Daily Intent

This week the Senate has been debating the details of the economic stimulus package passed by the House, while adding in their own little, or rather large, agendas.

The main topics of housing concern: whether fixing in low interest rates for refinances are necessary; will the $7500 tax credit buy incentive be extended to all; will tax cuts spur on home purchasing; postponing foreclosures; and how would backing the banks on loan modifications work out.

While this all gets hashed out, it is important to understand how our local real estate economies are faring.  Attached herein are the 2008 results for Seattle and Santa Barbara along with a December snap shot of Santa Barbaran sales.

The main points to extrapolate from the data:
- The high end markets performed better on a “median price” basis in comparison to 2007.  Bellevue and Montecito prices were both up on the year.
- All other areas were flat, if not down significantly, in price.
- Overall sales in 2008 were down across the board.  13 - 72%.  Very area specific.
-  2009 is starting off with competitive escrows, multiple offers, in many of the mid-level markets…any market that offers housing at prices that allow for the buyer to fall under the “conforming jumbo” category.
- Affordability climbs as rates and prices drop.  Rates in the low 5%s are helping aid refinances and new home purchases.  Pending home sales rose in December across the nation.
 
Buzzword: Wildcatting
“A policy instituted by the Securities and Exchange Commission (SEC) that calls for the review of an entire industry whenever critical problems (such as accounting fraud) are found within one or two companies in the industry.

The origins of this term are derived from the oil industry, where companies drill for oil in unexplored or wild areas.

The SEC based this policy on the principle that if one company is committing fraud there is a good chance that others are as well. Under this direction, the SEC has conducted investigations on many industries including the oil, cable TV and video game industry. This policy emerged after the Sarbanes-Oxley Act of 2002, which provided greater transparency for investors. “  -Investopedia

  Six Points to Ponder:

   1. Senate Debates: $885Bn stimulus.
   2. All Markets are down on the week.  The Dow at 7928.  S&P 500 at 823. Nasdaq at 1483.  Oil at $40.
   3. Job layoffs continue.  Last week 100,000 job cuts were announced.  In comparison: China, 20m migrant workers have so far lost jobs.
   4. Goldman Sachs estimates troubled assets could reach $5 Trillion.
   5. Amazon’s profit rises 9%.  Go Daddy fares well in down economy.
   6. The Pittsburgh Steelers emerged as Super Bowl Champions in an exciting back and forth battle.

Positives:

    * In just a few weeks we’ll have more clarity in the direction the economy is going.  The stimulus package and how it takes form will give a good indicator where money inflows and outflows will be found.  Opportunities?  Many.
    * Amazon’s many discounts over the holidays proved smartly.  GoDaddy, according to inside sources, are seeing increased domain name purchases as many lose their jobs and take to online businesses.
    * Super Bowl: The stars came to play, but it was a defensive end rumbling 100yds that had the game changer.

Negatives:

    * Companies are beginning to real buckle down on their expenses, taking drastic measures with regard to employment numbers.  More to come as the economy continues slumping.
    * $5 Trillion of trouble assets, if true, would be 3 times worse than past estimates and could send the economy tumbling downward even further.
    * Chinese migrant workers are already some of the poorest of the poor.  They will be returning to their lives in the countryside, losing much of their standard of living.

Services: Tax Returns, Qualified?

If you have an incredible CPA that saves you plenty of tax payments each year, this may be a concern when applying for a loan.  That said, bring them in and I’d be happy to go through them to give you a more solidified answer.
Local:

Team in Training - Try it Out.  1st Training of the Season.
Where: East Beach
When: 7am, Saturday February 7th.
Cost: $0
Why: Change your life.  Change other’s lives.  Run a marathon.  (San Diego, Alaska and Seattle)

Live and Be Well,

Jeff Bochsler