Hot News Today:
10-05-09 - NY Times
The worst Labor Market since 1945!
On Friday, the Bureau of Labor Statistics delivered its latest revelation that the jobs picture was far worse than it had previously reported. Using newly available data, the bureau now estimates that during the 12 months ended last March, the economy lost 5.6 million jobs, 824,000 more than the 4.8 million previously reported. This is the worst job numbers since unemployment rates spiked after WWII. - Many so-called economists keep talking about a "jobless" recovery. I don't pretend to be smart enough to understand all the intricacies of the entire economy, but with housing markets, there is no recovery without jobs! People don't buy homes if they don't have a job or are afraid of losing their job. When employment numbers turn around, and overall consumer sentiment improves, the demand for homes will pick up and the recovery in home prices will begin.
09-28-09 - CNBC
Housing Price Rebound? - Not in 2010!
On Friday, Jim Cramer predicted that housing prices might start picking up in 2011 or 2012, thanks to tax credits, lower inventories and decreased building. He urged investors to be positive on housing, but not to expect home builders to make money for a while because of housing price declines. - When Cramer called the housing bottom in July of this year, I thought he was nuts! A true housing PRICE bottom is likely 12 - 24 months away in most areas of the country. Finally though, Cramer sounds like he might be making sense. In some areas of the country that have seen significant price drops, the price rally might actually happen as we get into 2012. The only urgency to buy now is for investors who are making great money on fast flipping or long-term investors who see super low interest rates and very low prices.
09-23-09 - CNN-MONEY.com
Government-backed loans . . . just about the ONLY game in town!
About a third of buyers have 10% or less saved for a down payment, according to a recent Zillow.com survey. No wonder FHA loans have gone from 3% to 25% of the market within a three year period. If you are a buyer, you may not an FHA mortgage but as a seller, there's a good chance you'll be selling to someone who does.. - This is a very revealing statistic on the mortgage and real estate market. The statistic left out in this report is that the US is experiencing a 50% reduction in home sales from just a few years ago because the ONLY buyers of mortgages are the GSE's or Government Sponsored Entities. If you can get a mortgage through a smaller local bank or credit union, you may catch a little break on qualification rules. But, for the vast majority of home loans right now, you will have to jump through the government's strict hoops (Fannie, Freddie and FHA)
09-21-09 - AP
Real Estate Problems Make Dying More Painful!
Life insurers, including the biggest names like AIG, hit hard by increasingly bad real estate investments, are trying to recoup their losses by upping prices on life insurance while selling less of it. Insurers are also charging higher premiums for risk factors like obesity and hypertension. - Yep, everyone is feeling the sting of falling real estate prices. More importantly, what will you do about it? Will you just watch and whine or will you collect assets at pennies on the dollar and Build Your Empire!
09-017-09 - CNN-MONEY.com
Housing Report gets Mixed Reviews . . .
"Many builders have not only reduced excess inventory, but now are actually reporting such low inventory that they need to start more homes to replace those they've just sold," said Brad Hunter, chief economist for Metrostudy, a real estate analytics firm. A troubling aspect of the report was that starts of new single-family homes fell 3% in the month. Overall starts were higher due to a big gain in multi-family housing starts. - Many reporters and so-called analysts are completely OUT TO LUNCH on what the numbers mean! First, although a slight dip in housing prices and new inventory can mean a slight decline in jobs, we must remember that homes are simply a commodity, and an over-supply will keep all prices down! If the housing market is ever going to turn around, the single family home start numbers have to keep coming down! A 3% reduction in home starts is not "A troubling aspect" it is a good start!
09-15-09 - CNBC
Presidential Prime Real Estate!?
The home next to President Obama's house in an upscale Chicago suburb is up for sale. The home is over 6,000 square feet and is classified as a historic mansion. - To say that a home is "for sale" usually indicates a price tag. This situation is more like a highly publicized eBay auction. No price has been set but the sellers are open to bids. If I were in their shoes I would do the same thing! The media-frenzy-Obama-factor will surely add some huge mojo to this bidding war! You really need to see this clip as the neighbors tell us that Prez Obama likes to smoke! http://www.cnbc.com/id/15840232?video=1250248799&play=1
09-11-09 - seekingalpha.com - Foreclosures: They're Not Just For Breakfast Anymore" - Karl Denninger
Foreclosures On The Rise - Bad and Good!
"einstein p fleet" wrote, "We live in Miami and the situation is escalating, not improving. Foreclosures are stacked up in the courts and the banks have been either unwilling or unrealistic in regard to short sales, holding them up for months while prices continue to head south. In the meantime, the job market here ---- which was based on the real estate boom and tourism --- has deteriorated. Over 50,000 people left the state last month and unemployment continues to get worse. It's not a pretty picture, unless you have cash and are looking to retire." - Yep, it sounds like a great time to move to Florida, unless you need a job. If you are looking to retire though, there are bargains in real estate and it's getting less crowded! Now, if they could just get rid of the mosquitoes!
09-09-09 - www.GotBiz.tv
It's Coming . . . The Web TV Network for Entrepeneurs!
Business Doesn't Have to be Boring! - www.GotBiz.tv
09-08-09 - seekingalpha.com
Is the PMI index an indicator of good things to come?
"PMI (A Manufacturing Index - NOT Private Mortgage Insurance) in excess of 41.2 percent, generally indicates an expansion of the overall economy. Last Tuesday the PMI was reported at 52.9, which indicates growth in the overall US economy for the fourth consecutive month." - Looks like Economy is showing one more positive sign towards recovery. While most analysts cannot agree what will happen in the next 6 – 12 months, almost all agree that in two or three years America’s economy will be off and running again . An overall expansion in the economy surely means that even the real estate industry will not be left behind. As I have said many times before; 2009 is not the bottom for housing prices, but as other economic indicators pick up, housing will eventually too.
09-06-09 - housingpredictor.com
Down Numbers or just Good Opportunity?
"A full rebound of the housing market may take years to develop as bankers and White House officials work on a plan to at least cut down the record number of foreclosures." - Well, perhaps the housing market may not really be shining right now, but maybe from an investment perspective. According to houstingpredictor.com about 98% of home sales in the second quarter of 2009 were affordable to median income earners. That is a vast improvement from the affordability problems we saw in 2005 and 2006. So, as housing prices drop to numbers seen in 2002 or earlier, this might be a great time for you to take the plunge. Just make sure to do it on your terms and not just because your brother-in-law real estate agent tells you to.
09-03-09 - Bloomberg News
Rise In Pending Home Sales Figures - Is It A Sign Of Good Times?
"The index of signed purchase agreements, or pending home sales, gained 3.2 percent from July to August after a 3.6 percent rise in June, the National Association of Realtors said." - Of course, the NAR (National Assoc. of Realtors) has a very vested interest in home-buyer confidence. There has never been a single official statement from the NAR with a sentence like, “If you buy now, you will probably lose your shorts!” Notice that they mention only that pending sales volume is ticking up but not actual sales closings. They don't mention prices either because prices have dropped like a rock from this time last year! That said, prices are finally starting to look good again and buying at deep discounts with the added help of government tax credits will probably look like genius in a few years!
09-01-09 - CNBC
What Are Banks Really Doing with Bad Loans!
There is a lot of evidence that banks, already in deep financial trouble, are holding back delinquent loans and foreclosures from the marketplace to avoid further deterioration of their asset valuations. - Simply put, if banks can work out any possible deal with homeowners to keep a loan from becoming another non-performing asset, the bank will look better on paper. Even if homeowners have not paid their mortgage in months, many banks are reluctant to officially start the foreclosure process because it will damage the banks overall financial foundation. The video link below highlights some of these details and indicates that many more foreclosures will be entering the sales market in the next 12 - 18 months. Realty Check Repoort 8-31-09
08-28-09 - Realty Times
Extending the $8K housing Credit!
Congressional leaders and lobby groups are pushing hard to extend and expand the homebuyer tax credit that is scheduled to end by November 30th. The bills on the table include provisions to extend the credit for six to twelve months and to expand the parameters to include all buyers and even to increase the credit amount. - It's no wonder that all the home builders in the country are pushing the hardest for this extension/expansion. However, THE LAST THING THIS TROUBLED HOUSING MARKET NEEDS IS MORE NEW HOMES!!!! Excess inventory is the biggest drag on the residential and commercial real estate sector. The other elephants in the room are the increasing jobless numbers and tight lending restrictions. Hellooooo, anybody in DC listening?!?!?
08-26-09 - CNBC
Commercial Real Estate is Suffering!
Across the country, the general trends are showing vacancy rates for retail and other commercial space at 15 - 30% or more, and rising! That trend that is likely to continue well into 2010 as unemployment rises. - New investors should be very careful when buying commercial real estate, even if there are already tenants on board. There are always great deals in real estate but nothing can kill your net worth faster than a vacant building.
08-24-09 -Standard & Poor's Case-Shiller® and Case-Shiller Indexes® are registered trademarks of Fiserv, Inc.
Less Bad is still Not Good!
After 16 consecutive months of record annual declines, beginning in October 2007 and ending in January 2009, the indices have now shown four consecutive months of improvement in annual returns. "The pace of descent in home price values appears to be slowing" says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. - What?!?!? All the report really says is that although home prices still dropped 16% since last year, (Holy Crap!) that is actually not as bad as it has been. We are simply seeing prices drop a little more slowly. That's like saying your parachute only has 3 holes in it instead of 4. Do you feel better now?
08-20-09 -CNN-Money
No More Clunkers . . .
The $3 billion Cash for Clunkers program will shut down on Monday, the government announced Today. Transportation Secretary Ray LaHood said, "Now we are working toward an orderly wind down of this very popular program." Under the Clunkers program, vehicles purchased after July 1 were eligible for refund vouchers worth $3,500 to $4,500 on traded-in cars with a fuel economy rating of 18 miles per gallon or less. - Although many car dealerships have called this a success, very few economists or business analysts believe that the 2-month, 3 billion-dollar program will have lasting effects. The government went further into debt, helping consumers go into debt to buy cars, mostly from Toyota and Honda. Does that make sense for the American Economy?
08-13-09 -CNN-Money
High-End Homes are Getting Hit Hard!
At the current pace, today's inventory of homes priced at more than $750,000 would take 16.8 months to sell, compared with about 14.5 months a year ago, according to the National Association of Realtors. That's nearly double the overall housing market supply of 9.4 months.' This overhang is pushing high-end home prices down. For example, the median sale price for a home in New York City suburb Greenwich, Conn., fell by 24% to $1.5 million this year as sales numbers also declined by more than half, according to Prudential Connecticut Realty. - Uh, duh! Job losses are pushing toward 10%, and most wealthier individuals have lost 20 to 40% of their nest egg over the last year. Also, banks are avoiding mortgages over $729K like the plague. Is there any reason to think that homes over a million bucks wouldn't be stacking up and dropping in price?!?!?
08-11-09 -CNN-Money
Consumer Debt is Dropping!
Total consumer borrowing sank a seasonally adjusted $10.3 billion, or 4.9%, to $2.503 trillion, according to the Federal Reserve. The report measures how much debt consumers have outstanding. - First, a five percent reduction in consumer debt could very well be write-offs on unpaid debts. Second, consumers have at least as much desire to borrow as they did last month or last year. It is the banks, with their more conservative lending practices that have simply turned off the spigot! If banks were lending, borrowers would be increasing their debt load, not reducing it. Regarding mortgages, and not credit cards, when banks loosen the purse strings, housing prices will stabilize. Until then, look for more price drops.
08-10-09 -CNBC
Bull or Bear Market?
At the current pace, today's inventory of homes priced at more than $750,000 would take 16.8 months to sell, compared with about 14.5 months a year ago, according to the National Association of Realtors. That's nearly double the overall housing market supply of 9.4 months.' This overhang is pushing prices down. For example, the median sale price for a home in New York City suburb Greenwich, Conn., fell by 24% to $1.5 million this year as sales declined by more than half, according to Prudential Connecticut Realty. - Uh, duh! Job losses are pushing toward 10%, and most wealthier individuals have lost 20 to 40% of their nest eggs over the last year. Also, banks are avoiding mortgages over $729K like the plague. Is there any reason to think that homes for sale at over a million bucks wouldn't be stacking up and dropping in price?!?!?
08-05-09 -AP
Mortgage Modification or just Empty Promises?
President Barack Obama announced the "Home Affordable Modification Program" in March, 2009 and he promised it would help up to 4 million homeowners avoid foreclosure. Since then, only about 200,000 loan modifications are under way. Last week, 25 mortgage-servicing executives were summoned to the Treasury Department for meetings at which they promised to deliver 300,000 more loan modifications by Nov. 1. Even if the mortgage servicers make good on their promises, the total number of homeowners helped will be less than 13% of the President's goal. - Of course mortgage servicers like Bank of America, Wells Fargo, JPMorgan Chase and Citigroup are reluctant to increase their losses on loans that may not perform anyway. What is the real motivation other than pressure from the government now that bailout money has already been spent, largely on executive over-compensation? The bottom line is that are many more foreclosures on the way, which will mean plenty of great deals for real estate investors during the rest of 2009 and through 2010.
08-03-09 -CNBC
Bull or Bear Market?
There are plenty of opinions, rumors and speculators but the stock market keeps chugging higher. - There may be a million different takes on stocks, commodoties, currency exchanges and real estate markets but the only true signs to watch for in housing prices is the supply and demand curve. As long as defaults and foreclosures remain high, while job losses hover near 10%, ther can be no rebound in home prices.
07-29-09 -CNBC
Companies Cut Costs to be More Competitive, but at what Expense!?!
Companies across America (and the world) are cutting back on everything from catered lunches to pension benefits in order to remain competitive, or just to stay alive. This cost-cutting can have an immediate effect of enhancing a company's balance sheet, but the long-term effects are a big part of the problem! When companies shrink spending, the economy shrinks, and that creates a self-perpetuating downward spiral. - Until this trend changes, we won't see a turnaround in the real estate market or the overall economy.
07-27-09 -CNN-Money.com
Appraisals are Keeping Home Prices Down . . . NOT!
The National Association of Home Builders' Bernard Markstein told Diana Olick (CNBC) recently that "in a lot of places the appraisers have not been adjusting for . . . a foreclosed home or a short sale, and we've even had cases where appraisals have come in 10 or 20 percent below the construction costs of a new home." . -Sorry to all you homebuilders that the over-inflated pricing of your inventory is not sticking, but the new reality is that the actual market value for your homes is probably 20% below what you want to charge - regardless of what your costs are. As soon as you stop building and let demand catch up with the glut of inventory, we will finally find a housing bottom.
07-24-09 -CNN-Money.com
Home Sales Volume is Basically Flat but Prices fall 15.4% from last June!
Home sales volume peaked in August 2005 at an annualized rate of more than 7.2 million transactions, but sales have not reached the 5 million mark since last September, despite a large number of homes on the market, low mortgage rates, a tax credit for first-time homebuyers and dropping prices. Prices will likely continue to fall, although at a slower pace than 2007 and 2008. -If somebody really thinks we have seen the bottom, please explain what "bottom" means. With these trends, a housing price bottom is at least 12 months away! Who cares about a sales volume bottom or a housing start bottom when prices are down another 15% from last year and mortgage defaults are still at record levels!?!?!
07-20-09 - CNN-Money.com
President Obama Applies More Pressure for Mortgage Rescue Program.
The Obama Administration's mortgage rescue program has been plagued by problems since its February debut. As soon as most servicers started processing applications in April, borrowers began complaining that their paperwork was being lost, calls were going unreturned and decisions were being delayed. "This is disgraceful," said Sen. Christopher Dodd, D-Conn., head of the banking committee. "Why am I still reading about lost files, under-staffed and under-trained servicers, and hours spent on hold on the phone?" - Well, Mr. Dodd, obviously you can't handle the truth! The reason mortgage servicers are not motivated to spend more money to hire more people to reduce interest rates and re-structure loans is that it's all a money-losing proposition. How eager would you be to cut off your right leg with a hack saw, if it might (or might not) save your life?
07-16-09 - USAToday.com
Banks Cut Back Further on Credit Card Lending!
Banks are pulling back severely on card lending, even though businesses and consumers are begging for cash. In the first four months of 2009, banks issued 9.8 million new credit cards, a 38% drop from the same time last year, according to Equifax credit bureau data. Low-risk borrowers can still get credit, but they're getting about 3% less than last year. - The news media and consumer advocates are acting like this is some great surprise since the government has bailed out banks and put the pressure on to lend. Hellooooo!!!! The government also just passed new lending standards that make it less attractive for banks to lend money! Also, banks have been severely chastened for not having higher standards for issuing credit. How is the "credit crunch" any surprise at all? You can't put a wall in front of a horse and then beat him for not moving forward!
07-13-09 - USAToday.com
Rose-Colored Filter of the Economy.
The June Economic Outlook Index continues to showed signs that the economy may start to recover mildly around October of this year. Seven of the eleven leading indicators in the Economic Outlook Index were slightly positive. These indicators include: building permits, non-defense spending, stock prices, export orders, the interest rate yield curve, vehicle sales, corporate bond spread, hours worked, growth rate of real money supply, federal funds rate and crude oil prices. - I am not buying the interpretation of these indicating numbers because there are too many wild cards. For instance, housing starts are not nearly as important as total housing units sold as well as mortgage defaults! Also, the interest rates for banks lending to each other as well as the rates for consumers are not nearly as important as credit flow, which is dropping like a rock! Finally, with so many people facing unemployment and under-employment, all other bets are off.
07-10-09 - NYTimes.com
Even the Posh Areas of Europe are Hitting the Skids!
The New York Times highlighted the real estate market in Italy this week. The global economic downturn has brought down demand and prices for residential properties as much as 20% - I really love coastal Italy and the islands of Greece. I don't wish for tough times for our friends abroad, but if their prices continue to drop and the dollar comes back to a better level against the Euro, I'm quite sure I could talk my wife into a small villa as an investment. It appears that European real estate might just follow our lead as it did on the way up.
07-08-09 - Gov.ca.gov
California's Budget is a Bust!
Governor Schwarzenegger is playing hard-ball with state legislators to fix the most recent multi-billion dollar deficit for the "golden state." Service cuts, government worker furloughs and even legalizing marijuana for the tax revenues are options presented to fix the unprecedented shortfall. - California is my home state, but things are looking bad and getting worse. The biggest problems with all governments is that they tend to spend money they don't have, while passing on the burden to taxpayers in the future. When real estate values were high, and climbing higher, budgets were expanded to spend the tax revenues. Now that property values have dropped by 30 to 40% or more across the state, reckoning day has arrived. Good luck Cali, I still love ya'!
07-05-09 - CNBC
4th of July Red, White and Blues!
Stocks appear to be heading lower as unemployment and real estate continue to disappoint. - These headlines don't seem to have the drama they used to because they have become so commonplace. Still, The USA is the only place I'd want to live right now. Canada or New Zeland might come in second, but no other place on earth offers the freedoms, opportunities and hope that we get in the good 'ol USA!
06-29-09 - CNN-Money
Madoff gets 150 Years!
Judge Denny Chin sentenced Bernard Madoff to 150 years in prison for his admitted operation of the largest Ponzi scheme in history . . . unless you count Social Security. - The Judge said he was sending a message but the biggest message was sent loud and clear over the last 6 months: If you put on a great act, have no moral compass, and a few friends in high places, you can live really well on other people's money for a very long time!
06-25-09 - CNN-Money
Some Cool Sites to Help Real Estate Investors!
Zillow.com. - Now an iPhone app too. Hleps get an estimate of a homes value in an instant. Not accurate enough, but helpful.
InvestorLoft.com. - Interesting search filter for finding homes for sale that have great equity. Not in all states, but expanding!
Trulia.com. - Another search tool that seeks out homes that have recently reduced prices, often indicating motivated sellers.
CyberHomes.com. - A real estate market forecasting toolset. Paid service which tracks, graphs, and forecasts various aspects of specific market areas. Great info all in one place. Much more effective in populous areas.
06-22-09 - CNN-Money
Stocks take a big dive!
Wall Street had another bad day today and worries include oil prices, global uncertainty, unemployment numbers and fears of inflation. The profit taking of large hedge funds is also a culprit. - The truth is that on any given "up day" reporters will always dig up some positive news. On the "down days," the same reporters can find supporting stories for that too. There are so many good, bad and ugly stories every day in the world that no one can ever be sure exactly what causes stocks to move. That's another reason to prefer real estate over the nonsense of Wall Street.
06-17-09 - REUTERS
CALIFORNIA HOUSING WOES NEAR END?
A UCLA-Anderson Forecast report released on Tuesday said. "If there is any good news in the [California economic] picture, it is that the correction in the housing market is complete and the overshooting which normally occurs after a correction has appeared." The report further stated, "Our employment forecast suggests that it will be late in 2009 before prices are tempting enough and supply is low enough for the market to stabilize. - Blah, blah, blah. Forecasters never really know anything for sure because there are too many wild cards. However, if current statistical models hold true, the next 18 months should find a true bottom in California home prices and a rebound in values should follow. That should also apply in most of the US housing markets that have been hit hard by the price drops and growing inventory over the last 2 years. The harder they fall, the higher they bounce!
06-15-09 - AP
Lending will not be cheap or easy any time soon.
Citigroup Inc. Chief Executive Vikram Pandit tells attendees at the three-day National Summit that borrowers should accept a new world of tighter, more expensive credit as financial institutions recover from months of bad loans, failed banks and foreclosed homes, not to mention President Obama's new legislation limiting lenders' interest rates and fee charges. - This is exactly the wrong news for the struggling economy that reacts wildly to any fears about economic recovery and growth. No big surprise here; It appears that more weakness in consumer confidence, employment and the housing market is still ahead.
06-11-09 - Marketwatch
Retail surprise and Tech Rally.
The past three months have seen a significant rally in tech stocks and a little more optimism for retail sales. - The numbers cannot possibly equate to a complete turn-around for the global economy but it's pretty obvious that consumers and investors don't think we are in another Great Depression. There will certainly be many months of struggle for the economy ahead, but don't let the news media determine your course of action. As I always say, "Make your own luck!"
06-09-09 - CNBC
TARP Bail-Out Money to be repaid.
Ten of the nation's biggest financial companies got a green light today to return about $68 billion in federal bailout money. This frees the banks from the various strings attached to the money, including executive compensation restrictions. - The bad thing is that this repayment leaves these financial institutions with even less money to lend, which has been a large part of the bad economy in the past 2 years. Fewer loans means less money for consumers to buy everything from houses to cars to shoes.
06-04-09 - CNBC
Job losses may be slowing!
The May employment report, to be released tomorrow is expected to show an unemployment rate of 9.2 percent. If there were any new jobs added last month, they were government positions, like the 60,000 census workers hired in April. - Analysts actually seem to be taking this as good news and I'm really not sure why. Unemployment of almost 10% is horrible, especially if you are one of the unemployed. The fact that the increase in unemployment "may be" slowing down does not mean that a the end is near. If we are lucky, we are closing in on the bottom of a deep, ugly bell-curve. The up-trend is obviously many months or years away. Still, I don't need the economic reporters to tell me if I should be expecting a good quarter or not. I cannot control everything but I can take steps to ensure my own personal financial success.
05-29-09 - CNBC
More loans in default than ever.
April reports from mortgage trackers are out and the numbers look worse than ever. 12% of all mortgages are 30 days late or more. Worse still is the new statistics that show that prime mortgage defaults now outnumber sub-prime non-performing loans.
- So, I may sound like a broken record here but even though many "experts" say that the housing market will bottom out this summer, there cannot be a bottom, and certainly not a bounce until people stop losing their jobs at record levels and loan defaults drop back to the 5 or 6% range. We have a ways to go but the good news is that the bargains abound!
05-27-09 - CNN-Money
GM is going down!
General Motors is obviously NOT too big to fail. Some sort of bankruptcy looks imminent and many jobs will be lost. - It doesn't take a genius to see that job losses and generalized consumer fear are not good for a housing market price rebound. As the big companies continue to go down, it is my bet that real estate investing must now be for a long-term hold (5 years plus) or by flipping distressed properties. The middle ground is gone now like holding a non-cashflow property for a year or two while waiting for a price increase. There is great money to be made if you adjust to the current trends.
05-25-09 -Curbed.com blog - Happy Memorial Day to all our living Vets and Honor to those to have passed on!!!
Even Rich Home Owners are Feeling the Bite!!!
In San Francisco (and many other high-end home markets around the country) home inventory is building fast. Just a year ago, 12 month's inventory of homes was still getting yawns from the optimists who said the pain of the mortgage and housing mess wouldn't hurt the high-end. Now, with 19 month's of inventory, it is obvious that even those at the top are feeling the pain. - The high-end areas of both coasts will probably not see drops in pricing like the 500K to 900K market has seen, but if you have the money to spend, there will be some great bargains in the million plus communities as job losses continue in upper management.
05-21-09 - CNBC
Credit Card Companies Get Smacked!
New laws are about to be passed that are supposed to protect consumers by regulating some lending practices commonly used by banks to skim a little extra cream off of credit card users. - Actually, when laws are passed to "protect" people against the horrible lenders that "prey" on innocent over-spenders, banks simply restrict lending. I can't think of a worse time for this to happen! What is our government thinking?
05-19-09 - AP
Home Starts are at a 50-Year Low!
According to the big builders across America, new housing starts have not been this low in half a decade! - Honestly, that is the best news I have heard in a long time! Of course, it sucks if you are in construction, but for the housing market in general this means that the rebound in prices for existing home inventory is more likely because there won't be as much new product to compete with. It's all supply and demand!
04-17-09 - CNN-Money
Home values (nationally) have fallen 10 quarters in a row.
The National numbers show an overall average but the hardest hit areas, all of which fell by at least 35 percent year over year were all cities in just four states: Florida, California, Arizona and Michigan. - No surprises here but the good news is that when everything is on sale, and interest rates are extremely low, the opportunity for a mid to long-term real estate investment is simply incredible. Not all homes are good investments, but the right homes at the right prices and terms are phenomenal investments!
04-13-09 - CNBC
Unemployment is still on the rise!
The top ten states for unemployment are: Michigan, Oregon, South Carolina, California, North Carolina, Rhode Island, Nevada, Indiana, Washington DC, and Kentucky. - With Michigan above 12 percent unemployment, it is easy to see why home values are some of the lowest in the country. It is important to keep in mind that a state's average is not usually accurate for every city within that state. Also note that home values are not always directly correlated to unemployment numbers. That said, it is difficult to see a bottom, let alone a turn-a-round in home prices in any area with over 10% unemployment and foreclosures still on the rise. Mid to long-term investments can still be great but don't try to short-flip a property unless you are buying for pennies on the dollar.
04-09-09 - NY - Times
Condo and Co-Op fees are going up.
CO-OPS across New York City have raised their monthly charges by as much as 15 percent in recent months. - NYC is not the only place seeing these increases. HOAs and property managers all around the country are looking for more money as maitenence costs rise, taxes increase, and as many condo owners fail to pay what they owe. Costs have to be paid and as some owners default on their mortgages, taxes and HOA fees, the missing amounts have to be made up somewhere. Once again, we see the responsible citizens paying for those who can't or won't meet their obligations.
04-06-09 - CNBC
HSBC sells stock to raise cash.
European banking giant HSBC sold almost 5 billion shares at a significant discount, mostly to existing stockholders. This move netted the company 17.7 billion dollars. Raising such a huge sum of money became necessary as the subprime mortgage exposure has come crashing down on them in the last two years. - More cash for a big bank is always big news. Does this mean that lender terms will loosen up and loans will flow more easily again? We are all hoping so.
04-03-09 - NY-Times
Real estate in the BIG APPLE is losing its shine.
Hard times have come to the Manhattan real estate market, according quarterly real estate sales reports. Sales volume of apartments and condos are down, and when properties do sell, prices are down 20 percent or more from a year ago. Large, luxurious apartments on Fifth Avenue, Park Avenue and Central Park West, and new condominiums with many unsold apartments, have been particularly hard hit. One report by the brokerage firms, Brown Harris Stevens and Halstead Property, showed that the number of sale completions of condos and co-ops is down by 58 percent in the first quarter of 2009, compared with the same period of 2008. -No big surprise here. sales volume and prices are down everywhere. NYC thought they might be immune to the troubles faced in the large cities of Florida, California, Arizona and Nevada. Sorry New York, you're not exempt. Just remember though that lower prices, along with lower interest rates, mean more buying power!
03-30-09 - CNN-Money
Mortgage help may be in the works but foreclosures are still on the rise.
Across the US, the number of foreclosures filed in February rose to 243,000 from 217,000 in January, a 12% increase. Nearly 87,000 homes were repossessed by banks during February, a 28% jump from January. Since the mortgage meltdown began in the summer of 2007, almost 1.4 million homes have been lost. - If these trends continue, the rebound in home prices is still months or years away. Of course each region and city is its own real estate market, but these general trends are a big deterrent for home buyers. As an investor or home buyer, there are more opportunities than ever to find bargains and good interest rates to boot. Just realize that home prices may still have some room to drop.
03-25-09 - 20/20
Mortgage Renegotiation or Ripoff?!
Many companies are emerging to "help" home owners stay in their homes by renegotiating the loan terms. - While this sounds like a great idea, there are some things to watch out for:
1. Some of these companies are just scammers who take thousands of dollars up front and deliver mediocre results if any.
2. Even the legitimate companies can't help you if your mortgage bank doesn't want to make a deal.
3. Banks are more likely to make a deal to lower your interest terms if you are at least 60 to 90 days late on your mortgage, but you may get a foreclosure and an eviction notice just as likely as a lower rate.
03-19-09 - CNN-Money
New Residential Construction is Up!
There was a mini building boom in February. But with homes sales at their lowest levels in years, why is anything being built? - This CNN Money headline is not the important question. Home builders will always find ways to buy land and materials cheap, pay construction workers less and convince buyers that a new home is better than a used one. - No big surprise! Builders want to build! The real question is, "At these levels of increasing inventory, will there ever be sufficient enough demand to absorb the empty re-sale properties and bring back home values?" The answer is "Yes!" But don't hold your breath. As I have said before, the US population is increasing by roughly 4 million people each year. In five years that will be another 20 million people! It may take 3 - 5 years, but we will eventually see pent-up demand explode, with corresponding price increases for most America.
03-16-09 - CNN-Money
President Obama Delivers More Change Than Hope!
President Obama has some big plans for this Nation. Most of the business community, and average Americans who are watching their pension plans and retirement accounts plummet are a bit concerned that sweeping social reform might not be the best plan while the economy is in such trouble. Some will argue that there is no better time than the present. Others insist that this kind of "change" will destroy "hope!" - Only time will tell if Obama's big agenda was perhaps just pre-mature or completely ill-concieved, but the real estate market will certainly not hit bottom, let alone recover if jobs are still being lost, stocks are in the toilet and banks will not lend.
03-14-09 - CNBC
Big Bonuses to AIG Execs Make Big Waves in DC and across the Nation!
AIG and big banks have one hand out to the government for money, but seem to be shelling out the same cash to top management in the form of bonuses with the other hand. Nobody seems to be able or willing to spell out why such high dollar incentives are needed when certainly performance at the top has been dismal. - I guess the thing that surprises me is that our government, especially the democrats who are always suspect of big business, actually handed over massive sums of money without any concrete checks and balances in place. Why on earth would anyone trust the execs at failing institutions to act prudently when their records show otherwise?
03-12-09 - New York Times
Some Lending May Resume . . but don't hold your breath for investment loans.
The news from the banking sector has been fairly negative to wretched over the last Two years. The effect has been a virtual credit freeze for would-be home buyers as well as for consumers looking for car, boat, and RV loans, not to mention business loans. Well, some indicators are hinting at a thaw for the credit markets but the beneficiaries will not be the ones who want loans the most or need money the worst. - Banks have money to lend, and they are sending out that message, but just try to explain that you want money for real estate speculation or because you are betwen jobs and see what they say. Actually, they probably won't say a thing because they will be laughing too hard. I'm not. Give us some money with good rates and terms and we will show you what a stimulus looks like!
03-10-09 - CNBC
CitiGroup Stock Jumped 38% Today!
Too bad we all didn't buy loads of stock yesterday and cash in late today! Does this mean that Citi, or any other lender is out of the woods? A well-known banking analyst, Meredith Whitney says "no." She added, "Citi's capital position is stronger relative to how it was, but I wouldn’t call it strong. Trillions of dollars of loans have been mispriced by Citi", said Whitney. "By my math, they don’t make money in any of their businesses." - So, what does this mean to real estate investors and home owners in general? Not much. The real story for most of us is what the real mortgage aid package will look like from the Obama Administration. The details are still emerging but if large numbers of potential foreclosures can be stopped, and new buyers actually get good loans and incentives to buy, the bottom of the real estate mess could actually happen in the next 12 months. We will see.
03-04-09 - New York Times
CitiGroup to "help" troubled borrowers
CitiGroup may be in freefall but it is cutting some slack to it's unemployed borrowers. CitiGroup has just announced that mortgagees that can show their unemployment papers can get greatly reduced mortgage payments for 90 days or longer. - The devil is in the details so we will see what this really means in the next few weeks. Most rumors of help for troubled borrowers have seemed more like PR spin and less like real help for the home owners that need the most help. I am not optimistic that this will stem the tide of defaults that CitiGroup or any other bank is facing.
03-02-09 - Cnn-Money
Very Bad Day at the Office . . . at leat on Wall Street.
Wow, there seems to be only one story in the news today. The stock market took another beating, and most indexes show declines to levels we have not seen for over 10 years. - I have always felt like stocks were a far riskier bet than real estate. Day after dismal day, this point seems to be hammered home.
02-26-09 - CNBC
Obama Nation or Abomination?
Financial analysts are not very optimistic about Obama's recovery plans. They all admit that The new president inherited one huge mess, but the stimulus/stabilization/recovery plan under any name does not seem to be effective. - If the stock market, unemployment numbers, lending liquidity and loan default rates are the barometer, President Obama's "first hundred days" will definitely go down in history, but not for the reasons he had hoped.
02-23-09 - Cnn-Money
More rumors of specific bank nationalizations . . .
As bank stocks and general fiscal confidence slides into the dark abyss, there are more and more rumors of The US government taking control of CitiGroup, Bank of America and others as it did with IndyMac Bank and AIG last year. - Honestly, I don't know that a decision either way will be right or wrong, but indecision seems to be the real killer. When banks, investors and stock holders have no idea what tomorrow will bring, let alone the next quarter, everything is at a virtual standstill. No money flows in or out of an institution when everyone is basically holding their breath and turning blue! No one is lending. No one is borrowing. No one is investing or spending.
02-21-09 - CNBC
What Goes Down . . . Must Go Down More!?
Chart watchers like trends and the trends are pointing further south on stocks and real estate prices. - I personally am not a chart worshipper but a single investor cannot stop a stampede! It doesn't matter if a couple people are calling the bottom right now. The overall feeling about real estate and stocks is to run away and that won't change for a while (8-12 months minimum) That said, there are some great opportunities to buy real estate for long-term hold right now. Mortgage rates are DOWN and prices are too. Don't be overly hasty but look for treasure and be ready to pounce on it.
02-18-09 - Cnn-Money
Can President Obama's Plan Rescue the Housing Market?
The $75 billion foreclosure prevention program announced Wednesday by President Obama will go a long way to helping millions of distressed borrowers and to stopping the housing market's downward spiral, experts said. The plan, which calls for modifying loans at risk of foreclosure or already in default and for allowing those with little or no home equity to refinance into more affordable loans through interest rate reductions. - Blah, Blah, Blah. We heard this all before last year under the Bush Administration but $75 Billion bucks is a drop in the bucket for the housing mess. This plan will absolutely help a few individuals but the housing market as a whole will not likely hit bottom for many more months.
02-17-09 -CNN-Money
Can't Get a Loan to Save Your Life?
Well, You are not alone. Bankers say they are lending but try telling that to consumers having difficulty getting approved for mortgages, credit cards or auto loans. In recent weeks, politicians have accused financial institutions of failing to extend credit, despite taking in billions of dollars in taxpayers' funds during the past few months. But, financial executives, including the CEOs of eight banks that testified before Congress last week, have maintained that they are making new loans and that the nation would face an even more severe credit crunch had the government not thrown the industry a lifeline. - I can't blame banks for not lending. They keep seeing higher defaults on every loan. Where is the reward for them? Still, our tax dollars are supposed to help unfreeze credit and so far it is not working!
02-12-09 - Marketwatch.com
The Stimulus (or rather "Stabilization") Package . . .
Nobody seemed to like the package as revealed in very sketchy detail yesterday by Treasury Secretary Geithner. Not only was the announcement less than what investors and analysts hoped to see, there were so few details about how it would work that nobody could even sink their teeth into it. - You can't please everyone but usually you can please 30 - 40% of eager listeners. The real bummer for us real estate investors is that the $8K home buyer incentive does not look like it will apply to 2nd homes, let alone income property. Sure speculation by investors was a big part of the banking problem but somebody has to buy all that inventory. Landlords are people too!
02-10-09 - CNN-Money
Oil is down but Gas is up?
On Tuesday, U.S. crude for March delivery settled down $2.01 to $37.55 a barrel - the lowest settle since Jan. 16, when prices settled at $36.51 a barrel. Oil's plunge since last year has sent producers such as the Organization of Petroleum Exporters scrambling to prop up prices. Meanwhile, the retail price for regular gas rose Tuesday to a national average of $1.928, up 0.4 cent from the prior day, according to a poll of gas station credit card swipes from motorist group AAA. It was the 13th consecutive increase in the daily survey. - Lower oil prices should translate directly to lower gas prices but refiners and other middle men always slice the spread in their favor. Few consumer groups are complaining though as any gas prices under $2 seems like a steal compared to last year. Lower gas prices should also help transport businesses, all companies that move sizable inventory and most of the average folks across America. I personally haven't seen significant price drops at the big box home stores or anywhere else I buy materials for renovation projects. The same businesses that told me prices were going up last summer because of fuel costs have not brought prices down now that fuel is cheap. Surely they are taking profits where they can because fewer people are shopping in the first place. Oh well.
02-06-09 - CNBC
What's ahead for the economy in the near term?
"There's an underlying pessimism and a lack of consumer confidence. It's going to take a lot to bring this thing around," says Vern Hayden, president and mutual fund manager of Hayden Wealth Management, in Westport, Conn. "A sinking economy, soaring unemployment and a shattered financial industry--you don't overcome those things overnight, even with government bailouts. I'm not sure the government can bail it out." - That's not the best news but it is a pretty good commentary on the US and global economies. More trouble to come before the true rebound is here.
02-04-09 -CNBC
Superbowl SuperBiz!!!
The National Football League takes the 'recession proof' sentiment about the Superbowl literally! Ads on NBC brought a record 3 million bucks per 30-second spot and Tampa Bay expected $300 million to flow into the city from the game. "If we could build a stadium for 300,000 people we would sell out the game," says Brian McCarthy, a spokesperson for the NFL when asked about the effects of a down economy. "The Super Bowl has always lifted the spirits of America and this year is no different." - I personally wouldn't get all patriotic about a game played with a funny-shaped ball and really tight pants. "Lifting the spirits" of the American people is a bit self-absorbed. I love football, but I would say it's more of a big, fun diversion than a "spirit lifter." That said, it was a pretty good season for my Chargers, who were knocked out of the play-offs by those dang Steelers. I bought some overpriced "official" crap to support my team, and the economy was a bit better for it. Hmmmm . . . maybe if we could just extend the football season this year with some of the bail-out billions, the US economy would recover faster! That's what I call a stimulus package!
01-29-09 - AP
Fed Interst Rate stays low!
“The economy has weakened further,” the Fed said. To provide support, it said it would keep rates at rock bottom levels for “some time.” - The Fed's interest rate is the rate at which banks borrow from each other and will help keep prime low for sure. It has little to do with residential real estate mortgages, but this statement from the Fed certainly won't hurt would-be home buyers. If interest rates can stay low and mortgage loan restrictions begin to loosen, the real estate market will begin to see more action, although actual price increases are still a ways off.
01-27-09 - CNBC
The New Guy . . .
WASHINGTON - With foreclosures spiking, the Federal Reserve is taking steps to try to keep some distressed borrowers in their homes. Under the program, the Fed has a number of options to provide relief, including lowering the amount the homeowner owes on the mortgage, reducing the interest rate or lengthening the term of the loan. - Blah, blah, blah! We've heard these generalized, ambiguous statements for a year and a half but very little "relief" is actually happening for the people who really need it. Mortgage defaults and property foreclosures are still on the rise. These lower prices from the real estate defaults and foreclosures are bringing out the botttom-feeders, like savvy investors, but not helping homeowners one bit. I recommend bottom-feeding!
01-23-09 CNBC
Mortgage Rates are Very Low!
Mortgage rates have been dropping since late November, when the Federal Reserve said it was going to pump money into the banking system by buying $500 billion in mortgage-backed securities to get banks to lend more money and perhaps aid the ailing U.S. housing market. - The low mortgages are an important part of a housing recovery, but the terms and requirements for those loans are still tighter than grandma's girdle. Until terms loosen-up, inventory drops and the job market stabilizes, we will NOT see the real estate market turn around.
01-20-09 NY-Times
The New Guy . . .
Barack Hussein Obama became the 44th president of the United States today, and called on Americans to confront “our collective failure to make hard choices.” - I personally have little faith in political words, no matter what side of the spectrum they come from. Words are pretty and cheap. Having said that, Barak Obama has had a truly inspiring effect on much of the US, and even the world in the last several months as economies have tanked, corporations have folded and jobs have been lost. A huge part of any recovery is confidence. If consumer, corporate and even global confidence increases because of President Obama's inspiring words, I can also be a little more hopeful for a quicker economic recovery.
01-19-09 NY-Times
Good Home Builders Going Down!
Although the housing crisis is nearly two years old, many banks had refrained from cracking down on small home builders.
They are now starting to do so, and a wide swath of the industry could be forced out of business in the next few years. The trouble is concentrated especially in the Sun Belt, the scene of so much overbuilding. Not only have new-home sales stagnated, but builders confront a rising wave of foreclosed properties coming to market at prices below the cost of building a new home. To move houses, they have to mark them down to less than the cost of construction. The convergence of these problems is bringing many small and medium-size builders — who account for about 70 percent of new-home construction in the United States — to their knees. - While this is tough news for those builders who are going out of business and laying off workers, it is an essential part of getting the housing market back on track. Only when inventory is reduced can prices once again stabilize and then bounce back. It is the fundamental law of business: supply and demand.
01-15-09 CNN-Money
Lower prices are a Bad Thing?!?!?!
Economists worry about deflation because it is a sign of the ever-weakening demand for products. It can also be a further drag on economic activity by cutting into the willingness of both businesses and consumers to start spending again. Deflation was evident in both the Great Depression and the so-called "lost decade" that left Japan with a stagnant economy in the 1990s and earlier this decade. - To keep perspective, the price declines of the past few moths are not even close to those of the Great Depression, when there were year-over-year drops of about 10% every month from March 1931 to April 1933. Those kinds of numbers are not on the radar of even the biggest pessimists.
01-14-09 CNN-Money
Who will appraise the appraisers?
When home prices were soaring, one of the driving factors was that appraisers, pressured by loan officers and mortgage brokers, kept hyping home values. Not only did homebuyers wind up paying more, but the exotic mortgage products they needed to finance their purchases later exploded, setting off the financial and economic turmoil the nation is facing today. Now, the Federal Housing Finance Agency has announced a plan to curb the influence that loan originators exert on appraisers to overvalue homes. A new Home Valuation Code of Conduct, which will take effect this May, is an attempt to improve the reliability of appraisals for mortgages sold to the two companies. The guidelines prohibit lenders from coercing, extorting, colluding with, intimidating or bribing appraisers into making inaccurate appraisals. A 2007 survey by October Research found that 90% of appraisers said that they felt pressured to fudge figures. - My question is, "Who will appraise the appraisers - and the lenders for that matter?" If it is the private sector, as in peer review, there is hope. If the government regulates the mortgage/appraisal relationship and creates a bigger blockade of red-tape, real estate will not recover quickly.
01-12-09 CNN-Money
Dirty Homes . . . Sold Dirt Cheap!
In places like Detroit and Cleveland, banks are unloading rundown homes for next to nothing. And they're bargains, even after factoring in renovation costs.- Just be prepared to renovate and own a home in a bad part of town with mediocre tenant prospects for the next few years. If you have the time, money and patience, you can buy some great real estate investments. It may take 5 - 10 years, but your investments now should bring some sweet rewards, including an early retirement.
01-10-09 CNN-Money
The Effect of 8% Unemployment . . . and Rising
With three job seekers for every opening, the unemployed are taking any position they can find. Even if it means a huge pay cut - often 30 - 50%. - With unemployment and under-employment reaching new levels every month, there becomes a bad news feeding frenzy and a downward spiral effect. People don't buy homes if they don't feel secure about their jobs. They don't even go to the movies! If you have some assets to invest or some creativity and determination, real estate offers some incredible opportunities that simply are not there with stocks, bonds and other paper assets. The consumer mentality that got us in trouble was, "buy now, pay later." The smart investor knows that this is the time to "buy bargains now, and get paid later."
01-06-09 CNN-Money
The Future Looks . . . uh, . . . not so bright.
The U.S. economy is likely to deteriorate further this year and unemployment will rise into 2010, according to the latest forecasts from the staff of the Federal Reserve. This bleak forecast was presented to Fed policymakers when they met last month and lowered interest rates to near zero. According to the minutes from that meeting, the central bank is now predicting that gross domestic product, the broadest measure of economic activity, will fall in 2009. "I think that the Fed is really very scared right now -- like everybody else -- and they want to pull out all the stops," said David Wyss, chief economist for Standard & Poor's. The Fed indicated that most members at its meeting expected a slow recovery to begin in the second half of the year, but that unemployment would still rise "significantly" into 2010. - Bad economies are always an opportunity for savvy investors. If you don't feel very savvy, the next 4-6 months are the perfect time to get educated. the next 12 months after that will likely look like the best time to have purchased real estate and to invest in good businesses. Save your pennies, get educated and get ready to buy some bargains that will make you rich in 2011 and beyond!
01-03-09 CNN-Money
Millionaires' net worth has been slammed!
Stocks plummeted in 2008, one of Wall Street's worst years on record. By the end of the year, the Dow was down by more than a third, the S&P 500 was down almost 40%, and the Nasdaq was down 41.5%. The yearly losses are larger than any seen since the 1930s. Stocks would need to rise 65% in 2009 just to get back to end-of-2007 levels. The other major factor in the asset decline is real estate, George Walper, president of Spectrem Group said. Home prices posted an 18% annual drop in October, but, "If you single handedly own an apartment building, you're probably not looking at it every day and getting emotional," Walper said, "People might say, 'Oh, too bad for the millionaires,' but this is the group that needs to get on board to help the economy," Walper said. - This article truly nails it for the upper-middle class. They may only account for 15% of the US population but If they are feeling the pinch, everybody feels the pain. Money spent at the top trickles down. With no trickle, there is little to hope for in the general economy. When stocks again begin to rise, and real estate makes a bounce, the folks who have a good share of the money will again begin to spend and the economic outlook will be far brighter. The key for all investors is to get in before the next boom. That time is the next 12 - 18 months.
01-01-09
Happy New Year!!!
I believe that 2009 will be the bottom for real estate prices in most areas of the country. Sometime this year you should buy some money-producing real estate.
12-26-08 Salt Lake Tribune
Should Vegas Hedge its High-Roller Bets?
Las Vegas has made some significant moves toward luxury accommodations and high-roller attractions in the last decade but gaming revenue on the strip fell 25.8% since last year and the average daily room rate fell 14.3%. - I don't live in Vegas and I don't gamble, but Sin City is a great barometer for American discretionary spending. If Vegas is seeing hard times, with dismal expectations for 2009, most of the US economy will see the same in the next 12 months.
12-25-08
Merry Christmas!!!
Only a crazy work-a-holic would think about real estate today!
12-23-08 CNN-Money
Unhappy New Year.
Nearly 1 in 4 companies are planning layoffs in '09, and 1 million job cuts are forecast. - While this doesn't mean that one out of four jobs will be lost, it does mean that many people across the us will be nervous about their financial future. If a quarter of all companies are talking about employment cuts, Americans are generally going to spend less. This also means there will continue to be rising mortgage defaults and foreclosures. If you are in a position to invest in real estate, this is the best time to pick up bargains and to be independent of employer cuts and demands.
12-20-08
Real Help for Renters, Stuck in the Foreclosure Process!
Fannie Mae, the battered mortgage giant, has agreed to act as an interim landlord for thousands of tenants living in foreclosed homes around the country. Fannie will sign new leases for the approximately 4,000 renters in its foreclosed properties, said spokesman Brian Faith. These tenants would otherwise face eviction, even if they had been paying their rent on time, because of the owners' failure to pay the mortgage on the property. - This is good news for renters in bad situations. It is expected that Freddie Mac will follow Fannie's lead. Together, Fannie and Freddie hold about half of all mortgage loans. There will be problems however. Large, distant lenders are not going to be very responsive if a water heater fails. Also, lenders really want these bad loans off their books, not in a lease limbo! That's why lenders foreclose and sell non-performing real estate loans. However, these homes may have real trouble selling. Most investors don't want unknown renters in their newly acquired properties, and primary home buyers need to move in. The renters will be out on their butts anyway. This step to help renters and give lenders a little income is a tiny Band-aid on a gaping wound but I'm sure thousands of renters are relieved for the moment.
12-17-08
Fed Interest Rate Cut!
The Fed cut rates to a rock bottom low of 0% - .25%. and Wall Street seemed to like it as stock indices rose significantly. - What us real people want to know is if any of the efforts of the government to stimulate more lending and thus the economy, will actually trickle down. Banks have had every reason to start lending again, but so far, interest rates for cars, homes, credit cards, home equity lines of credit and business loans have not seen significant change since last year. The terms have also become unreasonable for all but the most prime borrowers with big down payments or collateral. Until the interest rate cuts reach the common man, along with better qualification terms, the economy will continue to stagnate.
12-15-08
Auto Makers Crying Wolf?
Are the auto makers really about to go under and bring the Nation into a black hole of economic anarchy? Well, the first part of that question may well be true! - Auto makers have made some poor decisions over the last 20 years that have sometimes worked out, but now those decisions are crushing them. Decisions about fuel efficiency, size, quality and employee compensation are not an exact science but poor adaptability and foresight mean that demanding unions and gluttonous upper-management are now feeling the pain. The second part of the question, about how bad things would really be if the auto-makers filed bankruptcy is really just speculation. People won't stop driving or buying cars overnight. The biggest problems don't seem to be which big, bloated, arrogant company is failing this week, but how Americans and investors feel about it. Other car companies like Jaguar, Saab, Rover etc. have essentially been bankrupt for years but have been bought and sold many times. Each time they seem to re-emerge with new ideas and new jobs. Chrysler got a big bail-out years ago and managed to survive but they didn't seem to learn the right lessons about the basics of supply, demand and efficiency. Will Americans believe that America is stronger with or without a handout for the big car companies? It depends a lot on how it is packaged in the media. Will GM, Ford and Chrysler simply close all doors and vanish if they don't get the billions they want? Not likely! If the Big Three don't get their billions and can't work through a bankruptcy situation, will Americans crawl into caves? Doubtful. Americans will buy more Hondas and Toyotas . . . and real estate - except in Detroit.
12-12-08 - ABC News
Big Dog Goes Down!!!
A man that most Americans have never heard of (Bernie Madoff) has admitted to scamming 50 Billion Dollars out of retirees, charities and many other investors. He was well-known in financial circles for the last 8-10 years as a successful investor and money manager. His fraudulent strategy made many investors think they were doing well, when really, a Ponsi scheme was building. When it all unravelled this fall, many people have found that their financial future is pretty bleak. - I hate to sound cynical but there are very few people I trust with my money. It takes significant effort to keep track of what your money is doing, but trusting others can be far more costly. Real estate, purchased right and managed right, can become a goldmine for you - and you always know where your money is!
12-10-08 - CNN-Money
Unemployment is Up - As Predicted.
Unemployment in the US has climbed to 6.7% according to this week's government report and worse numbers are expected tomorrow. Jobless claims are almost double what they were just a few years ago. - It is really hard to imagine a turn-a-round for real estate prices if a growing number of Americans are losing their jobs. There should continue to be defaults and foreclosures, bringing bargain real estate prices, for at least the next 12 to 18 months.
12-07-08 - DataQuick News
Southern California Sees Lots of Sales . . . but even Lower Prices.
Southern California home sales rose unseasonably in October from September as buyers shook off gloomy financial news and took advantage of often-steep discounts. The median sale price fell to $300,000 – a 67-month low – as foreclosures once again accounted for half of all resales - This story could be just about anywhere in larger cities across America. Activity is up in real estate transactions but actual prices are still dropping. Great for investors who can hang on for a few years while collecting some good rents. When things turn around, these investors will be the ones who make a killing!
12-03-08 - AOL News
Big Drop in Interest Rates for Home Mortgages?!
Lobbyists are pushing the Treasury Department to consider a plan to purchase mortgage-backed securities in the hopes of driving mortgage rates to as low as 4.5%, an industry source said. - If this really pans out as billed, it would be a another important patch in the ongoing attempt to overcome the real estate bust. The real problem is that supply is bigger than demand. Increasing the demand for home purchases by essentially lowering monthly payments is just one piece of the fix. Supply must also drop. Even though the US population is increasing by 4 million people each year, the over-supply in most large cities will take 12 - 24 months to burn off, if builders continue to cut production. Price increases will follow that. In the mean-time, cheap prices, low rates and large selection definitely make this a buyers market. Investors, start your engines!
12-01-08 -AP
Volatile Stock Market mirrors Consumer Fears!
With a bit of bad news like the "official" assessment that we are actually in a recessionary period, the stock market takes a dive and nobody buys cars, upscale clothes or houses. - Chicken or Egg?. Did fear come first or the drop in the economy? It doesn't really matter because they feed off each other. When things do turn around for the US Economy, it will likely be a big bounce!
11-29-08 - AOL News
Black Friday Was a HUGE Shopping Day As Usual!
The actual profit numbers are a long way off, but a lot of crazy shoppers were looking to spend money for discounted items yesterday. - If consumers are still spending, the economy is not dead yet. Sure, there may be thinner margins this year but at least money is changing hands. It appears that "The Great Depression II" is not here . . . yet .
11-27-08
Happy Thanksgiving!!!
DON'T THINK ABOUT REAL ESTATE TODAY! THIS IS A DAY OF FAMILY, FRIENDS, FOOD AND GIVING THANKS. IF YOU ARE ON THIS SITE THINKING ABOUT REAL ESTATE INVESTING, YOU ARE MORE OBSESSED THAN I AM AND YOU SHOULD SEEK PROFESSIONAL HELP.
11-24-08 - CNBC - Jim Cramer
Builders Want a Bail-Out Too!
Everybody wants a billion bucks as long as the US Government is being so generous with OUR money these days. The big home builders made Jim Cramer's "outrage of the day" segment today because although they are responsible for a huge part of the over-supply of homes that has contributed to the crash of housing values, they have their hands out in hopes of getting a bunch of cash along with banks, insurance companies and auto makers. - I have said this before but the BEST thing that can happen for housing values is for new construction to effectively stop while we allow demand to catch up with the supply of real estate. If these guys actually do get money, and continue building on speculation, there will be no rebound that we usually see after a bust. Instead, there will simply be a much longer decline.
11-20-08 - Every News Source
Uh Oh . . . Another Low!
No matter what reasons the financial talking heads give for the latest stock market dive (overvalued sectors, market fears, global weakness) the bottom line is that each week we keep seeing more bad news and new lows for the stock market. - What really surprises me is that anybody would be crazy enough to recommend a specific stock, mutual fund or strategy right now for Wall Street. The beauty of investment real estate (the right properties bought at the right values with positive cash-flows) is that in the short or long-term, other people (aka your tenants) are paying for your investment. You can't pick a winning stock in a bear market and you can't rent out your mutual fund.
11-18-08 - CNBC
Cars and Houses and Stocks . . . Oh My!
If you watch any financial news or turn on your radio you have heard nothing but bad news for the last year about houses and stocks. The latest pig to enter the slaughter house appears to be the American auto industry. If GM doesn't get a little influx of cash in the next month, they will probably go bankrupt, with the other American auto dealers right behind. - What do cars have to do with real estate investing? Well, cars are jobs (possibly 10% of US employment) and less jobs will mean less people buying homes or paying their mortgages. This could mean another huge jump in defaults and foreclosures. It would not be a pretty picture if one or more of the big car companies failed, but the US economy has survived worse things and will eventually recover either way. In the mean-time, take care of your assests and look for bargains in real estate.
VACATION IN CANCUN - SORRY ABOUT THE NEWS GAP. The sun was warm and the waves were good!
10-31-08
Happy Halloween . . . Are You Scared?
The economy continues to slide and unemployment is on the rise but not all economic news is horrific. Stocks have appeared stable in the last few sessions. Gas prices are way down from just a couple months ago and the dollar is up just in time for my vacation in Cancun! - Not such a scary day after all!
10-27-08 - CNBC
U.S. home builders try to reduce oversupply of homes.
The have managed to boost sales volume slightly by slashing prices and reducing speculative construction.
Sales volume surged 23% in the West, bouncing back from a similar decline in August, although most of that is bargain-priced short sales and foreclosures. Nationally, sales volume in September was down 33% compared with September 2007. The inventory of unsold homes fell to 7.3% in September to 394,000, This inventory number represents 10.4 months' worth of sales, about double the normal inventory. It's taking more than 9 months after completion for the typical new home to sell, a sign that builders have much more work to do to bring supply down to match demand. In the past year, the number of homes for sale that were under construction has plunged by 35%. The median sales price has also fallen to $218,400, down 9.1% in the past year. It's the lowest median sales price in four years. -These are all signs that the supply and price correction is well underway. I expect the bounce to happen in the first half of 2010 for the hardest hit areas of the country. Are you ready to take advantage?
10-24-08 - CNBC
Stocks slide again.
Yes, stocks were down again, but most analysts feared a much worse decline after foriegn markets tanked yesterday. -As I have said before, stocks are far riskier than real estate. If you look at your 401K or IRA holdings since 2000, you will probably find a 25-30% decline! A homeowner or investor that bought in 2000 is still looking at a value increase of 10-30% in most areas of the country. Sure, you could argue that home prices have dropped between 10-30% in some areas of the country in just 2 years but stocks have lost at least that much in the same period and haven't shown any better promise for the next few years. You can put your money in cyberspace if you want but I prefer dirt, homes, and rent money!!!!
10-22-08 - CNN-Money
"We May Have Hit Bottom."
Statistics on the economy, housing market, stocks, jobs and banking crisis indicate that the US may have seen the botom. -If I had a nickel for every time I have heard this in the last 18 months . . . I wouldn't have to make my money in real estate!!! Just as annoying as the constant doomsday predictions are the perpetual cheerleaders that keep saying that "the worst is behind us" and that "things are just about to turn around." The real story is always somewhere in the middle. There is more bad news to come in the next 12-18 months but as it looks right now, the world is not going to end! Now is the time to learn about your market and be ready to pounce on the great deals that come your way!
10-20-08
Obama vs. McCain.
Polls accross the board show that as the economy becomes more and more shaky, Americans want to get as far from the Republican policies as possible. Obama looks more like the easy winner as each day passes. -American voters don't necessarily believe that Obama has all the answers but they do favor "change" (that all too frequent C-word) over what's currently going on. What will an Obama win really mean for the current economic and real estate troubles? In the near term, any improvement will depend on confidence from consumers and the banking industry in the current actions underway from the Bush Administration, Treasury office (under Henry Paulson) and the Fed Chairman (Ben Bernanke). So far, that confidence hasn't been so hot. Anything done under an Obama Presidency won't really have an effect until mid 2009. All of this still boils down to confidence, and that remains to be seen.
10-017-08 -CNN-Money
Housing Starts Approaching a 20-Year Low.
Numbers from national builders confirm that September new home building starts are at the lowest levels since the mid 1980's. This is due of course, to the glut of unsold new homes, foreclosures and other re-sale properties. -While this is bad news for the construction industry, this is the best news for the eventual housing market turn-a-round. I have spelled this out in "Boom, Bust, Buy! - LuckyLarson's Guide to Foreclosure Investing." This is one of several events that must take place to bring existing home sales back! For more information on how you can capitalize on the current housing downturn, you must read this workbook.
10-015-08 -CNBC
Stocks Tank Again, Presidential Debates Drone on, and Unemployment Increases.
What do these three Headlines have to do with the real estate troubles? -EVERYTHING! When we can no longer see the shark fins in the water, Americans will once again go swimming. Until then, Americans are staying high and dry, huddled in the fetal position. My advice is to save your pennies and prepare yourself for the eventual turn-a-round. Accumulating cash, improving credit, finding helpful contacts and even buying bargain rental properties will pay big dividends in the next real estate boom of 2011 to 2014!
10-013-08 -DataQuickNews
California Dreamin . . . or Nightmare?
The cold hard stats are in and prices continue to tumble in the "golden state." Prices are down between 10-25% from a year ago and volume is still at very low levels. All accross southern California, foreclosure sales make up 1/3 to 2/3 of all re-sales. - With the median home prices at the same level as those of 2003, and ever-increasing rents, it is starting to look fairly attractive to buy a piece of So Cal. With the recent promises to banks from the federal government, there may be some loans available soon to actually make a purchase!
10-09-08 -CNBC
Is a Depression Imminent?
With so many large companies failing, and credit frozen, are we at the beginning of a true, prolonged depression? The recession that hasn't officially happened is already turning into a depression in the eyes of many, but is that too strong of a word? Many experts feel it is exactly the right word. - I am not a blind optimist or a cheerleader. I just don't see that conditions are even close to what happened in the 1930's yet. I hope we never see the day where 25% of working men are unemployed and wages fall by 30-40%. During the Great Depression, the common people lost over 140 Billion dollars in the 1930's when 9,000 banks failed and litterally had no money and no FDIC. In our day, when every man, woman and child spends more hours each day on their cell phone or in front of the TV than working, we are not in a depression. When people still line up for the latest iPod or iPhone, we are not in a depression. When 16-18 year-olds in my neighborhood are too busy playing XBox or Wii to get a summer job, we are not anywhere near a depression. Please see wikipedia.org for a good refresher if your history is a little rusty. http://en.wikipedia.org/wiki/Great_Depression
10-07-08 -CNBC
How Far Will It Go?
The Dow, Nasdaq and S&P are dropping fast. A host of concerns are at play and nothing is new. Its just the same concerns that have been dragging on the economy for the last 18 months. Inflation is up, credit is tightening further, unemployment is up, companies and investors are selling assets and hoarding cash, housing prices are still falling as defaults and foreclosures rise, businesses are unable or unwilling to purchase new goods, and consumers are buying less. - Why should anyone feel confident about buying homes, cars, stocks or anything else in such a troubled economic period? They Shouldn't!!!! Still, when the first signs of turn-a-round appear sometime in 2009, be ready to jump back in with both feet!
10-05-08 -CNBC
Why So Many Are Choosing To Walk Away From Their Homes.
Hundreds of websites explains to troubled homeowners the many benefits of sending "jingle mail" (Keys) to their mortgage company:
Your lender WILL NOT be able to call you in attempt to collect!
Your lender MAY NOT be able to collect any deficiency or loss they may receive by you walking away! (Select states only)
You CAN stay in your home for up to 8 months or more without having to pay anything to your lender!
You may even be able to have the foreclosure REMOVED from your credit!
It's important to act now before it's too late! Let us help you.
If you are a homeowner with negative equity and/or payments that you can't afford, this sounds like a great plan! Forget the fact that you agreed to pay the mortgage and that you have not been the most responsible with your budgetting. This is your door to freedom! Yep, you are a victim and this is the cure! It is also a sure sign that defaults and foreclosures will increase.
10-02-08 -CNN-Money
Governmental Help for Troubled Homeowners Begins.
The government kicked off a program Wednesday that aims to prevent foreclosures by letting an estimated 400,000 troubled homeowners swap their mortgages for more affordable loans. Lenders, rather than borrowers, will decide whether to participate in the program, which requires them to take a loss on the initial loan. The $300 billion, three-year program is designed to help borrowers who owe more on their loans than their homes are worth. - Like most programs the government has their hands on, this program will be slow to start and only marginally effective for the people that need the most help. Defaults and foreclosures will most likely continue to rise well into 2009 and in many places through 2010. The bright news is that this effort, combined with many other factors and programs, will eventually bring the housing market and the economy back. Remember, the harder they fall, the bigger they bounce!
09-30-08 -Barrons On-Line
There is more Bad News in the Mortgage World Just Around the Corner . . .
Pay option ARMS are the next big wave of the mortgage mess. If subprime loans were the earthquake that rocked the financial world, Pay-option ARMS are the devastating aftershock. These Payment-option adjustable rate mortgages delayed the payment of principle to help keep monthly payments down for buyers but as these less-than-interest-only loans adjust higher, foreclosures will only increase in 2009! This means that the real estate deals will just keep rolling in for investors over the next 18 months at least!
09-28-08 -Wall Street Journal
Builders are hurting.
KB Homes (one of the Nation's largest builders, reported a sixth-straight quarterly net loss Friday, as its orders and deliveries continued to slump amid weak demand for new houses. Orders fell 66% to 1,329 units in the home builder's fiscal third quarter.
I'm afraid that this is exactly what the real estate market needs even though many big empoyers in the construction industry are cutting back where it hurts many Americans - in their paychecks! If builders do not slow production drastically, current unsold inventory will only increase, making the price declines in housing worse. All markets operate according to supply and demand. When supply finally comes back in line with demand, prices will bottom out and eventually rise again.
09-23-08 -CNBC
Americans Cut Back on the Luxuries.
As employment continues to show signs of weakness, home values drop, stocks continue to slide and loans of all kinds become more scarce, consumers are spending less on dinners out, spa treatments and other luxuries. - Is this really news!?!?!? Duh! When people have no money and can't borrow any, they don't spend! I can't believe anyone would waste time even mentioning these facts. The only reason I do is that I hope Americans are saving a little bit on the side to be able to pounce on bargains in stocks and real estate when we begin the recovery in the next 18 months.
09-19-08 -CNN-Money
Wall Street Likes the Bailouts, Real Estate Markets Are Still Troubled!
The federal government has plans to begin the most sweeping intervention in the financial markets since the Great Depression. HUNDREDS of BILLIONS of DOLLARS are pledged but the details are still in the works. The final plan will focus mainly on the credit crisis that's creating havoc on Wall Street, shutting down significant business and personal investment and threatening global markets. - Well, here is the big meddling hand of our government that every free-market capitalist has feared, but has also resigned to. Of course, when government gets it's grubby hands on something this big, it is reluctant to let go. Taxpayers will pay big for such a huge governmental intervention, but at least some of the panic has been averted in the short-term. Stock indexes were up significantly today after the news. With defaults and foreclosure still setting new records, the housing market has less to cheer about. Investors are seeing the bargains they only dreamed of when credit was easy!
09-16-08 -CNBC
AIG Gets a Big Loan from Uncle Sam!
AIG - known mostly for their insurance business - was a bit over-leveraged in their mortgage dealings and faced certain doom. The government stepped in just in time to save them from bankruptcy with a huge "loan" with favorable terms for at least one side of the deal (our government). AIG will have two years to pay back a loan of up to 85 Billion Dollars at over 11% interest.
- Shoot, I'll lend 'em a few bucks myself. The real news is that if our broke government hadn't stepped in with money they don't really have, all hell would have certainly broke loose and the 500 point drop we saw in the stock market yesterday would have seemed like small potatoes by comparison to what would have happened if AIG went bankrupt. As bad as things sound, it is just a matter of a couple years till we see a big bounce at the end of this big drop. Those holding the cards when things turn will be the winners!
09-15-08 -CNN-Money
Lehman Brothers Goes Under!
Yet another big financial institution goes down! Their ties to bad mortgages couldn't be overcome with borrowing, begging or a bailout. Many saw this one coming but others thought they would get a govenment bailout like Bear Stearns early this year or Fannie and Freddie just this month. -The Good News: . . . uh . . . I'll get back to you on that. The Bad news: more red tape for buyers of Lehman Bros mortgaged properties.
09-13-08 -DataQuick News
A Really Bad Week for Banks . . .
Fannie Mae and Freddie Mac (the giants of the lending world who hold about half of all mortgages in the US) lost all their remaining stock value and were basically taken over by the US government this week in a move to save them from certain doom. Citigroup, Bank of America and others have also taken some hard hits. The worst news this week was for investment bank Lehman Brothers, which had already seen big write-downs and stock drops this year. For most of the last three years, the stock had bounced between 60 and 80 dollars per share. In this week alone though the stock dropped from about 17 bucks a share to just $3.65. That news is particularly bad if you happen to hold shares or stock options. The Good News: More short sales and foreclosure bargains for real estate investors.
09-10-08 -DataQuick News
Southern California Sales Volume Up, but Prices are Way Down.
Sales data from the Southern California real estate markets show a lot of activity from investors and other home buyers (about 15% to 20% in most areas). However, the increase in volume from just a year ago is still 20% below the average volume over the last 20 years. The real bad news is that prices declined from the already falling prices of 2007 a full 31.1% on average in the following counties: LA, Riverside, Ventura, San Bernadino, Orange and San Diego. The Good News: the deals just keep looking better all the time.
09-08-08 -BBC
Fannie and Freddie Bailout will have International Reprocussions!
The United States government will effectively "socialize" about half of all US lending, and this will have huge domestic and international effects on borrowing, lending, securities, pension funds, inflation and more.
-The Good News: Lending Armegeddon has been averted . . . at least for the near term. This is not a magic bullet but a necessary evil to shorten the duration of the mortgage and housing chaos.
- The Bad News: Somebody's got to pay for such an expensive rescue mission (Up to 200 Billion Bucks!). Those "somebodies" will be you and me! In the short-term, we will see a continued weakening of the dollar which will translate to higher consumer prices, and a further tightening of purse strings and fewer imports (not good for the already weak economies and housing markets here and abroad). In the long-term we will see higher taxes and much more red tape in the mortgage world. No fun at all!!!
09-07-08 -CNN-Money
FORECLOSURES AND DEFAULTS UP . . . AGAIN!
A record 1.2 million homes were in foreclosure during the second quarter of 2008. That represents 2.8% of all outstanding loans, up from 1.4% of all loans during the same period a year ago, according to a report released Friday by the Mortgage Bankers Association (MBA). During the three months ended June 30, 2.9 million homeowners, or 6.4%, were behind on their payments, up more than 25% from last year. Just more of the same here . . . the bad news just keeps comming but it sure brings great opportunities for those positioned to take advantage.
09-05-08 -CNN-Money
Silver Lining or Red Herring?
Rates for 30-year fixed-rate mortgages (FRMs) averaged 6.35% in the week ending Sept. 4, according to Freddie Mac (FRE, Fortune 500). That's down from last week, when it stood at 6.4%, and below a year ago, when the rate stood at 6.46%. So, even though banks don't actually have any money to lend, it is nice to know that rates are getting better!
08-31-08 -CNN-Money
Another One Bites The Dust!
State regulators shuttered a Georgia bank late Friday, marking the tenth bank failure this year. Integrity Bank, (kind of an ironic name) based in Alpharetta, Georgia, was closed by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation was named receiver. The Federal Deposit Insurance Corporation approved the assumption of Integrity Bank's deposits by Regions Bank, of Birmingham, Alabama. The failed bank's five offices will reopen Tuesday as branches of Regions Bank. There will be more failures and there will continue to be painful changes for the lending industry. Everyone connected to the building and real estate industry has or will be effected by all this mess, as well as home buyers and sellers. The botttom line still remains the same though: Real Estate is cyclical and those who invest in bargains in the next 12-18 months will look like geniuses in 5-7 years!
08-29-08 -CNN-Money
Buyers Ask . . . And they Do Receive!
Home buyers are in the driver's seat and they know it. They're using that leverage to pry more concessions out of desperate sellers after steep discounts in price have already been reached. 'Now it's my turn,' is the attitude," said Mike Byrd, a real estate agent with SLO Home Store in San Luis Obispo, Calif. "Some buyers are really putting the screws on." Just remember all you investors out there: 1. Any property can be a good value at the right price. 2. A good investment property will be one that you can get for low enough price that a quick flip will yeild profits AND/OR will cash-flow until your market turns around!
08-26-08 -Washington Post
The Bad News about the Housing Rescue Bill!
Existing-home sales rose 3.1% in July from the previous month, but growing inventories of unsold homes and rising mortgage interest rates continue to stall a housing-market recovery. The last several times the housing market saw a slump it took several years to see a "recovery" so I am always baffled that the analysts somehow expect a quick bounce. Nobody with a real brain is calling the absolute bottom yet so the recovery is still 12 - 18 months away in most areas of the country. In the mean-time, smart investors are buying cash-flow rental properties at bargain prices and waiting patiently.
08-19-08 -Washington Post
Big Banks Still Grasping At Straws . . .
Trying to stay afloat and look like "business as usual" is getting harder every day for the big boys like JPMorgan, CitiGroup and Chase & Co. Richard X. Bove, one of the most outspoken banking analysts since the credit crisis began last year, wrote that the concept of diversification in the financial world has broken down. Combining a business model of banking and credit cards with investment banking was supposed to hedge financial giants against problems in either market but both markets are currently weak and the big boys will either fail, split up or get bailed out by the US government. Bove said, "No steel company can sell steel when auto manufacturers aren't selling cars, and no bank can make big profits when there's a weakness in the housing and credit markets." It doesn't take a genius to see that no what big lenders say, they are hurting! Stock prices are at bottom and all the CEOs and PR spokespeople are dreaming up new and creative ways to spin the latest write-offs.
08-14-08 - Sotheby's
Uncle Sam Helps Out "First" Home Buyers
Details of "The American Housing Rescue and Foreclosure Prevention Act of 2008, (H.R. 3221) are being clarified so that home buyers can accurately take advantage of the benefis. More details can be found at the Sotheby's website (Link). The attempt of course is to stimulus the housing market. The bigger points are these:
1. Tax credit of $3,750 ($7,500 per couple) or 10% of home's purchase price.
2. Home must be a principal residence in the U.S. and closed on between July 1, 2008 and July 1, 2009.
3. Home buyer cannot have owned a home in the last 3 years.
4. Tax Credit is actually more like an interest-free loan and repayment is required.
5. The home buyer(s) cannot make more than 95K ($170K per couple).
If a first-time home buyer is sitting on the fence about a big purchase like a house, I strongly doubt that a convoluted, tax credit on next April's return is gonna be a huge motivator. I think it will be a mix of more jobs, more consumer confidence, lower fuel prices and investor interest that will eventually push the real estate market out of a slump. Another huge factor will be the population increase of 20 million people in the next 5 years!
08-08-08 -Love That Date! - San Diego Union-Tribune
Bad News can be Good News!
Central San Diego neighborhoods such as Logan Heights and Encanto that a few years ago saw home values skyrocket 50 percent or more in just two years are seeing investors and first-time buyers vie for fixer-uppers at bargain-basement prices. Several real estate agents who specialize in the sale of foreclosure properties say they are getting more interest from investors looking to buy homes cheaply in neighborhoods with rapidly declining values, fix them up and then rent them for more than the cost of the mortgage. I personally think that the bargains purchased in the next 12-18 months in most areas of the country will make those byers seriously rich in the next 5-7 years. Now go build your empire.
08-06-08 -CNN Money
Freddie Mac Heart Attack!
Company executives, in a sobering forecast about the nation's housing woes, said nationwide home prices are likely to drop another 7% to 9%. Those declines, and other problems in the economy, are likely to cause additional losses on the $1.8 trillion worth of single-family loans that Freddie guarantees or owns. "Today's challenging economic environment suggests that the housing market is far from stabilizing," Freddie Mac CEO Richard Syron said during a conference call. Yep, we've been saying it for a while now: some prices in many areas of the country will still get much worse before they get better. Those areas are mostly the same spots that saw the biggest gains during 2001 to 2006. As an investor, I am looking for good, long-term ( 4-6 year) rental properties. You can't go wrong with a bargain property that has a good cash-flow!
08-02-08 -Washington Post
The Bad News about the Housing Rescue Bill!
No More 100% FHA financing as of October 1st!!!! If the real estate market in the US was in a slump up to now, the worst slowdown is yet to come. It will be a good thing in the end for the stability of the Federal Housing Admin but for the last quarter of '08 and on through most of '09, a lot of buyers in the lower end of the market will just not be able to buy. FHA-qualified buyers will now have to come up with 3% of a home's purchase price instead of receiving a "gift" of that down payment from the seller. The only good news in the very near term might be the scramble of many buyers to buy something right now before the new rules go into effect.
08-01-08 -Every News Source!
Bush Signs 700-page Housing Rescue Bill!
He threatened to veto but signed it anyway! He was only trying to get a few things stripped from the bill that he didn't agree with. In the end, he didn't dare veto a bill that had so much support in an election year! What will this new law really do? The hope is that:
1. There will be fewer foreclosures.
2. Prices won't continue to plummet - as bad.
3. Banks on the edge won't go under.
4. Investor and consumer confidence will return.
It may take a year for the true effects to be felt but there will be important effects and a quicker turn-a-round for housing. Banking stocks might be a better investment all of a sudden. Houses (at the right price) are always a good investment!
7-30-08 -Washington Post
More Transparency from Lenders and Brokers!
The Department of Housing and Urban Development has proposed revising the form for the "good-faith estimate" of mortgage and closing costs to make it more useful to borrowers. Perhaps the most important proposed change in the good-faith estimate is the way it deals with payments by lenders to mortgage brokers who handle higher-rate loans, referred to as yield-spread premiums. Its about time that this was changed! Mortgage brokers often hide huge payouts on the "back-end" when they can bump up your interest rate even a fraction of a percent. This payment directly from a lender to the broker is not usually included on the HUD settlement statement unless you ask for it specifically. Most buyers think they are being charged only an origination fee but especially with higher risk loans, a big back-end yield-spread is taking place.
7-28-08 -CNN-Money
Banker Drinkin' the Cool-Aid!
Bank investor Tom Brown wrote this week that he believes the recent rally "marks the beginning of the greatest financial stock bull market in our lifetime, one that will be much broader than the bull market that began in 1990." Of course, Brown has been wrong before, as he was last year with a big bet on subprime lenders that had his Second Curve hedge fund down almost 50% by November. Now, I believe in sticking up for your industry and that someebody has to be optimistic, but this guy must have his head in the sand. I, Lucky Larson, personally believe that there will be a boom in the housing market starting in 2011-2014 and that likely, the stock market will have a great bounce too. To say that the banking sector is right now at the beginning of the biggest Bull-Market in our lifetime seems more than just optimistic. It seems bizzarre.
7-25-08 -CNBC
Banking/Housing Catch-22!
Housing prices continue to drop and banks are dropping just as fast. To fix this massive co-dependent destruction the government is trying to keep banks afloat by bailing water and plugging holes. At the same time, the government is trying to find ways to keep homeowners with dropping equity from defaulting on loans. The catch-22 is that banks cannot lend money with terms and rates that will help people buy homes because investors (who lend money to banks) are too afraid of the future loan defaults. Therefore, home prices are dropping because nobody can get a loan buy real estate and home prices continue to drop, making banks look even more risky and precarious. The turn-a-round will come but it is not in sight and there will still be some ugly days ahead for home owners and banks!
7-22-08 -Data Quick News
More Bad News from California!
Mortgage servicers for California home mortgages recorded 121,341 "notices of default" during the April-through-June period. That was up 6.6 percent from a revised 113,809 for this year's first quarter, and up 124.9 percent from 53,943 in second-quarter 2007. No surprise here but it sure appears that things will get worse before they get better. This is not a sign to hide in a hole though. Just last month I looked at several foreclosures and short sales in San Diego that ALL had multiple offers. Home buyers and investors are seeing some good opportunities. They are not paying full market value, but instead are buying at big enough discounts to offset the possibility of future declines.
7-17-08 -Comcast.net
Energy Costs take a bigger bite!
The percentage of income Americans spend on energy has almost reached 7%. To help put that in perspective, it's not the highest portion we've seen but it is the biggest percentage of our budgets in the last 20 years. Yeah, that makes most of us feel the pinch, but when average Americans are still lining up for hours to buy the latest iPhone, and movies like Hellboy II and Hancock can bring in 35 to 40 million bucks in a single wekend, Americans are not exactly scraping by.
7-14-08 -CNBC
Fannie and Freddie take a dive!
Fannie Mae and smaller sibling Freddie Mac are companies that own or guarantee almost half of all home loans in the United States. They face billions of dollars in losses and may need to raise massive amounts of new capital as the U.S. housing market faces its worst downturn since the Great Depression. Ooh, that's sounds pretty bad huh! Thankfully, we have a government that will bail out banks and other financial institutions and defer the bill for later taxpayers. Wheeew!
7-12-08 -Comcast News
IndyMac Bank Shuts Down!
Assets were siezed and regular operations were suspended on Friday. IndyMac becomes the biggest retail bank to fall victim to the U.S. mortgage crisis. IndyMac, said earlier this week that it was laying off half its staff and would halt mortgage-origination activity. The bigger they are . . .
I have two loans right now with these guys. As long as they are going under, I sure wish they would somehow lose my records and forget I owe them a few hundred grand. - Not likely.
7-08-08 -CNBC
The Dismal Dollar.
"The almighty dollar is mighty no more. It has been declining steadily for six years against other major currencies, undercutting its role as the leading international banking currency." The fact of the dropping dollar is actually good news for exporters of American goods and foriegn investors. European and Japanese investors are buying everything from boats, to business to real estate! Especialy in desireable city and coastal markets, foriegners are using their increased buying power, along with the drop in real estate values to pick up some great deals. Any negative fallout from this will be years in the future but I remember what happened in Hawaii in the early to mid 1990's when real estate prices dropped through the floor! The previous decade had seen a huge Japanese investment surge, but when the Japanese economy tanked, Hawaiian real estate plummeted.
07-05-08 - Sothebys
What The Housing Stimulus Bill Could Mean to You!
"The American Housing Rescue and Foreclosure Prevention Act of 2008, (H.R. 3221) contains a provision that would provide a temporary, first-time home buyer tax credit of $8,000 for the purchase of any home used as a principal residence and closed on between April 9, 2008 and April 1, 2009. In 1975 there was a similar situation in the housing market with a huge supply of new and unoccupied homes. The $2,000 tax credit then was a major stimulus that reduced housing inventory by about 60%. The overriding theme is to overcome the situation where one has to sell their existing home before buying another. With a larger pool of first-time buyers in the market, many could move up the housing chain." Hmmm . . . I doubt that a mere eight thousand bucks would get most new buyers off the fence in the places that are in the most trouble. Most areas of California, Nevada, Arizona, Mass, Florida, DC and New York have entry-level prices between $200K and $400K. A tax credit (not an immediate discount on the home) of a few grand is a nice gesture, but not a stimulus! It is investors who see bargains, that will become the stimulus. That is starting to happen.
7-02-08 -Reuters
More Negativity from the Guys at the Top.
U.S. Treasury Secretary Henry Paulson said on Wednesday that high oil prices, further home price declines and capital markets turmoil will prolong the American economy's slowdown. Paulson, in remarks prepared for delivery to the Chatham House think tank here, said U.S. home foreclosures will remain elevated and "we should not be surprised at continued reports of falling home prices." . Ya' don't have to be a genius or have a crystal ball to see this prediction. The current downward path of home prices and the upward trend of mortgage defaults will continue. As we keep saying right here on www.LuckyLarson.com, " There will continue to be great bargains in real estate for the next one or two years!"
6-27-08 -Wall Street Journal
Fed keeps short-term rates stable.
Although Ben Bernanke (Federal Reserve Chairman) has indicated concerns about inflation, He elected to keep short-term lending rates untouched. Just the fact that our buddy Ben mentioned concerns about inflation, rates in all other areas of lending will likely see a slight surge. Bummer!
6-24-08 -Wall Street Journal
FHA Improved or Weakened?
Since early 2000, the Federal Housing Administration has been looking at ways to expand their lending capabilities to help Americans buy homes in accordance with the long-held belief that home ownership promotes National stability and economic grotwth. As FHA has loosened qualification guidelines, increased limits and lowered mortgage insurance premiums they have indeed attracted more buyers - especially as other lenders have tightened purse strings or gone out of business . By doing this, FHA may keep the housing market from complete and utter doom but this will certainly weaken it's reserves and eventually tap the taxpayer for more support.
6-23-08 -Wall Street Journal
Personal Guarantees are coming back!
After a decade of easy lending, the dreaded personal guarantee is making a comeback in the real-estate industry, bringing back the kind of tough terms that borrowers hoped not to see again. By guaranteeing a loan with personal assets, large developers are literally putting their lives on the line. Some have no choice in todays lending climate. These "personal guarantee" requirements are not used in personal, residential lending. Your mortgage company won't ask you to use your car and boat as collateral . . . yet. The mortgage world has turned up-side down in the last year so anything is possible. Watch out!
6-20-08 -Wall Street Journal
Big Banks in Big Trouble!
Bank of America has taken more than $6.5 billion in write-downs of securities linked to shoddy mortgages and has drastically downsized its investment bank and cut more than 3,000 jobs. Wachovia has posted $5.3 billion in market-related write-downs since last summer and is downsizing its own investment bank. It has cut 500 jobs so far and slashed its long sacred dividend.
So,as always, when banks are in trouble over bad debt. they are anxious to get rid of it and move on. This means great deals with short-sales and REO (Bank Owned) properties. Look for bargains and make offers!
6-17-08 - IndyMac Bank Newsletter
Those with Deep Pockets See Big Opportunities in Real Estate!
"One bright spot in the housing market is affluent investors. They see bargains and are ready to buy. According to a recent survey, 77% of the wealthiest Americans — those with annual discretionary incomes in excess of $500,000 — see a “real opportunity” in the housing market, according to a recent study published jointly by American Express Publishing Corporation and the Harrison Group, a market research and consulting firm. The wealthiest are committed to buying soon, with 40% saying they are in the market to purchase real estate this year." So, if like me, you are looking to purchase in the next 12 months, it appears you are in good company. As a disclaimer, I don't know how this data was gathered or what the exact questions were on the survey but people with money always buy when the rest of the world panics!
6-15-08 - CNN-Money
Some Real Estate Markets See Signs of Life.
San Diego, Miami, Tampa, Vegas and Phoenix have seen some really bad declines in sales volume and prices. Inventory is way up and mortgage defaults are still increasing, BUT, home buyers are beginning to snap up the percieved bargains.
National trends are not as important to the investor as regional ones. If you know your market, you will know when it's right to get back into the water. Of course my books and videos teach you the signs to look for and some of them are beginning to show up.
6-13-08 - AP
New Jersey Numbers a bit too Rosy!
The National Association of Realtors released some first quarter 2008 numbers that indicated that New Jersey home sales were up four percent from the first quarter of 2007. Instead, New Jersey home sales actually fell 30 percent. The association's research division took responsibility for the mistake but didn't specify how it occurred. Hmmmmm . . . sounds fishy to me. As I have said before, if you ask most real estate agents and brokers whether it is a good time to buy or sell, they will always say, "yes!" as long as it increases their bottom line.
6-09-08 - CNBC
Housing prices could stabilize late this year.
Christopher Low, chief economist at FTN Financial in New York, said a recent, slight pickup in pending home sales could be a sign that the housing market could soon be stabilizing. "Sales will stabilize in the next few months and that will set the stage for inventories turning to normal sometime next year and maybe even for prices to appreciate a bit," he said. "For now, prices will continue to fall. There is still an inventory overhang that will take 18 months to work through. The end game of the housing bust is near." I think every real estate agent in the world is begging for headlines like this to be true, and they just might be! It is important to know that the words, "could stabilize" are a kinder phrase for "if we're lucky, the bleeding will stop." The reality is that the patient has already lost an arm and the leg may go too.
6-07-08 - Money Magazine
Housing Price Declines Expected for Another Year
(Money Magazine) -- The housing implosion is nowhere near over. In 75 of the 100 top U.S. cities, prices are expected to fall in the next 12 months according to Fiserv Lending Solutions. We have seen these headlines before and, of course, this is a blanket statement while real real estate market fluctuations always differ by specific location. Again, the higher the prices went in your area in 2000 - 2006, the harder they will fall. Slow, steady markets like High Point, NC and much of Texas did not jump and have not tanked! Also remember, in cyclical markets like most of California, Florida, DC, Boston and others, these big drops will eventually become
BIG BOUNCES! Be ready!
6-05-08
On-Line Real Estate Brokers Win a Big Case!
The Dept of Justice ruled in favor of discount, on-line brokers in a long fought battle over who can use of local Multiple listing services, among other things. (Link to Dept of Justice Report). I think this ruling will be good in the long run for the free-market. In the short-term, we won't see many obvious changes. (See Blog entry 6-05-08.)
5-29-08
San Diego Real Estate takes a 20% dive!
I'm in San Diego this week checking out the real estate market on the ground. Lots of Short-sales, foreclosures and very motivated sellers. Two big auctions are coming up in June and I will be watching close! What really surprises me is that properties are moving! I called on one short-sale property in San Diego (North County) that had 10 offers! Large banks like Countrywide have been slow to react but the buyers are there!
05-24-08 BBC
The Economy - falling with the housing drop.
Nationwide, US house prices are dropping for the first time since the Great Depression, and the rate of contraction is still accelerating. And with people unable to borrow more against the value of their homes, it also has an impact on the rest of economy. Americans spent so much money they didn't really have in the last 8 years that now it's time to "pay the piper." It's not the end of the world - but it's not the end of the downward spiral either. The bottom is there, and when we reach it in a year or so, things will bounce - big-time!
05-22-08 NAR
"For Sale" Home Inventory is Way UP!
The NAR (National Assoc. of Realtors) said US home inventory listed for sale rose 10.5% from a year ago to 4.55 million homes. That inventory would take 11.2 months to sell, which is the biggest backlog since the association began tracking family homes and apartments in 1999. No big surprise. Inventory always rises in spring. The real news is that housing inventory was already astronomically high! The best time to buy will be in 8 -18 months as interest rates are still low and prices are looking sweeter by the day! Don't buy just anything! Remember - Positive cashflow is king!
05-19-08 Reuters
Wal-Mart Stocks UP but Home Depot and Lowe's are Down!
It's not terribly surprising that the big box retailers associated with real estate are dropping fast and the biggest store chain in the world, with the cheapest crap in the world is up! People on an ever-tightening budget buy cheap crap and not new kitchens!
05-16-08 Reuters
New Home Starts Rise . . . but Not Really.
The April building start increase of 8.2% occurred entirely in multiple-unit dwellings, while single-family home building declined to a rate of 692,000 from 704,000 -- the lowest monthly rate since 604,000 in January 1991. Yep, multi-family housing (condos, apartments, townhomes etc.) always find popularity in "bust" markets because that's what people can now afford. many investors are buying and bulding affordable multi-family properties because rents are going up and the cash-flow is good on smaller units.
05-14-08 CNBC
Mortgage Rates Dip and Applications Rise.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended May 9 climbed 2.9 percent to 674.4. Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.82 percent, down 0.09 percentage point from the previous week. No real news here. Whenever rates drop, people take advantage of the chance to lower their existing payments. Real news would be that NEW buyers applied for loans in droves. Still not happening.
05-04-08 NAR
Numbers are not as bad as the media says.
The National Association of Realtors says that the national average home price drop of 12.7% is not the real story. Their estimate is more like 7.7%. This is still not a good number but they rightly point out that market fluctuations are specific and localized. Stockton California is in the toilet but Marin County, California is still doing well. They also point out that less expensive homes are out-selling the higher-priced homes because of the jumbo loan freeze. This will, of course, skew the numbers to look like prices accross the board are lower. Of course, the NAR must retain their positive image because they need to keep the paychecks coming. They are not exactly an unbiased source. The real news for investors is that the next 12 - 24 months will continue to see a bloodbath in many real estate markets, fueled in part by the media's love for disaster reports. This means that undervalued properties will abound in 2009 and 2010. Get ready to buy!
05-01-08 CNBC
Foreclosures will get worse before getting better!
RealtyTrac has reported worse numbers than expected about foreclosure rates. There has been a nationwide increase of 112% in foreclosures since this quarter last year. With so many adjustable rate mortgages out there with higher rates to come, foreclosures are expected to continue to increase through the end of the year. With such "scary" forecasts, I will be looking to purchase several properties by the end of the year in Southern California. My favorite saying is, "The harder they fall, the higher they bounce!"
04-29-08 CNBC
Feds rules make it harder to get mortgages!
As the Federal Reserve completes work on rules to root out abuses by lenders, its plan has run into a buzz saw of criticism from bankers, mortgage brokers and other parts of the housing industry. Well, Duh! Lenders make money by lending efficiently and charging fees. If lenders can't lend, they don't make money! This also means that potential home buyers are forced to sit on the sidelines. Strict lending guidelines may help stabilize the real estate market in the long run, but in the next few years they could absolutely KILL the real estate market and the economy along with it..
04-26-08 CNBC
Vacant houses are on the rise!
Vacancy rates accross the US are about 3% right now and much higher for homes currently "for sale." This means that homeowners are becomming extremely motivated to sell! This includes many banks that have become the reluctant owners of many foreclosure properties. Buyers have all the bargaining power on their side and sellers ae becoming far more flexible! If you can get a good loans, and the properties will cash flow, there has never been a better time to go bargain hunting. In many areas of the country, this situation will continue for the next 12 to 18 months.
04-19-08 Moody's
Home Owners with No or Negative Equity are "Walking;"
Mark Zandi of Moody's Economy.com estimates that 10.6 million homeowners will have zero or negative equity by the end of June, or 21 percent of first mortgage holders. And these are the home owners most likely to mail back the keys to the bank and simply walk away! The next 18 months will bring a foreclosure tidal wave like the US has not seen since the Great Depression.
04-17-08 Sotheby's Int. Realty
Banks Ratcheting Down Home Equity Lines of Credit:
With the interest rate on a Home Equity Line of Credit being much lower than other types of financing, this is an often used means of financing for home improvements, major purchases, vacation, emergency expenses, and more. But, you may not have as much to use as you think. Due to falling home values, many homeowners are receiving letters stating that their Home Equity Line of Credit has been reduced or suspended. Yep, I was contacted by Indymac on a HELOC that is paid off. They suspended the account for no other reason than they, along with most lenders, are feeling financially squeezed and they don't want to end up with any more bad debt.
I made a call and they reinstated the full amount.
04-15-08 CNN
Foreclosure Stimulus Bill:
A plan, just passed by the U.S. Senate and waiting to be carved up by the House combines large tax breaks for homebuilders and a $7,000 tax credit for people who buy foreclosed properties, as well as $4 billion in grants for communities to buy and fix up abandoned homes. I can understand the stimulus effect of seven grand to help me decide to buy a foreclosure. I can also see the benefit of grants for communities to fix up abandoned homes, but why in the world would the government give tax breaks to homebuilders who overbuilt and sold shamelessly to speculators? These are the culprits that really caused all these problems in the first place? Oh, could it be the homebuilder lobbists? Hmmmm . . . politicians always know who butters their bread!
04-11-08 Comcast
American Consumer un-Confidence:
Confidence in the economy fell to a new low in April. According to the RBC Cash Index, confidence dropped to a mark of 29.5. Last April, confidence stood at 85.4. The index is based on results from the international polling firm Ipsos.
Most news reports fail to mention one very important factor in any poll when statistics are gathered: How has recent media coverage affected the data? When every economy related news story mentions the words, “Bubble, Crisis, Crunch, Disaster or Failure,” there is bound to be a very negative effect on the very subjective opinions of random people being polled! With that said, this kind of doomsday panic always creates great buying opportunities so bring on the bad news baby!
04-09-08 CNBC
More NAR BS!
Despite the weakest yet pending home sales, the realtor group NAR (National Association of Realtors) said it expects existing home sales to stabilize for now and then possibly pick up in the latter half of this year.
Well, of course they are gonna' play cheerleader! They don't get paid unless they make a commission off you, when you buy or sell. They can see by the numbers that their team is losing bad, but they keep right on with the same old cheer, "Go Team!" So, when is it a good time to buy? Duh!!! When everyone with their head in reality is running the other way. There are sweeeeet deals on homes for sale by banks and desperate owners. If these steeply discounted homes cash-flow on rent and don't take much out of pocket to buy, write up the deal baby!
04-05-08 Honolulu Advertiser
Aloha to Aloha . . . and ATA
Yep, my favorite carriers to my favorite islands are going down! The cost of fuel and competition with other, better airlines has taken its toll.
This headline is not exactly real estate related but I am bummed! I've got a lot of friends that worked at Aloha on Maui and it won't be easy to replace those jobs. Oh, well. Another one (two) bite the dust!
03-30-08 BBC
The Fed Cuts RAtes Again.
The Fed has cut rates six times since September to try to boost the housing market and alleviate credit problems. The Federal funds rate now stands at 2.25%.
These low numbers are probably not the lowest we will see. The low Fed Rates are the interest on short-term loans that banks make to each other and have only a trickle-down affect on mortgage rates. Because banks are scared to death of all the bad debt and questionable stability in the whole lending market, these low rates are not having the desired effect. There is still a severe credit crunch because nobody is lending to anyone. It's gonna' get worse before it gets better.
03-24-08 BBC
Europe is also feeling the Credit Crunch and House Value Declines
Americans are feeling pain in the credit and housing market, but Europeans are not far behind. Housing prices, along with tightened lending, have taken a toll in the UK and in many cities in continental Europe.
Hmmmm . . . If the dollar wasn't so weak right now I would be shopping for a nice little villa in Tuscany!
03-18-08 All News Sources
All indicators show "recession" looming
Everyone in the news media is starting to feel very comfortable with the Big "R" word lately. There is no OFFICIAL "recession" yet because there are some key economic markers that have not been met but for all other purposes, the economy is receding.
For you and me in the trenches, this means it's the right time to look for real estate bargains, but it is not a time to be hasty in any decisions. I would definitely change out my bank stocks and Home Depot holdings for cash, and watch for screaming deals in short-sale or already bank-owned.
03-08-08 CNBC
FHA takes a jump!!!
In many cities across the Nation, FHA loan limits jumped to new high! This is a temporary measure calculated by the government to help potential buyers start buying!
- These new, higher loan caps (up to 729K in many metro areas) may push some fence-sitters onto the playing field. The new limits will not fix the rising foreclosure problem across the country but may help keep the housing bust from total deterioration. FHA loans are particularly appealing to first-time home buyers who have good job history. The loans do come with farly strict debt-to-income ratios and they exclude non-owner occupied properties, so there will be no sudden investor frenzy. If you are looking for a primary residence and you have a decent, steady income, this may be your lucky day!
02-18-08 CNBC
FHA, Fannie Mae and Freddie Mac are upping their limits
Fannie Mae and Freddie Mac are expected to increase conventional loan limits and homeowners with jumbo loans and in high-priced markets can tap into the lower rates, too.
- These new, higher loan caps won't be the cure-all for the housing slide but it will help cushion the landing and will help many buyers get into homes they couldn't have last month.
02-02-08 CNBC
Big money for Big oil . . .
In the last few days, Chevron, ConocoPhilips and Exxon Mobil announced record profits. For Exxon, not just a record numbers for the company, but for any US company ever! With that news I have heard two types of reactions from friends and associates:
1. "The government needs to do something about that!" 2. "I won't be buying their gas anymore. They are rich enough already!"
While I understand these reactions, I think most of us are missing it! My reaction was, "I wish I had bought their stock any time during 2003 to 2004 (See Exxon Chart) when all of us saw gas prices going up! If I hadn't had every dime and ounce of energy invested in Real Estate at that time, I could have done some research and made a lot of money. - So, what does this mean for you and me now? We can either whine about each economic occurrence, hope the government comes to our rescue (fat chance!) or we can take some initiative and turn what appears to be a negative situation into a positive opportunity. My expertise is in real estate and that is where I see a lot of "bad news" and some incredible opportunities!" What will you do?
01-30-08 CNBC
The New (not improved) Economy
Lots of interesting stuff right now being reported by all the news agencies: From those that track these sorts of things, the economy is looking pretty sad. Production in most industries is down and prices for gas, heat and food are up. Jobs in most sectors show some weakness and the housing industry is in the tank.
- So, what does this mean for you and me? It would be wise to cut out extravagances but don't hide in a cave! Now is the time to look for opportunities to invest in your education, your skills and in equities that do well in recession markets. It is also a great time to find great bargains in the housing sector. For some that may mean buying stocks of companies that will be positioned for the next trend but for most of us that means buying what investors call "bread and butter properties" that will always lease well and will go up in value when the market turns around. As they say, the population isn't getting smaller, and everybody needs to live somewhere! I wish I could be so specific that I could point to 3 properties in your neighborhood and tell you what to offer. I can't possibly know your exact situation though. That's where my Investor Kit comes in. With my system, you will learn what to look for that will meet your needs and help make you your fortune. When you're ready to take advantage of this great time for investors, check out my products page and then go build your empire!
01-26-08 BBC
The Mortgage Mess - explained in hindsight. I have read many articles on the mortgage meltdown in recent months to understand how the market crumbled so fast. There were warning signs for sure but few people predicted how fast and how bad things would deteriorate. In hindsight the experts can break it down quite well so we can all see how the "perfect storm" unfolded. BBC News did a great job with this online article including graphs and charts a couple days ago: http://news.bbc.co.uk
Time Magazine also explained the situation very well back in August: http://www.time.com
- As bad as it has been so far, many fear that the worst is yet to come. Many large financial institutions are acting publicly like it's "business as usual" but their financial underpinnings are weak and crumbling. The next 6-8 months will be very volatile and . . uh . . interesting. Just remember: the sky may be falling but at least we are not being eaten by zombies or that monster from Cloverfield.
01-24-08 WASHINGTON AP (Yesterday)
Student Loans . . . Big Defaults! - Sallie Mae, the embattled student lender, said Wednesday it lost $1.6 billion in the fourth quarter as borrowing costs rose and it set aside $575 million to cover bad loans.
- Mortgages and credit card debts are not the only loans in default these days. This means that even student loans will become more difficult to get in the future. Bummer man!
01-23-08 WashingtonPost.com (Yesterday)
Economic Stimulus Package is Near! President Bush and congressional leaders moved closer to agreeing on a compromise economic rescue package yesterday, fending off fresh protests from both the right and the left as they rushed to respond to a cascading series of economic troubles and to head off a potential recession. Senate leaders agreed to defer to House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader John A. Boehner (R-Ohio) as chief negotiators. But officials said they were close to the framework of a roughly $145 billion plan. About two-thirds of the money would go for tax breaks for individuals, plus extended unemployment and food stamp benefits, while the other third would be for business tax breaks. Individuals would get rebates of as much as $800, and married couples as much as $1,600. - Yes, the economy is showing serious problems but a half-baked rush-job is never the right answer. Both republicans and democrats want to look like they are in touch with the problem and that they are doing something about it, but throwing several hundred bucks at the majority of consumers and some short-term tax cuts for some businesses is not gonna' be a magic bullet! I don't have all the answers but it doesn't take a genius to see that the real problems were caused because too many people took on too much debt from credit and mortgage companies that took on too much debt. Now, our already broke government is trying to fix the problem by going 145 Billion dollars more in debt. This seems like madness! Check my blog for further discussion.
01-21-08 CNBC
Why Buy a Florida Home Now? Low Mortgage Rates Cut Payments, Say Florida Realtors . . . Grien-Scherer, a broker-associate at Coldwell Banker's office in the Fort Lauderdale suburb of Weston, is among the many Florida Realtors(R) who recognize that low year-end mortgage rates help multiply buyers' financial power. . . Blah, Blah, Blah
- That's actually what all real estate agents are saying right now - not just the ones in Florida. They are begging on their knees for potential buyers to get off the sidelines and purchase something . . . anything. Real estate agents don't make a dime unless properties change hands and in most areas of the country, the credit crunch and all the talk of dropping prices has cut transactions by 40% or more. That means that brokers and their agents have lost about half of their income. Many real estate brokerages across the country are simply closing down. Here is one example of hard times in Las Vegas: "Century 21 - Big Bucks to Bankrupt." And here is another, similar story in Arizona: "Re/Max Closing 13 Offices." So, what does this mean to you and me? Don't trust agents to tell you when or what to buy!!! They are desperate for income and not necessarily looking out for you. There are actually great opportunities right now for buying properties but to be a successful investor you have to know your specific market well and what exactly to look for. Of course my products and FREE INFO can give you the knowledge and skills you need but you can also start getting educated just by reading the newspaper, talking to local investors and even joining real estate investing clubs. If you are a successful investor already, please share your stories and comments in the Forum and Blog sections. Thanks!!!
01-16-08 CNBC
Home prices in many regions (but not all) will continue to drop.
Larry Goldstone, Thornburg Mortgage president & CEO explained on CNBC today that there is very little interest in the secondary mortgage market for the purchase of non-conforming loans. That means that most borrowers will still find it more difficult, more expensive or just plain impossible to get a home loan. This translates to further drops in home prices at least until 2009.
- It is important to note that Thornburg Mortgage deals with upper end home mortgages and that conforming properties, especially in areas with low rental vacancy are still excellent investor opportunities. As I have said many times and will say again: don't buy a property with expectations of short-term market increase right now. Instead, smart investors are buying all kinds of properties right now at steep discounts and/or with nice cash-flow from long-term rentals. That is the way to invest.
01-13-08 AFP
Chargers deliver upsets at NFL playoffs!
Yep, the Chargers beat the Colts again this season to prove they really belong among the best teams! As a native San Diegan, I Lucky Larson, have to throw out some good press for the home team. I only wish they didn't have to go to New England next week to play one of the best teams ever assembled. Does this piece of news have any business application in real estate investing? - Nope.
01-12-08 Assosiated Press
Turbulence ahead for the whole financial sector.
Yesterday the AP reported that Shares of American Express (CoAXP) plunged just over 10% Friday after the credit-card lender warned that fourth-quarter earnings will fall and a slowing U.S. economy will hamper profit in 2008.
- Seemingly unrelated problems like mortgage defaults, lower home values and higher gas prices are actually a huge part of so many other aspects of our economy. When people feel unsure about their jobs, paying for basic expenses like heating and gasoline and also have seen their personal ATM (home equity line of credit) dry up, they are far less likely to spend, even on credit cards. And, they are less likely to be able to pay for things they have already purchased. This all translates to a bumpy road ahead for most of us including our retirement accounts and family budgets. So, where does the smart money go? Well, the price of gold is at an all-time high. Many investors are bullish on essential commodities. Real estate investors are snapping up bread and butter rentals, because the population is not going down and people have to live somewhere! In my Investor Kit I teach just what properties to look for in times like these.
01-09-08 Comcast News
Who is to Blame!?!?!
- So, when everything is humming along and everyone is fat and happy (and making money) few people want to rock the boat by asking the hard questions like: "Is there real value in these tech stocks?" or "Should the Fed really be cutting interest rates again?" or "Are there adequate checks and balances in the mortgage industry?" When the world eventually goes to hell, suddenly everyone wants to blame, call names and see someone's head on a platter. I see idiots pointing the finger at George Bush or Alan Greenspan, just like the millions who were sharpening their axes after the massive tech bubble crash in Spring 2000, when Clinton was in office. It is never just one person's fault but everyone wants to believe it is. At big corporations there may be a head or two that will actually be chopped off here and there, for example, Bear Stearns said yesterday that Chief Executive James Cayne will give up control of the fifth-largest U.S. investment bank after unprecedented losses from the sub prime mortgage crisis. For the most part though, during boom years, those who ask the tough questions are brushed aside as "whiners" by the same masses who will later get out the pitchforks and storm the castle. Lookout Bush! You are the Frankenstein de jour!
01-07-08 CNBC
Oil Prices Up, Unemployment Up and Real Estate Values Down.
- These three points together do not bode well for the average American. When oil skyrockets, goods and services get a little more expensive. When employment looks a little softer, people spend less of their hard-earned money. When real estate values fall and loans are harder to get, people spend less of the money they don't actually have. If money doesn't flow, recession is right around the corner. The way our economy has stayed relatively strong over the last many years is that most Americans feel that if they spend money, even borrowed money, there will be more where that came from. When the spending slows, a lot of businesses, investors and individuals will get hurt. Some will get lean and mean. A few will thrive! What will you do?
01-04-08 CNBC
Housing Slump May Bottom by Mid-2008
White House Council Of Economic Advisers Chairman Edward Lazear gave this comment in a live interview yesterday about the economy, "Housing has been unfortunately a negative and that should stop probably in the next six months."
- What kind of a quote is that? This kind of ambiguous comment doesn't even deserve a story! What exactly "should stop?" . . . Housing? Foreclosures? Declining prices? And what do "should" and "probably" mean? The only thing his statement really says is that even the guys at the top can't predict the future - Duh! Why do they even open their mouths? Because the American people want to hear something and the news agencies need something to report. What does this mean to you and me? Not much! Just go find real estate bargains and make some money! Don't count on price appreciation this year but when the market does pick up again it will be a bonus!
12-27-07 DQnews.com
Data Quick News confirms serious declines in many US real estate markets to close out 2007.
We don't need a data tracking service to tell us that some real estate markets are seeing 40% sales reductions and 5-10% price drops! Ouch! The evidence is obvious to anyone with eyes and ears. Of course, some real estate agents try to paint a rosy picture in these areas with remarks like, "Many believe the worst is behind us." and, "Some stats indicate a new buying trend." While these statements are not technically false, they are actually transparent attempts at a shaky "positive mental attitude." While some people do say that the "worst" is behind us, there are far more analysts that predict the worst numbers are yet to come. There will be many more mortgage defaults, foreclosures and discounted properties. As I have said many times, this will mean more and more bargain buying opportunities . . . if you know what you are looking for and what to do with it when you find it! There are many places to learn how to invest in real estate. I may be a little biased but I think my free info and products are the absolute best places to start.
12-24-07 Reported everywhere . . .
Retailers and economy watchers are holding their breath.
Why does everybody care so much if consumers go broke buying lots of crap over the holidays? Well, it is a good indicator of many factors that influence decisions for policy-makers, corporate CEOs, marketing companies and so on. If the retail numbers are up or down a couple percentage points it really won't have much effect on you and me. The big, national numbers with everything lumped together are just too broad to mean much unless there is a big swing up or down. The economy remains stable or strong so long as lots of money, goods and services keep flowing. The most important numbers are the individual sectors and companies that will give indications of true consumer trends like on-line buying vs. brick and mortar, video and electronics trends, discount clothing vs. brand names, etc. Further scrutiny in the early months of '08 will then reveal which companies positioned themselves well for the current consumer and which ones were left behind. We will also find out how net pfofit margins look compared to gross sales to see which sectors and companies are lean and efficient and which ones are bloated and inefficient. I like to bring things back to real estate whenever I can because that is our business here. I am not an economist but all things are tied together. Consumers with little equity and borrowing power do not spend as much. Bad news about the economy further dampens spending and lending. Tightening of spending and lending further slows the real estate markets. There is always money to be made or lost in any type of economy! If you know what is going on, you can be the one making money.
12-19-07 CNBC
New, tougher rules for mortgage lenders . . .
New, strict guidelines were announced by the FED yesterday regarding lending practices. Some of the rules will apply to only higher-risk, sub-prime loans and some rules will apply to all loans. The laws are meant to protect the American people from unscrupulous lenders who have in the past taken advantage of many home buyers. Many of these practices have been a huge factor in the high rates of defaults, foreclosures and the current mortgage crisis.
- What does this mean to most of us? Well, some of the shady characters in lending that liked to whack borrowers with surprise fees, higher rates and big, back-end yield spreads will have to shape up - if they are not bankrupt already! The bigger banks may actually loosen some of their self-imposed restrictions now that the "Mighty FED" has spoken. Investors like us will find that it is still difficult or impossible to get the "easy money" we were getting used to until this year. We will have to see how the actual implementation of these new rules plays out in the coming months.
12-15-07 All the news channels reported . . .
Professional baseball is completely corrupted by illegal hormone use.
What does this mean to your and me? Absolutely nothing! As if these overpaid, attention-hogs actually have anything in common with the average guy or girl. Pleeeaaase spare me! I do, however, feel for all the young people in sports today. They have just been shown that as long as you out-perform the next guy, it doesn't matter if you cheat! Your team doesn't even have to win. You just have to get yourself famous and you've got it made.
12-13-07 Reuters reported two stories . . .
New FHA loan proposal will help troubled borrowers,
Fannie Mae and Freddie Mac anticipate more big losses in '08.
While the first story explains that up to 200,000 homeowners will be helped by the new guidelines for FHA loans, the second article still paints a bad future for the mortgage industry.
- There are no easy fixes for this mortgage mess and it is debatable whether the new FHA guidelines will affect anything on a national scale to make a real dent in the problem. However on an individual level, if you are a homeowner, struggling to pay your sub-prime, ever-increasing monthly payment, this could be your savior. You will be able to lock in a much better loan at a fixed rate and your future will look predictable and hopeful again. But, in areas like Detroit, MI, Stockton, CA , San Bernadino, CA, and Las Vegas, recent buyers have lost so much equity in the last 18 months that a better loan will not fix their problem. Many of these owners are simply walking away from their homes. That is the beginning of the sad expectations of Fannie and Freddie!
12-02-07 Reuters
Housing Inventory UP, and Prices DOWN!
"Lenders have tightened underwriting standards, and the turbulence in the capital markets led to a spike in the cost of jumbo loans," Frank Nothaft, Freddie Mac's chief economist, said in the statement. That added to the weight on prices from house inventories at their highest since 1985, he said. The Freddie Mac Conventional Mortgage Home Price Index Classic Series fell an annualized 1.3 percent last quarter, compared with appreciation of 0.5 percent in the second quarter, the No. 2 home funding company said in a statement.
- So, my investor friends, what does this news mean to you and me? Yep, you guessed it. More opportunity for bargains! That is a common theme on this site. You will keep hearing it over and over. Remember though that not every opportunity is a great deal. Not every bargain price is the right deal for your investing style. If you don't have renovation skills or contacts yet, then don't buy a fixer-upper. If you have terrible credit, getting a no-money-down loan will be expensive if not impossible. You have to know your market, your abilities and limitations. My first few deals were very creative because I didn't have money, skills or contacts. I still made lots of money and so can you! The free information on this site and my products will help you build your real estate empire!
11-28-2007 Source: (Forbes 11-07-07)
Don't Cut Rates, Cut Inventory By Any Means Possible
In his recent Forbes article: 10 Ways to Solve the Housing Crisis, Matt Woolsey really hits the mark.
The response of the Fed to cut rates in order to provide short-term liquidity isn't the solution to the housing crisis, says Glenn Kelman, CEO and president of Redfin, a Seattle-based Internet brokerage, who points out that rates are already very low. "Artificially stimulating demand is what got us into trouble in the first place," he says. Instead, cutting supply is crucial
“The market will only hit bottom after builders cut construction and sellers slash prices," says Mark Zandi, chief economist at Moody's Economy.com. "The longer builders (create new inventory) and sellers hold on, the longer the market will struggle."
- Mr. Woolsy's segment above on cutting inventory is the real key . . . but it won't happen until natural forces like builder bankruptcies force a reduction. No federal mandate or voluntary cutback by developers will ever materialize. Builders build and then use every tool and trick in the book to sell that inventory. That never bodes well for areas that have lots of land to keep developing. It's gonna be a bumpy, ugly ride!
Reuters 11-23-07
Greenspan - Housing price declines will keep declining.
Former Federal Reserve Chairman Alan Greenspan said on Friday that U.S. house prices have not bottomed out after a crisis in the subprime mortgage market. "The markets are becoming aware that the decline in U.S. housing prices is not stopping. It is at an unprecedented pace compared to the last 50 years," Greenspan said.
- No big surprise here. Inventory of unsold homes is rising in most US markets and the law of supply and demand states that when supply is up . . . prices go down. This means that the next year or more will still be a great time for bargain hunters! Go buy something will you! - just make sure you you get a really low price to allow flipping or that you get a positive cash flow rental and can hold for a few years. In several years (maybe only 3-5) you'll be sitting on a gold mine! - Happy hunting!
By Carole Moore • Bankrate.com 11-18-07 I read this article today and found it irrisistable not to pass it on. Carole makes some very good points that most people screw up. She recommends some VERY conservative fiscal strategies which I mostly agree with, so I have added my comments in Red. The whole article is: BankRate.com
9 ways to ruin your retirement
1. Buy more home than you can afford - TRUE! but she doesn't give any numbers! I say no more payment than 40% of Gross monthy income.
2. Base your projections on today's costs - Duh, we are all very aware of inflation!
3. Raid your 401(k) or cash it out - Unless it is a self-directed way to invest in REAL ESTATE!
4. Count on Social Security - Totally True! - Read my article here.
5. Believe your benefits will never change - Nope, you can't trust anyone else with your future -Again, read my article here.
6. Allow your kids' needs to trump yours - If you neglect your own future, then you will only be a burden later!
7. Count on your partner's income - As the bumper sticker articulates "SH_ _ HAPPENS!" so don't bet your whole future on someone else!
8. Plan to work forever - Health problems and other unforseables can change everything! - and being a greeter at Wally World is over-rated.
9. Don't worry about health issues - Hah! I'm bullet-proof. Nothing can possibly happen to me!
CNBC 11-16-07
Big and small investors are looking to buy.
Savvy investors are looking for great deals on some long-term holds. The next several months is the time to buy some of the best bargains this country has seen in many years. (The big cheese at the nations #1 lender, Wells Fargo, recently said that the housing market hasn't been this bad since the depression!) The increase in foreclosures can mean fantastic opportunities for investors that know what to do.
- Do you know what to do? The smart money is on discounted buying and 3-5 year holds. This article from CNBC has some good basics (http://www.cnbc.com/id/21304392) and of course this website's free info is a freakin' bonanza of insight to help you cash in on the foreclosure fiasco.
RealtyTrac® (realtytrac.com) 11-14-07
Foreclosures are Increasing - Big-Time.
RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, today released its Q3 2007 Metropolitan Foreclosure Market Report, which shows Stockton, Calif., Detroit and Riverside-San Bernardino, Calif., documented the three highest foreclosure rates among the nation’s 100 largest metropolitan areas during the third quarter. “Although cities in just three states — California, Ohio and Florida — accounted for more than two-thirds of the top 25 metro foreclosure rates, increasing foreclosure activity was not limited to just a few hot spots,” said James J. Saccacio, chief executive officer of RealtyTrac. “In fact, 77 out of the top 100 metro areas reported more foreclosure filings in the third quarter than they had in the previous quarter.
- Ouch! It's bad and getting worse! When will things turn around? Check out my recent article on Market Recovery.
CNBC reported 11-08-07
Bernanke predicts Housing Market to bottom-out by spring.
Ben Bernanke (Fed Chairman) predicts rising rates of loan default but that the bottom will come in spring 2008.
- Hmmmm . . . In my humble opinion, that is freakin' nuts!!! Actually, I believe that Bernanke doesn't believe his own optimism and I think his words are simply a well-meaning attempt at verbal reassurance to lenders and borrowers. Either way, there are better opportunities than ever to buy real estate right now. You just have to choose carefully and get 35%-40% discount for flipping or a discount AND a nice positive cashflow for a 2-4 year hold. Now, go build your empire!
Reuters/CNBC reported 11-02-07
Foreclosure Rates Double and will continue
The rate of foreclosures in the US will continue to be higher than normal for the next 18 months as the mortage crisis continues, a senior U.S. Treasury official says. "A rising foreclosure rate during a housing downturn is not surprising, but largely because of lax underwriting in recent years, especially in the subprime market, a higher than usual number of homeowners will face delinquency during the next year and a half," said Robert Steel, undersecretary for domestic finance today, Friday Nov 2nd, 2007.
Yep, that's what most the experts are saying - AND that means there are some great opportunities for buying bargains for the next couple years!!! Sweeeeet! I have made 6 offers this month. We'll see what pops!
Rueters (and everybody else) reported 10-31-07
Bernanke and the Fed cut rate by .25%
The Fed decided to cut its key overnight lending rate to 4.50 percent from 4.75 percent yesterday. This move was expected by most of the bean-counters that speculate on stuff like that. This move will lower a variety of rates related to short-term rates, like those on credit cards and home equity lines. It may also allow banks to lower rates on deposits. What does it really mean? Just that the big decision-makers at the top are not buying the smoke-blowing by all the economy "experts" that paint a solid, rosy picture of economic growth. If things were really that rosy, the Fed wouldn't cut rates to try to stimulate more over-lending and over-spending. Is that a good thing?
Here is The Fed's actual statement: http://www.cnbc.com/id/21563607
Associated Press and MSNBC reported 10-17-07
GMAC and other mortgage lenders have cut jobs by as much as 25%!
Yep, the mortgage companies are in trouble because of the bad loans they made and it is comming back to bite them hard. Not only are they cutting jobs, they are tightening loan guidelines which makes it harder for us investors to get money to buy all the bargain properties out there! I hve some secrets weapons to getting loans. It's all about finding the right lenders and the right properties!
Associated Press reported 10-17-07
NEW YORK - Oil prices set a new record of $89 per barrel Wednesday.
Ouch, that doesn't look good for Hummer owners and those of us who heat our houses with crude-related fossil fuels! Of course it also effects the cost of everything which has to be delivered anywhere . . . which is pretty much everything! More inflation is on the way!
MSNBC and Assosiated Press 10-16-07
The Mortgage and Housing problems are worse than expected . . .
“Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy,” Paulson (Treasury Secretary) said in a speech to Georgetown University’s law school. “The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.” Paulson further said that a housing problem is “not ending as quickly” as hoped and that “it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.”
-Yep, that is pretty bad news for some and great news for entrepreneurial-minded opportunists! There is big money to be made in the aftermath of others' overconfidence!
Associated Press reported 10-16-07
WASHINGTON - A deepening housing slump probably will be a “significant drag” on economic growth into next year and it will take time for Wall Street to fully recover from a painful credit crisis, Federal Reserve Chairman Ben Bernanke warned Monday. Bernanke once again pledged to “act as needed” to help financial markets — which have suffered through several months of turbulence — function smoothly and to keep the economy and inflation on an even keel.
“Conditions in financial markets have shown some improvement since the worst of the storm in mid-August, but a full recovery of market functioning is likely to take time, and we may well see some setbacks,” Bernanke said in a speech to the New York Economic Club.
DUH!!! I am not a freaking genius but this is just blabber to make it sound like the guys at the top know what they are doing. In the end, they throw some ideas at the wall and see what sticks. - Nothing definite, no real time-lines or visible benchmarks. A few years from now when all the mortgage crap has worked its way through, these same guys at the top will take credit for "helping our great nation weather the storm!" - Blah, blah, blah . . . . In the mean-time, I am gonna take advantage of the downturn and crank some cash. How about you!?!
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