ALMOST END OF MONTH

Wouldn't it be great if someone knew where the market was going? Depending on where one sits in the political spectrum it's possible to view the goings on in the political arena, legislative and executive; and the reporting media, print and visual, with alarm; outright fear; amusement; glee; approval or disapprobation. Politicians of all persuasions are leaping into the mortgage mess with solutions guaranteed to get them some press, probably guaranteed to hit all of us in the pocketbook, and very little else of merit. If left alone the market forces that got us here will almost certainly extricate us over time. Economic disruptions are somewhat like the common cold, the cure takes about seven days if treated, a week if left untreated. Not terribly sagacious on my part but the posturing of fools simply distracts us from attending to the business at hand, whatever that may be. Now that the fed has spoken we can all sit around and wonder what impact that will have, if any, and take bets on whether they're going to do it again, and if so what will that do, etc., etc. For the mortgage market, whether because of, or in spite of the fed, interest rates are about where they have been, in the low to mid 6% range for 30 year fixed rate loans. A very nice place to be.
Home sales however are something else again. The national figures are pretty heavily reported and don't mean a whole lot if you only are interested in one home you want to sell or buy. In our little neck of the woods the figures do mean a whole lot to us, and they are not pretty. September month to date (9/26/07) in greater Chico, 30 homes, 56% of 9/06. Paradise-Magalia, 20 homes, also 56% of 9/06, and for Glenn County 7 homes, 70% of 9/06. There are 556 homes listed in greater Chico, 387 in Paradise-Magalia, 177 in Glenn County. Remember these are MLS reported sales only and same for the listings. If you do the math you realize we have many, many months of supply at current sales levels. Great for buyers, tough on sellers. For the projections of resetting mortgages having a dramatic impact on the market, I doubt it. For people who simply need to get into a fixed vehicle and out of a resetting variable, the rates as noted are favorable. For those who have burdened their home beyond it's value by recklessly taking perceived equity out for good times and toys, tough. That's a personal financial problem, self induced, and not a social issue. However it is the issue the politicians are attempting to address.
Once again I can report that our offices are upbeat, listing activity is good, not great, sales are good, not great, commercial loan activity is pretty close to great, and so on. One of our commercial lenders called today and spent some time talking about how nice it's going to be when many of the opportunists are left by the wayside in this market and the client dedicated professionals are once again serving the needs of the public without distraction. We hope so.
Once again,
Thanks for visiting.

Another Peek Into Our Office

Almost all of the news is more of the same, tightening credit internationally, more lenders in trouble, the National Assoc of Realtors fighting for legislation to induce some action to "help" borrowers, more realistically to help realtors however, and Wall Street also looking for some sort of bail-out so the consequences of poorly thought out investment strategies can be shifted from a few of them to all of us. Reminder of the savings and loan bail-out of a few years ago. Pretty predictable behavior. In light of this media saturation with reporting and commentary about the mortgage mess, a look into our office to see if much has changed in real estate agents attitudes. I don't know if everyone is old enough to remember the Sonny & Cher hit of 1967, "The Beat Goes On", but it jumped to my mind when an offer from another office came in for one of our listed properties. The offer was for less than the listed price, not unusual but a tad excessive in this case, but most importantly asked for a 3% seller concession to pay for closing costs, and was predicated on the prospective buyer obtaining 100% financing. Didn't we understand that much of our current mortgage problem arose from people buying homes they couldn't afford? I would submit that if you can't afford a down payment or the cost to close the transaction, you should not be looking at homes to buy. Our listing client rejected the offer. As real estate agents we are obliged to present all offers to our clients. The decision to accept, reject, or negotiate is entirely theirs to make, but had we been approached to act for the prospective buyers in this case, as real estate agents we would have counseled them to wait for some greater financial strength. As mortgage agents we would probably have declined to represent them. There could be extenuating circumstances, but for a mortgage guy or gal, the question always comes down to, "if you can afford the payments for a 100% mortgage, which with taxes and insurance is undoubtedly higher than the rent you've been paying, then how come you haven't been able to save enough for closing costs and some sort of down?" As I said, "The Beat Goes On". Apparently agent greed has not taken a holiday, and putting people at risk is still the appropriate thing to do.
Maybe doing the right thing is attractive, maybe pure chance, but our commercial loan activity is moving nicely, and our real estate sales are good. Not great, but good. I'm continually surprised that more sellers don't seek us out to list their properties. We're running strong in that respect also, but since we do everything so well, and for so little in comparison to the % offices, I think we should have all the listings. My own form of greed probably.
As usual,
Thanks for visiting.

Better Late Than Never?

The daily intention has been to get this thing done, not that the world is waiting, but daily the torrent of news causes a "gee maybe something is about to happen" reaction in me, and so the delay, and nothing particularly surprising has happened. For today the Dow dropped almost $250 points and the "flight to quality" caused a jump in treasuries, and a similar drop in mortgage interest. Now a quality 30 year loan is down to about 6.25, no points. This is very attractive money, but not readily available to the same mob that have caused all the problems. This money is destined for people who intend to pay it back. The surprising thing to me about the jittery stock market, and the seeming alarm at the rapidly shifting patterns in the economy is the fact that it seems surprising to the media, and investor types. We've all known that the withdrawal of equity from rising home values for spending on "things" has been driving the economy. Now there is no equity, no spare cash, and Sear's has quit selling appliances, Home Depot and Loews have stopped selling big ticket improvement items, dealers have quit selling new cars, and many of the building trades are effectively shut down. Employment in the mortgage industry is in the tank, Countrywide announced today a layoff of 12,000 is pending, and other peripheral industries are likewise hurting. Would you like to be in the furniture business? Or perhaps buy a kitchen cabinet and appliance store? If all your money isn't tied up in an ice pick sharpening franchise this could be the big chance. Watching the first domino fall over and considering it a solitary event is a touch naive, and so is expecting the mortgage debacle to confine itself to housing. This is not negative commentary, and as the figures for sales in our little corner of the world will show, we're enjoying some semblance of normalcy. Are home prices dropping? Of course they are. Is that a problem? No. The problem was they were too high. As usual these figures are for MLS listed sales only and for single family residences. Chico, Aug 07, 85; Aug 06 91; Aug 05 108. Paradise/Magalia, Aug 07 37; Aug 06 42; Aug 05 60. Glenn County, Aug 07 12; Aug 06 14; Aug 05 24. The 2005 figures obviously reflect the flipping and speculative fervor of the time, aided in no small part by the activities of real estate people.
For whatever it may be worth, our offices are doing well both in real estate and mortgage activity, Chico and Orland both enjoying positive results, including I'm happy to say, some commercial loan business. We have a new web site which I hope you'll visit, devoted to mortgages and trying to attract commercial interest. If I've mentioned this before, I apologize. It's here.
The sky is not falling, if you want to sell or buy a home this is as good a time as any, and if refinancing is in your future, rates could hardly get any better. Call us.
As usual,
Thanks for visiting.