What goes down will come back up | PostIndependent.com

What goes down will come back up

Banker's Hours
Pat Dalrymple
Glenwood Springs, CO Colorado
Pat Dalrymple

Seafaring people will tell you that the rocks on which a vessel will founder are always closer than the sailor thinks. As is a landfall; at one moment, the ocean looks vast, at the next, land appears on the horizon, just a few miles away.

The analogy is curiously apt to financial crises, and especially the current one. Repeatedly, commentators are saying, “But it happened so fast!” Of course, the causes of the meltdown had been lurking beneath the waves for a long time, just like the rocks.

Now, we may be closer to the shore than we think. There are signs, faint for the moment, that the plunge in real estate prices is bottoming out. Capital is starting to perceive opportunities for some significant returns, and just maybe that initial trickle of investment could become a flood.

If past recoveries are any indicator, and to a degree they might be, there’ll be a sudden realization that the bottom has been hit, and it’s time to get in on the ground floor. Since this almost always happens all at once, virtually overnight there’s a lot of capital bidding for distressed assets. Prices start to rise, and the long ten or 15 year trek to the next crash will have begun. Banks and the FDIC, which owns the assets of failed banks, are getting more realistic about selling distressed real estate. The assets have been written down by the healthy banks, and the federal government isn’t in the business of owning foreclosed real estate, so there’s a lot less seller resistance to realistic sales prices.

Western Colorado is blessed, at least economically, with reserves of energy resources, especially natural gas, just waiting to be tapped as soon as a recovery is under way. It could well be that the region will be on the cutting edge of an improved economy.

This, if so, does not mean that we’re out of the woods. People are still being laid off, and those that have been are still having trouble finding jobs. Homeowners are shocked as pragmatic real estate agents tell them what their homes just might sell for. There are a lot of Colorado banks that have big problems with foreclosures and nonperforming loans. The smart money has it that, maybe, three more banks in the state will fail during the first half of this year.

Ask any of these people, the unemployed, certain bankers, if things are looking up, and you know what their answers would be.

But, as we’ve learned in crash after crash, recession and depression, nothing goes up forever. It will fall, generally fast and hard. By the same token, it will ultimately rise. We may be closer to the latter than we think.

Could be you’ll wake up some morning in the not too distant future and say, “Huh. I wonder what happened? Things look pretty good.”

Pat Dalrymple is a valley native. He’s been in the mortgage and banking business since 1961. He’ll be happy to answer your questions or hear your comments. His e-mail is dalrymple@sopris.net.

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