Here we are again, winding down the year and prepping all of our grandiose plans of mice and men for the new year. 2009 is all but in the record books. My guess is that many of you would like to tell 2009 “good riddance and don’t let the door hit you on the way out.”
Yup, 2009 was an ugly year for many. The magic question becomes “What is 2010 going to bring?”
The short answer: I don’t know. No one does. Miss Cleo (the late-night fortune telling informercial-ateur of yesteryear) is the only person I know with a functioning crystal ball, and she’s doing time in federal prison for fraud. Didn’t see that one coming, eh Cleo?
I’ve spent a few days rifling through the countless analyst reports out there speculating the markets movements in 2010. I’ll save you a lot of time and distill it down for you: lots of conflicting opinions.
So where does that leave you and me? We can continue to have our prosperity dictated by some corporate fat-cats on Wall Street or we can hunker down and do what is required of us by our families and our country. We can get to work with a vengeance.
Recession or not, improvement or further deterioration of the economy, housing market recovery or not, government bailouts or not, Erin and I are prepping for a great year in 2010. Regardless of the circumstance, there is no situation that this world can deal you that you cannot outwork. And outwork we shall.
So, what does your work ethic look like right now? How is your attitude toward facing the unique challenges of the new year? How likely are you to downsize your dreams or throw in the towel on pursuing your goals when alleged “experts” say that gloom and doom are here to stay? I hope, for your sake, that you are prepared for what’s to come. We are staring at a year full of greater adversity than we have faced in some time and greater opportunity than we can even imagine.
When that ball drops in Times Square and we all raise a glass of champagne, take inventory of all the wonderful things in your life. Entering the new year with an attitude of gratitude will provide the best springboard toward reaching your goals.
Not my normal economic shtick, I know. But I think it’s appropriate given the occasion.
Lastly, I want to personally thank each and every one of you for reading. Whether I talk to you on a daily basis or we haven’t spoken for a while, I appreciate so much your love and support. Your referrals and business are what afforded me the chance to now work side by side with my beautiful bride, and I can’t thank you all enough for that opportunity.
Happy New Year, everyone, and here’s to a terrific 2010!!!
Monday, December 28, 2009
Thursday, December 3, 2009
Rates are rockin', Big Ben is ready for round two and Geithner...well, God bless him, at least he's trying
Holy heck on a waffle cone, people. Let me try to itemize the plethora of madness that has taken place since my last newsletter installment:
1) Tiger Woods crashed into a tree and then essentially admitted to marital “transgressions”. Jerry! Jerry! Maybe just stick to the fairway next time, chief.
2) Global warming has been deemed an official hoax, which is awesome because now I can do my turn-a-can-of-hairspray-into-a-flamethrower trick at parties guilt-free.
3) Taking a page from Bush’s playbook, Obama has committed 30,000 more American troops to the cause of cleaning Al-Qaeda and the Taliban from Afghanistan. Hoo-rah. Let’s go bust some heads.
4) I took down two full Thanksgiving meals, gained 5 pounds and have since guilted myself into starting the P90X workout program. The words “Bring It” no longer make me happy.
And, despite the novels I could write on any of those topics, I’m going to discuss the economy. Yup. I’m just that committed to industry-specific topics. If only they all were so laser-focused.
First off, mortgage rates hit a 38-year low last week, dipping below 4.75% on the average 30-year fixed. Despite the Treasury ending their program to buy securities and keep rates down, they’ve stayed down all by themselves. Continued weakness in job creation and overall global uncertainty seem to be the primary causes.
As many of you know, the 1st-time homebuyer tax credit was extended for any contract signed before April 30th and Closed before June 30th. It was also expanded to include existing homeowners who want to move on up to a bigger place. Yaaaaaay for governmental help!
Ben Bernanke is enjoying another public flogging at the hands of Congress today as he tries to earn a second term as the Chairman of our Federal Reserve. Now, I’m a believer in Big Ben and his monetary decisions to date, so I hope he gets it. My guess is that they will keep him in his position purely because he’s the only one who can make some sense of our country’s tangled financial problems since he was there from essentially the beginning. Best of luck to you, Ben.
Geithner came out on Monday and, in the style of Yosemite Sam, called all the banks a bunch of low-down rassa-frassa dirty no-good rootin’-tootin’ money lovers who aren’t helping enough troubled homeowners achieve permanent loan modifications. While the spirit of what was said was well placed, there was very little as far as concrete threats or clear objectives in the speech aside from the somewhat arbitrary number of 375,000 loan mods by year’s end. So, fingers crossed that something actually gets accomplished, but Swami-Greg doubts it.
Do me a huge favor right now and think about anyone you know who could benefit from my services. Your referrals of friends, associates and family are the lifeblood of my business. If you know someone who is house-hunting or even thinking about it, please pass their info over to me. Even if you know someone who just talks a lot about the economy (as many tend to do these days) and you think they’d get value out of my newsletters, pass their info along. I do my best to keep these newsletters as “sales free” as possible, but I do want you to remember that your help and referrals are my greatest strength. Thanks for all you’ve done for me thus far, and thanks in advance for the referrals in the future!
1) Tiger Woods crashed into a tree and then essentially admitted to marital “transgressions”. Jerry! Jerry! Maybe just stick to the fairway next time, chief.
2) Global warming has been deemed an official hoax, which is awesome because now I can do my turn-a-can-of-hairspray-into-a-flamethrower trick at parties guilt-free.
3) Taking a page from Bush’s playbook, Obama has committed 30,000 more American troops to the cause of cleaning Al-Qaeda and the Taliban from Afghanistan. Hoo-rah. Let’s go bust some heads.
4) I took down two full Thanksgiving meals, gained 5 pounds and have since guilted myself into starting the P90X workout program. The words “Bring It” no longer make me happy.
And, despite the novels I could write on any of those topics, I’m going to discuss the economy. Yup. I’m just that committed to industry-specific topics. If only they all were so laser-focused.
First off, mortgage rates hit a 38-year low last week, dipping below 4.75% on the average 30-year fixed. Despite the Treasury ending their program to buy securities and keep rates down, they’ve stayed down all by themselves. Continued weakness in job creation and overall global uncertainty seem to be the primary causes.
As many of you know, the 1st-time homebuyer tax credit was extended for any contract signed before April 30th and Closed before June 30th. It was also expanded to include existing homeowners who want to move on up to a bigger place. Yaaaaaay for governmental help!
Ben Bernanke is enjoying another public flogging at the hands of Congress today as he tries to earn a second term as the Chairman of our Federal Reserve. Now, I’m a believer in Big Ben and his monetary decisions to date, so I hope he gets it. My guess is that they will keep him in his position purely because he’s the only one who can make some sense of our country’s tangled financial problems since he was there from essentially the beginning. Best of luck to you, Ben.
Geithner came out on Monday and, in the style of Yosemite Sam, called all the banks a bunch of low-down rassa-frassa dirty no-good rootin’-tootin’ money lovers who aren’t helping enough troubled homeowners achieve permanent loan modifications. While the spirit of what was said was well placed, there was very little as far as concrete threats or clear objectives in the speech aside from the somewhat arbitrary number of 375,000 loan mods by year’s end. So, fingers crossed that something actually gets accomplished, but Swami-Greg doubts it.
Do me a huge favor right now and think about anyone you know who could benefit from my services. Your referrals of friends, associates and family are the lifeblood of my business. If you know someone who is house-hunting or even thinking about it, please pass their info over to me. Even if you know someone who just talks a lot about the economy (as many tend to do these days) and you think they’d get value out of my newsletters, pass their info along. I do my best to keep these newsletters as “sales free” as possible, but I do want you to remember that your help and referrals are my greatest strength. Thanks for all you’ve done for me thus far, and thanks in advance for the referrals in the future!
Tuesday, November 24, 2009
What are you doing on December 3rd? Really? Sounds great, but a cocktail with me at Fleming's sounds better
First and foremost, my wife and I are hosting a happy hour on Thursday, December 3rd at Fleming’s Prime Steakhouse. As readers of my newsletter, we would be overjoyed to host you for a casual evening of great food, great drink, and great conversation. Details are at our website listed at the bottom of this newsletter.
And now back to your regularly scheduled rant.
We, as a nation, are in the throes of a very wild and debt-riddled recovery. It seems as though every time you turn on the news they either have a “Our economic messiah has arrived” statistic for you to show everything is great, or a “We’ve mortgaged our children to the Chinese who are using them to fund nuclear bombs” comment to show everything is terrible.
Gross Domestic Product (what we create as a nation) was downwardly revised in the 3rd quarter from 3.5% growth to 2.8% growth. Boooo. Home prices rose nationwide for the 5th straight month. Yay! 4.94% of all loans held by our banking system are 90 days or more delinquent (which is the most it’s ever been for 26 years) and an FDIC bank bailout fund is running in the red. Boooo. Existing home sales jumped upward by 10.1% nationwide (12.7% in the South). Yay! The dollar’s value has slid consistently for the past three months and China is going to try and replace the dollar as the international trade currency. Boooo. Consumer confidence is indicating that we will have a busy holiday season which is good for business and job creation. Yay!
Can everyone just make up their minds?
Truth of the matter is that Commander-in-Chief Barack is being told to spur job growth and stop the housing market deterioration while simultaneously not increasing the national deficit. That’s a lot like asking someone to run a marathon, but to breathe as little as possible while doing so.
Can’t. All. Be. Done. Under. Present. Circumstances. Period.
Pure Laissez-Faire economics (the idea that the markets are universally self-correcting and we should just let them do their thing) is dead. Someone in this global capitalistic game is going to try and mess with the system, so checks and balances need to be in place.
I don’t like running the money printing presses non-stop. I challenge you to find me one person who actually thinks that is a good and maintainable idea outside of extreme circumstances. But we are experiencing some EXTREME CIRCUMSTANCES. The black and white contest between ‘government should run everything’ versus ‘government should keep their nose out of everything’ is senseless. It’s all shades of gray and we’re pioneering uncharted economic territory right now.
Yes, large amounts of debt will come home to roost someday, no question about it. But who knows how much worse off we would be had we not been aggressive about addressing the economic collapse? Either way you slice it, the world’s financial waters will be choppy for the next few months. Join us for a cocktail on the 3rd to drown your concerns about it.
And now back to your regularly scheduled rant.
We, as a nation, are in the throes of a very wild and debt-riddled recovery. It seems as though every time you turn on the news they either have a “Our economic messiah has arrived” statistic for you to show everything is great, or a “We’ve mortgaged our children to the Chinese who are using them to fund nuclear bombs” comment to show everything is terrible.
Gross Domestic Product (what we create as a nation) was downwardly revised in the 3rd quarter from 3.5% growth to 2.8% growth. Boooo. Home prices rose nationwide for the 5th straight month. Yay! 4.94% of all loans held by our banking system are 90 days or more delinquent (which is the most it’s ever been for 26 years) and an FDIC bank bailout fund is running in the red. Boooo. Existing home sales jumped upward by 10.1% nationwide (12.7% in the South). Yay! The dollar’s value has slid consistently for the past three months and China is going to try and replace the dollar as the international trade currency. Boooo. Consumer confidence is indicating that we will have a busy holiday season which is good for business and job creation. Yay!
Can everyone just make up their minds?
Truth of the matter is that Commander-in-Chief Barack is being told to spur job growth and stop the housing market deterioration while simultaneously not increasing the national deficit. That’s a lot like asking someone to run a marathon, but to breathe as little as possible while doing so.
Can’t. All. Be. Done. Under. Present. Circumstances. Period.
Pure Laissez-Faire economics (the idea that the markets are universally self-correcting and we should just let them do their thing) is dead. Someone in this global capitalistic game is going to try and mess with the system, so checks and balances need to be in place.
I don’t like running the money printing presses non-stop. I challenge you to find me one person who actually thinks that is a good and maintainable idea outside of extreme circumstances. But we are experiencing some EXTREME CIRCUMSTANCES. The black and white contest between ‘government should run everything’ versus ‘government should keep their nose out of everything’ is senseless. It’s all shades of gray and we’re pioneering uncharted economic territory right now.
Yes, large amounts of debt will come home to roost someday, no question about it. But who knows how much worse off we would be had we not been aggressive about addressing the economic collapse? Either way you slice it, the world’s financial waters will be choppy for the next few months. Join us for a cocktail on the 3rd to drown your concerns about it.
Wednesday, November 11, 2009
Obama is bribing you to buy a house. I would too, I just don't have billions of dollars to do it with
Well good; it’s officially official. The 1st time homebuyer $8000 tax credit has been extended. And, for Super Mario bonus points, they even threw in a move-up homebuyer’s tax credit of $6500. Here are the new rules that potential purchasers must adhere to:
-Get under contract by April 30th, 2010
-Close by June 30th, 2010
-Single people must have an income of $125,000 or below
-Married people must have a household income of $225,000 or below
-Must be buying a primary residence
-Must be 18 or older
-Home cannot exceed $800,000 purchase price
All of those rules apply to move-up buyers. Additionally, move-uppers must have lived at the residence they are vacating as their primary home for at least 5 consecutive years out of the past 8. Additionally, the new tax credit is not retroactive. So, I guess the mad dash to the closing table by the end of this month has ended. We can go back to enjoying the holidays and stop giving ourselves panic attacks from bad inspections or slow sellers.
This stimulus extension comes on the heels of the G-20 summit, where representatives of the 20 most powerful economic countries convened to discuss fiscal policy. The latest release from this brain-trust: keep that stimulus flowing. Unemployment in America recently hit 10.2% (which translates to 18.2% if you count the underemployed or those who gave up trying to find a job) and the numbers globally are just as bad. So, even though continued stimulus has a depressing effect on our currency and global clout, it was a decision that had to be made.
The grand concern that develops from this: inflation. Thus far, the needles on the primary gauges of inflation haven’t moved much, but the precursors are starting to make some serious noise. Noticed that gas prices have started going up again? And usually the winter is supposed to bring them down a bit? Yeah, that’s not an accident. Try buying some jewelry for your sweetheart this holiday season. Notice that everything is on sale but gold is not? Yup. There’s a reason for that, too.
So, the captains of this economic ship know full well that they are sailing in very dangerous economic waters. Thus far, the shoddy employment situation has cancelled out the non-stop churn of the money printing presses. But eventually the gobs-o’-cash training wheels will have to come off, and when they do, it will be a hard trudge back to pre-recession strength.
-Get under contract by April 30th, 2010
-Close by June 30th, 2010
-Single people must have an income of $125,000 or below
-Married people must have a household income of $225,000 or below
-Must be buying a primary residence
-Must be 18 or older
-Home cannot exceed $800,000 purchase price
All of those rules apply to move-up buyers. Additionally, move-uppers must have lived at the residence they are vacating as their primary home for at least 5 consecutive years out of the past 8. Additionally, the new tax credit is not retroactive. So, I guess the mad dash to the closing table by the end of this month has ended. We can go back to enjoying the holidays and stop giving ourselves panic attacks from bad inspections or slow sellers.
This stimulus extension comes on the heels of the G-20 summit, where representatives of the 20 most powerful economic countries convened to discuss fiscal policy. The latest release from this brain-trust: keep that stimulus flowing. Unemployment in America recently hit 10.2% (which translates to 18.2% if you count the underemployed or those who gave up trying to find a job) and the numbers globally are just as bad. So, even though continued stimulus has a depressing effect on our currency and global clout, it was a decision that had to be made.
The grand concern that develops from this: inflation. Thus far, the needles on the primary gauges of inflation haven’t moved much, but the precursors are starting to make some serious noise. Noticed that gas prices have started going up again? And usually the winter is supposed to bring them down a bit? Yeah, that’s not an accident. Try buying some jewelry for your sweetheart this holiday season. Notice that everything is on sale but gold is not? Yup. There’s a reason for that, too.
So, the captains of this economic ship know full well that they are sailing in very dangerous economic waters. Thus far, the shoddy employment situation has cancelled out the non-stop churn of the money printing presses. But eventually the gobs-o’-cash training wheels will have to come off, and when they do, it will be a hard trudge back to pre-recession strength.
Tuesday, November 3, 2009
Free money for sale, but for how much longer?
There seems to be a world of confusion surrounding the extension of the $8000 1st time homebuyer’s tax credit. For some reason, a lot of large news networks broadcast a story that made it appear that Congress had already passed legislation extending the opportunity to capitalize on it.
Allow me to clarify:
Thus far, the extension of the tax credit has made it through a couple of financial committees, but has not yet been debated on the open floor. The problem is that if they introduce the extension as a new autonomous bill, it will go to the back of the line and have to wait in queue until its turn to be debated. By that point, the November 30th deadline will have come and gone.
So, in order to circumvent that delay, many are trying to add the tax credit extension into an existing bill concerning an extension of unemployment benefits. So, not only do supporters need to convince naysayers that the housing tax credit extension is good, they have to simultaneously promote the unemployment benefits extension.
If your ears are bleeding right now, don’t worry: that’s a common reaction to seeing how screwy our legislative branch works. Just try not to get any on your keyboard.
There is talk of extending the benefits to non-1st timers, talk of expanding the monetary value of the benefits, and talk of slowly decreasing the benefits as 2010 progresses. Until something solid gets passed in Congress, I’d rather not bog you down with the details.
I am of the opinion that this would be money well-spent, as real estate continues to be the linchpin of any sustained economic recovery. However, I can see the validity of the opposing views, claiming we have already driven up too steep of a national debt to justify more artificial tax breaks. Makes me glad I’m not the guy responsible for making these decisions. Long story short: once we get something written in stone surrounding this tax credit, I’ll be the 1st to let you know.
In other news, I am pleased to announce that my wife Erin is leaving the world of education and is teaming up with me as a loan originator. Everyone (or at least those who are honest with themselves) knows that women comprise the wiser sex. So, I’m excited to bring my lovely and talented wife on board. I expect this is going to dramatically increase the service we can offer and the presence we will have in the community.
Swing by www.GregWhiteside.com and see all of the fancy new updates she has added. 2010 promises to be an exciting year for real estate and finance, and I am amped about the opportunity to tackle it side-by-side with the love of my life.
Allow me to clarify:
Thus far, the extension of the tax credit has made it through a couple of financial committees, but has not yet been debated on the open floor. The problem is that if they introduce the extension as a new autonomous bill, it will go to the back of the line and have to wait in queue until its turn to be debated. By that point, the November 30th deadline will have come and gone.
So, in order to circumvent that delay, many are trying to add the tax credit extension into an existing bill concerning an extension of unemployment benefits. So, not only do supporters need to convince naysayers that the housing tax credit extension is good, they have to simultaneously promote the unemployment benefits extension.
If your ears are bleeding right now, don’t worry: that’s a common reaction to seeing how screwy our legislative branch works. Just try not to get any on your keyboard.
There is talk of extending the benefits to non-1st timers, talk of expanding the monetary value of the benefits, and talk of slowly decreasing the benefits as 2010 progresses. Until something solid gets passed in Congress, I’d rather not bog you down with the details.
I am of the opinion that this would be money well-spent, as real estate continues to be the linchpin of any sustained economic recovery. However, I can see the validity of the opposing views, claiming we have already driven up too steep of a national debt to justify more artificial tax breaks. Makes me glad I’m not the guy responsible for making these decisions. Long story short: once we get something written in stone surrounding this tax credit, I’ll be the 1st to let you know.
In other news, I am pleased to announce that my wife Erin is leaving the world of education and is teaming up with me as a loan originator. Everyone (or at least those who are honest with themselves) knows that women comprise the wiser sex. So, I’m excited to bring my lovely and talented wife on board. I expect this is going to dramatically increase the service we can offer and the presence we will have in the community.
Swing by www.GregWhiteside.com and see all of the fancy new updates she has added. 2010 promises to be an exciting year for real estate and finance, and I am amped about the opportunity to tackle it side-by-side with the love of my life.
Monday, October 26, 2009
When we lose the government's helping hand, we'll look for a helping ARM
Contrary to popular belief, Beelzebub did not invent adjustable-rate mortgages in an attempt to destroy America. Shocking news, I know. Seems like something he would do.
When we lose the government's helping hand, we'll look for a helping ARMReleased 10/26/2009Contrary to popular belief, Beelzebub did not invent adjustable-rate mortgages in an attempt to destroy America. Shocking news, I know. Seems like something he would do.
I’m quite sure I’m going to receive some criticism for this, but I am predicting that a major lifeline for real estate will be the return of the dreaded ARMs (adjustable rate mortgages). Here’s what’s keeping housing numbers positive right now:
1) Low fixed interest rates due to government interference (which is not maintainable)
2) A gigantic $8000 first time homebuyer tax credit (which is not maintainable)
The world of international business is very audibly telling the U. S. government that the methods being applied to the American housing market absolutely must end. Already interest rates have begun their upward movement. So, the question remains: without these two lifelines, what will keep home demand moving forward?
Answer: mortgage choices—and that means more than your standard vanilla 30 year fixed.
The 30 year fixed is the tried-and-true staple of mortgage lending, but it isn’t the only way to skin a cat. Now, I’m not saying that ARMs and exotic mortgages were not misused and overly marketed back in the frenzy of ‘04-’06. I think we can all agree that those tactics caused a ton of harm.
But you can’t look me in the eyes and tell me that a young person coming out of college who lands a job with a lot of room for growth couldn’t benefit from a mortgage that was 1/2 to 1 1/2 full percentage points lower than the going 30 year fixed rate and stays fixed for 5 years. The man could have a kid or get transferred to another firm out of town or simply get promoted and desire a bigger house or WHATEVER. The fact is no one knows what the next 5 years will hold. However, I’d go out on a limb and say that we could pretty safely guess in a lot of instances.
Did ARMs mess a bunch of people up? Yup. Pretty badly, I’d say. But that is chiefly due to an inability to refinance caused by plummeting home values.
Can I promise home values will rise in the next 5 years? Nope. I would bet all four of my limbs that they will rise, but I can’t promise it. But, if the economy gets messed up in that timeframe badly enough to cause even lower home prices, I can guarantee you’ll have bigger troubles than a lower home value.
And am I suggesting we all start calling me to refinance into 5 year ARMs? Nope. 30 year fixed rates are absolutely rocking right this second. But, it’s artificial and will not stick around permanently. When 2010 and beyond comes and fixed rates are back up in the 6’s, options that previously scared us until our socks turned yellow may start to make a bit more sense.
When we lose the government's helping hand, we'll look for a helping ARMReleased 10/26/2009Contrary to popular belief, Beelzebub did not invent adjustable-rate mortgages in an attempt to destroy America. Shocking news, I know. Seems like something he would do.
I’m quite sure I’m going to receive some criticism for this, but I am predicting that a major lifeline for real estate will be the return of the dreaded ARMs (adjustable rate mortgages). Here’s what’s keeping housing numbers positive right now:
1) Low fixed interest rates due to government interference (which is not maintainable)
2) A gigantic $8000 first time homebuyer tax credit (which is not maintainable)
The world of international business is very audibly telling the U. S. government that the methods being applied to the American housing market absolutely must end. Already interest rates have begun their upward movement. So, the question remains: without these two lifelines, what will keep home demand moving forward?
Answer: mortgage choices—and that means more than your standard vanilla 30 year fixed.
The 30 year fixed is the tried-and-true staple of mortgage lending, but it isn’t the only way to skin a cat. Now, I’m not saying that ARMs and exotic mortgages were not misused and overly marketed back in the frenzy of ‘04-’06. I think we can all agree that those tactics caused a ton of harm.
But you can’t look me in the eyes and tell me that a young person coming out of college who lands a job with a lot of room for growth couldn’t benefit from a mortgage that was 1/2 to 1 1/2 full percentage points lower than the going 30 year fixed rate and stays fixed for 5 years. The man could have a kid or get transferred to another firm out of town or simply get promoted and desire a bigger house or WHATEVER. The fact is no one knows what the next 5 years will hold. However, I’d go out on a limb and say that we could pretty safely guess in a lot of instances.
Did ARMs mess a bunch of people up? Yup. Pretty badly, I’d say. But that is chiefly due to an inability to refinance caused by plummeting home values.
Can I promise home values will rise in the next 5 years? Nope. I would bet all four of my limbs that they will rise, but I can’t promise it. But, if the economy gets messed up in that timeframe badly enough to cause even lower home prices, I can guarantee you’ll have bigger troubles than a lower home value.
And am I suggesting we all start calling me to refinance into 5 year ARMs? Nope. 30 year fixed rates are absolutely rocking right this second. But, it’s artificial and will not stick around permanently. When 2010 and beyond comes and fixed rates are back up in the 6’s, options that previously scared us until our socks turned yellow may start to make a bit more sense.
Tuesday, October 13, 2009
The d'enouement of housing stimulus
Last Thursday held two mortgage-market unfriendly items that are worthy of note: Fed Chairman Ben Bernanke stated that the Fed was inching closer to an inclination to raise short-term interest rates and America held a poorly bid 30 year bond auction. Mortgage rates suffered and increased as a result.
That’s the bad news. The good news is that even with that big whack to rates, we’re still hanging out just at or below 5% on an FHA insured 30 year fixed loan. Boo-yah.
This is Greg talking now (as opposed to any sort of hard factual source), but I can’t see things getting too much rosier on the interest rate front. The government effort to keep rates down is expiring on Halloween (what a creepy choice of days to end on) and the big fat $8000 1st time homebuyer’s tax credit is expiring at the end of November.
Do I think those two programs’ deaths will herald the end of “the good days” in buying real estate? Hardly. But it will make things a tad less attractive. The fact of the matter is that we still have some serious housing market work to do from a governmental perspective. A record 1 in 3 home loans in America is bigger than the house value it is collateralized by. 26 banking institutions in this country have more than 20% of the loans on their books 90 days or more in default. And the numbers aren’t improving; they’re progressively worsening. This implies to me that SOMETHING will be done in the genre of housing stimulation SOMETIME in the future. What, when, and how much are the big variables in the equation.
The reason I think we’ve seen the bottom in interest rates is three-fold. Number one: stocks globally are doing pretty darn good. Whether there is justification behind it or not, improving stock values makes bonds look weak by comparison. So, less money going to buy bonds = bond rates have to come up to attract more buyers = mortgages backing those bonds must increase their rates in tandem. Number two: we’ve borrowed a pile of cash already, and the more we borrow, the shakier the investment seems to the investors (China… and other people I’m sure) and the greater the political pressure to stop. Hence, rates come up to overcome their increased sense of risk. Number three: the Health Care debate. Distracting attention from a problem like housing will mean less political inclination to fix it.
So, is a return to a pure laissez-faire let-the-market-do-what-it’s-gonna-do necessarily a bad thing? Nope. And I only say that because we’ve already come so far down and have purged so much from the system. It does mean that, if you have the means, there isn’t a whole lot of incentive for waiting until 2010 to buy a house.
That’s the bad news. The good news is that even with that big whack to rates, we’re still hanging out just at or below 5% on an FHA insured 30 year fixed loan. Boo-yah.
This is Greg talking now (as opposed to any sort of hard factual source), but I can’t see things getting too much rosier on the interest rate front. The government effort to keep rates down is expiring on Halloween (what a creepy choice of days to end on) and the big fat $8000 1st time homebuyer’s tax credit is expiring at the end of November.
Do I think those two programs’ deaths will herald the end of “the good days” in buying real estate? Hardly. But it will make things a tad less attractive. The fact of the matter is that we still have some serious housing market work to do from a governmental perspective. A record 1 in 3 home loans in America is bigger than the house value it is collateralized by. 26 banking institutions in this country have more than 20% of the loans on their books 90 days or more in default. And the numbers aren’t improving; they’re progressively worsening. This implies to me that SOMETHING will be done in the genre of housing stimulation SOMETIME in the future. What, when, and how much are the big variables in the equation.
The reason I think we’ve seen the bottom in interest rates is three-fold. Number one: stocks globally are doing pretty darn good. Whether there is justification behind it or not, improving stock values makes bonds look weak by comparison. So, less money going to buy bonds = bond rates have to come up to attract more buyers = mortgages backing those bonds must increase their rates in tandem. Number two: we’ve borrowed a pile of cash already, and the more we borrow, the shakier the investment seems to the investors (China… and other people I’m sure) and the greater the political pressure to stop. Hence, rates come up to overcome their increased sense of risk. Number three: the Health Care debate. Distracting attention from a problem like housing will mean less political inclination to fix it.
So, is a return to a pure laissez-faire let-the-market-do-what-it’s-gonna-do necessarily a bad thing? Nope. And I only say that because we’ve already come so far down and have purged so much from the system. It does mean that, if you have the means, there isn’t a whole lot of incentive for waiting until 2010 to buy a house.
Friday, October 2, 2009
Forget milk, got job?
Got a job? Count yourself lucky. America’s latest employment report showed a loss of 263,000 jobs and a posted unemployment rate of 9.8%. This is the worst jobs reading that we have seen since June 1983. To give you some perspective, America would need to churn out 125,000 jobs just to keep pace with population growth. Sadly, this is probably the new norm we will be facing for a while: Fed Chairman Ben Bernanke was quoted as saying that unemployment would likely persist above the 9% level through all of 2010.
But what does 9.8% unemployment really translate to? If we add in all of the unemployed workers who acquiesced to taking part-time work or have given up the search completely, that number would be closer to 17% of the eligible American workforce. Now, pile on top of that those who show up to work every day and wonder if their job will still be waiting for them.
Add it all up, and I don’t know exactly how many you get. But I’d guess it’s something to the tune of a helluvalot.
Our current saving grace: non-existent inflation. Keeping prices stable goes a long way towards improving international trade and getting household spending back up and rolling. If we begin to see inflation ticking upwards, though, it will become a two-front war. And that is a scenario we as a country cannot afford right now.
Okay, I don’t mean to be a downer, but I do want to effectively communicate the gravity of what is happening out there. This is big deal. This is worth your attention. It is my sincere hope that these newsletters I put out get your gears turning and get you to make some important decisions about your family’s financial trajectory. I hope you’re taking pride in your work. I hope you’re trying to mitigate debt. I hope you’re planning for the worst and expecting the best. I hope you are appreciating all the many boons in your life with a renewed sense of fervor.
Yes, there’s a lot of fear out there, and for good reason. But fear without action is just a way to make yourself fat. I don’t know if the actions our government is taking is the right recipe needed to get us out of this. Here’s a tip: neither do you. Here’s another tip: even if you DID know, it wouldn’t make a lick of difference. What matters is YOU. What actions are YOU taking to increase your value? What discipline are YOU putting yourself through to become leaner and meaner at what it is you do?
Congrats to Rio de Janeiro on getting the 2016 Olympic Summer games. Now, if they can just coordinate an army to do Capoeira moves in perfect synchronicity a la China, I’ll be officially impressed.
But what does 9.8% unemployment really translate to? If we add in all of the unemployed workers who acquiesced to taking part-time work or have given up the search completely, that number would be closer to 17% of the eligible American workforce. Now, pile on top of that those who show up to work every day and wonder if their job will still be waiting for them.
Add it all up, and I don’t know exactly how many you get. But I’d guess it’s something to the tune of a helluvalot.
Our current saving grace: non-existent inflation. Keeping prices stable goes a long way towards improving international trade and getting household spending back up and rolling. If we begin to see inflation ticking upwards, though, it will become a two-front war. And that is a scenario we as a country cannot afford right now.
Okay, I don’t mean to be a downer, but I do want to effectively communicate the gravity of what is happening out there. This is big deal. This is worth your attention. It is my sincere hope that these newsletters I put out get your gears turning and get you to make some important decisions about your family’s financial trajectory. I hope you’re taking pride in your work. I hope you’re trying to mitigate debt. I hope you’re planning for the worst and expecting the best. I hope you are appreciating all the many boons in your life with a renewed sense of fervor.
Yes, there’s a lot of fear out there, and for good reason. But fear without action is just a way to make yourself fat. I don’t know if the actions our government is taking is the right recipe needed to get us out of this. Here’s a tip: neither do you. Here’s another tip: even if you DID know, it wouldn’t make a lick of difference. What matters is YOU. What actions are YOU taking to increase your value? What discipline are YOU putting yourself through to become leaner and meaner at what it is you do?
Congrats to Rio de Janeiro on getting the 2016 Olympic Summer games. Now, if they can just coordinate an army to do Capoeira moves in perfect synchronicity a la China, I’ll be officially impressed.
Tuesday, September 22, 2009
To continue stimulation or not to continue stimulation, that is the question
Well, Fed meeting week is upon us yet again. It seems like only yesterday that these people got together for two days to accomplish absolutely nothing. And it will take another two days for them to accomplish even MORE nothing. Our tax dollars hard at work.
We are rapidly approaching time for some action, though. As the global economy catches tread and things start to financially heat up again, the onus will be on the Fed to implement an exit strategy that will soak up all the excess capital in the markets without triggering a panic-hoarding effect amongst the investment community.
It’s kind of like pulling unemployment benefits from someone who was hurt but has since recovered. The original reason for the benefits was justified, but now they’re just happily sitting in the La-Z-Boy scarfing down Cheetos and watching Jerry Springer. Time to pull the plug and have Chester Cheetah go get a job.
Same goes for our economy. Stimulus, ridiculously low benchmark rates, bailouts and quantitative easing (printing money like crazy) was all necessary and justified at the time. But that time may soon be over, and pulling all that fun stuff out of the economy can be an unpleasant and politically suicidal thing to do.
But it must be done. Baby cannot have his bottle indefinitely.
Enter the conflict: what if we pull out the support structure before the economic recovery has fully cemented? A lack of stimulus is what turned the 1929 crash into the Great Depression, so we certainly don’t want to do that. But if we leave all that cash sloshing around in the global markets, we can darn sure expect some pretty stiff inflation just around the corner. And, I don’t know about you, but the thought of spending ten bucks for a loaf of bread doesn’t exactly Rodger my Hammerstein.
I went to great lengths for that reference, so I hope someone out there appreciated it.
So, between a see-sawing housing market, massive sums of debt with more on the horizon, healthcare debates causing people to act like they are possessed at town hall meetings, more troops needed in Afghanistan, the proposition for an uber-financial regulator to oversee everything involving money and lots more, I am exceedingly curious as to how many balls this government is capable of juggling before things start dropping. Let’s hope the answer is “a lot”. Because if not… yikes.
We are rapidly approaching time for some action, though. As the global economy catches tread and things start to financially heat up again, the onus will be on the Fed to implement an exit strategy that will soak up all the excess capital in the markets without triggering a panic-hoarding effect amongst the investment community.
It’s kind of like pulling unemployment benefits from someone who was hurt but has since recovered. The original reason for the benefits was justified, but now they’re just happily sitting in the La-Z-Boy scarfing down Cheetos and watching Jerry Springer. Time to pull the plug and have Chester Cheetah go get a job.
Same goes for our economy. Stimulus, ridiculously low benchmark rates, bailouts and quantitative easing (printing money like crazy) was all necessary and justified at the time. But that time may soon be over, and pulling all that fun stuff out of the economy can be an unpleasant and politically suicidal thing to do.
But it must be done. Baby cannot have his bottle indefinitely.
Enter the conflict: what if we pull out the support structure before the economic recovery has fully cemented? A lack of stimulus is what turned the 1929 crash into the Great Depression, so we certainly don’t want to do that. But if we leave all that cash sloshing around in the global markets, we can darn sure expect some pretty stiff inflation just around the corner. And, I don’t know about you, but the thought of spending ten bucks for a loaf of bread doesn’t exactly Rodger my Hammerstein.
I went to great lengths for that reference, so I hope someone out there appreciated it.
So, between a see-sawing housing market, massive sums of debt with more on the horizon, healthcare debates causing people to act like they are possessed at town hall meetings, more troops needed in Afghanistan, the proposition for an uber-financial regulator to oversee everything involving money and lots more, I am exceedingly curious as to how many balls this government is capable of juggling before things start dropping. Let’s hope the answer is “a lot”. Because if not… yikes.
Wednesday, September 2, 2009
Back to basics
It appears that El Capitan of the Federal Reserve Ben Bernanke has done a fine enough job to maintain his post as the Chairman for another 4 years. From my perspective, this was a fine choice by our President. Switching monetary horses mid-stream would be fairly catastrophic for the already fragile investor sentiment towards our shaky economy.
So, bravo Mr. Bernanke. Why on Earth this man would want a job where he gets screamed at for days on end twice a year and has the weight of the financial world on his shoulders I will never know. But, he seems pleased with it, so I’m happy for him.
Beyond that bit of news, I wanted to take a week to discuss with you the basics of mortgage lending. I know, I know, you people hunger, nay, you THIRST for my rampant sarcasm and my piercing commentary on the most relevant issues in our economic lives.
But one of the most golden opportunities in real estate to date is about to expire, and I would be doing you all a disservice if I didn’t provide at least one frying-pan-upside-the-skull type of message just laying out there what it takes to join the proud ranks of American homeowners.
Listen: lending has tightened from it’s hay-day of “If you have a pulse, you’re approved!” but it isn’t ridiculously hard either. Here’s what we’re after:
1) Pay your bills on time for 12 months.
2) Have a score of 620 or better.
3) Be somewhat consistent in your employment.
4) Don’t spend more than half of what you make on anything that’ll show up on your credit report.
5) Bring a 3.5% down payment of the price of your dream home. Or your starter home. Or your “I just simultaneously found out that I got a promotion and that my mother-in-law is moving in and I need more space” home. Either way. 3.5% is the moral of that story.
6) Be patient and find a seller desperate enough to take care of your closing costs.
Are there exceptions to these rules? Yeah. Is there any other stuff. Yeah. But those are the biggies. It’s not 20% down and a 700+ credit score and the soul of your 1st-born child like some people think. If you make sense to the bank as someone who will pay your mortgage, they will line up to fund you.
With Uncle Sam paying through the nose to keep rates low and an $8000.00 check waiting for you in 2010’s tax season (only 89 shopping days left, kids), it might be a dandy idea to at least give homeownership a shot.
So, bravo Mr. Bernanke. Why on Earth this man would want a job where he gets screamed at for days on end twice a year and has the weight of the financial world on his shoulders I will never know. But, he seems pleased with it, so I’m happy for him.
Beyond that bit of news, I wanted to take a week to discuss with you the basics of mortgage lending. I know, I know, you people hunger, nay, you THIRST for my rampant sarcasm and my piercing commentary on the most relevant issues in our economic lives.
But one of the most golden opportunities in real estate to date is about to expire, and I would be doing you all a disservice if I didn’t provide at least one frying-pan-upside-the-skull type of message just laying out there what it takes to join the proud ranks of American homeowners.
Listen: lending has tightened from it’s hay-day of “If you have a pulse, you’re approved!” but it isn’t ridiculously hard either. Here’s what we’re after:
1) Pay your bills on time for 12 months.
2) Have a score of 620 or better.
3) Be somewhat consistent in your employment.
4) Don’t spend more than half of what you make on anything that’ll show up on your credit report.
5) Bring a 3.5% down payment of the price of your dream home. Or your starter home. Or your “I just simultaneously found out that I got a promotion and that my mother-in-law is moving in and I need more space” home. Either way. 3.5% is the moral of that story.
6) Be patient and find a seller desperate enough to take care of your closing costs.
Are there exceptions to these rules? Yeah. Is there any other stuff. Yeah. But those are the biggies. It’s not 20% down and a 700+ credit score and the soul of your 1st-born child like some people think. If you make sense to the bank as someone who will pay your mortgage, they will line up to fund you.
With Uncle Sam paying through the nose to keep rates low and an $8000.00 check waiting for you in 2010’s tax season (only 89 shopping days left, kids), it might be a dandy idea to at least give homeownership a shot.
Friday, August 21, 2009
A mish-mash, a hodge-podge, a veritable potpourri
There are times in the course of human history that a ton of little bits of news come out, but none of them are really interesting enough to warrant a whole newsletter. This is one of those times.
Existing home sales rose by 7.2% nationwide last month, showing the greatest jump in the past two years. While this has many realtors dancing naked in the streets (and I’ve seen ‘em), I am a tad less apt to party like it’s 1999. Much of this phenomenon can be attributed to homebuyers trying to close before the rapidly approaching demise of the $8000 1st time homebuyer tax credit (only 101 shopping days left, kids). Also, home prices are still falling (significantly faster on the West Coast than here on the East Coast, thankfully).
I sincerely hope that last comment doesn’t make me the victim of a gang-related shooting. Just reporting the facts, homies. Fo’ shizzle.
Cash for Clunkers, the amazingly well-received government program aimed at supporting the auto industry and reducing car emissions, will end on Monday. There just ain’t any more money to throw at it. So, once that falls to the wayside, we will get a better glimpse as to just how healthy our auto sector (and hence the non-farming middle part of our country) really is. Maybe we’ll have to bring in the new death panels to decide their fate.
Tee hee. I love topical humor.
Everyone and their mother is trying to call when the national economy will bottom and begin the long trek back to the financial heights of yesteryear. Even our glass-is-half-empty Fed Chairman Ben Bernanke is coming out with more upbeat language about the possibility for economic stabilization. While I will be the 1st to admit that there are some reasons to be optimistic, the sentiment on Main Street is still poor. That, and the mass amount of liquidity provided to the markets is like methadone to a heroin addict. Good, but not a long-term solution. I want to see our economy stand up and admit “Hi, my name is America and I’m a debt addict.”
And, to close on a positive note, convicted multi-billion dollar scam artist Bernie Madoff allegedly had (drum-roll, please)… a mistress! Awesome! Hey, at least the guy is staying true to the scum-of-the-earth motif he started with. There’s something to be said for consistency.
Existing home sales rose by 7.2% nationwide last month, showing the greatest jump in the past two years. While this has many realtors dancing naked in the streets (and I’ve seen ‘em), I am a tad less apt to party like it’s 1999. Much of this phenomenon can be attributed to homebuyers trying to close before the rapidly approaching demise of the $8000 1st time homebuyer tax credit (only 101 shopping days left, kids). Also, home prices are still falling (significantly faster on the West Coast than here on the East Coast, thankfully).
I sincerely hope that last comment doesn’t make me the victim of a gang-related shooting. Just reporting the facts, homies. Fo’ shizzle.
Cash for Clunkers, the amazingly well-received government program aimed at supporting the auto industry and reducing car emissions, will end on Monday. There just ain’t any more money to throw at it. So, once that falls to the wayside, we will get a better glimpse as to just how healthy our auto sector (and hence the non-farming middle part of our country) really is. Maybe we’ll have to bring in the new death panels to decide their fate.
Tee hee. I love topical humor.
Everyone and their mother is trying to call when the national economy will bottom and begin the long trek back to the financial heights of yesteryear. Even our glass-is-half-empty Fed Chairman Ben Bernanke is coming out with more upbeat language about the possibility for economic stabilization. While I will be the 1st to admit that there are some reasons to be optimistic, the sentiment on Main Street is still poor. That, and the mass amount of liquidity provided to the markets is like methadone to a heroin addict. Good, but not a long-term solution. I want to see our economy stand up and admit “Hi, my name is America and I’m a debt addict.”
And, to close on a positive note, convicted multi-billion dollar scam artist Bernie Madoff allegedly had (drum-roll, please)… a mistress! Awesome! Hey, at least the guy is staying true to the scum-of-the-earth motif he started with. There’s something to be said for consistency.
Friday, August 14, 2009
That anvil overhead seems to be getting bigger
Another Fed meeting has come and passed and, as expected, dang near nothing happened. Benchmark rates are being held between 0 and .25% and no more money has been committed to buying long-term treasuries. Pretty quiet meeting.
Buuuuuuut, it’s the calm before the storm.
Let’s think about things. The Fed is holding mortgage rates down manually through these treasury purchases. That program will expire in October, meaning rates are inexorably headed higher at that time. The $8000.00 tax credit will expire at the end of November as well. Merry friggin’ Christmas.
That’s a double-smack to real estate. And, I may be alone on this one, but I’m pretty sure that shooting the knees out from the real estate market is...dumb. Really dumb. Like, heave us kicking and screaming back into recession, dumb. Stabbing a fork into an electrical socket while standing in a kiddie pool and juggling lit Molotov cocktails, dumb.
Okay, that last one was a tad extreme. But you get the message.
Stocks are doing super-dee-duper because companies are posting great numbers. But, the majority of that improvement is coming via the billions that us taxpayers spent to subsidize their problems. So, yes, it’s cool that the Armageddon-style, we’re all going to lose our jobs and have to resort to subsistence farming to feed our kids scenario has passed. But life is not peachy keen quite yet.
So, Swami-Greg has some predictions to make:
The heat on Obama to stop overspending will result in the expiration of the real estate friendly programs to stem the tide of governmental debt. The holiday season will hit and consumers wont spend nearly the money that Wall Street is hoping they will spend. Corporate numbers will start to falter.
And the mighty U. S. of A. will limp into 2010, the anointed recovery year, rather weak.
What happens then is up in the air. But one thing is for sure: I am quite glad I am not a politician. I have a hard enough time deciding between paper and plastic, much less guiding the country through a financial minefield.
Buuuuuuut, it’s the calm before the storm.
Let’s think about things. The Fed is holding mortgage rates down manually through these treasury purchases. That program will expire in October, meaning rates are inexorably headed higher at that time. The $8000.00 tax credit will expire at the end of November as well. Merry friggin’ Christmas.
That’s a double-smack to real estate. And, I may be alone on this one, but I’m pretty sure that shooting the knees out from the real estate market is...dumb. Really dumb. Like, heave us kicking and screaming back into recession, dumb. Stabbing a fork into an electrical socket while standing in a kiddie pool and juggling lit Molotov cocktails, dumb.
Okay, that last one was a tad extreme. But you get the message.
Stocks are doing super-dee-duper because companies are posting great numbers. But, the majority of that improvement is coming via the billions that us taxpayers spent to subsidize their problems. So, yes, it’s cool that the Armageddon-style, we’re all going to lose our jobs and have to resort to subsistence farming to feed our kids scenario has passed. But life is not peachy keen quite yet.
So, Swami-Greg has some predictions to make:
The heat on Obama to stop overspending will result in the expiration of the real estate friendly programs to stem the tide of governmental debt. The holiday season will hit and consumers wont spend nearly the money that Wall Street is hoping they will spend. Corporate numbers will start to falter.
And the mighty U. S. of A. will limp into 2010, the anointed recovery year, rather weak.
What happens then is up in the air. But one thing is for sure: I am quite glad I am not a politician. I have a hard enough time deciding between paper and plastic, much less guiding the country through a financial minefield.
Tuesday, July 7, 2009
How much recovery is in this recovery?
The stock market at large has risen approximately 33% from it’s lows last year, fueling feelings of cautious optimism amongst market participants. However, over the past few months bonds, commodities and stock markets seem to be stuck in a trading range that none can budge.
So why the sudden freeze?
The short answer: no one really knows how much recovery has actually happened. Sure, we’ve gone through the majority of one stimulus package, and that provided a nice boost. But unemployment continues to creep towards the psychologically significant 10% mark. Existing home sales have boasted two consecutive months of gains, but the median home price in the country continues to slowly decline. For every down number, there is an up number, and vice versa. Tons of mixed messages.
But, outside of all the hoopla of the markets and their endless barrage of facts and statistics, I would like to humbly propose two questions to you:
1) Are YOU spending money like you used to?
2) Do YOU feel comfortable enough with your income and your assets that you are willing to bring more risk into your financial life?
I didn’t think so.
And that implies to me that it’s back to basics for the vast majority. Pragmatic savings plans. Continuing education to keep yourself job-worthy no matter how many jobs are left. People buying homes to live in, not to flip for a quick profit. Multiple jobs for some people. Hard, simple work. Not the glamorous, champagne-fueled, securitized and repackaged way to make millions overnight on the backs of the innocent. Just hard, simple work. It’s what built this fine country and it is what will bring us back from the brink of economic ruin.
Now is the time for all of us to re-evaluate our goals and re-organize our finances. The more personal responsibility, the better. For many, the American Dream still remains owning your very own piece of America. I would love to tell you that homeownership is the can’t-lose, make-money-hand-over-fist-just-for-sitting-there style of investment that it used to be.
But it’s not.
It is, however, a historically stable and universally recognized asset and is still one of the central keys to building long-term wealth. And if you would like to see just how affordable and attainable homeownership really is, I would love the chance to talk to you about it.
So why the sudden freeze?
The short answer: no one really knows how much recovery has actually happened. Sure, we’ve gone through the majority of one stimulus package, and that provided a nice boost. But unemployment continues to creep towards the psychologically significant 10% mark. Existing home sales have boasted two consecutive months of gains, but the median home price in the country continues to slowly decline. For every down number, there is an up number, and vice versa. Tons of mixed messages.
But, outside of all the hoopla of the markets and their endless barrage of facts and statistics, I would like to humbly propose two questions to you:
1) Are YOU spending money like you used to?
2) Do YOU feel comfortable enough with your income and your assets that you are willing to bring more risk into your financial life?
I didn’t think so.
And that implies to me that it’s back to basics for the vast majority. Pragmatic savings plans. Continuing education to keep yourself job-worthy no matter how many jobs are left. People buying homes to live in, not to flip for a quick profit. Multiple jobs for some people. Hard, simple work. Not the glamorous, champagne-fueled, securitized and repackaged way to make millions overnight on the backs of the innocent. Just hard, simple work. It’s what built this fine country and it is what will bring us back from the brink of economic ruin.
Now is the time for all of us to re-evaluate our goals and re-organize our finances. The more personal responsibility, the better. For many, the American Dream still remains owning your very own piece of America. I would love to tell you that homeownership is the can’t-lose, make-money-hand-over-fist-just-for-sitting-there style of investment that it used to be.
But it’s not.
It is, however, a historically stable and universally recognized asset and is still one of the central keys to building long-term wealth. And if you would like to see just how affordable and attainable homeownership really is, I would love the chance to talk to you about it.
Thursday, June 25, 2009
HVCC: Great idea, awful results
Our fearless Federal Reserve chairman Ben Bernanke just enjoyed his semi-annual congressional beat-down today where he gives his testimony on the state of monetary policy. He had to walk a very fine tightrope of saying inflation will remain tame, that the economy is steadying but still experiencing difficulty, and that he will leave his “quantitative easing” programs (translation: throw money at the problem until it goes away) in motion.
And he did just that. And there was much rejoicing. Yaaaaaaaay.
So, the low mortgage rates that we enjoy today dodged yet another bullet that could have ratcheted them back up into the 6’s overnight. That makes me and my clients very happy campers.
There are, however, some things I am less than happy about. The big one right now is the new HVCC rules that are in effect. For those who are unfamiliar with HVCC, it is a system by which brokers and bankers must order appraisals through an appraisal management company without ever speaking to the appraiser. The intent behind this is to prevent fraud and collusion. If the broker can’t talk to the appraiser, he can’t manipulate him into giving an artificially inflated figure and everyone stays honest.
Right?
Wrong. Horribly, horribly wrong.
What has happened is that these management companies have gone out looking for the cheapest bidder to farm the work out to so they can keep as much money as they can for themselves. Well, the cheapest appraiser is often times not going to give you the top-quality work that a normal appraiser will give you. Because of this, we are seeing house values coming in lower than they should. And that is costing the industry a lot of transactions that would otherwise work. And THAT is contributing to the continued decline we are experiencing in home prices.
For the real estate industry, it’s kind of like kicking the walker out from underneath an old person. Only not nearly as funny.
The good news is that local home inventories are starting to level off. That means that demand is starting to come back, and we can start to entertain the hope that home prices will start to come back as well. But only time will tell.
And he did just that. And there was much rejoicing. Yaaaaaaaay.
So, the low mortgage rates that we enjoy today dodged yet another bullet that could have ratcheted them back up into the 6’s overnight. That makes me and my clients very happy campers.
There are, however, some things I am less than happy about. The big one right now is the new HVCC rules that are in effect. For those who are unfamiliar with HVCC, it is a system by which brokers and bankers must order appraisals through an appraisal management company without ever speaking to the appraiser. The intent behind this is to prevent fraud and collusion. If the broker can’t talk to the appraiser, he can’t manipulate him into giving an artificially inflated figure and everyone stays honest.
Right?
Wrong. Horribly, horribly wrong.
What has happened is that these management companies have gone out looking for the cheapest bidder to farm the work out to so they can keep as much money as they can for themselves. Well, the cheapest appraiser is often times not going to give you the top-quality work that a normal appraiser will give you. Because of this, we are seeing house values coming in lower than they should. And that is costing the industry a lot of transactions that would otherwise work. And THAT is contributing to the continued decline we are experiencing in home prices.
For the real estate industry, it’s kind of like kicking the walker out from underneath an old person. Only not nearly as funny.
The good news is that local home inventories are starting to level off. That means that demand is starting to come back, and we can start to entertain the hope that home prices will start to come back as well. But only time will tell.
Tuesday, June 9, 2009
Would you like a side of chicken fried rice with that 2.5 trillion dollar debt?
So, everyone jokes that we’ll all be speaking Chinese in the next century because they’re “buying America piece by piece”. Well, how much does China really own of us? And how do they own us?
Let’s take a second to look at our torrid love affair with the Chinese. Why do we buy stuff from China? Because it’s cheap. It’s usually cheaper than a domestic equivalent. Why is it so much cheaper? Well, having a sixth of the world’s population available for inexpensive labor doesn’t hurt. But that’s not enough to create the cost imbalance.
Their stuff is cheap because they keep their currency artificially devalued.
It’s one of the many numbers games that got us into this seemingly interminable dross. You see, if we kept giving them money for their stuff, our currency would weaken and theirs would strengthen due to trade imbalance. And, since their stuff is cheap to begin with, China’s not going to turn around and buy the stuff we make. But they have to give the money back somehow.
So they buy our debt.
Treasuries and bonds and mortgage-backed securities and ANYTHING with a fixed rate of return. Compared against the world’s market, our debt was the safest and highest yielding around. Combine that with a country full of frivolous spenders (by the way, the newest iPhone just came out! Go buy it! Buy two! Now! AHHHH! SHOPPING!!!) and you’ve got a circular money system where we get cheap stuff AND a seemingly endless stream of financing for whatever our government wants.
Enter the subprime crisis.
Now, all of the loans that backed the debt that the Chinese held started to suddenly head south. Like, straight to hell, south. Also, China’s economy started to fire up as a new generation of young capitalists took the labor market by storm which pumped up their currency value. All of the sudden, our rosy little fake trade relationship came to the ugly realization that it couldn’t last in its current iteration.
We’re still borrowing, of course. But our buddies on the other side of the globe aren’t quite as interested in lending to us anymore. So, the cost of lending is going up. Hence, bond prices are going up. Hence, interest rates all over are going up. Hence, mortgage rates are going up.
And that’s no bueno for the housing market.
Our little romance isn’t going to suddenly end. They need us to buy their stuff. Badly. Do you know how many jobs they have to create over there? And if they fail, do you know how nasty the middle-class uprising would be?
But the fact remains that there’s trouble in paradise that a box of chocolates and a dozen roses probably won’t repair.
Let’s take a second to look at our torrid love affair with the Chinese. Why do we buy stuff from China? Because it’s cheap. It’s usually cheaper than a domestic equivalent. Why is it so much cheaper? Well, having a sixth of the world’s population available for inexpensive labor doesn’t hurt. But that’s not enough to create the cost imbalance.
Their stuff is cheap because they keep their currency artificially devalued.
It’s one of the many numbers games that got us into this seemingly interminable dross. You see, if we kept giving them money for their stuff, our currency would weaken and theirs would strengthen due to trade imbalance. And, since their stuff is cheap to begin with, China’s not going to turn around and buy the stuff we make. But they have to give the money back somehow.
So they buy our debt.
Treasuries and bonds and mortgage-backed securities and ANYTHING with a fixed rate of return. Compared against the world’s market, our debt was the safest and highest yielding around. Combine that with a country full of frivolous spenders (by the way, the newest iPhone just came out! Go buy it! Buy two! Now! AHHHH! SHOPPING!!!) and you’ve got a circular money system where we get cheap stuff AND a seemingly endless stream of financing for whatever our government wants.
Enter the subprime crisis.
Now, all of the loans that backed the debt that the Chinese held started to suddenly head south. Like, straight to hell, south. Also, China’s economy started to fire up as a new generation of young capitalists took the labor market by storm which pumped up their currency value. All of the sudden, our rosy little fake trade relationship came to the ugly realization that it couldn’t last in its current iteration.
We’re still borrowing, of course. But our buddies on the other side of the globe aren’t quite as interested in lending to us anymore. So, the cost of lending is going up. Hence, bond prices are going up. Hence, interest rates all over are going up. Hence, mortgage rates are going up.
And that’s no bueno for the housing market.
Our little romance isn’t going to suddenly end. They need us to buy their stuff. Badly. Do you know how many jobs they have to create over there? And if they fail, do you know how nasty the middle-class uprising would be?
But the fact remains that there’s trouble in paradise that a box of chocolates and a dozen roses probably won’t repair.
Monday, June 1, 2009
It's a good news, bad news kind of situation
Good news: The $8000 tax credit for first-time homebuyers can be applied toward your down payment or closing costs at the time of purchase. YAAAY!! I believe that warranted both the bold-print and the font size. Realize, however, that FHA still requires 3.5% of the down-payment come out of your pocket, so unless you’re getting a grant, still no free homes. But still, good stuff! Great things are continuing to happen to make homeownership for you 1st-time homebuyers more and more affordable.
And now the bad news: Remember last week when I said that rates would ‘eventually’ head higher? Well, ‘eventually’ arrived last Wednesday, when the 2nd consecutive long-term treasury bond auction drew a weak crowd.
Evidently the old “two strikes and we PANIC IN THE STREETS” rule seems to be in effect.
So here’s what’s up: If no investors bid for bonds at a certain yield (let’s say 4%) then bond sellers (like Uncle Sam) have to jack up the interest rate to attract greater attention. Since Treasury bonds (the bonds our government issues in order to finance it’s debt) compete on the open market with mortgage bonds (the bonds that determine the rates that I can offer you), an increase in one will usually mean an increase in the other.
Why aren’t investors biting at these bonds? Two reasons: Dollar Weakness and Inflation. They think that we’re printing too much money and that the global economy will rebound soon. Too many dollars chasing too few goods drives prices up (let us not so easily forget how much paying $4.00 plus per gallon sucks). So if I own a bond that’s paying me 4%, and I think everything I buy is going to be 5% more expensive next year, then I just lost 1%.
And nobody likes losing money for no good reason. That means, unless bond rates go up, no bonds get sold.
And if bonds don’t get sold, we don’t get to do nifty stuff like offer General Motors $30,000,000,000 more in taxpayer dollars to play with.
Makes it look like a lot when I put all the zeroes after it like that, eh?
So, it’s going to become a battle of how much money Obama feels like devoting to keeping mortgage rates down. But eventually it’s going to become a contest of how hard he can push against the ocean of debt that these various bailouts are creating.
I’m not here to say whether it’s a good idea or bad idea that this is happening the way it is. That’s for politicians to decide. I’m just saying that big-time market manipulation historically rarely ends well.
A lot of moving parts, to say the least. This is why I always recommend you work with professionals who understand these market moves (for example, um… me). Without a good understanding, you have no chance to capitalize on the up-side benefits or shield yourself from the down-side risks.
And now the bad news: Remember last week when I said that rates would ‘eventually’ head higher? Well, ‘eventually’ arrived last Wednesday, when the 2nd consecutive long-term treasury bond auction drew a weak crowd.
Evidently the old “two strikes and we PANIC IN THE STREETS” rule seems to be in effect.
So here’s what’s up: If no investors bid for bonds at a certain yield (let’s say 4%) then bond sellers (like Uncle Sam) have to jack up the interest rate to attract greater attention. Since Treasury bonds (the bonds our government issues in order to finance it’s debt) compete on the open market with mortgage bonds (the bonds that determine the rates that I can offer you), an increase in one will usually mean an increase in the other.
Why aren’t investors biting at these bonds? Two reasons: Dollar Weakness and Inflation. They think that we’re printing too much money and that the global economy will rebound soon. Too many dollars chasing too few goods drives prices up (let us not so easily forget how much paying $4.00 plus per gallon sucks). So if I own a bond that’s paying me 4%, and I think everything I buy is going to be 5% more expensive next year, then I just lost 1%.
And nobody likes losing money for no good reason. That means, unless bond rates go up, no bonds get sold.
And if bonds don’t get sold, we don’t get to do nifty stuff like offer General Motors $30,000,000,000 more in taxpayer dollars to play with.
Makes it look like a lot when I put all the zeroes after it like that, eh?
So, it’s going to become a battle of how much money Obama feels like devoting to keeping mortgage rates down. But eventually it’s going to become a contest of how hard he can push against the ocean of debt that these various bailouts are creating.
I’m not here to say whether it’s a good idea or bad idea that this is happening the way it is. That’s for politicians to decide. I’m just saying that big-time market manipulation historically rarely ends well.
A lot of moving parts, to say the least. This is why I always recommend you work with professionals who understand these market moves (for example, um… me). Without a good understanding, you have no chance to capitalize on the up-side benefits or shield yourself from the down-side risks.
Thursday, May 21, 2009
Why is Obama the only guy who gets to print infinite money?
Despite a sputtering but solid rally in the stock markets, we’ve enjoyed some surprisingly low interest rates in the mortgage market. Usually, when stocks are on the way up, investors will cash out their bonds and buy in. Since mortgage interest rates are dictated by the investment community’s appetite for bonds, what is good for stocks is usually bad for mortgage rates.
Why is right now the exception to the rule? Because Uncle Sam is printing money like crazy and using that money to buy mortgage bonds. I believe some call this technique “robbing Peter to pay Paul.”
For the short term, this means that you and I have access to rates lower than the market can really support on it’s own. The government is assuming that by keeping rates super-low, they will encourage people to buy homes rather than rent, which will hopefully repair our country’s housing crisis and, ultimately, our economy.
That’s the optimistic assumption we’re working with, at least. A good old fashioned glass-is-half-full outlook.
For the long term, all that money floating around will result in one of two things: inflation or sky-high rates and taxes. Basically, if you own a store and you think your customers just got some more money, you’re going to jack up your prices to get your piece of that bigger pie. So, Uncle Sam will increase key interest rates and try to suck money out of us to prevent consumer overspending.
Regardless, the bleaker the economic news, the more Uncle Sam will come riding to the rescue and say that he’s going to throw taxpayer money at keeping mortgage rates low. Today, we saw the Federal Reserve come out with a very gloomy outlook on the rest of 2009 and rates instantly dropped.
So, while you may not have a job by the end of the year, it’s crazy cheap to buy a house.
The fact is, this is a situation that we can’t keep up for long. Eventually, the treasury will run out of money aimed at keeping rates low and these mortgages in the high 4’s and low 5’s will become a thing of the past. It’s not a matter of if; it’s a matter of when.
In other news, California has evidently abandoned their ‘legalize marijuana and tax it to cover our gaping budget hole’ agenda and has opted instead to let the constituency decide for itself. So, everyone voted between massive budget cuts or tax hikes and deficit increases. That’s fairly similar to deciding between being blinded or being shot in the kneecaps. Not thrillingly fun either way you go.
And, of course, California decided simply to increase their budget deficits and deal with the problems later in life. Procrastination. Awesome. Maybe Mr. Schwarzenegger should just crank out a few more action flicks to pay for their debts. Seemed to work for Sylvester Stallone in the new Rambo.
Why is right now the exception to the rule? Because Uncle Sam is printing money like crazy and using that money to buy mortgage bonds. I believe some call this technique “robbing Peter to pay Paul.”
For the short term, this means that you and I have access to rates lower than the market can really support on it’s own. The government is assuming that by keeping rates super-low, they will encourage people to buy homes rather than rent, which will hopefully repair our country’s housing crisis and, ultimately, our economy.
That’s the optimistic assumption we’re working with, at least. A good old fashioned glass-is-half-full outlook.
For the long term, all that money floating around will result in one of two things: inflation or sky-high rates and taxes. Basically, if you own a store and you think your customers just got some more money, you’re going to jack up your prices to get your piece of that bigger pie. So, Uncle Sam will increase key interest rates and try to suck money out of us to prevent consumer overspending.
Regardless, the bleaker the economic news, the more Uncle Sam will come riding to the rescue and say that he’s going to throw taxpayer money at keeping mortgage rates low. Today, we saw the Federal Reserve come out with a very gloomy outlook on the rest of 2009 and rates instantly dropped.
So, while you may not have a job by the end of the year, it’s crazy cheap to buy a house.
The fact is, this is a situation that we can’t keep up for long. Eventually, the treasury will run out of money aimed at keeping rates low and these mortgages in the high 4’s and low 5’s will become a thing of the past. It’s not a matter of if; it’s a matter of when.
In other news, California has evidently abandoned their ‘legalize marijuana and tax it to cover our gaping budget hole’ agenda and has opted instead to let the constituency decide for itself. So, everyone voted between massive budget cuts or tax hikes and deficit increases. That’s fairly similar to deciding between being blinded or being shot in the kneecaps. Not thrillingly fun either way you go.
And, of course, California decided simply to increase their budget deficits and deal with the problems later in life. Procrastination. Awesome. Maybe Mr. Schwarzenegger should just crank out a few more action flicks to pay for their debts. Seemed to work for Sylvester Stallone in the new Rambo.
Thursday, April 23, 2009
How to do better when you're not really doing any better at all
Maybe you’ve heard, maybe you haven’t, but our stock market has improved about 25% in recent months, coming from the lows of 6400 on the Dow to a current level of right around 8000. Great news, right? Time to double-up on those 401K contributions, right? Optimism and champagne are flowing freely in the streets, right?
Maaaaaaaaybe not so fast.
You see, the fun thing about the stock market is that the numbers can be doctored on a short-term basis by a ton of different factors. For example, a company can come out with outstanding earnings and simultaneously announce a massive downsizing. Great for short-term stock improvement, bad for the long-term job market. Or, like Bank of America, they can report a bunch of one-time profits supported by a change in accounting rules (not necessarily a substantive improvement in real business) and a concurrent jump in loans going bad. Not an overall improvement, I would say.
The moral of the story is that, while stocks may be improving modestly, the economy at large is not. Without a true and lasting turn in job creation, housing, business lending, etc., we can expect stocks to bounce up and down like a sailboat in a squall.
And it is that very stock volatility that is keeping investors cautious and promoting low mortgage interest rates. Stack on top of that the massive purchasing power of the Federal Reserve and their open willingness to buy long-term securities (like mortgage-backed securities) and we’ve got a recipe for a continuing low rate environment. This is a good thing, because homebuyers are beginning to come out of the woodwork, coaxed by the $8000 tax credit and a large inventory of homes to choose from.
One piece of good news is that analysts are predicting a rolling bottom for the housing market in areas that have declined by 40% in value. Yes, a 40% drop in your home’s value is a bitter pill to swallow, but finding a bottom will do wonders for home purchases and the economy at large. So, I’ll take it.
To close on a depressing note (I always like to leave ‘em crying), the Chief Financial Officer of Freddie Mac (a governmentally sponsored entity that helps prop up the mortgage finance market) killed himself on Tuesday. Yes, one of the few guys who has open access to what the balance books of a major mortgage player looks like felt it necessary to end it all.
Disconcerting, to say the least.
Maaaaaaaaybe not so fast.
You see, the fun thing about the stock market is that the numbers can be doctored on a short-term basis by a ton of different factors. For example, a company can come out with outstanding earnings and simultaneously announce a massive downsizing. Great for short-term stock improvement, bad for the long-term job market. Or, like Bank of America, they can report a bunch of one-time profits supported by a change in accounting rules (not necessarily a substantive improvement in real business) and a concurrent jump in loans going bad. Not an overall improvement, I would say.
The moral of the story is that, while stocks may be improving modestly, the economy at large is not. Without a true and lasting turn in job creation, housing, business lending, etc., we can expect stocks to bounce up and down like a sailboat in a squall.
And it is that very stock volatility that is keeping investors cautious and promoting low mortgage interest rates. Stack on top of that the massive purchasing power of the Federal Reserve and their open willingness to buy long-term securities (like mortgage-backed securities) and we’ve got a recipe for a continuing low rate environment. This is a good thing, because homebuyers are beginning to come out of the woodwork, coaxed by the $8000 tax credit and a large inventory of homes to choose from.
One piece of good news is that analysts are predicting a rolling bottom for the housing market in areas that have declined by 40% in value. Yes, a 40% drop in your home’s value is a bitter pill to swallow, but finding a bottom will do wonders for home purchases and the economy at large. So, I’ll take it.
To close on a depressing note (I always like to leave ‘em crying), the Chief Financial Officer of Freddie Mac (a governmentally sponsored entity that helps prop up the mortgage finance market) killed himself on Tuesday. Yes, one of the few guys who has open access to what the balance books of a major mortgage player looks like felt it necessary to end it all.
Disconcerting, to say the least.
Tuesday, April 7, 2009
The makings of a virtuous circle
Hooray! Our money woes are a thing of the past! President Obama had a rousing show of support at the recent G-20 economic summit, where the leaders of the 20 most economically influential countries in the world convene to fix our shattered economy, so that’s why it takes a whole day.
Give them a week and I’m sure we’ll have global warming, poverty, and epidemic diseases all eliminated.
No, I am a fan of tradition and all, but this summit amounted to little more than international lip-service and lots of sign-wielding protesters. High level schmoozing does not a solution make. Many countries have volunteered to “do what they can” to help drag everyone out of this global recession, but I doubt that means more than giving doe-eyed stares as America yet again works out a way to resolve a fundamentally broken international economy.
Stack on top of that the latest unemployment statistics, which show our fine nation at an 8.5% rate of unemployment. To provide some contrast, two years ago we were at 4.4%. Yessir. About doubled. However, some economists and market analysts seem to think that between the series of stimuli that the government has injected into our money markets and the ‘tighten our belts’ nature of American business and consumers, that we may be approaching a bottom for job losses. It’s the “every piece of bad news is getting us closer to some good news” mentality. The glass is half full type of thing.
And one indicator that most are pointing to is the signs of life coming out of the housing market. Foreclosure rates are slowing as most of the loans that will go bad have already gone bad. 1st time homebuyers are trying to take advantage of low mortgage interest rates. Home sellers have become more realistic about prices, offering exceptional deals. It’s not the golden days of 2005-2006 all over again, but it is a welcomed change from what we’ve seen for the past 24 months.
Once the housing market turns decisively, it’s a domino effect of incredible goodness from then on. Bank balance sheets improve along with rising home prices. Loans start getting made to spur new business growth, leading to more jobs created, increased wealth and spending, and a boat-load of resulting economic improvement. A proverbial virtuous circle.
So, despite bad numbers from the stock market and the overall economy, it is this author’s opinion that there is much room for optimism. The correction process will be long and challenging, but I do believe that it has in some fashion already begun, and that’s reason to wear a smile on your face.
And to buy a house. Or two. And to finance them through Greg.
Give them a week and I’m sure we’ll have global warming, poverty, and epidemic diseases all eliminated.
No, I am a fan of tradition and all, but this summit amounted to little more than international lip-service and lots of sign-wielding protesters. High level schmoozing does not a solution make. Many countries have volunteered to “do what they can” to help drag everyone out of this global recession, but I doubt that means more than giving doe-eyed stares as America yet again works out a way to resolve a fundamentally broken international economy.
Stack on top of that the latest unemployment statistics, which show our fine nation at an 8.5% rate of unemployment. To provide some contrast, two years ago we were at 4.4%. Yessir. About doubled. However, some economists and market analysts seem to think that between the series of stimuli that the government has injected into our money markets and the ‘tighten our belts’ nature of American business and consumers, that we may be approaching a bottom for job losses. It’s the “every piece of bad news is getting us closer to some good news” mentality. The glass is half full type of thing.
And one indicator that most are pointing to is the signs of life coming out of the housing market. Foreclosure rates are slowing as most of the loans that will go bad have already gone bad. 1st time homebuyers are trying to take advantage of low mortgage interest rates. Home sellers have become more realistic about prices, offering exceptional deals. It’s not the golden days of 2005-2006 all over again, but it is a welcomed change from what we’ve seen for the past 24 months.
Once the housing market turns decisively, it’s a domino effect of incredible goodness from then on. Bank balance sheets improve along with rising home prices. Loans start getting made to spur new business growth, leading to more jobs created, increased wealth and spending, and a boat-load of resulting economic improvement. A proverbial virtuous circle.
So, despite bad numbers from the stock market and the overall economy, it is this author’s opinion that there is much room for optimism. The correction process will be long and challenging, but I do believe that it has in some fashion already begun, and that’s reason to wear a smile on your face.
And to buy a house. Or two. And to finance them through Greg.
Thursday, March 19, 2009
It's on like Donkey Kong
In a surprise move, the Fed decided on Wednesday to implement their often talked about plan to become a direct purchaser of long-term securities. Amongst other things, they are devoting 750 billion more dollars toward buying mortgage-backed securities over the next few months.
Translation: The Fed has pulled out the biggest gun it has toward keeping mortgage rates down and is now using it liberally.
The message to the markets is clear: Ben Bernanke and the Federal Reserve will pump in as much cash as it takes to end our current recession, regardless of the long-term consequences. The positive side of this is that mortgage rates will be manually forced down for a short period of time. We should see fixed rates on 30 year mortgages drop decisively into the 4’s over the course of the next couple of weeks. The negative side of this is that creating $1,200,000,000,000 out of thin air devalues the dollar and our international economic preeminence.
Yes. Eleven zeroes after a one and a two. It’s a lot. Bill Gates can’t even imagine that much money.
But let there be no confusion. This is a no holds barred move on the Fed’s part. Ben Bernanke, our fearless Federal Reserve Chairman and resident expert on the Great Depression, would rather be known as the man who went too far rather than the man who didn’t go far enough. I hope he’s right.
So between this lowering of rates and the $8000 dollar for dollar tax credit to first time homebuyers, Uncle Sam has pretty much said he’ll do anything short of dressing up like a clown to get you to buy a house. That is because we need the housing market working again to fix the banks who fund the businesses who create the JOBS. So, seriously, go buy a house. It’s the American thing to do.
I know. I’m ripping off the car dealerships slogans to prove a point.
As if the Madoff pyramid scheme fiasco wasn’t enough, AIG has proven to us once again how despicable some financial institutions can be by paying out 165 million dollars in executive bonuses to their financial services division. You heard right: $165,000,000 to the folks who single-handedly trashed your economy. Historically, any high-ranking official who performed as poorly as these guys did were usually guillotined, not rewarded. Well, since everyone who can spell AIG has been driven into a blind fury by the incident, Congress decided to use the opportunity to look good. So, they are voting to tax those bonuses by upwards of 90%.
If you can’t block ‘em, tax ‘em. Works for me.
Translation: The Fed has pulled out the biggest gun it has toward keeping mortgage rates down and is now using it liberally.
The message to the markets is clear: Ben Bernanke and the Federal Reserve will pump in as much cash as it takes to end our current recession, regardless of the long-term consequences. The positive side of this is that mortgage rates will be manually forced down for a short period of time. We should see fixed rates on 30 year mortgages drop decisively into the 4’s over the course of the next couple of weeks. The negative side of this is that creating $1,200,000,000,000 out of thin air devalues the dollar and our international economic preeminence.
Yes. Eleven zeroes after a one and a two. It’s a lot. Bill Gates can’t even imagine that much money.
But let there be no confusion. This is a no holds barred move on the Fed’s part. Ben Bernanke, our fearless Federal Reserve Chairman and resident expert on the Great Depression, would rather be known as the man who went too far rather than the man who didn’t go far enough. I hope he’s right.
So between this lowering of rates and the $8000 dollar for dollar tax credit to first time homebuyers, Uncle Sam has pretty much said he’ll do anything short of dressing up like a clown to get you to buy a house. That is because we need the housing market working again to fix the banks who fund the businesses who create the JOBS. So, seriously, go buy a house. It’s the American thing to do.
I know. I’m ripping off the car dealerships slogans to prove a point.
As if the Madoff pyramid scheme fiasco wasn’t enough, AIG has proven to us once again how despicable some financial institutions can be by paying out 165 million dollars in executive bonuses to their financial services division. You heard right: $165,000,000 to the folks who single-handedly trashed your economy. Historically, any high-ranking official who performed as poorly as these guys did were usually guillotined, not rewarded. Well, since everyone who can spell AIG has been driven into a blind fury by the incident, Congress decided to use the opportunity to look good. So, they are voting to tax those bonuses by upwards of 90%.
If you can’t block ‘em, tax ‘em. Works for me.
Wednesday, February 25, 2009
How does $8,000 in your pocket sound to you?
There are a lot of volatile cross-currents washing through the financial markets right now. If we were not sure about things a month ago, we’re hopelessly confused now. The big stimulus package, a new pile of national debt, a record drop in home prices over the 4th quarter of 2008, CitiGroup, AIG, and the auto makers all needing more money...it’s enough to make you want to hide under the covers with the lights off.
However, tumultuous times present unique (though fleeting) opportunities. And there are two major points I’d like to bring to your attention:
1) We have a ‘new and improved’ 1st time homebuyer tax credit! $8,000 dollars straight in your pocket just for buying a place! And you don’t have to pay it back! I know! It’s totally mind-blowingly awesome!!! As with all good things, this tax credit comes with some strings attached (buy a home costing over $80,000, earn less than $150,000 annually as a couple, haven’t owned a home in the past 3 years) but nothing constricting. The big difference between this credit and the $7,500 tax credit we had before is you don’t have to repay this one if you live in the home for 3 years. That’s like your boss giving you a $1.28 per hour raise for 3 years just for being a homeowner. Except your boss is America.
2) Bank stress testing is a’coming. As a nation, this is not one of our brightest ideas. The concept is that we’re going to send an army of regulators marching to all the banks in our country to comb their books and see if those banks could survive a “worst-case scenario” economy. If it is determined that the bank is in trouble, confidence in that bank will collapse (along with their stock price) and government intervention will be necessary. Basically, if regulators say a bank will fail, it will become a self-fulfilling prophecy as everyone jumps ship. My problem: it’s setting up some otherwise solvent institutions for failure by virtue of mob mentality. But such is the skittish nature of investors these days.
The moral of the story is that we are going through a very murky period. A single day can make a world of difference on everything, including asset values and mortgage rates. If you are thinking about buying a home, set up a time to talk with me so I can help you time these big market upheavals and find surprisingly good deals amongst them. Uncle Sam is trying to encourage homeownership in every way that he can. Now might be the time to start examining the options.
However, tumultuous times present unique (though fleeting) opportunities. And there are two major points I’d like to bring to your attention:
1) We have a ‘new and improved’ 1st time homebuyer tax credit! $8,000 dollars straight in your pocket just for buying a place! And you don’t have to pay it back! I know! It’s totally mind-blowingly awesome!!! As with all good things, this tax credit comes with some strings attached (buy a home costing over $80,000, earn less than $150,000 annually as a couple, haven’t owned a home in the past 3 years) but nothing constricting. The big difference between this credit and the $7,500 tax credit we had before is you don’t have to repay this one if you live in the home for 3 years. That’s like your boss giving you a $1.28 per hour raise for 3 years just for being a homeowner. Except your boss is America.
2) Bank stress testing is a’coming. As a nation, this is not one of our brightest ideas. The concept is that we’re going to send an army of regulators marching to all the banks in our country to comb their books and see if those banks could survive a “worst-case scenario” economy. If it is determined that the bank is in trouble, confidence in that bank will collapse (along with their stock price) and government intervention will be necessary. Basically, if regulators say a bank will fail, it will become a self-fulfilling prophecy as everyone jumps ship. My problem: it’s setting up some otherwise solvent institutions for failure by virtue of mob mentality. But such is the skittish nature of investors these days.
The moral of the story is that we are going through a very murky period. A single day can make a world of difference on everything, including asset values and mortgage rates. If you are thinking about buying a home, set up a time to talk with me so I can help you time these big market upheavals and find surprisingly good deals amongst them. Uncle Sam is trying to encourage homeownership in every way that he can. Now might be the time to start examining the options.
Sunday, February 15, 2009
Countdown to stimulus stimulation!
In a moment of profound unpreparedness, our brand-spanking new Treasury Secretary Tim Geithner spoke on Tuesday about the ’details’ of the upcoming stimulus package. After no ‘details’ whatsoever were declared, the stock market expressed their discontent by trashing the Dow Jones Industrial Average by 300+ points. Ouch-town, population you, Tim. Maybe it’s best to have the information before you tell the press that you want to release the information.
As I write this newsletter, the House of Representatives is hard at work debating the particulars of the upcoming stimulus bill. Senate is set to get their think tank a-rolling later this evening. The latest page count for the bill is 1071. To give you a base of comparison, reading this bill would be comparable to reading Pride and Prejudice, The Grapes of Wrath, and washing them both down with Machiavelli’s The Prince all in one day. Only more boring.
Where are the Cliff’s Notes when you need them?
If my high school English class was any indicator, I’m guessing that many of our fine representatives won’t read the bill word for word. At least some politicians are being honest about it. U.S. Rep. Emanuel Cleaver, a Missouri Democrat, was quoted as saying, “Regardless of party, we will all cast our votes with one hand and cross our fingers with the other.”
So, you’re basically telling me that we’re spending close to a trillion dollars on...something that the people who made it really don’t understand? Isn’t this how I, Robot started? It didn’t work out so well for Will Smith in that one.
Simultaneously, Barack and his Obama-nauts are trying to hammer out a mortgage subsidy program. To spare you the convoluted web of details, essentially what they are trying to do is come up with a standardized qualification and re-appraisal process that all banks can use to establish eligibility for loan modification. The talk of the program alone brought the stock market roaring back over 200 points towards the tail-end of yesterday. I’m a big fan of anything that government is willing to do to keep people in their homes and stop home price depreciation. Rock on, Barack.
Another immediately problematic trend is America’s newfound desire to save money. Between dwindling retirement accounts and severe job insecurity, consumers have retrenched and started to put their cash in their mattresses. It has gotten to the point where some in the administration wish to change the phrase ‘A penny saved is a penny earned’ to ‘A penny saved is a penny you’re not spending to generate commerce and jobs for your fellow Americans, you unpatriotic jerk’. Yikes.
As I write this newsletter, the House of Representatives is hard at work debating the particulars of the upcoming stimulus bill. Senate is set to get their think tank a-rolling later this evening. The latest page count for the bill is 1071. To give you a base of comparison, reading this bill would be comparable to reading Pride and Prejudice, The Grapes of Wrath, and washing them both down with Machiavelli’s The Prince all in one day. Only more boring.
Where are the Cliff’s Notes when you need them?
If my high school English class was any indicator, I’m guessing that many of our fine representatives won’t read the bill word for word. At least some politicians are being honest about it. U.S. Rep. Emanuel Cleaver, a Missouri Democrat, was quoted as saying, “Regardless of party, we will all cast our votes with one hand and cross our fingers with the other.”
So, you’re basically telling me that we’re spending close to a trillion dollars on...something that the people who made it really don’t understand? Isn’t this how I, Robot started? It didn’t work out so well for Will Smith in that one.
Simultaneously, Barack and his Obama-nauts are trying to hammer out a mortgage subsidy program. To spare you the convoluted web of details, essentially what they are trying to do is come up with a standardized qualification and re-appraisal process that all banks can use to establish eligibility for loan modification. The talk of the program alone brought the stock market roaring back over 200 points towards the tail-end of yesterday. I’m a big fan of anything that government is willing to do to keep people in their homes and stop home price depreciation. Rock on, Barack.
Another immediately problematic trend is America’s newfound desire to save money. Between dwindling retirement accounts and severe job insecurity, consumers have retrenched and started to put their cash in their mattresses. It has gotten to the point where some in the administration wish to change the phrase ‘A penny saved is a penny earned’ to ‘A penny saved is a penny you’re not spending to generate commerce and jobs for your fellow Americans, you unpatriotic jerk’. Yikes.
Tuesday, February 3, 2009
If you don't know where you're going, "speed up" may not be the best answer
Another Super Bowl has come and gone. Congrats to the Steelers for winning, and congrats to the Cardinals for putting on such a terrific back-and-forth contest. Arguably one of the best Super Bowls I’ve seen in recent history.
And at this year’s Super Bowl party, I heard plenty of people talking about the economy and the housing markets. Everyone, it seems, knows the correct way for our government to bail us out (and isn’t quiet about it) and wonders why the powers that be ‘just don’t get it’.
Guys and gals, the people who spend every waking second of the day studying this stuff don’t have a solid clue as to what to do about it. I’m not downplaying the economic ideals of the proletariat, but I am asking that all of you respect the interconnected complexity of this crisis we face. Every potential method of recovery comes with it’s own unique costs and benefits and will be riddled with various political agendas.
Add on top of that a sense of urgency that must be balanced with ample time to do due diligence. The upcoming stimulus package is a prime example of just that: we need to get it implemented as fast as possible to prevent more jobs from disappearing and more businesses from failing. However, if we don’t take the needed time to go through the program line by line, billions of dollars will be lost due to inefficiency, special interest groups, and general corruption.
Damned if you do, damned if you don’t.
One idea that is raising a lot of controversy is the ‘Buy American’ or ‘Hire American’ clauses that are attached to receiving funds from this stimulus. The idea is great: if we buy from or hire only Americans, we’ll stimulate our economy faster. The drawback is that the international community will see it as an act of Protectionism, which does not bode well for trade. We just got our first earful of angst from the world at the recent Davos International Economic Conference.
The fact is, big decisions are being made on Capitol Hill that will set the trajectory for the next few years. Hopefully, our governing body will prove to be patient and prudent enough to actually stimulate the economy and not just fund a bunch of dead-end special interest groups.
But only time will tell.
And at this year’s Super Bowl party, I heard plenty of people talking about the economy and the housing markets. Everyone, it seems, knows the correct way for our government to bail us out (and isn’t quiet about it) and wonders why the powers that be ‘just don’t get it’.
Guys and gals, the people who spend every waking second of the day studying this stuff don’t have a solid clue as to what to do about it. I’m not downplaying the economic ideals of the proletariat, but I am asking that all of you respect the interconnected complexity of this crisis we face. Every potential method of recovery comes with it’s own unique costs and benefits and will be riddled with various political agendas.
Add on top of that a sense of urgency that must be balanced with ample time to do due diligence. The upcoming stimulus package is a prime example of just that: we need to get it implemented as fast as possible to prevent more jobs from disappearing and more businesses from failing. However, if we don’t take the needed time to go through the program line by line, billions of dollars will be lost due to inefficiency, special interest groups, and general corruption.
Damned if you do, damned if you don’t.
One idea that is raising a lot of controversy is the ‘Buy American’ or ‘Hire American’ clauses that are attached to receiving funds from this stimulus. The idea is great: if we buy from or hire only Americans, we’ll stimulate our economy faster. The drawback is that the international community will see it as an act of Protectionism, which does not bode well for trade. We just got our first earful of angst from the world at the recent Davos International Economic Conference.
The fact is, big decisions are being made on Capitol Hill that will set the trajectory for the next few years. Hopefully, our governing body will prove to be patient and prudent enough to actually stimulate the economy and not just fund a bunch of dead-end special interest groups.
But only time will tell.
Monday, January 26, 2009
The Obama effect
It’s official: Barack Obama is the Commander-in-Chief, despite some impromptu rewording of the presidential oath. He even still has that new president smell. In the midst of two wars, rapidly increasing unemployment (Caterpillar, ING, Microsoft, Home Depot, Sprint, Pfizer, and US Airways all cut thousands of jobs today), and a sharp and growing international recession, Americans are hopefully hoping for all that hope that Obama talked about during his campaign.
I can’t personally comment on the hope aspect of things, but I can guarantee you that change is coming in a big way.
One of the first actions taken by our new president is to push through a stimulus package riddled with tax cuts for both families and businesses. The price tag: $825 billion (so far). By the time it actually gets implemented, it may top one trillion dollars. That’s a one with twelve zeroes after it. Yikes.
Needless to say, since raising taxes isn’t an option right now, Uncle Sam is gonna have to go borrowing. That process is beginning this week and has no end in sight.
“So Greg, you’re a mortgage guy. Why do you care about what Washington DC is doing?” you ask.
Well, Uncle Sam’s debt is competing with mortgage-based debt to draw investors. The more supply that hits the street, the higher yields they will have to offer (meaning higher interest rates) in order to stay competitive. And that is just the phenomenon we’ve seen that has driven interest rates up for 7 trading days straight.
As a sidebar in the “for-what-it-is-worth” category - it is probably worth noting that even with the recent increase in mortgage rates, note rates are still at least one-full-point lower than they were just three months ago. I know that doesn’t mean much for those who are targeting a 4.5% or lower 30-year fixed mortgage interest rate – but for those with more realistic expectations the current range of rates offer what will likely prove to be solidly within a very narrow variance of the best mortgage financing opportunity of lifetime.
Another bright spot is that the National Association of Realtors released data showing that existing home sales surged in December of 2008 at a 6.5% annualized pace. This is rather shocking because December is usually viewed as a slow month for real estate (because who’s got time to buy a home when you’re bargain hunting for a new sweater for junior?), so this is a great sign that all the pent-up demand for homes is finally starting to flow back into the market.
It’s about time.
I can’t personally comment on the hope aspect of things, but I can guarantee you that change is coming in a big way.
One of the first actions taken by our new president is to push through a stimulus package riddled with tax cuts for both families and businesses. The price tag: $825 billion (so far). By the time it actually gets implemented, it may top one trillion dollars. That’s a one with twelve zeroes after it. Yikes.
Needless to say, since raising taxes isn’t an option right now, Uncle Sam is gonna have to go borrowing. That process is beginning this week and has no end in sight.
“So Greg, you’re a mortgage guy. Why do you care about what Washington DC is doing?” you ask.
Well, Uncle Sam’s debt is competing with mortgage-based debt to draw investors. The more supply that hits the street, the higher yields they will have to offer (meaning higher interest rates) in order to stay competitive. And that is just the phenomenon we’ve seen that has driven interest rates up for 7 trading days straight.
As a sidebar in the “for-what-it-is-worth” category - it is probably worth noting that even with the recent increase in mortgage rates, note rates are still at least one-full-point lower than they were just three months ago. I know that doesn’t mean much for those who are targeting a 4.5% or lower 30-year fixed mortgage interest rate – but for those with more realistic expectations the current range of rates offer what will likely prove to be solidly within a very narrow variance of the best mortgage financing opportunity of lifetime.
Another bright spot is that the National Association of Realtors released data showing that existing home sales surged in December of 2008 at a 6.5% annualized pace. This is rather shocking because December is usually viewed as a slow month for real estate (because who’s got time to buy a home when you’re bargain hunting for a new sweater for junior?), so this is a great sign that all the pent-up demand for homes is finally starting to flow back into the market.
It’s about time.
Friday, January 16, 2009
The financial markets aren't buying in to what Washington is doing
Rates have notably slipped today in response to the decision to release the remaining $350 billion in Troubled Asset Relief Program (lovingly known as the TARP) funds. Here’s the short list of why this is not boding well for mortgage investors:
1) Nobody knows where the 1st $350 billion ran off to and no one really thinks it did what it was supposed to do toward stabilizing our financial markets.
2) Spending this money with another $825 billion (and growing) Obamanomics stimulus package waiting in the wings means a mountain of federal debt is just around the corner. Uncle Sam will deal with that debt, in part, by issuing bonds.
3) A huge influx in the bond supply will force interest rates up on all fixed income investments (like mortgages) to attract investor attention.
Combine this with the indigestion Bank of America is feeling after gobbling up Merrill Lynch (who happened to post a $15.3 billion dollar loss this quarter) and you’ve got the recipe for uncomfortable investors. Consequently, $20 billion of the TARP funds is going to BoA to offset that loss.
I’m not saying that these decisions are dumb or unnecessary. Lord only knows that I would be hiding under my desk sucking my thumb if it were my responsibility to allocate these funds. But the fact remains: rates are creeping back upward.
Now, Uncle Sam will do what he can to keep rates down through direct purchase of mortgage-backed securities. However, keeping the average 30 year fixed at or below 5% is going to require the cooperation of independent investors, and it’s looking more and more like that isn’t going to happen.
In the macroeconomic world, our rate of consumer inflation came in at the lowest annualized reading in over 50 years of +0.1%. This is a bright spot in otherwise dismal times, providing much needed financial relief for folks like you and me.
Speaking of bright spots, I have to take a moment to mention Captain Chelsey B. Sullenberger III, the ridiculously talented pilot who floated an Airbus 320 to a splash landing in the Hudson River shortly after geese destroyed the engines. After crash landing the plane and helping all 155 passengers off the plane, the Captain walked the aisles twice (while the plane was still sinking) to ensure no one was left aboard. Aside from two broken legs, no one was hurt or killed. It’s always refreshing to hear about real American heroes, and Captain Sullenberger certainly has earned that title.
I always knew those geese were up to no good...
1) Nobody knows where the 1st $350 billion ran off to and no one really thinks it did what it was supposed to do toward stabilizing our financial markets.
2) Spending this money with another $825 billion (and growing) Obamanomics stimulus package waiting in the wings means a mountain of federal debt is just around the corner. Uncle Sam will deal with that debt, in part, by issuing bonds.
3) A huge influx in the bond supply will force interest rates up on all fixed income investments (like mortgages) to attract investor attention.
Combine this with the indigestion Bank of America is feeling after gobbling up Merrill Lynch (who happened to post a $15.3 billion dollar loss this quarter) and you’ve got the recipe for uncomfortable investors. Consequently, $20 billion of the TARP funds is going to BoA to offset that loss.
I’m not saying that these decisions are dumb or unnecessary. Lord only knows that I would be hiding under my desk sucking my thumb if it were my responsibility to allocate these funds. But the fact remains: rates are creeping back upward.
Now, Uncle Sam will do what he can to keep rates down through direct purchase of mortgage-backed securities. However, keeping the average 30 year fixed at or below 5% is going to require the cooperation of independent investors, and it’s looking more and more like that isn’t going to happen.
In the macroeconomic world, our rate of consumer inflation came in at the lowest annualized reading in over 50 years of +0.1%. This is a bright spot in otherwise dismal times, providing much needed financial relief for folks like you and me.
Speaking of bright spots, I have to take a moment to mention Captain Chelsey B. Sullenberger III, the ridiculously talented pilot who floated an Airbus 320 to a splash landing in the Hudson River shortly after geese destroyed the engines. After crash landing the plane and helping all 155 passengers off the plane, the Captain walked the aisles twice (while the plane was still sinking) to ensure no one was left aboard. Aside from two broken legs, no one was hurt or killed. It’s always refreshing to hear about real American heroes, and Captain Sullenberger certainly has earned that title.
I always knew those geese were up to no good...
Saturday, January 10, 2009
A sobering employment report from Washington
High-end fraud.
It’s the latest blow that has been dealt to the investment markets. First, Bernie Madoff misappropriated 50 billion dollars of investors’ money in a gigantic pyramid scheme (and no, it was not called Amway). Those affected include high-net worth individuals, hedge funds, pension funds, even charity funds. This event undermined the already faltering confidence that John Q. Public has in our financial system. Now, the owner of Satyam computers (one of India’s largest companies) has just come forth with information that 90+% of the cash on his company’s books was completely made up.
The reason these things are relevant is that these happenings allow the vicious cycle to continue. Stuff like this causes investors to lose confidence so they stop investing or even pull money out of companies and that causes the companies to start making layoffs to save money so then people get worried about losing their jobs and stop spending money which further decreases company revenues and worsens economic indicators which further decreases investor confidence and so on and so on and so on.
Run-on sentence. I know. Microsoft Word already alerted me. But you get the point.
One piece of evidence we can look to is the mounting job losses in America. December saw 524,000 jobs get cut, bringing our unemployment rate up to 7.2%, the highest we’ve seen in 16 years. President-Elect Obama is of the opinion that the government is the only power strong enough to re-direct us out of this downward spiral. So, he is pushing Congress to pass a new stimulus package that could carry a price tag of about 800 billion dollars by some tallies.
As a quick side note, has anyone else noticed how ridiculously monstrous these numbers have gotten? I remember when 10 billion dollars seemed like a lot of money. I bet we’ll see someone eventually try to find a way to spend infinity-trillion-kajillion dollars on re-paving roads in Nebraska or something.
So what does all of this mean for mortgages? Well, bad news for stocks tends to be good news for mortgage-backed securities, and that means low rates. 30 year fixed rates are still hovering around the low-5’s to high-4’s and Uncle Sam has reiterated the fact that he plans on buying up a ton of mortgage debt in an effort to keep the rates low.
The only hidden problem is the mountain of debt our country is racking up. If Big Brother spends money and issues bonds to cover that debt, then the flood of bonds into the market will force interest rates upwards over time. So, if you still have a job then mortgage rates are still very attractive and it might be a good time to go house-hunting. But for how long it will stay good is anybody’s guess.
It’s the latest blow that has been dealt to the investment markets. First, Bernie Madoff misappropriated 50 billion dollars of investors’ money in a gigantic pyramid scheme (and no, it was not called Amway). Those affected include high-net worth individuals, hedge funds, pension funds, even charity funds. This event undermined the already faltering confidence that John Q. Public has in our financial system. Now, the owner of Satyam computers (one of India’s largest companies) has just come forth with information that 90+% of the cash on his company’s books was completely made up.
The reason these things are relevant is that these happenings allow the vicious cycle to continue. Stuff like this causes investors to lose confidence so they stop investing or even pull money out of companies and that causes the companies to start making layoffs to save money so then people get worried about losing their jobs and stop spending money which further decreases company revenues and worsens economic indicators which further decreases investor confidence and so on and so on and so on.
Run-on sentence. I know. Microsoft Word already alerted me. But you get the point.
One piece of evidence we can look to is the mounting job losses in America. December saw 524,000 jobs get cut, bringing our unemployment rate up to 7.2%, the highest we’ve seen in 16 years. President-Elect Obama is of the opinion that the government is the only power strong enough to re-direct us out of this downward spiral. So, he is pushing Congress to pass a new stimulus package that could carry a price tag of about 800 billion dollars by some tallies.
As a quick side note, has anyone else noticed how ridiculously monstrous these numbers have gotten? I remember when 10 billion dollars seemed like a lot of money. I bet we’ll see someone eventually try to find a way to spend infinity-trillion-kajillion dollars on re-paving roads in Nebraska or something.
So what does all of this mean for mortgages? Well, bad news for stocks tends to be good news for mortgage-backed securities, and that means low rates. 30 year fixed rates are still hovering around the low-5’s to high-4’s and Uncle Sam has reiterated the fact that he plans on buying up a ton of mortgage debt in an effort to keep the rates low.
The only hidden problem is the mountain of debt our country is racking up. If Big Brother spends money and issues bonds to cover that debt, then the flood of bonds into the market will force interest rates upwards over time. So, if you still have a job then mortgage rates are still very attractive and it might be a good time to go house-hunting. But for how long it will stay good is anybody’s guess.
Sunday, January 4, 2009
Welcome to 2009
The new year is upon us. 2009. Wow. This time last year gasoline was over $4.00 a gallon, all five of the major investment banks still existed, our country hadn’t ‘bailed out’ any major institutions, and Barack Obama and Hillary Clinton were still battling for the democratic nomination. Seems like so long ago already.
2008 shook the very foundations of our country’s financial system. Between a banking collapse, stock market upheaval, skyrocketing unemployment and a sharp decline in home values, we are arguably in the midst of the greatest economic crisis our country has experienced since the Great Depression.
But with a new year comes new hope. Most economists have agreed that 2009 will mark the turning point for the American housing market and, hopefully, the economy at large.
And so, for the proud few surviving mortgage brokers, it’s go time. Low rates and bottoming home prices are creating the perfect environment for a new housing boom. The next generation of smart homeowners have already begun searching for their future houses.
Consider me your new and improved friendly local mortgage broker.
This year, I’m planning to-
-provide minute-by-minute updates on everything affecting the mortgage market through my website, www.gregwhiteside.com.
-be your local housing expert whether you own a home, are buying a home now, or will be buying a home in the future: I will help renters negotiate the best deals, I will compare renting versus owning options, I will counsel you to increase your credit rating, I will help you analyze real estate investment options, and I will help you best use mortgage debt to maximize your family’s cash-flow.
-continue to build my relationship with each and every one of you through listening to your feedback, holding individual consultations, and hosting major social events.
In the coming months, your friends, family and associates will be talking about the real estate market more than ever before. I sincerely ask that you mention Greg whenever the conversation comes up.
2008 shook the very foundations of our country’s financial system. Between a banking collapse, stock market upheaval, skyrocketing unemployment and a sharp decline in home values, we are arguably in the midst of the greatest economic crisis our country has experienced since the Great Depression.
But with a new year comes new hope. Most economists have agreed that 2009 will mark the turning point for the American housing market and, hopefully, the economy at large.
And so, for the proud few surviving mortgage brokers, it’s go time. Low rates and bottoming home prices are creating the perfect environment for a new housing boom. The next generation of smart homeowners have already begun searching for their future houses.
Consider me your new and improved friendly local mortgage broker.
This year, I’m planning to-
-provide minute-by-minute updates on everything affecting the mortgage market through my website, www.gregwhiteside.com.
-be your local housing expert whether you own a home, are buying a home now, or will be buying a home in the future: I will help renters negotiate the best deals, I will compare renting versus owning options, I will counsel you to increase your credit rating, I will help you analyze real estate investment options, and I will help you best use mortgage debt to maximize your family’s cash-flow.
-continue to build my relationship with each and every one of you through listening to your feedback, holding individual consultations, and hosting major social events.
In the coming months, your friends, family and associates will be talking about the real estate market more than ever before. I sincerely ask that you mention Greg whenever the conversation comes up.
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