Daily Intent

The summer months are a time of transition.  Transition out of school and into days of freedom for teachers and students.  For parents, it marks a period of creativity and management of their children, no longer willing homework completion, but now directing boredom fighting activities.   For business owners, employees begin to take extended vacations and leave the office early to get out and play in the sun, requiring managers to get creative with who to place where to pick up the slack.  And for others, it’s the perfect time to relocate and/or begin house hunting.

I’ve had many great conversations over the last few weeks about whether now is the time to take the leap into homeownership.  Housing prices are down, bidding wars are pervasive in the lower ends of the market, and rates are relatively low, though creaping up.  Moreover, many are under the belief the bottom of the market is here.

The answer is obviously different for each person / family, but the factors that can help you determine the answer are not.

These factors must be taken extremely seriously given the market instabilities.  Now is a time where smarts has to override emotions.  No one knows for certain where the bottom lies.  The market still has plenty of distressed homeowners looking to unload properties, banks looking to unload newly found inventories, companies laying off employees, and buyers rattled by 30% drops in their portfolio.  On the flip side, the first time homebuyers are eager to get into the market.  They are powering forward.  They can finally afford a home.  Demand is high and  supply is limited in areas where $60K - $100K household income can get a loan.

So when assessing whether a house / condo is for you, consider these questions before making an offer.
1. Would you be willing to live in this property for at least 5 years?
2. Should you lose your job, get relocated, or need to move for any other reason, could you rent out the property and still live comfortably?
3. Are your monthly mortgage payments in line with a lifestyle you are comfortable living?
4. Should your neighbor sell for less than you purchased for, would you be able to stomach it?
5. How much will the property cost you in upgrades, furniture, etc… to get it to a point you would be happy living in for 5 years?   Will these extra costs put you into debt?
6. Does the house price your offering make sense?
7. Does the loan you would obtain fall align with your time frame?

If you can answer these questions confidently and correctly, you will prepare yourself for homeownership that is freeing and fulfilling, rather than restricting and stressful.

Buzzword: Rocket Scientist
“In the world of finance, these are people with science and math degrees who work in the finance field building highly advanced quantitative finance models. These models help banking, insurance and investment firms to price financial instruments.

If an investment firm hires a PhD student with a background in theoretical physics to create a model that prices futures and options, that person would be considered a “rocket scientist” by the traders in the investment firm because of the complexity and skill required to create these models that help traders of futures and options. ”
-Investopedia.com

  Six Points to Ponder:

   1. Bond yields continued upward this week.  Higher rates slow mortgage applications.  Those looking to refinance have been put on hold.
   2. Markets - All are up. The Dow currently at 8769, S&P 500 at 941 and the Nasdaq at 1847.  Oil is up to $71/bbl.
   3. Chrysler and Fiat, after back and forth legal battles, close deal.
   4. Apple wows the world again with increased product greatness and decreased product pricing.  2008 iPhone now available for $99.   Macbook prices down 10%.
   5. Zeo, the personal sleep coach, enables you to personally monitor your sleep patterns.  Wake up feeling more refreshed.
   6. Federer takes the French Open after surviving a fan scare.  The Lakers are up 2 to 1 over the Magic.  Penguins and Red Wings are tied 3 to 3 going back to Detroit.  Tiger Woods is back to being Tiger.

Positives:

    * Those associated with Chrysler, now understanding the deal is official, can move forward with their business strategies.  Further stalemates with the deal would have pinched off production and progress.
    * Cautious  optimism permeates through Wall Street despite concerns over government deficits, inflation, and foreclosure numbers.  Oil topping $70 / bbl is what the Saudi’s were looking for earlier in the year.  I believe this is a good thing.  Oil prices too low increases our dependence on the black plague and cuts off “green” innovation.
    * Apple understands the state of the economy.  They have perfected the ability to create “shiny objects” at prices conscious of the American public’s pocketbooks.
    * No longer is it necessary to sign-up for university testing, getting covered in electrodes, sleeping in a laboratory bed, and feeling a bit creeped out about someone watching you sleep.  Visit www.myzeo.com.  For $399, their product will help you understand if you are hitting the necessary REM cycles during a night of sleep.  You will get consultations to better your environment, improving your sleep.   I look forward to being more active and alert throughout my days.
    * One of the better two week sports stretches of the year.

Negatives:

    * Bond yields heading upward are a result of the markets’ worries over limited demand for the government issued debt.  Inflationary concerns, coupled with perceived market stabilization, carry forward beliefs the Fed will increase their overnight lending rate in the coming months.  Being that our mortgage rates follow parallel to these rates, borrowers suffer.  That said, if rates stay in the mid-5%s, I believe we will be okay.  However, if the conforming rates rise into the low 6%s, the housing industry may relapse.
    * A Fiat injected Chrysler doesn’t have any sort of wow factor.

Local:

Unfurling of 40×60ft American Flag
Where: Lobero Theatre, Santa Barbara
When: Sunday at Noon
Cost: Free
Why:  Feeling down on patriotism?  This might be the perfect way to revive your inner community spirit; listen to patriotic music, poetry and readings while learning about why the massive flag hangs on the Lobero each year at this time.

Live and Be Well,

Jeff Bochsler