So, here is what I am seeing right now from my client and network base of small businesses and Taxpayers. They range from Portland to the Border and, of course, San Juan County.  I do have clients in HI, CO, TX, NC, CA and TN.

The hardest and first hit was the construction and housing industries.  It has been devastating.  A lot of those laid off were sub-contractors.  That means they have their own business, they cannot collect unemployment (because they were not Employees) and they fall through all the statistical reports.  When the county or State releases their data there is only 6%-7% unemployment but, that does not include all the small businesses that are either closed and way down in income.  We did over build.  Our prices rose way too high too fast to be sustainable.  We all know that.  We expected it to level out and not grow for a long time – but we did not expect the free fall.  We do not know when it will end, but I can tell you this:

1.       Real Estate Sales actually rose in the month of December and appears will be the same for Jan. nationwide.  This is primarily because of the increases in CA, AZ, FL and NV.  Most of these sales are short sales or foreclosure sales.  These Buyers feel the market has bottomed out and are buying.  We hope they are right.

 

2.       The NWMLS reports for the year (this primarily covers the area I noted above) shows King County having 7% lower in Average Closed Sale prices  and maintaining Median Prices. The DOM (Days on Market) only being an average of 19 days longer(74 total) than 2007.  So, that is a really strong market for the 2008 economy.  San Juan County, on the other hand, shows around a 11% decrease in Average and 9% in Median closed sales and an increase of 32 days on market (150 for the year but 236 for December sales).  San Juan County has the longest days on market for the NWMLS for December, but they do have a large number of Sellers that can afford to wait until the market starts getting stronger.  The total averages of the NWMLS shows the Average and Median Closed Sale prices for 2008 8% down from 2007.  Given the National picture, we are very lucky.

 

3.       I am receiving reports from Realtors from Snohomish County to the border that saw an increase in transactions in Jan.  A lot of people have had time to get their taxes and financial statements in order so they can qualify for the low mortgage rates.  Sellers are realizing they have to be more creative in assisting qualified Buyers to purchase their properties.  We are continually seeing a rise in Seller Financing and lease options and both Realtors and Sellers are starting to price their properties to sell. 

 

4.       Almost all small businesses related to construction are down – my specialty contractors are down and average of 60% for 2008.  Retail and Lodging stayed pretty steady through last summer, but fall and winter have been devastating.   Their inventories are huge.  Some of them closed for the winter, others permanently.  A major problem – again throughout the Northwest-has been commercial Landlords refusing on negotiating on leases that are simply too high.  They would rather have an empty place than some rent until things turn around.  This is happening from Downtown Seattle to all the small communities.  This is really going to be devastating to commercial real estate.   Owners are realizing, too late, that now they will not be able to get financing or Buyers for empty commercial real estate.  Professional Services seem to staying fairly strong – particularly the necessary ones.  The problem a lot of them will have is a growing amount of Accounts Receivable.  People have maxed out their credit cards and cannot even pay with them.  Even one will be affected in some way.

So, what are people doing?  I am negotiating with a few of my clients that cannot pay me for an exchange of services.  I have an excavation business that needed a lot of my assistance – but I have a piece of raw land I will be building on (much smaller project than originally planned) that I need excavation on.  We have a written agreement to exchange checks (i.e. both will report the income for tax purposes) for services.  I do that with a lot of my clients where we can both benefit.    I have a lot of clients that are utilizing the local community colleges for continuing education.  Learning new skills that will enable them to apply for a job that is available will become essential.  The Medical Industry is hiring.  There are still Tech jobs in many companies.  You have to have the right skills. 

In San Juan County, we have formed a County-wide Critical Needs Task Force.  We are trying to bring together all the key resources for our County population to receive the assistance and training they need at this time.  This includes all the Social Services, Food, Housing, Job, Financial, Medical, Transportation, Senior, and Educational areas.  It is a big job, but something we have talked about for years and this current economic situation has created the opportunity to finally put this in place. 

I am a fan of the Northwest Business News magazine.  It is apparent in that publication that many communities along the I-5 corridor are starting major business networking groups.  It is really interesting and extremely hopeful how people are reacting to this economic crisis.  I have been really pleasantly surprised.

I would like to ask all of you, however, to please look out for the elderly.  Those are my clients that have been hurt the most.  They have done everything right, they did not overspend, they saved their entire lives, and many of them have now lost 30% to 50% of their savings.   They have no idea of how they are going to take care of themselves and are too old to have a “new plan”.  We need to take care of them.  There are services in place for them that they are totally unaware of.  If you have a neighbor or know of someone in that situation, call your local Senior Services and have someone work with them so they become aware of the assistance that is available.  These are people who simply do not think they should ask for help.