Mortgage Market News for the week ending April 11, 2008

Fed Minutes Reveal Growth Concerns While there were no quiet days in the mortgage market during the week, the enormous swings in rates seen recently were absent. The sparse economic news did little to change the outlook for future economic growth and inflation, and the net result of a series of medium sized daily rate movements was a slight drop in mortgage rates for the week. The most notable economic news during the week was the release of the minutes from the March 18 Fed meeting. According to the minutes, the three quarters point rate cut was made to help avoid a worse than expected downturn in economic growth. The Fed forecasted that rate cuts and government stimulus packages will lead to faster economic growth during the second half of the year. Falling home prices and turmoil in financial markets were cited as the two most significant reasons for the slowdown. Two of the ten voting Fed officials wanted a smaller rate cut due to inflation concerns. Investors are now evenly split between an additional quarter point or half point rate cut at the next meeting on April 30. In the housing sector, the February Pending Home Sales index fell a little more than the expected from January, and the index was down -21% from one year ago. Pending Home Sales are a leading indicator of future housing market activity, so the next Existing and New Home Sales reports may show small declines. The National Association of Realtors (NAR) latest forecast predicted that conditions will remain flat for the next few months, but that activity will pick up during the second half of the year. The Chief Economist of the NAR expects that higher mortgage loan limits will lead to increased sales later in the year.

 

Brought to you by:

Corey Phelps

Front Street Mortgage

Phone: 231-360-7283

Mortage News for week ending April 4, 2008

Economic Weakness Lowers Mortgage Rates Comments from Fed Chief Bernanke and weaker than expected data from the job market painted a grim picture of current economic conditions. Slower economic growth generally leads to lower inflation, which is good news for mortgage markets, and mortgage rates dropped moderately during the week. Wednesday, Bernanke testified before Congress. The focus was on the Bear Stearns rescue plan rather than current economic conditions, but he did outline the Fed’s latest economic outlook. While acknowledging that the economy is in the midst of a downturn, he suggested that the economy will strengthen in the second half of the year, and he expects that growth will be positive in 2009. He believes that Fed rate cuts and government stimulus packages will help lift the economy. He also predicted that inflation will moderate in future months. Friday’s Employment report fell short of even Wall Street’s reduced expectations. Against a consensus forecast for a loss of -50K jobs, the economy lost -80K jobs in March, and the figures from prior months were revised lower by an additional -67K. This marked the worst monthly results since March 2003. Once again, the construction and manufacturing sectors performed poorly. Average Hourly Earnings, a proxy for wages, rose at the expected rate. Overall, even though the job market performed very poorly during the first quarter of 2008, the current Unemployment Rate of 5.1% is still reasonably low by historical standards, and the Fed thinks that a recovery is not too far away.

 

Brought to you by:

Corey Phelps

Front Street Mortgage

Phone: 231-360-7283

Weekly Mortgage Update

Week of: Monday, April 07, 2008

Present Market Conditions
Rates eased slightly last week with the release of March’s Jobs Report. However, in his testimony before the Joint Economic Committee of Congress last week, Chairman Bernanke stated that the Federal Reserve remains cautiously optimistic on future economic growth. Bernanke predicts that growth is expected to proceed at or a little above its sustainable pace in 2009, bolstered by a stabilization of housing activity, albeit at low levels, and gradually improving financial conditions.

Expectations
With the Economic Calendar being a little lighter this week, look for investors to hold pending the Jobless Claims report due Thursday and the Consumer Sentiment Report due Friday.

Guidance
With current mortgage rates still remaining at historically low levels, now is the best time to contact Georgie so she can structure a mortgage solution to meet your financial goals.

MSHDA update!

Hello!  There has been some exciting MSHDA changes.  The new income limit for 1-2 persons is $73,080, for 3 or more the income limit is $85,260.  Now, get this………the sales price limit has increased to $224,500! The current 30 year MSHDA rate is at 5.5% Call me if you would like more details. Have a great weekend. 

Georgie

Real Estate Recovery – Not an April Fool’s Joke

REAL ESTATE RECOVERY

 

This is not an April Fool Joke.

 

Throughout Michigan there are signs that the real estate market is showing major signs of recovery throughout the State. For example in the Grand Traverse Region between 2006 and 2007 residential units sold was only down by 6.8% when compared to the major reduction between 2005 and 2006 when there was a reduction of more than 15.4% and the 1^st quarter of 2008 numbers appear to be significantly ahead of the 1^st quarter 2007.

 

Recovery seems to be underway as evidenced by reduced residential inventory, foreclosures off by more than 7.9% throughout Michigan, good buying opportunities, Michigan now ranked # 12 in the nation in foreclosures down from # 1 less than one year ago and builders looking at projects as evidenced by recent applications for hearings and land use permits at the township level. As reported by CNBC today some buyers are acquiring land for future projects even in states like California where foreclosures have dramatically increased in recent months.

 

Additionally, we are seeing the extremely pro-active involvement of real estate associations who are finally helping their members by sponsoring and attending events designed to bring out the buying public through education and awareness of market conditions.

 

In Traverse City for example the Traverse Area Association of Realtors is sponsoring a free public real estate expo “The Housing Game” this weekend specifically designed to put a positive spin on the housing situation through education, awareness and exposure to Realtors, banks and builders.

 

In addition, some Realtors are finally getting in a pro-active mode again falling back on old fashion techniques such as contact with relatives, friends, former clients and extensive use of the internet.

 

Great buying opportunities exist throughout Michigan and some investors both foreign and domestic are finally taking advantage of the situation. If you are a seller now is the time to involve a professional – not your best friend because he or she needs a listing.

 

Now is the time to participate in the recovering real estate market by contacting a professional at Remerica Traverse City.

Brent Nichols

Co-Broker/Owner

231-941-8283

brent@remerica.com

 

No Time for Sleeping Sellers

Positive thoughts are essential in this down housing market and it is time for sellers and Realtors to go back to basics. The technology age is in “hyper-overdrive” when it comes to the housing sector with nothing but one negative thought after the other following, and feeding on, the next set of negative statistics and hyped by the media.

 

While Michigan may have led the nation into the housing recession due in not small part to the inability of the American automobile industry to get their act together (still promoting horsepower and gimmicks rather than efficiency, miles per gallon and cost per mile) we are seeing great real estate buying opportunities but can do much better as both sellers and Realtors.

 

So what is it that can be done to enhance home sale opportunities?

 

First, a few relevant concepts and factoids that seem to be in play at this time:

1.    Any appraisal more than six months old is worthless.

2.    Neighborhood sold properties used in market analysis may no longer be valid.

3.    Banks have an inventory of foreclosures negatively impacting resale homes and new built homes.

4.    Many of the articles and “breaking news” factoids are repeats of yesterday’s news and simply repackaged and presented as new – over and over.

5.    Testing the water to see what my home is worth is a very antiquated concept.

 

So what to do?

1.    Price it right and aggressive from the beginning. Be prepared to reduce the price every couple of weeks.

2.    Offer a substantial commission or Realtors will move to one with a larger commission because of the inventory available – buyers market in every way!

3.    Clean, repair, polish everything, trash out, power wash; lighten the logistics load as it is truly “white glove” inspection time. If there ever was a time to complete cleaning and fix up now is the time. Buyers make their “like-don’t like” decision within seconds of entering your home.

4.    Offer a selling bonus to the selling broker or other incentives – anything to get people into your home.

5.    Hire a broker that understands the internet and lists on multiple sites – a sign in the ground and on suedoe.com or joedoe.com won’t get your home sold or even seen on the internet.

6.    Don’t hire a friend to sell your property. You are selling the largest asset that you most likely own and you need a professional who can represent YOUR interests. Amateur hour it is not.

7.    Be sure your Realtor can string two thoughts together and write a complex sentence.

8.    See if your agent answers his/her phone after hours and on the weekends. Buyers want to talk with someone now when they call, not to some answering machine or uninformed agent.

9.    Give any offer, especially a first offer serious consideration as it may be the best one you will receive. Don’t pass up an offer believing that a better offer is just around the corner.

10. Be prepared to negotiate.

 

Real estate sales by nature are adversarial. You have a buyer and a seller how can it be anything but adversarial? Somebody is going to beat the other person out of a few bucks and for me that is a very negative experience.

 

You need a tough, tested and sometimes not so nice professional negotiator who will represent YOUR interests.

 

You know where to come when you need one!

Written by:

Brent Nichols

Co-Broker/Co-Owner

231-941-8283

brent@remerica.com

Diesel Prices Impacting Home Buying?

Items for contemplation:

Being an old diesel head, by my calculation diesel fuel is up in the last year more than 40%.

Because diesel fuel is used for every form of transportation (trucks, trains, airplanes, delivery trucks) it should not be any surprise that the cost of food products, durable goods, building materials, equipment, you name it has increased in cost at far greater rate than the general inflation rate.

The loss of the Bear Stearns investment house and purchase by JP Morgan supported by the FED clearly is an indication of just how deeply the fuel and housing crisis is impacting our daily life and, for us involved in the housing sector, the ability to achieve the American dream of home ownership.

Across the board we are seeing major builders in turmoil, small and large builders in foreclosure, banks making margin calls, investors loosing their nest eggs, personal portfolios being attacked by recessionary fears, the depreciating dollar, the ever stronger Euro, oil going up daily and no end in site for downward price adjustments in home sector.

Because Michigan led the nation in an uncontrolled economic flat-spin (sky-divers term for an out of control free fall) we are now seeing buying opportunities far ahead of the nation. Now is the time to buy individual homes; now is the time to buy packaged foreclosures; now is the time to buy development properties; now is the time to invest in our State because it is the right economic decision for you at this moment in time.

So what does diesel fuel have to do with housing, simply put everything! Every building product used in some way is dependent upon the consumption of diesel fuel. Generators, trucks, cement mixers, delivery trucks, processing plants, worker to/from work transportation etc.  At the moment the impact of soaring diesel fuel costs is just beginning to be understood and the dramatic impact of diesel fuel has not yet been fully impacted in the housing industry as it has been in some sectors of the economy (freight haulers for example).

Bottom Line: Buy now while the price of homes and building materials are at record level lows and before the price of diesel begins to boost the price of homes and commercial projects.

 

Brent Nichols

Co-Owner/Co-Broker

brent@remerica.com 

Listing Activity & Market Report

We are excited to have more positive news for you!

First, we have hired a full time licensed assistant reporting only to the Nichols Sales Team. Ms. Rebecca Adler brings to our team many years experience as an office manager, sales assistant, broad real estate experience and extensive knowledge of commercial real estate sales and marketing. Some of the tasks Rebecca will be handling are: seller communications, general sales, database management, Team listing processing, seller & buyer management/meetings, transaction coordination, assistance with recruiting & Remerica Northern Michigan franchise sales. Please contact Rebecca anytime and feel free to work directly with her for any reason. You can expect to hear directly from her from time to time and of course the Nichols Team will remain intimately involved.

Secondly, we are excited to announce that we are continuing to grow. Several months ago we started the process to purchase a building to relocate to by June 1st, 2008. Be assured it will have lots of space to grow into and ultra high visibility. Our hopeful new location will dramatically add to our companies’ exposure and will allow us to display our listing inventory directly to an area of heavy drive-in and walk-about traffic. Additionally, our on site agent capacity will also dramatically increase.

2008 Home Builders Expo: Our display again this year at the Home Show was a tremendous success. We were able to gain good company recognition as well as interact directly with the buying public. Our new Remerica display booth stood out as one of the best displays at the show!

“Housing Game” seminar on April 5th at the Hagerty Center in Traverse City is where you will find us next in a continual effort to locate qualified buyers for your property. We will be there all day & hope to benefit from this highly publicized event sponsored by local banks, the Chamber of Commerce, Record-Eagle, Remerica and the Traverse Area Association of Realtors. Attendance is free! Please come on in and visit us at Booth #15.

Market Talk: As you already know the market as a whole continues to be very difficult and may continue to weaken as indicated everywhere we look on a daily basis. Pricing continues to be the number one factor standing between a simple listing and an actual sold property.

Our personal observations do seem to point to an upturn in local sales sooner than the rest of the country. This is simply a result of the timeframe that Michigan went into the current recession. In other words, we seem to have hit the bottom already, while the rest of the country is just now beginning to see the hill. Hopefully we are correct & we will see a consistent upturn soon.

Furthermore, the Michigan State Housing Authority will soon be implementing new loan refinance programs as a part of its “Same the Dream” campaign which is targets at citizens that may be facing foreclosure. It is our hope that these kinds of proactive solutions & continued low-cost money will assist the economy there in Michigan & will help turn-around the housing/property market sooner than later.

Thank you for your continued loyalty & trust during these trying times.

Sincerely,

Brent & Brad Nichols

Co-Owners/Co-Brokers

brent@remerica.com

brad@remerica.com

Weekly Market Forecast

Week of: Monday, March 17, 2008

Present Market Conditions
The Federal Reserve, in an extraordinarily rare weekend move, took bold action Sunday evening to provide cash to one financially squeezed Wall Street investment house, Bear Stearns. This a fresh effort to instill confidence in the global markets based on problems arising from the global credit crisis. “These steps will provide financial institutions with greater assurance of access to funds,” Federal Reserve Chairman Ben Bernanke told reporters in a brief conference call Sunday evening. U.S. Treasury notes rose, causing the 10-year yield to fall 10 basis points to 3.36 percent as traders bet the U.S. central bank will lower its benchmark rate by a full percentage point when it meets this week.

Expectations
Expect one of the most volatile, media hyped news weeks in recent memory. According to Freddie Mac’s Chief Economist, Frank Nothaft, “The combination of lower mortgage rates and lower house prices contributed to a more affordable market for homebuyers. The National Association of Realtors® reported that January’s Pending Home Sales Index held unchanged from December, contrary to the consensus expectation of a one percent slide, signaling that existing home sales in February could hold steady from January’s level.”

Guidance
Now is the time for consumers to consider taking advantage of historically low mortgage rates and attractive housing prices. Contact Georgie to ensure you structure a solution tailored to compliment all your financial goals.

Traverse Mortgage Corporation   (231) 947-9700        (800) 968-3680 

Market Update & MSHDA Change

MSHDA increases the rate to 5.375%
  
Week of: Monday, March 10, 2008 

Present Market ConditionsTremendous volatility was the continued theme for financial markets last week. Investors and consumers are hopeful that aggressive Federal Reserve actions coordinated with strong banking industry reforms might counter much of the negative news that is dominating the major media outlets. Record high oil prices and the latest job loss numbers have created the most recent round of negative sentiment. 

ExpectationsAnother expected Feds Funds rate cut on March 18th will, at a minimum, add some psychological improvement to the housing and financial market woes. FNMA and FHLMC raised their lending limits, allowing for greater access to capital and the ability for the nations two largest investors to help struggling homeowners refinance and purchase homes. Middle range fixed rate mortgages, those with fixed terms between 5 and 7 years, should become very attractive over the coming weeks and months. 

GuidanceNow is an excellent time for consumers to take advantage of the historically low rates. Contact Georgie to discuss a tailored mortgage solution to meet your unique financial goals. Traverse Mortgage Corporation(231) 947-9700  (800) 968-3680