WEEK #2 at WESTWOOD ROTARY - July 14th
DENNIS CORNWELL started us off with the Pledge. PP JIM DOWNIE and PP STEVE DAY took us along for two Service numbers, the U.S. Air Force and The Artillery Song, for which we had song sheets, thankfully. PP RON LYSTER was the designated Invocator, and he elected to provide a bit of history. This being Bastille Day, we learned that there were only seven inmates still incarcerated when the hated symbol was taken over by French citizens. This was 1789, and the impetus was toward revolution. On July 13th, guards at the Bastille were fired upon, and crowds stormed the Paris Arsenal and acquired lots of muskets. The revolutionaries gained control of Paris, then forced King Louis 16th to accept a constitutional government. They were inspired by our Declaration of Independence in 1776. This led to the abolition of the Monarchy, and in 1793, Louis and Marie-Antoinette were sent to the guillotine for treason. Good stuff – thanks, RON. (Outside of PP TOM LENEHEN, most of us didn’t know the details of this episode - and TOM wasn’t even there to share in the story!)
RALPH BEASOM announced that we had TWO Visiting Rotarians – Gordon and Penny Shurtleff, who belonged to two DIFFERENT Rotary Clubs in the La Jolla area. They were at the end of a two-month cross country sojourn, and Gordon told me he had made up at more than 100 different Rotary Clubs. He and SHANE WAARBROEK were sharing information on expanding membership. They exchanged banners with WVRC.
SEAN McMILLAN announced the forthcoming District Breakfast will be held on Tuesday, July 26th at 0700 at the Crown Plaza Hotel, 5985 W, Century, near LAX. At this writing, there were two seats left at our table – call SEAN. Prexy DON noted that the Annual Fun Party is set for August 20th, Saturday evening, at his home – and it’s sold out! RALPH BEASOM came forward to present PP RUDY ALVAREZ with the wonderful scrapbook he always provides the immediate PP. It has lots of photos, is nicely bound, and will remind PP RUDY of many of the events during his year. We thank RALPH BEASOM for this volunteer effort on his part, year after year!
PP RUDY found himself in London last week – during the bombing. He gave an excellent overview of how London reacted to this tragedy. Essentially, the people of London went ahead with their activities, while paying attention to any 'suggestions' that the authorities broadcast. The center of London became empty, but there was never any panic or evidence of undue concern. As an example of this attitude, Rudy’s daughter and granddaughter took their usual horseback ride in Hyde Park that afternoon. RUDY, we thank you for this detailed report – and I think we can safely say that no other local Rotary club had an on-site reporter in London!
VISITORS
GORDON FELL, our new Treasurer, brought his daughter, Krisena, who has just completed her first year at Harvard Dental School.
NICK KAHRILAS had a Special Guest, Ed Wright – this was his second visit.
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JIM COLLINS, who as you know is the Senior Past President of WVRC, came forward to make a presentation. PP JIM noted that Prexy DON would be having lots of papers to carry around, and thus he presented him, on behalf of the Club, with a new Rotary Briefcase. DON commented that he didn't have that much to carry – but the advice was, "Just Wait!"
Being the second Thursday of the month, it is now Birthday Day. Accordingly, and after putting all suspects on notice last week, the following names were called; ED GAULD, who took over the celebration of the 4th of July, did so in Long Island City, NY., as did HANK HEUER who liked the day but elected Yonkers, also in NY. MAX LICHTENBERGER preferred the 6th, but in far-away Steyr, Austria. CLAWSON BLEAK moved the location to St. George, Utah, on the 10th. HENRY TSENG chose the 12th, in Yokahama, Japan – it was only his 98th! And while the day was the same, the numbers were different for PEGGY BLOOMFIELD, who came along in Escondido. Reliable GORDON FELL got us back to LA, on the 18th, while Honorary Member YOSH SETOGUCHI joined GORDON in LA, the next day. Honorary Member SALLY PHILLIPS likes baseball, I guess, so she settled on Cooperstown, but in North Dakota on the 29th. Last, but certainly not least, we have TERRY M.WHITE, electing Santa Monica on the 31st. All those present were suitably gifted, but the missing must PAY! (Since I'm 'On Deck' next month, I must report that the rendition of HB was perhaps the worst I've ever heard – and twice in a row might kill it forever…Note that I wasn’t alone in this judgment – PP STEVE SCHERER reported the same reaction from his whole TABLE!)
Prexy DON then pulled another fundraiser. He asked that everyone in attendance who was NOT wearing his Rotary Pin fork over Five Bucks. GORDON FELL was the assigned collector – note that he didn’t have a pin, either – but the blow was perhaps somewhat softened when DON stated that this 'donation' would provide a new Rotary Pin for those who needed one. So this is the notice – if you want a new pin, see me next week at the meeting, OK? On that subject, I have the chains that some of the ladies prefer for their badges – again, just lemme know, OK?
In the interest of 'Just the facts, maam' as Sgt Friday used to say, I feel obligated to report that another Joke of the Week appeared. This concerned two 80-year olds who were planning to get married. Jacob, the groom-to-be, steered his wife-to-be into a drugstore they encountered on a walk one afternoon. After querying the owner about the appropriate items they stocked, he announced that they would list the store on their Bridal Registry! Now, I don’t want this weekly 'feature' to fall into the same category as Rudy’s World, but it might be worth considering to spread the net a bit as far as joke sources…ELLIOTT TURNER comes to mind.
PP CHRIS GAYNOR introduced our Speaker, Randy Freeman, who is with Prudential in the Palisades. His subject was the elusive 'bubble' – and CHRIS has a lot of clients asking him about it –Should I buy? Am I too late? Is this like 2000? Remember at that point, the NASDAQ was at 5000 – and it has never approached that figure since. Randy has been with Prudential for the past fifteen years – here are his thoughts.
He showed us a couple of 'tools' that might be used. One was a crystal ball, and another a pair of dice – he doesn’t advocate either one, of course. He defines a bubble as an unsustainable and seemingly inexplicable rise in real estate prices, accompanied by investor-fueled frenzied buying. When the price of the product accelerates beyond its underlying value, a price correction is almost inevitable. What is driving today’s increases are low interest rates and speculative buyers who expect – literally – that their property will increase by 22% annually for the next decade.
These low interest rates allow first time buyers – and even second home buyers – the chance to buy property that perhaps they could not afford otherwise. Population growth is a factor – all our major cities are growing, increasing demand. The third major factor is the existence of the Baby Boomers – those born between 1945 and 1963 number twenty nine million – the largest generation in our history. Taken together, they have fueled the great spending wave of the last twenty years. The boom in the stock market, the rise in real estate prices, and the booming global economy have combined to create this 'bubble'. When the stock market turned down in the late 1990’s, savvy investors began looking for other places to put their money. The housing market has been the major beneficiary of this switch in investment strategies.
This generation is in its peak investment and spending phase right now. And as long as baby boomers continue to spend, the economy will continue to rise. However, by 2008-2010, this 'income' may begin to shrink. The global economy comes into play here – a recent high rise sold out in three months, with units costing over one million each, and this was in Bangkok Just this last year prices in Hong Kong have risen 19% - and 47% in Bulgaria. Americans are out searching for bargains all over the world.
The last down cycle we had was from 1992 to 1998. Some properties are just now surpassing their 1992 value – but the push goes on. Areas that continue to be 'overpriced' include LA, San Diego, San Jose, and Santa Barbara and other areas in other states, of course. The general rule is that four straight quarters of recession will turn down real estate prices – but that doesn’t seem to be a likely scenario, does it? Our local economy is showing no signs of a slowdown, per capita income and employment are up – these are certainly positive signs. Shortage of property for sale is a factor – there are 91 houses on the market in the Palisades, compared to an average of 250. In Westwood there are 41 houses available. Smaller markets 'echo' what the nearby larger markets are doing – thus our increases pass on to nearby states and communities. The tipping point for a real slowdown in purchases is said to be interest rates above 8%.
Here are seven steps you can consider taking to protect your investment:
1. Include real estate within your portfolio, but not half or more.
2. Consider buying properties which are outside the 'bubble'
3. Keep your eye on local economic indicators.
4. If interest rates go up sharply for several months in a row, the bubble may be close to bursting
5. Be prudent in your purchases of investment properties
6. Hire a top realtor who knows local conditions and understands worldwide trends
7. And DON’T use a crystal ball or dice!
Q&A: ED GAULD, What would be the effect if they repealed Prop 13? This is a smaller and smaller portion of the home market – it probably wouldn't make much difference...
LEE DUNAYER, Are condominiums rising at a faster rate that single family homes? Yes, because there are now lots more condos available for sale. This makes them more affordable.
Randy Freeman, thanks for a balanced and helpful presentation.
