Mark MacKenzie

So I go to my son's Thanksgiving "feast" at his pre-school today. He had on a pilgrim hat he had made and had a tasty looking meal with a dozen of his closest friends. A great time was had by all - and of course because I was thinking about 300 things as I ran out the door to meet him there, I forgot the camera. But I will get a picture of him in his Pilgrim hat and post it on here shortly.

The reason this is "blog worthy" is because of what the teachers had their students do. Each kid was asked what they were thankful for. Our son Jackson said, "his family and doggy" which was great to hear as a parent. It couldhave been candy, or juice, or his toys, whatever. In fact one kid was grateful for Barack Obama even though his parents had admitted that they voted for McCain!

But this got me thinking about something that I try to acknowledge every day, and that is what I am thankful or grateful for - it is amazing what comes into your life when you acknowledge what you already have, it puts you in a state of abundance.

So, here is my top 10 list of things I am thankful for:

1.) My family. My beautiful wife Sarah and our three babies Jackson, Carter, and Madison - and yes, even our "doggy" Bailey. I had no idea that life can be so good.

2.) I am thankful that our family is healthy.

3.) I am thankful that I live in the greatest country in the world. Because it has given my every opportunity to succeed - which is all anybody ever wants - an opportunity.

4.) I am thankful to all of my clients and business partners that have helped grow my business to where it is today.

5.) I am thankful that I still have a job, and that despite the changing real estate market, I have the opportunity to still wake up every day and work - there are a lot of Americans that don't have this opportunity.

6.) I am thankful that our family is healthy.

7.) I am thankful for the challenges that I face in my business because without them, i would not be who and where I am today.

8.) I am thankful for the 24 years that I had to spend with my Dad before he passed on.

9.) I am thankful that our family is healthy.

10.) I am thankful for Active Rain for giving us all an opportunity to learn and interact at a speed that none of us would be able to do without this community.

So what are you thankful for?

My favorite piece of real estate information was published today - the existing home sales report that is put out by the National Association of REALTORS every month.

The reason I like it is because it is timely, it is national and regional, it has home sales and listings, and it shows the past 12 months of data.

If you want to know what is going on in the real estate market on a national level, this report has all of it.

The first thing I look at is the month's supply of housing. I want to see if this number has improved or declined sicne last month. That's the most important indicator. It tells me if the relationship between the supply and demand for housing (the reason why the market is in decline) is getting better or worse.

In this case, the month's supply of housing rose 2% from a 10.0 month supply in September to a 10.2 month supply in October. Not bad, but not what I would want to see. The goo news is that this number is an improvement from last year when there was a 10.5 month supply of housing.

As I had mentioned, the month's supply of housing is the relationship between the supply and demand for housing. This month, the number of listings or homes for sale declined -0.9% from last month and -4.5% from last year. That is really good news. As I have been saying, there are simply too many homes for sale and this is causing downward pressure on home values. Currently there are 4.234 million homes for sale.

The other half of the month's supply of housing is the demand or the number of sales. Home sales declined -4.6% from last month, which is the reason why the month's supply of housing increased this month. However, home sales are only down -0.7% from last year, not too shabby.

At this current pace of home sales, the NAR projects that 4.98 million homes will be sold within the next year, or approximately 415,000 per month. They then divide the number of home for sale, 4.234 million, by the 415,000 and that gives us a 10.2 month supply of housing. That is the relationship between the supply and demand for real estate.

Of the four regions that the NAR tracks, the West is the only region that is showing signs of a recovery. Home sales in the West are up 40.5% from last year and 6.1% from last month. The second stat, the increase in home sales from last month is amazing to me. Despite an economic crisis, credit crisis, election uncertainty, and the elimination of down payment assistance, home sales were still up month over month for the West region.

All three of the other regions showed a decline in home sales month over month as well as year over year. In fact, home sales in the Midwest plummeted -14.4% from last month.

In conclusion, the housing market has a long way to go until it can achieve some price stability. However, while the October numbers were a retreat from September, I was surprised it wasn't worse considering the economic events of the month.

Having recently completed my new book, It's The Housing Market, Stupid! I had a chance to do some research and introspection on the infamous $700 billion "Wall St." bailout.

And the conclusion that I have come to is that this was perhaps the largest waste of taxpayer money in the history of our country.

As you may remember, the original plan was for the taxpayer money to be used to buy up mortgage backed securities. This was the fundamental premise for the bill being passed. This is what the President, Paulson, and Congress "sold" the American people on. We needed to do this or the stock market and the economy would collapse, the situation was dire and this was the only solution. We needed to act immediately. And like lemmings, our Congress passed the bill.

Here is the problem I have, the bill ultiamtely did pass on October 3rd. However, only 11 days later, on October 14th, Paulson pulled a 180 and decided that rather than buy up the mortgage backed securities as they initially proposed as being the only solution, the Treasury was going to take equity stakes in banks in an effort to get the banks to lend. The one problem is that you can't legislate lending.

And by the way, the Secretary of Treasury, Henry Paulson, is the former CEO of Goldman Sachs. Goldman Sachs was of course one of the nine banks to receive some of the initial funds of the program.

I am not in any way suggesting that Paulson is a crook, I believe he was well intentioned, the point I want to make though is whether or not this bailout was even necessary.

What is alarming is that the solution that Washington sold the American people on, the solution that was critical and dire to bringing stability to the financial markets, the solution on buying up mortgage backed securities- has not been implemented yet. And the sky still has not fallen.

President Bush said something to the affect during his speech to the American people that if we didn't act, the stock market would drop even more, home values could plummet, foreclosures would rise, and that we would see job losses as well as a long and painful recession.

So tell me, what has changed from pre-bailout to post-bailout?

Yes, you could argue that the credit markets have begun to thaw. The one small little detail that a lot of people overlook when attributing this thawing of the credit markets to Paulson's plan is that on October 8th, five days after Congress passed the $700 billion bailout, Bernanke and the Fed opened up their lending window to the commercial paper markets. This action of course does not cost taxpayers any money. This begs the question, why didn't Bernanake do this earlier or why didn't Paulson allow for this new lending window to run its course?

Isn't that what we have been hearing, the commercial paper markets have been thawing?

Here is a headline from the Washington Post on October 29th:

U.S. Markets Surge As Credit Starts to Thaw

Fed's Debt-Buying Program Gaining Traction

I wanted to bring this up because I believe that there is always more than one way to solve a problem, that throwing billions at a problem, doesn't guarantee a solution, and that ultimately even some of the "smartest" people on Wall St. and Washington, people closest to the problem, can be wrong.

www.ItsTheHousingMarketStupid.com

CNBC's Jim Cramer made a post today about his 100-day plan for Obama.

In addition to his recommendation that Obama make Cramer the head of the SEC, the Fed, and the Treasury, he also made a good point about how to address housing.

Cramer gets it, and he is close on how we solve it.

Cramer acknowledges there are simply too many homes for sale, he suggests there are 1.3 million too many. He is dead on about this estimation. Currently there are 4.266 million homes for sale and we are on pace to sell 5.18 million homes this year. At this pace, we would want to only have 3.1 million homes for sale; this would give us a 6 month supply of housing which is considered to be a balanced market.

The problem is there are too many homes for sale. Stop with these preposterous bailouts and focus on getting the excess supply sold. Cramer gets this.

He goes on to propose that the government actually use $400 billion from the TARP program and physically buy up these 1.3 million homes, get them off the market. Cramer then suggests the government sell the homes with favorable financing, low down payments and 5% interest rates.

OK, fair enough, but you still need a buyer for these properties Cramer. Until you have a buyer, they are still "on the market".

And more importantly, there is a more cost effective way to do this as I detailed in my previous blog post: http://activerain.com/blogsview/776963/50-Bonus-Depreciation

By offering 50% bonus depreciation as the government has already done in the GO Zone since 2005 you can bring buyers to the table, buyers with capital, who cant get loans from banks, who will purchase this excess supply of homes.

It is not up to the government to try to fix everything. It is simply the government's responsibility to create the economic conditions necessary (fiscal policy) that will let Americans stimulate the economy by making investments in real estate and in their businesses.

For a while now I have been talking about my new book, It's The Housing Market, Stupid!that will be available by the middle of this month.

I have also been talking about my housing and economic stimulus plan that is revealed in the book. The plan that doesn't involve a bailout. The plan that could work incredibly well, and if it doesn't, won't cost the taxpayers any money.

Additionally, I have been talking about that despite November 4th being a historic day that I believe should make every American proud to be an American, I have been quick to remind myself and others that read my blog, that ultimately it is up to the American people to make the change that they want to see in their lives and in their country.

I believe that it is our leaders that are responsible for creating an economic environment that will allow businesses and Americans to succeed. The American people are America's greatest resource, not the Treasury's printing press.

So far, monetary policy is not allowing the American people to succeed so we need to look at fiscal policy.

It is not the responsibility of our leaders to bailout every company and homeowner that comes calling for billions of federal loans or a new home loan. That is not what this country is about and that is not how we stimulate the economy. We need to do more than just survive this economic crisis, we need to thrive.

It's The Housing Market, Stupid! reveals a plan to create an economic environment that will allow the housing market to get traction and ultimately form a strong foundation that will allow us to rebuild our economy on.

One of the significant proposals that I detail is the use of a 50% bonus depreciation that was already passed into law as part of the Gulf Opportunity Zone act of 2005 for the regions that were affected by Hurricane Katrina and Rita.

This 50% bonus depreciation applies to both businesses that investment in equipment and those that elect to invest in real estate.

Specifically, the way it would work for real estate investments is that ordinarily you can depreciate the structure of a residential property over 27.5 years. So if the structure is valued at $200,000, ordinarily the owner would depreciate $7,272 per year ($200,000/27.5) for 27.5 years.

Under the 50% bonus depreciation, the person that made the investment would receive 50% of the depreciation in the first year or $100,000 ($200,000 x 50%). The balance of the depreciation, the other $100,000, would continue to be depreciated over the next 26.5 years or $3,773 per year.

Under this plan, an American could invest in real estate and receive a $100,000 tax write off (not tax credit) as a result of their investment.

The result of this proposal is that it would stimulate new demand for real estate that would help to absorb the excess supply of housing. It is the excess supply of housing that is causing the downward pressure on home values that is contributing to foreclosures and ultimately billions of write-downs for Wall St..

In the It's The Housing Market, Stupid! I detail how this stimulus could result in 1 million additional homes being sold within one year and the cost would only be $23 billion in lost tax revenues. A small cost considering the tab is nearly 1 trillion and counting for this crisis.

This is the type of economic environment that the government needs to create for Americans to invest in America. The American people are this countries greatest resource, let's put that resource to work.