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Down economies reduce consumer spending, creating a bind for retailers. As excess inventory collects dust, companies have little choice but to drop prices in hopes of selling more product.

For the bargain shopper with extra cash right now, there are some terrific deals to be had out there. This 4-minute piece from NBC’s The Today Show highlights a few of them.

• Wines over $25 per bottle reduced up to 50%
• High-quality diamonds reduced up to 30%
• Summer rental homes reduced up to 50%

Furniture is another discounted item.

Now, these aren’t everyday-type purchases, but when the economy turns around for good, the bargain-priced items highlighted in the video are expected to return to their former price levels.

Even some items that may not go up in value after the recession ends may be good deals if they keep a monthly payment lower. Buying or leasing a car now for example might allow you to retain a lower payment and lower ongoing expenses if you’re buying a new car as auto manufacturers are creating cash back incentives, low lease rates, and great loan terms to motivate people to buy cars.

If you have the means, therefore, consider taking advantage while costs are down.

Sometimes, saving money on your mortgage is as simple as picking a better closing date.

It’s all about Rate Lock Commitments.

A Rate Lock Commitment is a bank’s promise to honor a specific mortgage rate for a specific period of time.  They are a lender’s prediction of what mortgage markets will look like at some point in the future.

The future is murky, of course, so it follows that the longer the rate lock, the higher the bank’s corresponding interest rate.

Banks have to compensate for “time risk”.

Rate locks typically come in 15-day increments with the 30-day lock serving as the basis for all other pricing:

• 15-day rate lock : 1/8 percent lower than the 30-day rate lock
• 30-day rate lock : The basis for all other pricing
• 45-day rate lock : 1/8 percent higher than the 30-day rate lock
• 60-day rate lock : 1/4 percent higher than the 30-day rate lock

These aren’t exact figures, of course.  Spreads between rates can (and do) vary from lender-to-lender.  On average, though, they’re fairly close.

This is why choosing a closing date is so important to your mortgage rate. A 45-day closing may reduce your rate 0.125% versus a 46-day one.

Assuming a $250,000 home loan near today’s rates, that’s an annual difference of $236.

So, when negotiating a contract on a home, keep in mind how rate locks work to make sure you get the best rate possible. The shorter the length of your rate lock commitment, the more money you might save long-term.

A second money saving trick is adjusting your closing date towards the end of the month. At settlement you will pay interest from the date of settlement to the end of the month you settle in. For example, if you settle on the 5th of the month, you will pay 25 days interest. If you were to settle on the 25th of the month, you would only pay 5 days interest, reducing the cash needed at settlement by 20 days (or 2/3rds of your monthly interest payment). While this doesn’t actually save money, it does help your cash flow at the time of settlement (when money always seems a little tight).

You might think it even smarter to settle on the last day of the month to minimize the interest payment, but with so many people trying to settle then, potential problems seem to pop up in timing which might end up with your settling on the 1st day of the following month if anything gets delayed, costing you even more cash than you wished – so keep a little cushion in there for surprises, and you should maximize your cash flow, have a few days to move before your next rental payment, and breath a little easier.

Last Tuesday — for the first time in a long while — members of the press met the monthly Case-Shiller Index data with enthusiasm. And why shouldn’t they? 19 of the 20 measured markets showed a slowing pace of home price decline in April.

Here are some of the headlines about the story:

• Case-Shiller Home Prices Decline Only 18% (Business Week)
• Case-Shiller Less Bad (Seeking Alpha)
• Home Prices In 20 Cities Drop Less Than Expected (Bloomberg)

Now, the headlines feel negative, but they’re actually highlighting some key strengths in April’s figures. For example, nearly half of the Case-Shiller markets posted gains in April and all but one showed month-over-month improvement.

It’s a step in the right direction but doesn’t mean that housing has turned around for good.

We have to be careful about how we interpret the Case-Shiller Index because it’s an imperfect housing gauge. The most obvious Case-Shiller flaw is that it only measures home values in 20 cities nationwide and they’re not even the 20 biggest cities.

Houston, Philadelphia, San Antonio and San Jose are excluded from the report and each ranks among the country’s 10 most populous areas. Because of that, I usually don’t like to quote the Case-Schiller Index, because we live in Philadelphia, and if our data is not included in the calculations, using it to discuss our market is an inherently flawed conversation.

That said, the report is still paid attention to nationally because the Case-Shiller Index is thought to identify broader housing trends and that helps to shape economic policy, and the idea of a single index is attractive to people writing about housing.

Not only versus last month but also versus last year, the pace at which home values are falling appears to be getting slower. This is the third straight month Case-Shiller has reported as such.

Now, three months makes a trend, but the data has to stay strong through the summer months to mark a bona fide turnaround. If the Case-Shiller Index shows strength for May and June, it could be the signal for which the markets have been waiting.

Motorized garden tools come in two varieties — gas-powered and electric-powered.

If you take a close look, however, you’ll notice that professional landscapers and gardening experts almost always choose the gas-powered types. This is because gas-powered garden tools both outperform and outlast their electric counterparts.

On the downside, they’re an environmental nightmare.

According to the California Air Resources Board, a typical 5-horsepower, gasoline-powered lawnmower produces more pollution in 60 minutes of operation than a Toyota Prius produces in 800 miles of driving.

The environmental pollution created by lawn care products is one of the reasons why the Eco Trimmer by Lehr is getting such good buzz.  As the first propane-powered garden tool, the Eco Trimmer combines the lawn care power of a gas-powered tool with the environmental accountability of an electric one.

The propane-powered tool emits 96 percent fewer carcinogens than a gas-powered tool and is completely non-toxic to ground and soil.  Its performance is highly-rated, too.

The Eco Trimmer sells for about $200 on Amazon.com and is available in most major hardware stores.  You can read more about the product and its environmental impact at the official Lehr website.

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If you’ve ever been grilling for friends or family and emptied your gas tank mid-burger, you’ll appreciate the GasWatch Propane Level Indicator and Safety Gauge.

For less than $20, the fits-most-grills appliance connects between the gas tank and the regulator, clearly displaying the propane left until a refill is needed.

When the needle falls to red, grillers can expect another 15 minutes of cooking until total flame out.  The method is reportedly more reliable than the magnetic tank gauge method that involves pouring hot water down the side of the tank and reading a temperature-sensitive ink spot.

Additionally, if the GasWatch gauge senses a leak, it shuts down the flow of propane to keep the grill from catching fire.

July 4th is behind us, but there’s lots of grilling left in the season.  Pick up a GasWatch propane gauge at a local Home Depot or hardware store, or buy one online at Amazon.com.

Last week’s jobs report is the latest data point to drag down rates for today’s home buyers and would-be refinancers.

As reported by the government, the national Unemployment Rate rose to 9.5 percent in June — a 25-year high.

As the percentage of out-of-work Americans grows, households have less disposable income to pump back into the economy.

And so, because consumer spending accounts for two-third of the economy, the growing ranks of the unemployed are forcing markets to change expectations about when the U.S. economy will reach its full recovery.

Inflation is the enemy of mortgage rates.  The perceived absence of inflation, therefore, can be its friend.

With fewer working Americans, we can expect slower economic growth plus a smaller probability for inflation over the medium-term. This is why mortgage rates are lower of late, off by as much as a half-percent from the peak.

Home affordability is up. And in a market like Philadelphia where prices have remained typically affordable, that may account for the additional activity we are seeing this summer as home buyers work towards attaining future security for their families through home ownership.

So if affordability is up, should you be looking to see what might be in your best interest?

The Pareto Principle is a statistical concept most commonly known as the 80/20 Rule, and is commonly applied in a variety of situations. for example “20% of the salesmen make 80% of the sales” or put another way “20% of your efforts generate 0% of your results”

Iin other words 80 percent of the effects come from 20 of the causes according to this principal.

Apparently, the 80/20 Rule applies to foreclosures, too — at least according to data compiled by foreclosure-tracking firm RealtyTrac.

Based on data from May, 11 states accounted for 80% of the country’s foreclosure activity. The remaining 20% was spread across the 39 others.

That’s 80/20 almost to the tee.

The disparity goes deeper that that, though. The top three states in RealtyTrac’s list — California, Florida, Nevada — were home to half of May’s foreclosure-related actions.

Clearly, foreclosures are concentrated in certain geographies, generally where the spike in the real estate market was the greatest. Put another way, the places with the greatest increases, saw the greatest decreases in price, and were subject to the greatest abuses in mortgage lending. As a result these states are seeing the largest amount of foreclosures

But, even in Pennsylvania,where we are not suffering from as difficult a market as other places in the country, foreclosures still impact us. This is because mortgage lenders are often national companies, lending in all 50 states.

When home loans go bad — in any state — lenders respond by increasing downpayment requirements and by adding new borrowing hurdles. If you’ve applied for a mortgage in the last 18 months, you’ve experienced this phenomenon personally.

On the other side, if you’re a home buyer in a foreclosure-heavy state, you’re finding terrific value versus several years ago. It’s one reason why Existing Home Sales in the West Region are up by 19 percent from last year, for example.

Water high in mineral content — specifically calcium and magnesium — is more commonly known as “hard water“.

There’s no negative link between hard water and human health, but hard water has been known to mess with a homeowner’s penchant for cleanliness.  Over time, mineral deposits can collect and “stain” anywhere that there’s running water.

In the home, hard water stains are most commonly found in bathrooms.

In this 2-minute video from Rachel Yatuzis, we see the Hard Water Stain Remedy in action.  It doesn’t take much time, or even much effort.  Removing the stains can be as simple as mixing lemon juice, vinegar, and baking soda.

The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged last week on June 24th within its target range of 0.000-0.250 percent.

The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is not slowing with the same speed versus just two months ago and that financial markets, in general, are improving.

These are two signs that the country may be emerging from recession, if it hasn’t already. ANd that means good news for the real estate market which usually leads the way into and out of economic times like these.

The news isn’t all good, however. The Fed made a point to highlight the potential hazards the nations faces on its path to economic recovery:

• The prices of energy and commodities have been rising


• Job losses are still mounting nationally


• Businesses are reducing capital expenditures

Market reaction to the Fed’s press release has been muted.

With no new stimulus and no new “tools” to spur the economy unveiled, Wall Street is business as usual. Mortgage rates are unchanged post-FOMC today.

So it would seem when all is said and done, that even if we are coming out of the toughest times, there will still be plaenty of challenges to meet us on the way out.

The FOMC’s next scheduled meeting is August 11-12, 2009.

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Once Upon TV..

Do you remember the show, That Was the Week That Was? I guess I am showing my age. It was hosted by David Frost and it was a satirical look at the week in politics. Well, I feel like this past week in my real estate business was like that. It was a very different week than anything I have experienced in over two years.  I  received multiple offers on two of my listings. One listing went under agreement in two days and I sold two of my own listings. In all, five properties went under agreement and now I am concerned that my listing inventory has dwindled. I am hoping that it is not a satirical look at the way real estate has been, but instead a change that will stick.

So what happened?

Well here is my vision. Interest rates went up. That seems like a bad thing, but buyers that have been sitting on the fence, waiting for the best rate or the bottom of the market, got scared when the interest rates climbed to the highest they had been in 7 months. So they jumped of the fence. In addition, sellers have become more realistic and are finally pricing their houses at the current market price, not the market of three years ago. Put them both together and you have a great situation for everyone, including the real estate agent.

So the question is…

Is this the week that was, or is it the weeks that will be? Although increased, mortgage interest rates are still low. There is $8,000 available to the first time home buyer ,but the clock is ticking on that. And the inventory is starting to shrink while prices have dropped. I think we have hit bottom guys, so wait no more! Take in from the real estate maven, get out and buy now!