Spring in Steamboat is the most unpredictable time of the year but also the most interesting. No doubt we will experience a few more snow showers but in between we should be able to get in a few rounds of golf and get that bike all tuned up for the summer. The river will begin to flow in earnest and the buds on the trees are just another indication that we are emerging from our winter season. Sales of land in Routt County should see a little spike as clients can actually see what they are purchasing. It is also a time for most locals to take a breath, go on a nice vacation and return ready and eager to tackle all that summer has to offer.

As we are apt to do we want to find a culprit to blame for the current economic woes. It must be the banks fault or unscrupulous corporate CEO’s. Who can we vilify for our current state? Well maybe no person or set of people in particular but an accounting method. What?  Many economists are reexamining FASB 157 or “Mark to Market�.  An interesting Article by Barry Habib explains this accounting phenomenon.  Here is a portion of his article:Let’s go back to the stock market crash, which occurred between 2000 and 2002. With the S&P down 49% and the NASDAQ down 71%, many people lost much of their life savings and they were very angry. Companies like Enron and Arthur Andersen were able to find ways to make books look more attractive, which was reflected in artificially inflated stock price.Both the public and Congress had a call for more transparency in business and hastened the passage of “Mark to Market� accounting.This is the notion that all assets should be valued as if they were sold on a daily basis. Under the letter of the law, failure to do this conservatively can now result in jail time. So what’s the problem? Let me make a quick analogy using a scenario that should make perfect sense to you.Let’s imagine that you own a house in a neighborhood where all of the houses are priced around $300,000. Unfortunately, your neighbor, who owns his house free and clear, falls ill and needs emergency cash quickly. Because he is under duress, he must sell the home for $200,000 in order to get the cash he needs right away, even though the home is worth considerably more. Now would this mean that your home is now worth the same $200,000 that your neighbor sold his for? Of course not, because you are not forced to sell under duress. It just means that your new neighbor got a great deal.However, if you were a publicly traded company and had to abide to Mark on Market account rules, you and the rest of your neighbors would now have to say, by law, that your house was worth only $200,000 – not the $300,000 you would get for it if you actually sold.Please let me know and I will be glad to forward you the remainder of the article which goes on to explain how this accounting method can devastate a bank or lending institution.As the season draws to a close we are seeing increased inventory and motivated sellers in the Steamboat Springs Real Estate market. It’s a great time to take advantage of low interest rates and a strong negotiating position. Give us a call and let us show you how we can save you time and money and get you into that property that you have longed for.

This entry was posted on Wednesday, April 8th, 2009 at 7:58 am and is filed under Financing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.