Daily Intent

Santa Barbara, CA
It has been a while since I have commented on the housing market in full.  I leave the statistics out because readership expands across many different markets, however there is one overriding consistency that is worth touching upon.

What is peculiar about the current real estate market is that we are neither in a buyer’s market or a seller’s market, rather a “banks’ market”.  I don’t mention this to scare you.  Like the other two market descriptors, “buyer’s” and “seller’s” , it is meant to prepare you and manage your focus when attempting to buy or sell.

For example, if you know it is a “buyer’s market”, you can anticipate an environment where supply is high, offers are low, and the buyer is calling the shots.  Whereas, in a “seller’s market” you can expect prices moving upward, low inventories, multiple offer situations, and the seller having the leverage.

A new understanding enables and empowers you to take advantage of the opportunities a bank’s market presents.

In a “banks’ market”, you can expect the banks to often dictate the price of homes via their appraisal, foreclosure and short sale pricing.  You can assume the duration of time it takes to complete a transaction will be highly contingent upon the bank.  They are  making the decision on an acceptable sales price, this often can take months, and/or how long a loan takes to approve and fund a buyer.  It is good to note, approval times are improving.  Lastly, in a bank’s market, you can expect the bank to fully analyze each buyer’s affordability, aka pre-approval level.  Affordability correlates with home prices in most markets.

The main disadvantage to such a market, as you can extrapolate, is the bank has much of the control.  They are the referee.  They create the rules.

Not to worry.  There is huge opportunity here for you.  These new rules discourage some from even attempting to take action in this type of market.  You are different.

In order for you to take advantage, it starts with having a strong team around you.  A strong team will save you time, keep you focused and ultimately save and/or earn you money.  Start with an astute real estate agent.  They will know the typical turn around time for banks in your area.  They will know if the property is priced to sell and can expect multiple offers or not.  They will know which questions to ask your lender.  On the selling side, the agent will be able to tell you where to price a home given the foreclosures and short sales happening around you.  Secondly, find a lender that knows the market, has good relations with their underwriting team, understands the “new rules” of the game and is straight forward.   In short, they know if you will qualify upfront.  Remember, most people don’t take these team members seriously.  You have an advantage in doing so.

Couple with your team of trusted advisors two personal qualities:  patience and detail.  The buyers and sellers that aren’t patient with the current process, often give up.  You may have to make a few more offers today than you did two years ago, however the one that gets accepted will be ideal.  You may have to wait an extra month in selling your home, but the patience can pay off in timing, number of offers, and price.  The bank will request everything but your blood type, so be detailed, have your financial folders ready to go, to ensure quick answers and an approval from your lender.

This may not be a market you have ever experienced; however, you can see that your preparedness will align you in a way few others can match.  Sleep well at night knowing you are on the winning team, a team that understands how the referee, the bank, is dictating the outcome.

*I look forward to hearing your perspective.  Please don’t hesitate to contact me should you wish to get statistics for your specific market.
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Catalyst for Thought-  Minds - “Tapping global resources, locally”
John Greathouse, UCSB Professor, author of http://www.infochachkie.com, and adviser to many multi-million dollar companies.  October 1st. Thursday. 12pm.  SOLD OUT  …Make sure you get the invite to the next event.  Sign up at…
  http://www.catalystsb.org/users/login
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Buzzword: Short Squeeze
“A situation in which a lack of supply and an excess demand for a traded stock forces the price upward. Short squeezes occur more often in smaller cap stocks with small floats.

If a stock starts to rise rapidly, the trend may continue to escalate because the short sellers will likely want out. For example, say a stock rises 15% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the stock. If enough short sellers buy back the stock, the price is pushed even higher.  “  -Investopedia.com

…This has no relation to one’s “main squeeze”.   : )

  Six Points to Ponder:

   1. Markets Down. The last 7 days of trading resulted in slight pull backs as investors took money off the table, ending the quarter strong - The Dow is trading  at 9742, S&P 500 at 1061 and the Nasdaq stands at 2126.  Oil is down, too, $67/bbl.
   2. Fed “Funds” Meeting.   The Fed did just as expected, they kept rates flat.  They extended funds toward mortgage-backed securities into 2010.  Thus, Mortgage rates are down on the week!
   3. Happy Home Prices Counsel Consumer Confidence.   Prices were up across the nation in July.  A 1.6% increase was the 3rd straight month of gains.  Out of 20 major cities, only two saw price declines: Seattle and Las Vegas.  Confidence took Seattle’s view, lowering in September to 53.1 from a rating of 54.5 in August.
   4. World Wave Woes.  Tsunami in the South Pacific has taken 99 lives.  Indonesian 7.6 mag earthquake has rattled and trapped thousands more.
   5. Gas-to-Liquids Jet Fueled Forward.  New technologies are allowing the conversion of natural gas into liquid form.  Shell, oil producer and owner of the world’s largest “GTL” plant, received approval this week to create jet fuel from natural gas.
   6. Fumblerooski.   Both college and pro football have professional gamblers in Vegas scratching their heads.  Who saw the fumblerooski coming?  Each week highly touted favorites are being knocked off.  Tiger Wins FedEx Cup.    And it is filled with $10 million.  The Dodger’s Magic Number.  One.

Positives:

    * We made it through September up 2% in the markets.  An inherently poor performing month, 1% down on average, this is extremely positive news for those looking to regain much of their losses.  You can expect some choppy waters ahead, but note, the last 6 months of progress has boosted you back up into the boat, rather than leaving hanging on to the side.
    * The Fed extending out their purchasing time of mortgage-backed securities tells us a couple of things.  First, they believe our best chance of making it out of this recession is through credit availability.  The more burden they can relieve from banks, via buying up distressed debts weighing on balance sheets, the sooner banks will return to reasonable lending standards.  Secondly, the housing market still has some challenges ahead with foreclosures looming in the spring.  Lower rates today should mitigate some of the risk of excessive foreclosures in the future.
    * People are wanting to buy homes.  Whether it be because of the first time home buyer credit, low rates, or the fear of missing out on low prices, demand is winning out over supply.  You will want to watch trends at the start of the year once the credits are up and rates begin to trend back to more normal levels.
    * Technology now allows us to convert gas, a form humans have long only been able to smell, into a tangible liquid that we can see, touch, and fuel thousands of people across the globe.   
    * Sports are most exciting because of “anticipation”.  Anticipation of what could happen next.  We like teams we know because we know the players and what each player is capable of.  The anticipation of each next outcome.  This football season is allowing for ultimate anticipation.  No one knows who will win on any given Saturday / Sunday.  The anticipation is fantastic!

Negatives:

    * The Fed leaving interest rates low, shows the economy is still in need of support.  The foundation hasn’t been completed for them to pull away their training wheels.  
    * Consumer confidence falling after a few months of increases.  Might this have been a result of getting kids back to school and being reminded of their inability to afford school supplies and clothes of years past?  Or could it be a slight lapse of confidence due to little news in the positive or the negative?
    * The Earth below is powerful and can take out ill-equipped villages in a matter of minutes.  Economic progress is important.   Strong buildings.  Quick communication.  Sufficient medical support.   Market based solutions is where this all begins.

Local:

Pink Martini
Where: The Arlington
When: Wednesday, September 30, 8pm.  That’s tonight!
Cost: $28 - $58
Why:  12 piece  romantic “little orchestra”.  They rock.  And they are from Portland, Oregon.  All great things come from P-town.
How:  Bring your “main squeeze”.
For other fun weekend ideas, go to www.lovemikana.com

Live and Be Well,

Jeff Bochsler