Why home values may take decades to recover

By Dennis CauchonUSA TODAY
More room to fall?
For every $100 spent on a house in 1950 the investment rose slightly through 2002, then soared to about $192 in 2006, adjusting for inflation. Then credit dried up, and the bust began.
Rick Wallick moved into a new, three-bedroom $200,000 home in Maricopa, Ariz., in October 2005. Today, the home is worth $80,000.
The disabled software engineer stopped making mortgage payments this month. His $70,000 down payment is now worthless. His dream house will be foreclosed on next year.
"We're so far underwater it's not funny," says Wallick, 57, who had to return to his original home in Oregon to care for a sick family member and tend to his own medical problems. Wallick, one of the hardest-hit victims in one of the states hit hardest by the housing crisis, lost 60% of his home's value in three years.
For more... http://www.usatoday.com/printedition/news/20081212/1ahouseprices12_cv.art.htm?POE=click-refer

Chicken Little Doesn’t Sell Houses

RISMEDIA, Dec. 9, 2008-”One day, Chicken Little was walking in the woods when-KERPLUNK-an acorn fell on her head. ‘Oh my goodness!’ said Chicken Little. ‘The sky is falling!” Thus begins a timeless tale that seems more relevant each time I read another “authoritative” article positing that the recovery in real estate is years away.
I want to scream: “Your 2009 will be what YOU make it. The sky is not falling and you can be sure that many people will succeed in 2009, just as many continue to succeed, even now.”
We should refuse to buy in to “informed opinion” that predicts three more years of economic morass. It’s time we take responsibility for our own success and make things happen for ourselves.
Once we get through January, I believe we will see the beginnings of recovery. Credit will loosen, people will begin to regain some confidence that Washington has an idea of what they are doing, and opportunities to succeed will abound. Oh, it never will be 2005 again, but who really wants that, anyway? Agents who fail to take strong action to succeed despite conditions will be dropping like acorns in a stiff wind. for more...http://rismedia.com/wp/2008-12-08/chicken-little-doesnt-sell-houses/ I'm a Real Estate Professional that refuses to bear the burden of Doom and Gloom and forge ahead to make it better than before.

Can the Government Keep Spending? Most Economists Say Yes

Not my opinion, but the talking heads say....
RISMEDIA, Nov. 28, 2008-(MCT)-Since the U.S. economy went into freefall in September, the federal government has announced hundreds of billions of dollars in bailouts and economic stimulus packages in attempts to shore up banks and reignite the economy.
The latest astronomical figure is an $800 billion, in a package announced Tuesday by the Federal Reserve and the Treasury Department. Many are wondering, however, how long this spending can go on.
Here are a few answers: http://rismedia.com/wp/2008-11-27/can-the-government-keep-spending-most-economists-say-yes/

NEWS ALERT - Paulson Unveils $800 Billion Plan to Ease Credit Crunch

“A very strong statement of support for the housing market”
By David Lightman
RISMEDIA, Nov. 25, 2008-(MCT)-Treasury Secretary Henry Paulson, warning that “millions of Americans cannot find affordable financing for basic credit needs,” announced a major expansion of the federal bailout on today as much as $800 billion to make mortgages and consumer credit more available and affordable.
The government will buy up to $600 billion in mortgage-backed assets, and, in a separate action, lend up to $200 billion to investors who have bought securities backed by consumer loans such as credit cards, auto and student loans, in a bid to free up consumer credit. for more... http://rismedia.com/wp/2008-11-25/news-alert-paulson-unveils-800-billion-plan-to-ease-credit-crunch/

The First Time Buyer $7,500 IRS Tax Credit: Why Isn’t There More Excitement?

By David Fialk
RISMEDIA, Nov. 10, 2008-What is a potential home buyer to do? There is widespread negative publicity about the future of real estate values. There is negative publicity regarding the difficulty in obtaining mortgage financing, the problems with sub prime mortgages, home foreclosures and the collapse of financial institutions. They are experiencing an astronomical drop in the value of their stock portfolios. They have concern with job security. Can you blame buyers for slowing down and not rushing into a long term financial commitment, such as purchasing a home? for more.... http://rismedia.com/wp/2008-11-09/the-first-time-buyer-7500-irs-tax-credit-why-isnt-there-more-excitement/

Good News for Real Estate? Largest Monthly Home Sale Percentage Increase in 5 Years Reported

RISMEDIA, Oct. 27, 2008-Due to falling real estate prices and rising foreclosures on the West Coast, sales of existing homes rose to its highest level in 13 months and highest percentage increase in five years, according to a report issued today by the National Association of Realtors (NAR). The increase resulted from buyers responding to improved housing affordability conditions, the organization stated.
Existing-home sales-including single-family, townhomes, condominiums and co-ops-rose 5.5% to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August, and are 1.4% higher than the 5.11 million-unit pace in September 2007. See more...http://rismedia.com/wp/2008-10-24/breaking-news-good-news-for-real-estate-largest-monthly-home-sale-percentage-increase-in-5-years-reported/

Pending Home Sales Up Strongly

Pending home sales activity surged as buyers took advantage of low home prices and affordable interest rates, according to the latest report. The Pending Home Sales Index jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July, and is 8.8 percent higher than August 2007 when it stood at 85.8. The index is at the highest level since June 2007 when it stood at 101.4. Lawrence Yun, NAR chief economist, said home buyers were responding to improved affordability. “What we’re seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C. region,” he said. "It’s unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we’re hopeful most of the increase will translate into closed existing-home sales.”Read the story >View the commentary >View the forecast >View Pending Home Sales Index>
2008 Local Market Reports
Every housing market is unique, and all real estate is local. That’s why NAR is working to bring you more information on the local level. These reports, which encompass 150 separate local markets, reflect data available through the first quarter of 2008 and provide insights into the fundamentals and direction of the nation's largest metropolitan housing markets. Each downloadable report evaluates a number of factors affecting home prices, including:
The health of the local job market
Foreclosure rates
Housing inventory
Debt-to-income and mortgage-servicing-costs-to-income ratios
These reports are available to members only and require a log in.Find your local market >How to read these reports > (342K PDF)
Dr. Yun’s 2009 Economic Forecast
The U.S. economy has entered a recession and will contract for the next three quarters, and the recovery, from the second half of 2009, will be tepid. The unemployment rate will peak at 6.7 percent by midyear next year before steadily heading down. However, existing home sales will be rising despite challenging economic times. Read the entire commentary >
COMMERCIAL FUNDAMENTALS
Multi-Family Market Trends
While the residential market is still dealing with delinquent mortgages and foreclosures, the multi-family sector is feeling some positive side-effects. A good number of potential first-time home buyers are waiting out the current economic and housing conditions, and choosing to rent. In addition, in markets with significant foreclosures, displaced homeowners choose multi-family buildings to rent. Read more >

When the going gets tough; 9 Ways to work through the Stagnifaction...

So how do you put these words into action? Here are 9 ways how …
1. Live by the Serenity Prayer - “Accept the things you cannot change, have courage to change the things you can and the wisdom to know the difference.” In business, the wind is either going to blow against your back or directly in your face, but rarely will it blow neutral. Remain calm and composed and keep sailing full force forward through stormy seas ahead.
2. Ignite the passion for what you do - Remember why you got into your given field and retain the enjoyment you have for the business. Passion creates positive energy, which ignites and excites, whereas stress creates negative energy, which deflates and fatigues. When you have a passion for what you do, you enjoy the process (your job) as much as the end result (your paycheck). And passion is contagious, lifting your staff, co-workers and customers and producing better results in the process.
3. Commit yourself to personal and professional goals - Dreams are all about “wanting, hoping and waiting for it to happen,” whereas goals are dreams with a deadline. The two most self-defeating words in goal setting are “if only”; they provide a built in excuse. Write your goals down, visualize achieving these goals and live for them everyday.
4. Have a plan - “If you do not have a roadmap, any ole road will get you there.” Make sure, when working towards the plan and on daily to-do tasks, the energy you exert has an economic benefit and gets you closer to your goal; otherwise it’s wasted energy. Set mini goals with mini timelines and stay laser focused, ignoring the many distractions trying to sway you off track.
5. Work the plan - While having a positive attitude is important, only when coupled with positive activities will bring success. Your plan should include sales, marketing and PR components to attract the business that you deserve.
6. Refine and live your value proposition - In these days of hyper-competition, you have to have a USP (Unique Selling Proposition) that translates to a UBA (Unique Buying Advantage). If you’re not unique, you can’t compete. Know and promote your 3 Ds; what makes you drastically and distinctively different.
7. Provide a world-class customer experience - During tougher economic times, there is a tendency for buyers to become more price conscious in an effort to save money. As competition increases and business slows, there is a knee-jerk reaction for businesses to reduce prices to match or beat the competition. Instead, focus on the unique value that you provide through an outstanding customer experience, with value-added benefits that customers and clients cannot receive anywhere else. Protect your turf by reinforcing the value that you provide before the competition out-positions or undersells you.
8. Focus on new business development - If per-account spending is affected by a slow down, expanding your customer base can make up the difference. There are others in your market who could be just as satisfied with your products, services and customer experience as your existing clientele are … they just don’t know it yet.
9. Brand extend - Consider new revenue sources that you can capitalize on within your business. Starbucks has been successful selling CDs, UPS stores selling greeting cards and Applebee’s offering “Curbside to Go.” What add-on products and services would be of interest to your existing clientele that could provide additional revenue without a lot of additional cost or additional effort?
While the above are important in any economic environment, they are imperative in tougher economic times. Business is cyclical, and those who dig deep to plant strong roots will not only survive the down cycle, but will thrive when the economy turns. Hunker down, get back to business and take back control of your destiny. You are in good hands … your own!

What's Happening with Mortgage rates?

Mortgage rates have been on the rise. I’m now looking at about 6.25% - 6.50% (note rate) for a highly qualified buyer’s, but why?
The question is simple enough: What's going on with mortgage rates?
What makes them rise, or fall? Is it the Fed? The economy? Inflation? The banks? The President? Fannie Mae or Freddie Mac? Is it a secret ?
The answer is that rates are moved by a number of related factors, and believe it or not, you -- Joe or Jane Consumer -- are one of those factors.
Mortgage money can come from many sources, including deposits at banks and brokerages, but most comes from investors through what is collectively known the "capital markets." This is where investors interested in purchasing certain kinds of debt instruments -- bonds, in this case -- come to buy these items.
In order to attract investors, sellers of bonds must compete with one another to get their money. They do this by offering a variety of “instruments" (also called "product") with differing structures of risk and return over given periods of time. These offerings compete with other investments which are reasonably similar in performance, such as US Treasuries, corporate bonds, foreign bonds, etc.
Who are these investors, and why are they so fickle? Mostly, they're people like us, and we want two opposing things: low payments on our debt, especially our mortgage, and high returns on our investments. You (or your investment advisors or fund managers) will only buy so many low- yielding bond investments (mortgage or otherwise), because we would take our money elsewhere if the returns are too low.
Investor demand for a given kind of investment plays a considerable role in moving market yields, because investors have literally hundreds of places to put their money. It's a crowded marketplace, with many sellers of various products competing for those investor dollars. Investor demand for specific product rises and falls with changes in investment strategies; if demand falls enough, a change needs to be made to attract investors again. How to attract them again? Usually it’s by raising the interest rates, thereby raising the return on investment.
Of course, it's not as easy or simple as that. Mortgage market makers serve not one client, but two: investors, who want the highest possible return on their investments, and the homeowner or homebuyer, who wants the lowest possible interest rate. Simultaneously, rates need to be high enough to attract investors but low enough to attract borrowers. It's quite a complex dance; investors, though, make the music.
As interest rates (yields) decline, investment customers can become more or less interested, depending upon the direction of economic growth, inflation, appetite for the given product, and several other factors. Typically, though, the lower those rates get, the fewer investors are interested in putting them on their books … so again we are facing higher rates to compete with higher investment return.
Bottom line: I think we will see another Fed rate cut. If and when this happens, my personal opinion is that the window of opportunity to cash in on a great rate will be narrow. The Wall Street investor’s will want risk reduction and more return on their investment pool of funds. The prospective currently is that the market has not corrected itself …at least not yet.

Let me know if I can help you.

Gail Roberts / Columbia Mortgage
360- 816-9207 office
360-903-8423 cell

Home Sales to be Flat Before Rise

A continuation of soft market conditions is forecast for existing-home sales in the months ahead, with improvement expected by the second half of this year if loan limits are increased, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS® .

Lawrence Yun, NAR chief economist, said sales activity is expected to remain soft through the first half of the year despite a generational low in mortgage interest rates. “Household formation was only half of what it should have been last year given the demographics of a growing population and sustained job growth, so there clearly is a pent-up demand from buyers who are on the sidelines,” he said. “Existing-home sales have moved narrowly since last September, but when the full impact of higher loan limits for conventional mortgages begins to impact the market there is likely to be a notable rise in home sales and prices. If higher limits are enacted very quickly, we’ll see a faster and more meaningful recovery by expanding safe, affordable financing in high-cost areas – that, in turn, would help to stimulate overall economic activity.”

http://www.realtor.org/rmodaily.nsf/pages/News2008020701?OpenDocument

Fed Move May Not Change Mortgage Rates

by Chris Kissell Thursday, January 31, 2008
When the Federal Reserve meets and changes rates, we all have questions: What does it mean to me? Will my mortgage rate go up or down? Is this a good time to refinance? Bankrate is here to help. We've looked at five categories -- mortgages, home equity loans, auto loans, credit cards and certificates of deposit -- to determine if the Fed's moves made you a winner or a loser. Here's a look at mortgages: Click on bottom link for the rest of the story.
More From Bankrate.com: • Mortgage Rates Skyrocket • Smart Strategies After the Fed Cut • Refinancing Exotic Mortgages
Mortgages
http://finance.yahoo.com/personal-finance/article/104327/Fed-Move-May-Not-Change-Mortgage-Rates;_ylt=AnTzkRGjbS75Cg_kqs9u96G7YWsA

Dilemma for Sellers

Wednesday, November 28, 2007BY CAMI JONER, Columbian staff writer

It's been four months since Lori and Fred Clark put their Vancouver house up for sale and joined thousands of sellers in pursuit of a shallow pool of buyers.

While they haven't had any offers for their one-story ranch, the Clarks say they're willing to wait out the market. However, they've taken down the "For Sale" sign that was once in their tidy front yard because they're fed up with curiosity seekers who seem to think the sign gives them license to peer into windows and trample through gardens. They've also cut their price.

The rest of the story; http://www.columbian.com/business/businessNews/2007/11/11282007_Sellers-Dilemma.cfm

5 Simple Ways to Increase a Home's Value

Good home maintenance is key to creating and preserving a home’s value. Not to mention, it also impresses potential buyers. Here are five basic steps that every home owner ought to take — before spending money on dream bathrooms or gourmet kitchens.
1. Safety. Make sure smoke detectors and carbon monoxide detectors are installed and in good working order. Check fuel-burning appliances to make sure they are properly vented and no gas connections leak. Make sure the electrical system is adequate. Flickering lights and popping breakers are the sign of a problem. Anchor handrails and grab bars adequately.
2. Preventive maintenance. Repair any leaks in the roof, seal gaps in the siding, paint bare wood, replace damaged decking, patch cracks in concrete, and caulk around tubs and showers.
3. Conserve energy. Install a programmable thermostat, weatherstrip doors and windows, fix leaking faucets, upgrade insulation, and replace leaky windows.
4. Go green. Consider environmentally friendly materials for windows, doors, siding, decking, fencing, roofing, flooring, and insulation.
5. Improve comfort. Get rid of clutter, open up spaces, update window treatments to allow in more light, and organize closets and storage.Source: The Associated Press, James and Morris Carey (12/29/07)

Where the Truth about Today’s Market Really Lies

Where the Truth about Today’s Market Really LiesBy Eugene L. Meyer
RISMEDIA, Jan. 3, 2008—The latest news on the real estate front was either calmly reassuring or deeply alarming, depending on your point of view. The lead paragraph on the National Association of Realtors’ Nov. 21 release reported that home sales prices actually rose in most metropolitan markets. The Associated Press lead, however, emphasized the negative statistic that the number of home sales had fallen in 46 states during the third quarter. Both were correct. http://rismedia.com/wp/2008-01-02/where-the-truth-about-todays-market-really-lies/