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Before becoming a REALTOR I spent many years as a stage magician.

One of my favorite routines involves three vintage black 45 RPM phonograph records, that, with the help of three silk handkerchiefs…red, yellow, and blue…magically change to the colors of the silks.

My patter for the routine is that these are not just records but a new invention called “video discs” which enable me to mail my client a video magic show if I can’t perform for that audience in person.  I explain that I have three different programs to choose from – the red show, the yellow show, and the blue show but the factory made a mistake and colored all the vinyl discs black so I can’t tell which is which. That is when I magically “color in” the records on both sides to mystify the audience.

You might wonder what, besides the color change of the records is so amazing? Just that I developed the story line about the video discs in 1973 while performing at the world famous Steel Pier in Atlantic City. Obviously, this was well before the invention of  our modern DVD technology!

Obviously the story show a clearly that the magic of today is the technology of the future. We should never doubt the possibilities that science and technology holds, especially in the world of real estate. Today’s housing market brings possibilites that we just didn;t consider before. For example there are many environmentally friendly developments in houses that were not possible before. Construction techniques and alternative energy sources have brought us what builders are calling “Green Houses”.

Just as there are ways to accomplish levitation through magnets builders can accomplish large energy savings and more technologically amazing things. While these things become less amazing when they are explained or become available to all of us, they are  no less fascinating. Leaving us to think about the more important things like… how do those bunnies keep coming out of those hats…cloning perhaps?

The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged last week.  It remained within a target range of 0.000-0.250 percent.

In its press release, the FOMC reiterated most of the key points from its December 2008 statement, including:

• The U.S. employment outlook continues to deteriorate
• Consumers and businesses continue to cut spending
• The housing sector is still showing weakness

In addition, the FOMC addressed the “extremely tight” credit conditions for U.S. households and business, even as it said some financial markets are showing signs of improvement. 

To the Fed, the latter is a precursor for the former.  For Americans needing new mortgages or other forms of credit, it may mean that getting approved gets easier sometime late this year.

Most importantly, the Fed’s press release again mentioned the policy-setting group’s intention to “employ all available tools” to promote economic growth.  This includes the open-market purchasing of mortgage-backed debt that has helped fuel the current Refi Boom. The Fed indicated a willingness to extend the program beyond the initial $500 billion, if necessary.

For each of the Fed’s interventions, though, there is a trade-off. 

Buying securities costs money and the Fed — literally — comes up with the cash by printing it.  The extra supplies devalue the U.S. dollar which, if left unchecked, can cause the Fed’s plan to backfire in the form of runaway money supply-led inflation.  The Fed is aware of this risk and is pledged to monitoring it closely.

Overall, mortgage rates worsened today after the Fed’s statement.

Source
Parsing the Fed Statement
The Wall Street Journal Online
January 28, 2009
https://online.wsj.com/internal/mdc/info-fedparse0928.html

When a homeowner sells his home and decides to buy a new one, there are 3 basic options for the residence — sell it, keep it, or rent it.

In doing that, new mortgage guidlelines make it more important than ever that people sell and setttle their old home before they settle on their new one. Otherwise, no matter which path they choose, move-up homebuyers in need of a new conforming mortgage will find qualifying for a home loan to be more difficult this season than in the past.

Its all because mortgage guidelines are dramatically tighter for people “carrying two mortgages”.

Among the changes this spring’s buyers face:

Selling the primary residence
If you plan to close on your new home prior to the closing of your existing home — even if it’s only by a day — both payments must be listed as monthly debts on your mortgage application. This will disqualify the majority of homebuyers.

Converting your residence to a second home
If your current home has less than 30 percent equity in it, your mortgage application for the new home will not be approved unless you can show 6 months worth of mortgage payments + taxes + insurance in reserves for the current home and new home combined.

Converting your residence to an investment property
If your current home has less than 30 percent equity in it, any rental income derived from a tenant is disallowed on your mortgage application for the new home. You must still count the mortgage payment + taxes + insurance as a monthly debt.

In other words, getting your home sold first, just like the old “pre-boom” days is still the smartest way to move forward in the current market because being a move-up buyer isn’t as simple as it used to be. New lending rules make buying a new home an exercise in timing and financial planning. And the rules are expected to get tougher, too.

Therefore, if you expect to be a move-up buyer in the next 12 months, consider getting your home listed first, and scheduled to settle before you close on your new home.

Understanding the new mortgage landscape and how they can influence your upcoming purchase may be the difference between getting approved for a home loan, and getting turned down.

Don’t let the plunging median sales price fool you — December’s Existing Home Sales data has home sellers smiling.

Just one month after falling below the 5-million unit trend line, sales volume roared back by 300,000 homes in December, surprising housing analysts and making a case that this spring’s Buying Season could be a competitive one.

Falling home prices helped fuel home sales.  Nationally, the median sales price — the point at which half of all homes sold for more and half sold for less — was $175,400, down $32,000 from last year.

However, the most important part of December’s Existing Home Sales report isn’t making headlines.

At December’s sales pace, it would now take 9.3 months to exhaust the existing home supply.  Last month it was 11.2 months.  This means that buyers are competing to purchase fewer homes which, in turn, puts upward pressure on home prices.

This is Supply and Demand at its most basic definition.

Since 2009 started, real estate agents and brokers at CENTURY 21 Advantage Gold and other offices in the Philadelphia marketplace have been noting an increase in buyer activity, which seems to indicate that people have begun to find some of their confidence in what has been a pretty stable market.Perhaps this additional activity is indicative of the absorption of the existing housing market.

Economists have long said that the keystone of housing’s recovery will be rebalancing in home supply.  Coupled with the all-time low in housing starts, December’s Existing Home Sales data signals future strength.

(Image courtesy: The New York Times)

After a weak holiday shopping season, annual retail sales declined in 2008.

It marks the first annual Retail Sales decline since the government started tracking the data 40 years ago.

It also gives credence to the notion that the U.S. economy is suffering through a deeper recession that previously thought. A pullback in spending — especially during the shopping-heavy month of December — highlights the cautious nature of today’s American shoppers.

And in a strange sort of way, all of this may end up being good news for spring home buyers.

Because Retail Sales are reflective of consumer spending, a dramatic pullback helps to keep the economy in slow gear, countering the inflationary impact of government stimulus and direct intervention. Inflation, you’ll remember, causes mortgage rates to rise. Its absence, therefore, helps to keep mortgage rates low.

In addition, it’s earnings season on Wall Street and weak corporate guidance has spurred a 6-day decline in the Dow Jones Industrial Average. As dollars leave the stock market, investors are parking them in the safer world of bonds. This includes mortgage bonds, of course, which further pressures rates lower. And of course, lower rates make housing, at any price more affordable for any buyer.

As a result, economic weakness — to a point — can be the friend of a person in need of a new home loan. For active home buyers or people entering the market this spring, therefore, the timing may be just right, with affordable prices in our market combining with these lower rates to make the potential housing cost better than it will probably be in the future as the economy recovers spurring sales and reducing inventory.

(Image courtesy: The Wall Street Journal Online)

Ironing boards can be bulky and awkward — especially in a cramped laundry room or a small apartment.  

Instead of fumbling with a folding board for a quick press, look to the Touch-Up Topper instead.

The Touch-Up Topper is a heat-resistant, portable ironing surface that rolls or folds for storage.  Using sewn-in magnets, the quilted pad fastens to the top of most washers and dryers, turning any metallic surface into an instant ironing surface. 

At 32″ x 18 1/2″, the Touch-Up Topper has a larger ironing surface than traditional ironing boards and it costs less, too.  The Touch-Up Topper costs $14.95 and is available for sale at SkyMall.

Another week, another headline screams how mortgage rates have falled to an all-time low.

Freddie Mac published its weekly mortgage rate survey Thursday and found that the “average” mortgage rate is now 4.96 percent, the lowest since the survey started in 1971.

But, if we look beyond the headline, we find that there’s another part of the story worth watching.  Mortgage rates are falling but the number of points required to lock those rates is not.

Lenders now require an average payment of 0.7 points to get the 4.96 percent rate from the headlines.  That’s up from 0.6 percent last week and 0.4 percent a year ago.

A “point” is a fee equal to 1 percent of the loan size. 

Therefore, to get access to a 4.96 percent interest rate on a $200,000 home loan, today’s lender would require an extra $200 versus last week and $600 versus last year.  Today’s mortgage borrower would be subject to a $1,400 closing cost in addition to the “typical” closing costs accompanying a purchase or refinance.

This is a period of historically low rates — there’s no doubt about that.  However, the cost of getting access to low rates is increasing.  The press doesn’t always tell that part of the story and it’s one more reason to look deeper than the headlines.

(Image courtesy: The Wall Street Journal)

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I hate to be cliche, but it is January  and there is just nothing like the New Year’s theme.  A lot of people have been saying things like “here’s to a better 2009” and I am all for that.  Not that there was anything wrong with 2008…

This year is going to be a great one.  The real estate market is really poised for a comeback.  It could have happened in 2008, but it didn’t.  I’m predicting Spring 2009 for people to come out of the woodwork and finally purchase the home they’ve been waiting to buy.

I am also poised for a great year. I have my brand new 2009 planner just waiting to be filled with appointments.  I finished out my last quarter of 2008 with an extensive training program including everything from environmentally conscious design to universal design.  Very interesting stuff that I look forward applying in 2009.

Lastly, rather than resolutions, I picked out 3 quotes for a great year.  I hope you will find them inspiring as well:

“Treat people as if they were what they ought to be and you help them become what they are capable of becoming.” — Johann Von Goethe

“The person who removes a mountain begins by carrying away small stones.” — Chinese Proverb

“Obstacles are those frightful things you see when you take your eyes off the goal.”

Happy New Year and here’s to a great 2009!

The New Year is not yet one week old but that’s not stopping market “experts” from predicting what’s in store for 2009.

The calls on housing and mortgage rates run the gamut:

• Home prices have farther to fall
• Home prices have touched bottom
• Mortgage rates will dip
• Mortgage rates will rise

Put it all together and it’s clear that the experts have no better idea about the future than you or I.  Their guesses are educated ones, but they’re guesses nonetheless.

A terrific example of how poorly experts can predict the future comes from a Wall Street Journal performance analysis of 1,700 mutual funds.

In 2008, only one earned a positive return.  That one fund represents zero-point-zero-six percent of all tracked mutual funds.  Surely, the fund managers of the other 99.94% didn’t expect to post negative returns on the year.

So, before you use predictions about the demise (or recovery) of the broader economy to make “personal economy” decisions, consider that the oft-quoted experts have a hugely better track record in analyzing the past than the future.

All we know for sure right now is that home prices in our market have not fallen as far as the prices in other markets, and that the reduction in activity has not been mirrored by a drastic reduction in sales prices. With housing as affordable as it is now, buying a home for your family , or to establish financial security for yourself is still a good idea, if you buy with the intention of remainng in the property for more than a year or two. And with rates as low as they are now, over the long term, the 1 or 2% price fluctuations we have seen would not impct the long term benefits of home ownership.

The old saw still holds true “it is better to buy real estate and wait than it is to wait and buy real estate”