Daily Intent

Prices are down.  It is true.  Home sales are up.  This, too, is true.  And perfectly timed interest rates are down.  Thus, affordability is up 7%.

Despite the often horrific and uneasy headlines, people are buying homes.

Who are the ones buying?  First time home buyers.  Investors.  Internationals.  Each are powered by different motives.

The first time home buyers are witnessing rising rents, have been less affected by the market down turn and loss of long term savings, and new home prices are now actually affordable to them.  They are hungry.  They no longer want to pay someone else’s mortgage.  They want and need the tax advantages.  Moreover, they have time to wait out a down turn until a return to appreciation.

The investors on the other hand are witnessing price levels that allow for cash flow.  They can rent out properties at levels that will cover both their mortgage and taxes and insurance.  This was not the case three years ago.  The initial costs for investment properties, due to more stringent underwriting guidelines, are a small fee for a long term return on assets.  For them, the stock market appears a riskier use of their extra investment dollars.

The internationals are products of the weakening US dollar until recently.  They were capitalizing off the cheap availabilities to get into the US market.  However, this reality is quickly changing as both our dollar strengthens and their economies struggle.

Other factors that have been propelling the housing economy forward are the result of government doings.  They have agreed upon over $2Trillion to help the system.  Believing the housing market stability is the key cornerstone to revitalizing the entire economy, the majority of the trillions are focused on propping up home ownership.

Loan limits were increased to $729,750 in some counties (Santa Barbara) and now they are receding to $603,750.

The government wants you to buy a home.

Whether it is right for you to buy your first or tenth home takes detailed analysis of your current situation and future plans.  Should you ever wish to brainstorm, analyze, or even move forward with a transaction, please give me a call.

I have attached a more in depth write-up of these details as well as some local market data should you wish to dive deeper into your analysis.
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Buzzword: Gazunder

“When a buyer reduces his or her bid for a property before the transaction has been signed and finalized.
 
 If the real estate market is crashing, a buyer might offer less because he or she knows that the seller desperately wants to sell the property.”  -Investopedia

  Four Points to Ponder:

   1. The Santa Barbara Tea Fire has been contained.  210 homeowners and their families are left without homes.  Orange County fire contained.  LA County fire 95% contained.
   2. The Dow broke 8000.  S&P 500 down 52pts, hits 5yr low.  Nasdaq down 127pts.  Oil is down to $53.
   3. Bernanke and Paulson fielded pointed questions Tuesday.  CEOs of American car dealers took the stand Wednesday.  Fed notes hint at rate drop come next meeting and longer term weakening economies.
   4. UCSB Men’s Basketball take on the unanimous #1, North Carolina Tar Heels at home Friday night.

Positives:

    * Insurance companies have been quick to respond in helping those families affected by the fires.  They are writing checks to enable them the funds to stay in hotels or lock into longer term leases.
    * The combination of the fire departments hard work, new intelligence to fire fighting, and lower than expected winds all aligned to prevent the fire from being dramatically worse.
    * The spotlight of NCAA Men’s basketball hits Santa Barbara tomorrow.

Negatives:

    * “8000 is becoming a curious bottom as we’ve tested this threshold a few times now.  Should we break through into the 7000s and stay, we will have more issues ahead.” - Market Street Report last week.  Reality: we broke through 8000 to end at 7997 today.  Should the markets not recover tomorrow, we should expect another 5 or 10% drop moving forward in the short term.
    * The US car companies have been slow to move and intensely hindered by the unions.  This is a Catch-22.  Failure will have large scale impacts.  Whereas, aid will further perpetuate terrible business practice.

Services: Fire Victims

If you or your friend has your loan with Countrywide, please call.  I have access to your loan information, appraisal and insurance information, that will aid in expediting the insurance claims process.

Local:

Fundraiser for Fire Victims
Where: Stateside
When: Thursday Night, 8pm.
Cost: $15
Why: Your community is in need. The victims need everything from clothes, to books, to toys, to cars, to kitchen supplies.  Help raise funds to purchase these goods.

Live and Be Well,

Jeff Bochsler