All I've Got to Do

I hate to go on and on about the slump in the housing market, but I will anyway. The economic news has stated that housing starts were at an unprecedented low last year. So what does that mean? It means that builders aren't building because buyers aren't buying. "Housing starts" is not the only way you can tell that the market is down but it is one of those "economic indicators" that economists must use because they can't call all of the real estate companies in the country and say, "Hey! How's business!"

Housing starts is like the unemployment rate, the cost of living, the stock market, the rate of inflation, the gross national product, the national debt, ad nauseum. The bean counters have to count something so they make little charts then count the little dots. I'm not saying that these indicators are not useful, they are. But they can be a bit misleading because they are averages for the country. Every region, state and community are different. Look at Detroit. Car manufacturing has been slipping for decades and the place is drying up and blowing away.

One of Wilmington's economic indicators that I have noticed is a new little subdivision that used to be the hottest thing since sliced bread, canned beer and indoor plumbing. Three years ago, those houses were going up almost overnight and selling just as quickly. They were priced for the upper middle class family and for the upwardly mobile. I drive through that area now and it looks like a ghost town. There is an unfinished street, empty lots full of tall weeds, piles of construction debris, new construction that has never sold and empty homes whose first inhabitants have moved on only to abandon the house to the vagaries of the real estate market.

Gee, I sound like some armageddonist. But if you are going to sell real estate these days, you have to get real (no pun intended) then don't take anything for granted. When things are slow, you don't just sit back and prop your feet up. You must work even harder.

For the first time in my real estate career, I have invested in marketing books. I have always eschewed the inspirational writers and speakers because they sounded so slick and evangelical to me. So one of the books I purchased has true funny stories of sales people's blunders then an analysis of what went wrong. The other book has business letter templates for marketing, prospecting and follow-ups. And...I have actually been using them, not just trying to learn by osmosis.

So far, no good. But if you keep doing what you've always done but expect different results, you are clinically insane. You may be right, I may be crazy. But it just might be a lunatic someone is looking for. And when that time comes, I can proudly stand up and say, "I'm a lunatic! Let me sell your house!"

I think I have internalized the sales blunders. Ooops!

You Really Got a Hold on Me

The housing market, once again, is making headlines. Well, if you don't count the State of the Union Address, which I don't. Here are some recent news blurbs concerning the State of the Housing Market, which will continue to effect us all. Much more than some lame duck.

"Make housing part of stimulus, NAR Says...The federal economic stimulus package under discussion by President Bush and Congress should loosen constraints on Fannie Mae and Freddie Mac to help make homeownership more widely available to households, NAR says. "Any stimulus package must address housing issues and increase the conforming loan limits for these two government-sponsored enterprises," says NAR President Dick Gaylord. NAR has been calling on Congress and the administration to increase the loan limits for Fannie Mae and Freddie Mac from the ceiling of $417,000 to $625,000. Doing so would reduce the supply of homes on the market by more than a month, strengthen home prices by 2-3 percentage points, and increase economic activity by $42 billion, NAR estimates. Foreclosures could also be reduced by 140,000 to 210,000 and result in an additional 348,000 home sales. )"- The Ohio Association of Realtors.

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20080129&id=8105059

Above is a link to the news about CountryWide, the well known controversial mortgage lender. As you may know, it was purchased by Bank of America. For good or evil? You decide.

'“It looks to me as though maybe we haven't reached the complete bottom yet, but we're in the bottoming phase right now,” he said.
But the latest data don’t help forecasters much. Since July, the median price of existing homes has trended lower, but it ticked up slightly in December. And while sales volume began perking up in late 2006, a 0.8 percent drop in last month has some analysts rethinking the notion that the market had bottomed out.
“I still think there's further downside risk,” said Richard Berner, chief U.S. economist at Morgan Stanley. “And the reason is that it has become a buyer’s market with the imbalance between supply and demand both for new and existing homes out there.”
The supply of unsold homes — which soared to more than seven months worth of inventory for single-family homes from four months at the start of 2005 — has come down a bit. But it’s not clear whether the market is getting back on its feet or sellers have decided to pull their homes off the market and try again when the market improves.'- By John W. Schoen Senior Producer MSNBC updated 6:34 p.m. ET, Thurs., Jan. 25, 2007.

More gloom and doom? Well, we need to be realistic. The single largest contributing factor in the housing slump is the simple principle of supply and demand. Of course, why there is more supply than demand is a bit more complicated. Foreclosures and the threat of foreclosure, due to greedy lenders and a false sense of security amongst them, has contributed greatly to the glut on the market.

The Fed recently lowered interest rates by 3/4% and it is rumored that there may soon be another 1/2% decrease. What does that mean to mortgage rates? Diddly. That lowered rate affects what one bank lends to another, sometimes to increase their on-hand reserves which is mandated by the Fed. Sound like a game of round robin. Yep.

So, if you have bad credit or no money to spend, the interest rate means nothing to you.

But hang in there, folks. If you are in trouble with your credit card company, you can call them and negotiate a different interest rate or payment. The same goes for your mortgage lender. Call them. I can't reiterate that enough. If this whole mess is going to turn around, we have to take advantage of all resources. Every little bit helps. Don't wait for the ones with all the power and money to come knocking on your door to help you. They are only worried about themselves. YOU have to take charge, be brave and take charge.

Knowledge is power. Al Gore invented the internet for a reason.

Cry Baby Cry

http://www.housingmarketfacts.com/

Still on the fence about buying a home? Do you even have a fence? Chances are, if you are a renter, you not only don't have a fence but you don't have a yard.

This website gives some factoids about the benefits of owning a home. One is that, chances are, a home will be your biggest investment and asset. And, for this reason, it is an endeavor not to be taken lightly. Be prepared, if you purchase a home, that you nurture it, love it and make it your own.

That got a bit mushy, but when something becomes personal to you, you are more likely to fight for it.

The above website will address the wherefores and how-to's. Part of my job is to help you find a home, not just a house.

I think I'm gonna cry......

She's Leaving Home

There should be no problems. Sounds like a line from "Westworld", remember the 70's sci fi movie where the promo said "Where nothing can go wrong"?

Well if something sounds too good to be true, it usually is. In our little scenario where Mr and Mrs Jones wants to buy a house, there was really nothing wrong with each response they received - "no problems". But the cumulative effect can be devastating.

First of all, the bank is willing to make a sub-prime loan. Sub-prime means that it doesn't meet the minimum requirements set so that a loan may be federally insured. In theory, there is nothing wrong with that. But what is happening now is the high default rate because the whole economy is slowing and people's living expenses are going up or they are losing their jobs so they can't make their mortgage payment because the bank had to charge a huge interest rate in order to insure that they make some money incase someone defaults so the bank forecloses but they have lent more than what the home is worth because the price is inflated due to the added closing costs and the previously hot market so the bank can't sell the house and get their money back so the bank loses money so they tighten their lending practices so the little guy can no longer get a loan and the big guy is trying to get out from under their big balloon payment which is a large sum of money due all at once but no one is buying a McMansion because they cost too much to heat because fuel prices have gone up and the baby boomers are downsizing because they are empty nesters and want smaller homes so the big houses are sitting so the people that are trying to sell them are having to take a loss because of the glut on the market of large homes and the new mid-priced homes are sitting because of all the new subdivisions that popped up due to farmers not being able to make a living so they sell off road frontage or whole farms and investors sucked them up because the land was so cheap then they have to make a profit so they sell lots to builders and the builders build until there are too many new houses so the builders stop building and their construction crews get laid off and everyone is selling and no one is buying so there is a glut on the market so a buyer has an advantage because if one person won't come down on their price someone else will so prices start to drop what with the law of supply and demand and with all the empty foreclosed homes on the market seasoned investors and first time investors are looking for a bargain to fix up to sell or rent then everyone thinks that houses are out there for the taking and they don't want to pay anything close to what a home is worth but people still have to sell so they end up owing more than what they can sell the house for which results in negative equity also known as being upside down so the seller actually has to bring money to closing which amounts to almost paying someone to take your house and with fewer sales the title companies don't have closings so they end up closing their doors and the mortgage broker has no mortgages to broker so he goes out of business and realtors can't sell houses because of the afforementioned conditions and you wonder why the housing bubble burst?

But now the banks are getting real and have started putting programs together to help people stay in their homes because it is expensive to foreclose..........

HELP! is really on the way, I promise.