One of the technical terms used when evaluating a healthy economy is a term called velocity of capital. What this means is how fast money is moving around from one person to another, or defined as “The velocity of money is the rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period of time. Velocity of money is usually measured as a ratio of GNP to a country’s total supply of money.”
As you can see from the above graph the Velocity is on a steady decline. So what causes the drop? My opinion is that there are two main reasons:
When someone purchases a home it’s not just the seller and buyer who are happy. There are those downstream of this closing that are going to be happy when the home closes. Typically the listing and selling agents are happy, but there are others who also benefit from this happiness and make a living off of the sale. Sure the buyer is happy, they have their dream home they always wanted, and the seller is happy since the can move to their next home, or maybe get rid of the current home. It’s going to be a Happy, Happy, Happy fest. The agents who listed/sold the home can’t wait till they receive the final HUD 1 is completed and the title company sends out the checks to the brokers. Most agents keep a list of the transactions in their pipeline and like most agents, their spouse is quizzing them on the transactions. My wife usually says, ‘got anything closing this week’? She says this specially during the holiday season. I’m happy to say that yes!. This is going to be a good Christmas. However there are many others who will benefit from this transaction and will have a happy Christmas.
It is amazing when you think of all the people who will touch this transaction to complete the deal at all. BUT what’s really startling is how many people will be able to keep their job, put food on the table and survive.
With all of this occurring, we should sell homes all the time, but I’m shocked by the road blocks our government has put in place to stop this from occurring. In an effort to fix the last collapse of the housing industry, the administration has generated a mountain of mind numbing regulations to stop consumers from purchasing a home. It’s like passing through gates of hell to get a loan. We have gone too far in the wrong direction to fix the problem. The incoming administration has indicated that they are aware of this problem and is promising to fix the regulations ASAP. Let’s get money flowing again!
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.