Is the credit crunch still tightening??

First off, I have to apologize for not posting on this blog in over a month. I had a major computer set back when I lost my complete hard drive. It has taken me over a month to get back on track and in the swing of things. Unfortunately this blog was put on the back burner during that time......

We all know that the market was starting to turn a month or so ago. Reports were published about homes moving and many of us thought that we saw some light at the end of the tunnel, maybe that was wishful thinking but we have experiences many setbacks in the last month. I listened to an interview with many executives of the top banks in the country. What they said was that they are waiting for the government to issue a stimulus package much like the one earlier on in the year before they back off on their credit tightening. This is not good for us as consumers.

Mortgage brokers continue to get email alerts from our lenders outlining tougher and tougher lending restrictions while at the same time asking us for business. So I know the banks and lenders are still hurting as well but continue to cut their nose off in spite off their face. I am hoping that we have found a bottom to this volatile market.

There was another interview that I watched where they were talking to the president of one of the largest hedge funds in the US. He said that the credit market won't change until February. I will leave my political views out of this as much as I can but I don't think that a new president is going to come in and fix these problems immediately. He didn't elaborate on whether that was what he was thinking would bring the change to the credit markets or not. He did however mention the same issues as the big banks did by saying that the government would ease credit problems in the near future with another stimulus package. I think that is what he was talking about in February with the credit markets changing. The question is, can those affected by the credit crunch ride it out until February? The other problem is, who is affected by this credit crunch. Even the diesel repair shop that I have work on my truck has experienced an extreme slowing of their clientele with these market changes.

Hopefully we will get some news that allows me to post some positive news on this blog. As you know I try to be optimistic so my next post I will find something positive in this market to post. It is Friday!! Have a great weekend.

Is it picking up???

Today the Dow Jones posted the largest one day rise in its history. This is great news but it also posted its largest drop last week. If we can stay in the black then we have something to look forward to but this roller coaster is taking peaks and valleys like we have never seen before. I talked to a few agents last week that expressed that their activity on their listings have really picked up lately. I posted a thread earlier mentioning that the National Association of Realtors posted a report that showed that written REPC's picked up in August when they were expected to drop. This is all great news for the housing market because it shows that maybe we have flattened out. I don't think any of us expect the housing market to jump up but we are all wondering if we have hit the bottom. The bailout was supposed to ease credit concerns and the stock market bouncing back in record numbers hopefully shows that those concerns have somewhat been alleviated for the time being. While this seems to alleviate investors concerns, in the mortgage industry we have not seen guidelines loosen up, in fact we continue to see the already strict guidelines tighten even more. My email is continuing to be flooded by lenders dropping loan programs and lenders requiring more and more disclosures to be signed throughout the entire loan process. This can make buyers and loan officers extremely frustrated. Hopefully the gains in the stock market that we saw today will not be erased by future speculation.

I created another blog for real estate professionals, builders, developers etc. Please take a moment to view the blog and read the material. It is a shared blog so if you would like to post your thoughts let me know and I will add you to the blog. I hope you had a great weekend. Enjoy the Monday Night Football game.

August Existing Home Sales Increase Unexpectedly

According to a report by the National Association of Realtors, pending home sales increased 7.4% from July 2008's numbers. This is great news because most analysts have said that homes sales would decrease at an average of 1.5% in August. While the numbers are still well below the highs of 2005, they are a reflection that the market is trying to find a bottom. If investors and buyers feel that the bottom is here or very near then we should expect to continue to see increases in home sales.

Even troubled areas such as Arizona, Nevada and California saw increases as well. It is important to note that the numbers reflect written contracts and not actual home sales. Hoepfully these buyers were not affected by FHA removing their down payment assistance programs or any of the other financial reactions that could jeopardize mortgage lenders loan approvals. The groups chief economist predicted that some of the sales would fall through because of the markets. Only time will tell how much of an impact this had on this significant movement he was quoted as saying. I do not have the figures for you Utah but would like to think that Utah experienced the same trend. Augusts REPC's most likely won't reflect actual home sales until mid Sept through Oct. This is decent news and definitely worth sharing.

Consumer Credit Falls at Record Pace

The most recent consumer credit report released by the Federal Reserve shows that Americans paid down their consumer debt in record numbers in August of 2008. The numbers were astonishing because the number showed that for the first time in eleven years, Americans actually paid down more debt than they spent. Are we learning from our previous mistakes? I think so. U.S. outstanding consumer credit decreased by 3.7% in the month of August. This my not sound like a whole lot when you look at the percentages but Americans paid down 7.9 Billion in consumer debt in August according to the Federal Reserve. Credit Card and other revolving debt fell by .8% or .6 Billion dollars in August while non-revolving borrowing fell by 5.4% or $993 billion.

There are pros and cons to this report. If we are not spending then we are saving and that makes us more susceptible to a recession. If we do not pay down our consumer and credit card debt then we are less likely to keep our heads above water during this financial crisis. Times are extremely difficult right now for many people. The best advice you can get is to be smart right now with your money. Don't make knee jerk decisions to liquidate your assets such as 401k's, etc. You will obviously lose right now. Economists say that 401k's are designed for the long haul and not to make spontaneous decisions. You may have lost money recently but if you can ride out the wave you will be better off in the long run.

Houses Passes Bailout

Today the house passed the 700B bailout for the financial crisis. I have heard mortgage brokers that are staunch advocates for the bailout and others that hoped it failed. I have to admit I am very skeptical about this bailout. There are certain aspects of the bailout that I like, while there are many others that I do not like at all. I want to think that the private sector could step in and take over these financial institutions and do a better job with them than the government can. On the other hand, it was also announced today (although overshadowed by the bailout) that there were 159,000 people that lost jobs in September. It was the highest job loss in 5 years. These are people that can't pay taxes, house payments, social security, etc. This situation could possibly only get worse for these people if the bailout does not alleviate the strapped financial sector.

Banks have all but stopped the cash flow to small business and clients. I am afraid that if we don't act and do something now then the financial crisis can and will get far worse. Unfortunately I think it is going to get worse regardless of the bailout. How worse you ask? I may also be buying into the media hype. Only time will tell but I think we are not through this storm yet. Now that the bailout has passed, we as Americans need to make sure that the government does it's job with this bailout and that we hold those accountable that created this crisis. We cannot afford to get ourselves in this situation again. Some may disagree but I think we need to get these companies privatized and making money as quickly as possible. I do not feel comfortable letting the government control the entire financial section of our country. We have seen where social security is headed, the financial industry could be quick to follow.

By the way......Have a great weekend!!

Market Updates and Info

There have been some significant changes in the market recently. The FDIC has been proposed to raise the limit of insurance from $100,000 per depositor to $250,000. The proposed amount is the amount that the government agreed to insure money market accounts for just recently. The last change in the FDIC insured amounts was over 28 years.

This week I am being asked. How does this help me? Will this help the market?

In regards to the first question my answer would be no. The recent changes do not help the average homeowner who does not have 100k-200k in their banking institution. It will help many larger companies who are scared with the markets conditions to keep all of their money in one institution and make it easier to make payroll.

The main reason for this change in my opinion is to alleviate some of the stress and panic that is striking the average American that has money in their local lending institution. I think this will also stop some of the speculation that has been driving the roller coaster market recently.

As you know I do not try to dwell on the negatives of the market. The main reason is I don't have any control over the market and couldn't change it if I tried. Most of us in the real estate business are in this for the long haul so we might as well make the best of a bad situation.

Real Estate / Mortgage Marketing & Motivation

We have all had enough about the bad news in the market recently. Keep in mind there are still aggressive loan programs available for your buyers. Interest rates remain low making the prices of homes more affordable for those that are looking to buy. I received a call yesterday from a colleague that asked if I had the “golden key” to this market because his brokerages loan applications had basically died. Unfortunately there are no golden keys, as we all know the market is what it is and we have to pound away at it to make it work for us. He mentioned that it has been difficult to get up and go to work in the mornings because the market has worn him down. I told him I would personally call him every morning to make sure he was in the office and closing deals to feed his family. Accountability is bigger than ever right now because many real estate professionals are in the same situation and letting the market get the best of them. Find someone to motivate you and hold you accountable for what you have to get done today. If you don’t have someone that will call you, call me. I will be more than happy to help.

Enough about that, we are implementing some new marketing to help create business for real estate agents call capture #’s. We have a new program that will allow the seller to pay for the buyers first 6 months house payments. By adding our rider sign to your listings, agents have been able to increase their call capture calls by over 30%. We have not done this yet in Utah but it is being done in other states with huge success. If you are using call capture for leads, I would like to offer you this service to increase your business. For other marketing ideas and questions don’t hesitate to give me a call or shoot me an email.

I received some great advice this week from a loan officer in Florida. He has made over 700k this year and made 1.2M last year in Florida’s extremely tough market. This was his advice to me. “You need to keep up with what is working. Would you sell records or ipods right now?”

I have never blogged or been a fan of blogs but I needed to get out of the record business I guess. I hope you enjoy this blog and find the information useful.

Have a great weekend!!