding debts, we keep spending more money than we’re taking in. But only a partisan fool would suggest that this is due to Obama. The national balance sheet was already $9.9 trillion in the red when he took office. He has done a good job of pumping that up to $15.9 trillion. But had McCain been elected in 2008 we would be in roughly the same place.

The reason for that is simple. Every modern-day president knows that his only chance of being elected or re-elected depends on the economy. If the electorate believes that the president is “doing a good job” with the economy, it will re-elect him. If it believes he has made things worse, it will elect his opponent, who will be arguing that he can fix it.

But today there is no way to fix the economy.

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