I have one thing to say, BUY, BUY, BUY. If ever there was a time to get off of the fence it is now. I encourage all of you to BUY, and your friends to buy. As of today we are below 2004 values, year-to-date, with the exception of area 171 (southwest suburban) and that area is trending down as well.
The foreclosed market is finite, one TRILLION dollars is going to make a difference in this market and now is the time to buy. Over this weekend JP Morgan (read Washington Mutual) has acknowledged that the company needs to re think the foreclosure process and even go beyond to look at homeowners that are in good standing today but may become distressed sellers tomorrow. Other lenders are beginning to show signs of similar thinking.
Are the prices going to descend lower? Here is food for thought:
Double Diamond/Damonte Ranch, one of the hot beds for distressed sales, data is for homes under $300,000 sold in 2008 by quarters:
1st quarter sales: 21 homes sold for an average of $267,258
2nd quarter sales: 37 homes sold for an average of $263,010
3rd quarter sales: 47 homes sold for an average of $262,347
That is a change in values of only 2% over 10 months. The average home in escrow today is $265,627. I have to ask you is this the picture of a bottomless market?
With a trillion dollars and banks possibly rethinking how they foreclose, we are in a great position to see inventory drop and choices dry up. I am not suggesting a price bounce of any measure now, or any time soon. What I do see is that the deals of today will disappear much sooner than buyers realize.
Where are the good buys? Just about anywhere you look and for whatever your budget is. I do not see any price recovery for homes valued after late 2003 through mid-2007 for several years or more. The real road to recovery will be for the sellers that sell today and buy back into these much reduced values and ride the recovery from the bottom up. Holding on is going to be expensive for those that really want to sell and are trying to “hold out” for the market to “go up.”
Oh, one last thought, I have purposely written this on November the 3rd. Whatever happens tomorrow, regardless of your feelings, a major milestone will be behind us and we will all have the same opportunity to move forward for the better and look up. I for one plan on moving forward and I expect to find willing and capable buyers for every one of my clients and for my buyers, to find them a home that they can be proud of for many years to come.
Friday, November 7, 2008
Monday, November 3, 2008
Apple Hill Excursion
The Morris family took a trip up to Apple Hill on Nevada Day and it was a fantastic way to spend the holiday. The drive up was gorgeous and all the orchards were brimming with shiny, fresh apples and apple products galore. Who knew so many different kinds of apples existed and were readily available so close to home?
After it was all said and done, we hit about half a dozen orchards and went home leaden with Winesape, Pink Lady, Arkansas Black, Granny Smith and even a few Red and Golden Delicious, not to mention all the apple butter and jam!
No trip to Apple Hill is complete without tasting some fresh, homemade apple pie. Kids Inc. had amazing French apple pie with vanilla icecream and cinnamon-caramel sauce. Since it was a state holiday in Nevada, the vast majority of cars in every parking lot had Nevada plates and the orchards offered discounts and fun freebies to Nevada residents, which was pretty special.
Apple Hill (near Placerville) is a fun and nostalgic way to kick off the fall/winter season. The apples are still great, so be sure to scoot over the hill soon and pick up a stash. Shauna has put her takings to good use and made an apple pie with Gruyere backed into the crust, as well as apple tarts, which were a great way to use up the "scraps" from the pie. She'd be happy to share the recipe as well.
Happy apple picking!
After it was all said and done, we hit about half a dozen orchards and went home leaden with Winesape, Pink Lady, Arkansas Black, Granny Smith and even a few Red and Golden Delicious, not to mention all the apple butter and jam!
No trip to Apple Hill is complete without tasting some fresh, homemade apple pie. Kids Inc. had amazing French apple pie with vanilla icecream and cinnamon-caramel sauce. Since it was a state holiday in Nevada, the vast majority of cars in every parking lot had Nevada plates and the orchards offered discounts and fun freebies to Nevada residents, which was pretty special.
Apple Hill (near Placerville) is a fun and nostalgic way to kick off the fall/winter season. The apples are still great, so be sure to scoot over the hill soon and pick up a stash. Shauna has put her takings to good use and made an apple pie with Gruyere backed into the crust, as well as apple tarts, which were a great way to use up the "scraps" from the pie. She'd be happy to share the recipe as well.
Happy apple picking!
Wednesday, October 22, 2008
AOPA Article about Alamos Airlift
Here is a link to the article AOPA did on their website about the relief effort supported by the Baja Bush Pilots:
http://www.aopa.org/aircraft/articles/2008/081021alamos.html
The article gives an overall description of the effort and the hurricane.
http://www.aopa.org/aircraft/articles/2008/081021alamos.html
The article gives an overall description of the effort and the hurricane.
Tuesday, October 21, 2008
Alamos Airlift
Ten days ago Hurrican Norbert tore through central western Mexico, leaving a lot of destruction in its path. Through the concerted effort of the Baja Bush Pilots a relief effort was put together to bring much needed supplies or food and clothing to the victims of Norbert.
The small town of Alamos was hit hard in the middle of the night on the 11th, leaving many homeless and sadly many lives were taken as well. David got involved with this incredible relief effort and we, along with 33 other pilots, packed our plane to the brim with supplies and headed to Mexico at 06:30 on Friday morning, and returned shortly thereafter at 16:30 (4:30pm) on Saturday afternoon.
Below are pictures of the rubble and river that runs through town, which flooded and took bridges and buildings with it. It was heartwarming to see so many people pull together in a private effort to help make a difference in the lives of this small community.
The small town of Alamos was hit hard in the middle of the night on the 11th, leaving many homeless and sadly many lives were taken as well. David got involved with this incredible relief effort and we, along with 33 other pilots, packed our plane to the brim with supplies and headed to Mexico at 06:30 on Friday morning, and returned shortly thereafter at 16:30 (4:30pm) on Saturday afternoon.
Below are pictures of the rubble and river that runs through town, which flooded and took bridges and buildings with it. It was heartwarming to see so many people pull together in a private effort to help make a difference in the lives of this small community.
Monday, September 29, 2008
Saturday, September 20, 2008
What a week
Well it had to happen sooner or later.
I am not going to hash out what the press has been saying, suffice it to say that the seriousness of the situation should give all pause to think. Reno, Sparks, Northern Nevada and our entire state have been affected for the last 2.5 years by the greed that entered the financial markets in the early part of this decade. Forbes just did a nice short and to the point piece on what has happened.
Is it time to panic? Actually, it's really not.
People need to go on with their lives, yes, saving would be a good idea, spending less than you make and putting off a few trips to the mall to shop for what you do not need is also a good idea. As bad as Wall Street has treated the American public there is still a lot right and our basic functioning economy is moving along, albeit slowly we are not negative.
Positive thoughts are very helpful in these situations and dreaming up the worst is not going to help anyone.
From my perspective this week I have been very busy on Thursday, Friday and today as I write this portion of the blog. I am showing properties and I expect two offers before the weekend is over.
Buyers are buying and homes are selling.
We are a strong country and lets put our backs into this and think clearly with a bit less emotion and work for our future.
Heck, we have two days left of summer, get out and enjoy yourself!
I am not going to hash out what the press has been saying, suffice it to say that the seriousness of the situation should give all pause to think. Reno, Sparks, Northern Nevada and our entire state have been affected for the last 2.5 years by the greed that entered the financial markets in the early part of this decade. Forbes just did a nice short and to the point piece on what has happened.
Is it time to panic? Actually, it's really not.
People need to go on with their lives, yes, saving would be a good idea, spending less than you make and putting off a few trips to the mall to shop for what you do not need is also a good idea. As bad as Wall Street has treated the American public there is still a lot right and our basic functioning economy is moving along, albeit slowly we are not negative.
Positive thoughts are very helpful in these situations and dreaming up the worst is not going to help anyone.
From my perspective this week I have been very busy on Thursday, Friday and today as I write this portion of the blog. I am showing properties and I expect two offers before the weekend is over.
Buyers are buying and homes are selling.
We are a strong country and lets put our backs into this and think clearly with a bit less emotion and work for our future.
Heck, we have two days left of summer, get out and enjoy yourself!
Wednesday, September 10, 2008
Reno Air Races
This is the week of the Reno Air Races. It is some what ironic that last week was the Great Reno Balloon Races and this week are the Reno Air Races. Within two weeks Reno hosts the Great Reno Balloon Race and the Reno Air Races. From the age of un-powered flight to powered flight back to back.
Love it!
I have been fortunate to have been going to the races on and off for over 30 years. I remember living in the dorms at the University of Nevada, Reno and hearing the sound of P-51's and P-38's flying out to Stead for the air show and the races. If you have never gone to the Reno Air Races treat yourself to something special.
Air Races at one time were common across the country but over the years these very special races have gone into the history books but today in Reno one can see at one time a collection of history dating back to the first world war. Not only can you see history that made the 20th century. You can watch history fly! Many of these planes are now worth well over $1 million dollars and in Reno you can hear and watch these planes actually fly. Over the years planes from the WW1 years, the 20's, 30's, 40's, 50's to F22 are all here and you can actually touch many of them. Ever wanted to stand next to a Mig 15 and a F-86 and a F-117 and talk to the men and women that have flown them? Then come out this week and experience a stunning event.
When you go, not "if", go. Take a hat, take a light coat, sunscreen, be prepared for wind, sun, hot and cold, heck, this is Nevada! Bring good walking shoes (the runway is over a mile long and you can easily walk from one end to the other and back again. Bring a camera (but save the film on the actual racing and the air show, the planes are too far away and too fast to get a good shot, just enjoy the show) and get a pit pass and walk the planes and take your photos. The crews love to talk about their planes and still today you can stand next to a gentlemen that is old, grey and maybe even needing some help walking . Listen and he will tell you about being 22 and flying that plane into harms way.
Listen to the stories that the Reno Air Races bring to life. Talk with you soon.
Love it!
I have been fortunate to have been going to the races on and off for over 30 years. I remember living in the dorms at the University of Nevada, Reno and hearing the sound of P-51's and P-38's flying out to Stead for the air show and the races. If you have never gone to the Reno Air Races treat yourself to something special.
Air Races at one time were common across the country but over the years these very special races have gone into the history books but today in Reno one can see at one time a collection of history dating back to the first world war. Not only can you see history that made the 20th century. You can watch history fly! Many of these planes are now worth well over $1 million dollars and in Reno you can hear and watch these planes actually fly. Over the years planes from the WW1 years, the 20's, 30's, 40's, 50's to F22 are all here and you can actually touch many of them. Ever wanted to stand next to a Mig 15 and a F-86 and a F-117 and talk to the men and women that have flown them? Then come out this week and experience a stunning event.
When you go, not "if", go. Take a hat, take a light coat, sunscreen, be prepared for wind, sun, hot and cold, heck, this is Nevada! Bring good walking shoes (the runway is over a mile long and you can easily walk from one end to the other and back again. Bring a camera (but save the film on the actual racing and the air show, the planes are too far away and too fast to get a good shot, just enjoy the show) and get a pit pass and walk the planes and take your photos. The crews love to talk about their planes and still today you can stand next to a gentlemen that is old, grey and maybe even needing some help walking . Listen and he will tell you about being 22 and flying that plane into harms way.
Listen to the stories that the Reno Air Races bring to life. Talk with you soon.
Thursday, September 4, 2008
Mt. Rose
In many ways this has nothing to do with real estate and everything to do with real estate. After many, many years of looking up at Mt. Rose, all 10,770 feet and being too busy to take the hike to the top this week I finally hiked to the top of the mountain.
If I had known just how hard the last 2 miles and 2,200 feet was going to be maybe I would of been a bit less enthusiastic and put it off for another year. As I started my climb and crossed ice at the edge of the creeks I knew that the morning was going to be interesting. By the time I got to the summit it was very cold and windy but the view of Reno, Tahoe, Truckee, Donner lake and out across eastern Nevada were just stunning. I still hurt today but I look forward to another summit!
Even though I was really exhausted by the time I got back to my car the feeling of success was just terrific. Going back to work the next day was a pleasure and I have to admit this has been a great week.
OK, back to real estate news next time.
If I had known just how hard the last 2 miles and 2,200 feet was going to be maybe I would of been a bit less enthusiastic and put it off for another year. As I started my climb and crossed ice at the edge of the creeks I knew that the morning was going to be interesting. By the time I got to the summit it was very cold and windy but the view of Reno, Tahoe, Truckee, Donner lake and out across eastern Nevada were just stunning. I still hurt today but I look forward to another summit!
Even though I was really exhausted by the time I got back to my car the feeling of success was just terrific. Going back to work the next day was a pleasure and I have to admit this has been a great week.
OK, back to real estate news next time.
Wednesday, September 3, 2008
Join us in the Fight Against Breast Cancer
REMAX International is a huge sponsor of the Susan G. Komen Race for the Cure and this year we are working hard to put together the biggest team we've ever had! Everyone in the David Morris Group has signed up to participate on race day and we would love to see you there too.
You can walk, run, or even sleep-in for the cure! If you're not able to join us on October 5th, then your generous donations to the cause are much appreciated and very welcome. Please visit the following link to donate or join. When you arrive at the site, follow the link on the main page that says "join my team" in order to join Team REMAX, or feel free to donate on our page.
Thank you for your support!
https://www.kintera.org/faf/donorReg/donorPledge.asp?ievent=274384&lis=0&kntae274384=CE9A1109B13848EA9B1E06A65A32F61D
You can walk, run, or even sleep-in for the cure! If you're not able to join us on October 5th, then your generous donations to the cause are much appreciated and very welcome. Please visit the following link to donate or join. When you arrive at the site, follow the link on the main page that says "join my team" in order to join Team REMAX, or feel free to donate on our page.
Thank you for your support!
https://www.kintera.org/faf/donorReg/donorPledge.asp?ievent=274384&lis=0&kntae274384=CE9A1109B13848EA9B1E06A65A32F61D
We're Getting a Face Lift!
OK, not an actual face lift, but we are changing our image. You'll start to see our new DMG logo on our email signatures and advertising as well as our stationary, which is coming soon. Of course, in the essence of being resourceful and Earth-friendly, you'll see some stragglers of the old logo we are phasing out.
Overall, don't fear the change, it's still the same great DMG that has been working hard for you for years! We hope you like our new look.
Thursday, August 21, 2008
Brief details on the "New" housing bill
I want to take just a moment and cover the primary changes in the bill HR 3221, with 800 pages I am going to only make comments on 5 points:
On Sept 30th 2008 DPA (Down Payment Assistance) programs will end. What does that mean?
Today a buyer can write an offer and ask the seller to up to 6% of the purchase price to be applied to the buyers recurring and non recurring closing costs/down payment. This has allowed a large group of credit worthy buyers to buy today. No more as of the end of Sept!
FHA Loan to Value decrease:
Buyers will need 3.5% cash to buy, up from 3.0%. Sounds small but combined with the end of DPA more buyers are going to be locked out of the market.
FHA MIP (Mortgage Insurance Premium" will increase:
Rate will go up from 2.25% to 3.00%. The loan insurance will go up slightly (this insurance for the loan is usually less than 4 years in duration).
$7,500 Tax Credit:
First Time Buyers (that is anyone who bought and did not won a home in the prior 3 years) can get a $7,500 tax credit if they purchase a home from April 9th 2008 to July 1st 2009. Look at this as an interest free loan for 15 years paid back at $500 per year.
Hope for Home Owners:
Upside down on the loan and want to keep the home? IF you qualify the lien holder will work the the borrower to write down the mortgage to no more the 90% of the appraised value. Example: if a borrower owes $300,000 but the home is worth $200,000 the borrower will receive a new loan for 90% of $200,000, which equals $180,00. The $120,000 is forgiven.
That is all for today.
On Sept 30th 2008 DPA (Down Payment Assistance) programs will end. What does that mean?
Today a buyer can write an offer and ask the seller to up to 6% of the purchase price to be applied to the buyers recurring and non recurring closing costs/down payment. This has allowed a large group of credit worthy buyers to buy today. No more as of the end of Sept!
FHA Loan to Value decrease:
Buyers will need 3.5% cash to buy, up from 3.0%. Sounds small but combined with the end of DPA more buyers are going to be locked out of the market.
FHA MIP (Mortgage Insurance Premium" will increase:
Rate will go up from 2.25% to 3.00%. The loan insurance will go up slightly (this insurance for the loan is usually less than 4 years in duration).
$7,500 Tax Credit:
First Time Buyers (that is anyone who bought and did not won a home in the prior 3 years) can get a $7,500 tax credit if they purchase a home from April 9th 2008 to July 1st 2009. Look at this as an interest free loan for 15 years paid back at $500 per year.
Hope for Home Owners:
Upside down on the loan and want to keep the home? IF you qualify the lien holder will work the the borrower to write down the mortgage to no more the 90% of the appraised value. Example: if a borrower owes $300,000 but the home is worth $200,000 the borrower will receive a new loan for 90% of $200,000, which equals $180,00. The $120,000 is forgiven.
That is all for today.
Thursday, August 7, 2008
Wait and Rent or Act and Buy?
This is the rent versus buy example mentioned in the newsletter:
For the buyer here is a sale that closed on 7/28/08 and a buy now vs. a rent and buy and wait for the market to drop scenario:
2,500 square foot home rental value $1,500 per month x 12 months = $18,000 rent plus an extra move for $2,500 for a total out of pocket of $20,500 (if you do this for 2 years the numbers the cost is about $38,500). Purchase today with 10% down or $31,000 your P.I. payment will be fixed @ $1,730 per month.
Now in one year assume that the home has lost 10% value and rates have moved as expected .5% up the new P.I. will be $1,665 per month. You saved by waiting to buy 1 year $63.00 per month but you spent $18,000 to rent so you could get a “real deal”. The landlord said thank you and you will need 23 years to recoup your $63 that you saved by waiting for the market to “drop”. What if rates do not change? It will still take you over 10 years to get even for renting for a year.
Oh, on the same subject which is a better buy? A bank owned home or an upgraded owner occupied home competing with the banks to sell? I think that as a personal home or an investment, you are selling yourself very short by only buying on price today and not looking at the inherent value of upgraded owner occupied homes. As an investor some of the REO’s are clearly great buys but again, if you are buying for the long run, really take the time to look at your long term rental growth or costs to upgrade by looking at some of the owner occupied homes with their upgrades (many of the foreclosed home’s lack upgrades and improvements as the buyers were buying the minimum stripped down homes in many cases). The value of better located homes and better upgraded homes in the future can be counted on to return a better value/rent. Always keep in mind that money is in fact cheap and an extra $10 per day can make the difference between a plain Jane home and a really nice home.
For the buyer here is a sale that closed on 7/28/08 and a buy now vs. a rent and buy and wait for the market to drop scenario:
2,500 square foot home rental value $1,500 per month x 12 months = $18,000 rent plus an extra move for $2,500 for a total out of pocket of $20,500 (if you do this for 2 years the numbers the cost is about $38,500). Purchase today with 10% down or $31,000 your P.I. payment will be fixed @ $1,730 per month.
Now in one year assume that the home has lost 10% value and rates have moved as expected .5% up the new P.I. will be $1,665 per month. You saved by waiting to buy 1 year $63.00 per month but you spent $18,000 to rent so you could get a “real deal”. The landlord said thank you and you will need 23 years to recoup your $63 that you saved by waiting for the market to “drop”. What if rates do not change? It will still take you over 10 years to get even for renting for a year.
Oh, on the same subject which is a better buy? A bank owned home or an upgraded owner occupied home competing with the banks to sell? I think that as a personal home or an investment, you are selling yourself very short by only buying on price today and not looking at the inherent value of upgraded owner occupied homes. As an investor some of the REO’s are clearly great buys but again, if you are buying for the long run, really take the time to look at your long term rental growth or costs to upgrade by looking at some of the owner occupied homes with their upgrades (many of the foreclosed home’s lack upgrades and improvements as the buyers were buying the minimum stripped down homes in many cases). The value of better located homes and better upgraded homes in the future can be counted on to return a better value/rent. Always keep in mind that money is in fact cheap and an extra $10 per day can make the difference between a plain Jane home and a really nice home.
Friday, July 25, 2008
Housing bill has Somthing for nearly everyone
Today if all goes well the Senate will vote on the new housing bill and by next week may be law.
If you are ignoring this bill thinking that it is only for a few people in dire need of help think again.
Yes, the bill does focus heavily on homeowners in serious trouble but the bill has many other features as well, here is a brief list of what is in the bill:
RENEGOTIATING MORTGAGES: Creation of a program that may allow some people to replace old loans with new fixed rate loans. The troubled loan must have originated before Jan. 1, 2008 and the loan must be on your primary residence. Income verification will be required. Your loan to income payments must exceed 31% of your monthly income.
Lenders are not required to give you a better deal under the new law even if you do meet the new qualifications unless they feel that you are in fact close to default.
If you do get the new loan you may not do a home equity loan for 5 years and an additional fee will be required and the government will be guaranteeing this loan so they will share in any gain. Sell the home in less than 5 years and the government may get all of the gain.
FIRST TIME BUYERS: If you are buying a home for the first time as your primary residence a buyer may be eligible for a tax credit of $7,500 or 10% of the purchase price, which ever is smaller. As always there are catches and if you make more than $95,000 as a single person you are out of luck and if married you are on your own after $170,000 in income. But for buyers in more modest income ranges this is a nice boost.
In addition the buyer will be paying this credit back over a 15 year period of time so it may be better to think of this as an interest free loan.
Oh, the tax credit is retroactive to April 9, 2008. Any home bought from Jan. 1, 2009- June 30, 2009 can be used on the 2008 tax return. See your accountant for full information.
ADDITIONAL DEDUCTIONS: Your accountant per this bill may give you good news in that you get a federal tax deduction for $500 or $1,000 (if married) from your property taxes. Again see your accountant for the full details.
REVERSE MORTGAGE CHANGES: For older Americans the reverse mortgage has been a boom and to some degrees a disaster. The new bill attempts to address two problem areas. First a limit on origination fees at 2% up to $200,000 and 1% beyond up to a maximum of $6,000. In addition the borrowers cannot be forced to purchase an annuity or other financial insurance.
Last the maximum amount that can be borrowed has been raised and the nationwide cap is now $625,000 up from $400,000.
REDEFINITION OF JUMBO LOANS: This one is a bit hazy but it appears that our friends Freddie and Fannie can now buy loans up to $625,000. There is a 115% rule that will affect the actual amount so depending on where you are the new jumbo rate may be less than $625,000.
VETERANS: Lenders will have to wait 9 months, not 90 days to start foreclosure proceedings on homes owned by veterans.
This is a quick re-cap, things probably will change a bit but as you can see the bill does offer assistance to a much broader spectrum of the population that most people realize and many people here in Reno will benefit from the legislation.
Have a great day!
If you are ignoring this bill thinking that it is only for a few people in dire need of help think again.
Yes, the bill does focus heavily on homeowners in serious trouble but the bill has many other features as well, here is a brief list of what is in the bill:
RENEGOTIATING MORTGAGES: Creation of a program that may allow some people to replace old loans with new fixed rate loans. The troubled loan must have originated before Jan. 1, 2008 and the loan must be on your primary residence. Income verification will be required. Your loan to income payments must exceed 31% of your monthly income.
Lenders are not required to give you a better deal under the new law even if you do meet the new qualifications unless they feel that you are in fact close to default.
If you do get the new loan you may not do a home equity loan for 5 years and an additional fee will be required and the government will be guaranteeing this loan so they will share in any gain. Sell the home in less than 5 years and the government may get all of the gain.
FIRST TIME BUYERS: If you are buying a home for the first time as your primary residence a buyer may be eligible for a tax credit of $7,500 or 10% of the purchase price, which ever is smaller. As always there are catches and if you make more than $95,000 as a single person you are out of luck and if married you are on your own after $170,000 in income. But for buyers in more modest income ranges this is a nice boost.
In addition the buyer will be paying this credit back over a 15 year period of time so it may be better to think of this as an interest free loan.
Oh, the tax credit is retroactive to April 9, 2008. Any home bought from Jan. 1, 2009- June 30, 2009 can be used on the 2008 tax return. See your accountant for full information.
ADDITIONAL DEDUCTIONS: Your accountant per this bill may give you good news in that you get a federal tax deduction for $500 or $1,000 (if married) from your property taxes. Again see your accountant for the full details.
REVERSE MORTGAGE CHANGES: For older Americans the reverse mortgage has been a boom and to some degrees a disaster. The new bill attempts to address two problem areas. First a limit on origination fees at 2% up to $200,000 and 1% beyond up to a maximum of $6,000. In addition the borrowers cannot be forced to purchase an annuity or other financial insurance.
Last the maximum amount that can be borrowed has been raised and the nationwide cap is now $625,000 up from $400,000.
REDEFINITION OF JUMBO LOANS: This one is a bit hazy but it appears that our friends Freddie and Fannie can now buy loans up to $625,000. There is a 115% rule that will affect the actual amount so depending on where you are the new jumbo rate may be less than $625,000.
VETERANS: Lenders will have to wait 9 months, not 90 days to start foreclosure proceedings on homes owned by veterans.
This is a quick re-cap, things probably will change a bit but as you can see the bill does offer assistance to a much broader spectrum of the population that most people realize and many people here in Reno will benefit from the legislation.
Have a great day!
Thursday, July 24, 2008
Housing Sales Up and Prices Flat
On Tuesday the front page of the Reno Gazette-Journal had the headline "Housing Sales Up as Prices Stay Flat," while the Wall Street Journal and other sources say sales are down in June. So who do you believe?
As the author of this blog entry, my issue is with how information is given to you, the consumer. What is right, what is wrong and what to believe.
Heck, I'm all for good news but let's make it real. The Wall Street Journal is in fact correct, sales are down in June and probably in July as well.
My numbers only reflect the resale market and new home sales that are included in the MLS system. I do this because I feel that it is in fact the resale market that is our reality check on what is going on in the real estate market. Selling new homes is great for developers but as a home owner the question is, can you sell your home and for how much in what given period of time? All new homes sales quickly become possible sellers in the resale market over time, so what happens in the resale market is critical to the health of our business.
In the first quarter of 2007 838 homes sold and in the second quarter 1,013 homes sold for an increase in activity of 18%.
In the first quarter of 2008 597 homes sold and in the second quarter 991 homes sold for a increase in activity of 40%.
I realize that I am drawing from one set of numbers but from what I see, we have positive growth and that needs to be publicized, this is GREAT news!
Unfortunately, the press seems to want to make extremes out of news, either stating things worse than they are or better than they are. My issue is that when one pumps up the good news it opens the door to the next reporter to make the negative news look worse than it is.
The fact is that as of today, July of 2008 is running 30% behind July of 2007. So does that mean that we have fallen down?
The fact is that our market did well in the first six months of this year despite all that we are dealing with and we ARE working out our issues slowly but surely. The REO/short sale market is not unlimited and unless, as a buyer, you only want to buy within a fairly restricted area of the market, the depressed prices elsewhere will stabilize sooner than you realize. No, I did not say prices are going to rise but prices are going to stabilize sooner than you think. For sellers, all this means is that to sell you need to price to the real numbers that are being reported and to wait out this market, and get substantial returns for waiting, is going to be a very, very long wait.
Let's focus on the good news that we're seeing positive growth in the market and keep working in the right direction. The combined efforts of agents, buyers and sellers will help make this "adjustment" a thing of the past.
As the author of this blog entry, my issue is with how information is given to you, the consumer. What is right, what is wrong and what to believe.
Heck, I'm all for good news but let's make it real. The Wall Street Journal is in fact correct, sales are down in June and probably in July as well.
My numbers only reflect the resale market and new home sales that are included in the MLS system. I do this because I feel that it is in fact the resale market that is our reality check on what is going on in the real estate market. Selling new homes is great for developers but as a home owner the question is, can you sell your home and for how much in what given period of time? All new homes sales quickly become possible sellers in the resale market over time, so what happens in the resale market is critical to the health of our business.
In the first quarter of 2007 838 homes sold and in the second quarter 1,013 homes sold for an increase in activity of 18%.
In the first quarter of 2008 597 homes sold and in the second quarter 991 homes sold for a increase in activity of 40%.
I realize that I am drawing from one set of numbers but from what I see, we have positive growth and that needs to be publicized, this is GREAT news!
Unfortunately, the press seems to want to make extremes out of news, either stating things worse than they are or better than they are. My issue is that when one pumps up the good news it opens the door to the next reporter to make the negative news look worse than it is.
The fact is that as of today, July of 2008 is running 30% behind July of 2007. So does that mean that we have fallen down?
The fact is that our market did well in the first six months of this year despite all that we are dealing with and we ARE working out our issues slowly but surely. The REO/short sale market is not unlimited and unless, as a buyer, you only want to buy within a fairly restricted area of the market, the depressed prices elsewhere will stabilize sooner than you realize. No, I did not say prices are going to rise but prices are going to stabilize sooner than you think. For sellers, all this means is that to sell you need to price to the real numbers that are being reported and to wait out this market, and get substantial returns for waiting, is going to be a very, very long wait.
Let's focus on the good news that we're seeing positive growth in the market and keep working in the right direction. The combined efforts of agents, buyers and sellers will help make this "adjustment" a thing of the past.
Tuesday, July 22, 2008
New York Times, good reading
I found this article from the New York Times and thought that it was well written and was worth passing on, oh it is a long article: My thoughts are at the bottom.
"July 19, 2008
Uncomfortable Answers to Questions on the Economy
By PETER S. GOODMAN
You have heard that Fannie and Freddie, their gentle names notwithstanding, may cripple the financial system without a large infusion of taxpayer money. You have gleaned that jobs are disappearing, housing prices are plummeting, and paychecks are effectively shrinking as food and energy prices soar. You have noted the disturbing talk of crisis hovering over Wall Street.
Something has clearly gone wrong with the economy. But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.
Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.
“The open question is whether we’re in for a bad couple of years, or a bad decade,” said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.
Is this a recession?
Officially, no. The economy is not in recession until a panel at a private institution called the National Bureau of Economic Research says so. Unofficially, many economists think a recession started six or seven months ago, even as the economy has continued to expand — albeit at a tepid pace.
Many assume that if the economy expands at all, then it isn’t a recession, but that’s not true. The bureau defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months.” If enough people lose their jobs, factories stop making things, stores stop selling things, and less money lands in people’s pockets, it is probably a recession.
Whatever it is called, it is a painful time for tens of millions of people. Indeed, this may turn out to be the most wrenching downturn since the two recessions in the early 1980s; almost surely worse than the recession that ended the technology bubble at the beginning of this decade; perhaps worse than the downturn of the early 1990s that followed the last dip in real estate prices.
But, despite what some doomsayers now proclaim, this is not the Great Depression, when unemployment spiked to 25 percent and millions of previously working people woke up in shantytowns. Not by any measure, even as your neighbors make cryptic remarks above dusting off lessons passed down from grandparents about how to turn a can of beans into a family meal.
How bad is housing?
Bad in many markets, awful in some, and still O.K. in a few.
The downturn has its roots in the real estate frenzy that turned lonely Nevada ranches into suburban ranch homes and swampland in Florida into condominiums. Speculators drove home prices beyond any historical connection to incomes. Gravity did the rest. After roughly doubling in value from 2000 to 2005, home prices have fallen about 17 percent — and more like 25 percent in inflation-adjusted terms — according to the widely watched Case-Shiller index.
Even so, most economists think house prices must fall an additional 10 to 15 percent to get back to reality. One useful measure is the relationship between the costs of buying and renting a home. From 1985 to 2002, the average American home sold for about 14 times the annual rent for a similar home, according to Moody’s Economy.com. By early 2006, home prices ballooned to 25 times rental prices. Since then, the ratio has dipped back to about 20 — still far above the historical norm.
With mortgages now hard to obtain and speculation no longer attractive, arithmetic has replaced momentum as the guiding force for housing prices. The fundamental equation points down: Even as construction grinds down, there are still many more houses on the market than there are people to buy them, and more on the way as more homeowners slip into foreclosure.
By the reckoning of Economy.com, enough houses are on the market to satisfy demand for the next two-and-a-half years without building a single new one.
The time it takes to sell a newly completed house has expanded from an average of four months in 2005 to about nine months, according to analysis by Dean Baker, co-director of the Center for Economic and Policy Research.
And many sales are falling through — more than 30 percent in some parts of California and Florida — as buyers fail to secure financing, exacerbating the glut of homes, Mr. Baker said.
No wonder that in Los Angeles, San Francisco, Phoenix and Las Vegas, house prices have in recent months declined at annual rates of more than 33 percent.
When will banks revive?
So far, they have written off more than $300 billion in loans. Many experts now predict the toll will rise to $1 trillion or more — a staggering sum that could cripple many institutions for years.
Back when home prices were multiplying, banks poured oceans of borrowed money into real estate loans. Unlike the dot-com companies at the heart of the last speculative investment bubble, the new gold rush was centered on something that seemed unimpeachably solid — the American home.
But the whole thing worked only as long as housing prices rose. Falling prices landed like a bomb. Homeowners fell behind on their loans and could not qualify for new ones: There was no value left in their house to borrow against. As millions of people defaulted, the banks confronted enormous losses in a bloody period of reckoning.
In March, the Federal Reserve helped engineer a deal for JPMorgan Chase to buy troubled investment bank Bear Stearns. Many assumed the worst was over. But, this month, the open distress of Fannie Mae and Freddie Mac — two huge, government sponsored institutions that together own or guarantee nearly half of the nation’s $12 trillion in outstanding mortgages — sent a signal that more ugly surprises may lie in wait.
To calm markets, the government last weekend hurriedly put together a rescue package for Fannie and Freddie that, if used, could cost as much as $300 billion. The urgent need for a rescue — together with another round of billion-dollar write-offs on Wall Street — has unnerved economists and investors.
“I was a relative optimist, but I’ve certainly become more pessimistic,” said Alan S. Blinder, an economist at Princeton, and a former vice chairman of the board of governors at the Federal Reserve. “The financial system looks substantially worse now than it did a month ago. If the Freddie and Fannie bailout were to fail, it could get a hell of a lot worse. If we get more bank failures, we have the possibility of seeing more of these pictures of people standing in line to pull their money out. That could really scare consumers.”
In one respect, Mr. Blinder added, this is like the Great Depression. “We haven’t seen this kind of travail in the financial markets since the 1930s,” he said.
More than two years ago, Nouriel Roubini, an economist at the Stern School of Business at New York University, said that the housing bubble would give way to a financial crisis and a recession. He was widely dismissed as an attention-seeking Chicken Little. Now, Mr. Roubini says the worst is yet to come, because the account-squaring has so far been confined mostly to bad mortgages, leaving other areas remaining — credit cards, auto loans, corporate and municipal debt.
Mr. Roubini says the cost of the financial system’s losses could reach $2 trillion. Even if it’s closer to $1 trillion, he adds, “we’re not even a third of the way there.”
Where will the banks raise the huge sums needed to replenish the capital they have apparently lost? And what will happen if they cannot?
The answers to these questions are unknown, an unsettling void that holds much of the economy at a standstill.
“We’re in a dangerous spot,” said Andrew Tilton, an economist at Goldman Sachs. “The big threat is more capital losses.”
Banks are a crucial piece of the economy’s arterial system, steering capital where it is needed to fuel spending and power growth. Now, they are holding tight to their dollars, starving businesses of loans they might use to expand, and depriving families of money they might use to buy houses and fill them with furniture and appliances.
From last June to this June, commercial bank lending declined more than 9 percent, according to an analysis of Federal Reserve data by Goldman Sachs.
“You have another wave of anxiety, another tightening of credit,” said Robert Barbera, chief economist at the research and trading firm ITG. “The idea that we’ll have a second half of the year recovery has gone by the boards.”
Is my job safe?
Economic slowdowns always mean job losses. Unemployment already has risen, and almost certainly will increase more.
The first signs of distress emerged in housing. Construction companies, real estate agencies, mortgage brokers and banks began laying people off. Next, jobs started being cut at factories making products linked to housing, from carpets and furniture to lighting and flooring.
But as the real estate bust spilled over into the broader economy, depleting household wealth, the impacts rippled out to retailers, beauty parlors, law offices and trucking companies, inflicting cutbacks throughout the economy, save for health care, farming and energy. Over the last six months, the economy has shed 485,000 private sector jobs, according to the Labor Department. Many people have seen hours reduced.
The unemployment rate still remains low by historical standards, at 5.5 percent. And so far, the job losses — about 65,000 a month this year — do not approach the magnitude of those seen in past downturns, particularly the twin recessions at the beginning of the 1980s, when the economy shed upward of 140,000 jobs a month and the unemployment rate exceeded 10 percent.
But Goldman Sachs assumes unemployment will reach 6.5 percent by the end of 2009, which translates into several hundred thousand more Americans out of work.
These losses are landing on top of what was, for most Americans, a remarkably weak period of expansion. From 1992 to 2000 — as the technology boom catalyzed spending and hiring — the economy added more than 22 million private sector jobs. Over the last eight years, only 5 million new jobs have been added.
The loss of work is hitting Americans along with an assortment of troubles — gasoline prices in excess of $4 a gallon, overall inflation of about 5 percent, and declining wages.
“In every dimension, people are worse off than they were,” said Mr. Roubini, the New York University economist.
Are consumers done?
That is a major worry.
The fate of the economy now rests on the shoulders of the American consumer, whose spending amounts to 70 percent of all economic activity.
When people go to the mall and buy televisions and eat out, their money circulates through the economy. When they tighten their belts, austerity ripples out and chokes growth.
Through the years of the housing boom, many Americans came to treat their homes like automated teller machines that never required a deposit. They harvested cash through sales, second mortgages and home equity lines of credit — an artery of finance that reached $840 billion a year from 2004 to 2006, according to work by the economists James Kennedy and Alan Greenspan, the former Federal Reserve chairman. That allowed Americans to live far in excess of what they brought home from work.
But by the first three months of this year, that flow had constricted to an annual rate of about $200 billion.
Average household debt has swelled to 120 percent of annual income, up from 60 percent in 1984, according to the Federal Reserve.
And now the banks are turning off the credit taps.
“Credit is going to remain tight for a time potentially measured in years,” said Mr. Tilton, the Goldman Sachs economist.
This is the landscape that has so many economists convinced that consumer spending must dip, putting the squeeze on the economy for several years.
“The question is, will it get as bad as the 1970s?” asked Mr. Rogoff, recalling an era of spiking gas prices and double-digit inflation.
Long term, Americans may have no choice but to spend less, save more and reduce debts — in short, to live within their means.
“We’re getting a lot of the adjustment and it hurts,” said Kristin Forbes, a former member of the Council of Economic Advisers under President George W. Bush, and now a scholar at M.I.T.’s Sloan School of Management. “But it’s an adjustment we’re going to have to make.”
Who’s to blame?
There is plenty to go around.
In the estimation of many economists, it starts with the Federal Reserve. The central bank lowered interest rates following the calamitous end of the technology bubble in 2000, lowered them more after the terrorist attacks of Sept. 11, 2001, and then kept them low, even as speculators began to trade homes like dot-com stocks.
Meanwhile, the Fed sat back and watched as Wall Street’s financial wizards engineered diabolically complicated investments linked to mortgages, generating huge amounts of speculative capital that turned real estate into a conflagration.
“At the end of this movie, it’s clear that the Fed will have to care about excesses,” Mr. Barbera said.
Prices multiplied as many homeowners took on more property than they could afford, lured by low introductory interest rates that eventually reset higher, sending many people into foreclosure.
Mortgage brokers netted commissions as they lent almost indiscriminately, offering exotically lenient terms — no money down, no income or job required. Wall Street banks earned billions selling risky mortgage-linked securities around the world, aided by ratings agencies that branded them solid.
Through it all, a lot of ordinary Americans borrowed a lot more money then they could afford to pay back, running up enormous credit card bills and borrowing against the value of their homes. Now comes the day of reckoning."
I think that the author has presented an interesting case. I will tend to take a more simplistic look though and remind myself and others that it is very easy to see only the best at times and the worst at times. It is times like this that make you stop and realize that maybe it really is darkest before the dawn and opportunities abound if we change our outlooks when we read news like this.
"July 19, 2008
Uncomfortable Answers to Questions on the Economy
By PETER S. GOODMAN
You have heard that Fannie and Freddie, their gentle names notwithstanding, may cripple the financial system without a large infusion of taxpayer money. You have gleaned that jobs are disappearing, housing prices are plummeting, and paychecks are effectively shrinking as food and energy prices soar. You have noted the disturbing talk of crisis hovering over Wall Street.
Something has clearly gone wrong with the economy. But how bad are things, really? And how bad might they get before better days return? Even to many economists who recently thought the gloom was overblown, the situation looks grim. The economy is in the midst of a very rough patch. The worst is probably still ahead.
Job losses will probably accelerate through this year and into 2009, and the job market will probably stay weak even longer. Home prices will probably keep falling, shrinking household wealth and eroding spending power.
“The open question is whether we’re in for a bad couple of years, or a bad decade,” said Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, now a professor at Harvard.
Is this a recession?
Officially, no. The economy is not in recession until a panel at a private institution called the National Bureau of Economic Research says so. Unofficially, many economists think a recession started six or seven months ago, even as the economy has continued to expand — albeit at a tepid pace.
Many assume that if the economy expands at all, then it isn’t a recession, but that’s not true. The bureau defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months.” If enough people lose their jobs, factories stop making things, stores stop selling things, and less money lands in people’s pockets, it is probably a recession.
Whatever it is called, it is a painful time for tens of millions of people. Indeed, this may turn out to be the most wrenching downturn since the two recessions in the early 1980s; almost surely worse than the recession that ended the technology bubble at the beginning of this decade; perhaps worse than the downturn of the early 1990s that followed the last dip in real estate prices.
But, despite what some doomsayers now proclaim, this is not the Great Depression, when unemployment spiked to 25 percent and millions of previously working people woke up in shantytowns. Not by any measure, even as your neighbors make cryptic remarks above dusting off lessons passed down from grandparents about how to turn a can of beans into a family meal.
How bad is housing?
Bad in many markets, awful in some, and still O.K. in a few.
The downturn has its roots in the real estate frenzy that turned lonely Nevada ranches into suburban ranch homes and swampland in Florida into condominiums. Speculators drove home prices beyond any historical connection to incomes. Gravity did the rest. After roughly doubling in value from 2000 to 2005, home prices have fallen about 17 percent — and more like 25 percent in inflation-adjusted terms — according to the widely watched Case-Shiller index.
Even so, most economists think house prices must fall an additional 10 to 15 percent to get back to reality. One useful measure is the relationship between the costs of buying and renting a home. From 1985 to 2002, the average American home sold for about 14 times the annual rent for a similar home, according to Moody’s Economy.com. By early 2006, home prices ballooned to 25 times rental prices. Since then, the ratio has dipped back to about 20 — still far above the historical norm.
With mortgages now hard to obtain and speculation no longer attractive, arithmetic has replaced momentum as the guiding force for housing prices. The fundamental equation points down: Even as construction grinds down, there are still many more houses on the market than there are people to buy them, and more on the way as more homeowners slip into foreclosure.
By the reckoning of Economy.com, enough houses are on the market to satisfy demand for the next two-and-a-half years without building a single new one.
The time it takes to sell a newly completed house has expanded from an average of four months in 2005 to about nine months, according to analysis by Dean Baker, co-director of the Center for Economic and Policy Research.
And many sales are falling through — more than 30 percent in some parts of California and Florida — as buyers fail to secure financing, exacerbating the glut of homes, Mr. Baker said.
No wonder that in Los Angeles, San Francisco, Phoenix and Las Vegas, house prices have in recent months declined at annual rates of more than 33 percent.
When will banks revive?
So far, they have written off more than $300 billion in loans. Many experts now predict the toll will rise to $1 trillion or more — a staggering sum that could cripple many institutions for years.
Back when home prices were multiplying, banks poured oceans of borrowed money into real estate loans. Unlike the dot-com companies at the heart of the last speculative investment bubble, the new gold rush was centered on something that seemed unimpeachably solid — the American home.
But the whole thing worked only as long as housing prices rose. Falling prices landed like a bomb. Homeowners fell behind on their loans and could not qualify for new ones: There was no value left in their house to borrow against. As millions of people defaulted, the banks confronted enormous losses in a bloody period of reckoning.
In March, the Federal Reserve helped engineer a deal for JPMorgan Chase to buy troubled investment bank Bear Stearns. Many assumed the worst was over. But, this month, the open distress of Fannie Mae and Freddie Mac — two huge, government sponsored institutions that together own or guarantee nearly half of the nation’s $12 trillion in outstanding mortgages — sent a signal that more ugly surprises may lie in wait.
To calm markets, the government last weekend hurriedly put together a rescue package for Fannie and Freddie that, if used, could cost as much as $300 billion. The urgent need for a rescue — together with another round of billion-dollar write-offs on Wall Street — has unnerved economists and investors.
“I was a relative optimist, but I’ve certainly become more pessimistic,” said Alan S. Blinder, an economist at Princeton, and a former vice chairman of the board of governors at the Federal Reserve. “The financial system looks substantially worse now than it did a month ago. If the Freddie and Fannie bailout were to fail, it could get a hell of a lot worse. If we get more bank failures, we have the possibility of seeing more of these pictures of people standing in line to pull their money out. That could really scare consumers.”
In one respect, Mr. Blinder added, this is like the Great Depression. “We haven’t seen this kind of travail in the financial markets since the 1930s,” he said.
More than two years ago, Nouriel Roubini, an economist at the Stern School of Business at New York University, said that the housing bubble would give way to a financial crisis and a recession. He was widely dismissed as an attention-seeking Chicken Little. Now, Mr. Roubini says the worst is yet to come, because the account-squaring has so far been confined mostly to bad mortgages, leaving other areas remaining — credit cards, auto loans, corporate and municipal debt.
Mr. Roubini says the cost of the financial system’s losses could reach $2 trillion. Even if it’s closer to $1 trillion, he adds, “we’re not even a third of the way there.”
Where will the banks raise the huge sums needed to replenish the capital they have apparently lost? And what will happen if they cannot?
The answers to these questions are unknown, an unsettling void that holds much of the economy at a standstill.
“We’re in a dangerous spot,” said Andrew Tilton, an economist at Goldman Sachs. “The big threat is more capital losses.”
Banks are a crucial piece of the economy’s arterial system, steering capital where it is needed to fuel spending and power growth. Now, they are holding tight to their dollars, starving businesses of loans they might use to expand, and depriving families of money they might use to buy houses and fill them with furniture and appliances.
From last June to this June, commercial bank lending declined more than 9 percent, according to an analysis of Federal Reserve data by Goldman Sachs.
“You have another wave of anxiety, another tightening of credit,” said Robert Barbera, chief economist at the research and trading firm ITG. “The idea that we’ll have a second half of the year recovery has gone by the boards.”
Is my job safe?
Economic slowdowns always mean job losses. Unemployment already has risen, and almost certainly will increase more.
The first signs of distress emerged in housing. Construction companies, real estate agencies, mortgage brokers and banks began laying people off. Next, jobs started being cut at factories making products linked to housing, from carpets and furniture to lighting and flooring.
But as the real estate bust spilled over into the broader economy, depleting household wealth, the impacts rippled out to retailers, beauty parlors, law offices and trucking companies, inflicting cutbacks throughout the economy, save for health care, farming and energy. Over the last six months, the economy has shed 485,000 private sector jobs, according to the Labor Department. Many people have seen hours reduced.
The unemployment rate still remains low by historical standards, at 5.5 percent. And so far, the job losses — about 65,000 a month this year — do not approach the magnitude of those seen in past downturns, particularly the twin recessions at the beginning of the 1980s, when the economy shed upward of 140,000 jobs a month and the unemployment rate exceeded 10 percent.
But Goldman Sachs assumes unemployment will reach 6.5 percent by the end of 2009, which translates into several hundred thousand more Americans out of work.
These losses are landing on top of what was, for most Americans, a remarkably weak period of expansion. From 1992 to 2000 — as the technology boom catalyzed spending and hiring — the economy added more than 22 million private sector jobs. Over the last eight years, only 5 million new jobs have been added.
The loss of work is hitting Americans along with an assortment of troubles — gasoline prices in excess of $4 a gallon, overall inflation of about 5 percent, and declining wages.
“In every dimension, people are worse off than they were,” said Mr. Roubini, the New York University economist.
Are consumers done?
That is a major worry.
The fate of the economy now rests on the shoulders of the American consumer, whose spending amounts to 70 percent of all economic activity.
When people go to the mall and buy televisions and eat out, their money circulates through the economy. When they tighten their belts, austerity ripples out and chokes growth.
Through the years of the housing boom, many Americans came to treat their homes like automated teller machines that never required a deposit. They harvested cash through sales, second mortgages and home equity lines of credit — an artery of finance that reached $840 billion a year from 2004 to 2006, according to work by the economists James Kennedy and Alan Greenspan, the former Federal Reserve chairman. That allowed Americans to live far in excess of what they brought home from work.
But by the first three months of this year, that flow had constricted to an annual rate of about $200 billion.
Average household debt has swelled to 120 percent of annual income, up from 60 percent in 1984, according to the Federal Reserve.
And now the banks are turning off the credit taps.
“Credit is going to remain tight for a time potentially measured in years,” said Mr. Tilton, the Goldman Sachs economist.
This is the landscape that has so many economists convinced that consumer spending must dip, putting the squeeze on the economy for several years.
“The question is, will it get as bad as the 1970s?” asked Mr. Rogoff, recalling an era of spiking gas prices and double-digit inflation.
Long term, Americans may have no choice but to spend less, save more and reduce debts — in short, to live within their means.
“We’re getting a lot of the adjustment and it hurts,” said Kristin Forbes, a former member of the Council of Economic Advisers under President George W. Bush, and now a scholar at M.I.T.’s Sloan School of Management. “But it’s an adjustment we’re going to have to make.”
Who’s to blame?
There is plenty to go around.
In the estimation of many economists, it starts with the Federal Reserve. The central bank lowered interest rates following the calamitous end of the technology bubble in 2000, lowered them more after the terrorist attacks of Sept. 11, 2001, and then kept them low, even as speculators began to trade homes like dot-com stocks.
Meanwhile, the Fed sat back and watched as Wall Street’s financial wizards engineered diabolically complicated investments linked to mortgages, generating huge amounts of speculative capital that turned real estate into a conflagration.
“At the end of this movie, it’s clear that the Fed will have to care about excesses,” Mr. Barbera said.
Prices multiplied as many homeowners took on more property than they could afford, lured by low introductory interest rates that eventually reset higher, sending many people into foreclosure.
Mortgage brokers netted commissions as they lent almost indiscriminately, offering exotically lenient terms — no money down, no income or job required. Wall Street banks earned billions selling risky mortgage-linked securities around the world, aided by ratings agencies that branded them solid.
Through it all, a lot of ordinary Americans borrowed a lot more money then they could afford to pay back, running up enormous credit card bills and borrowing against the value of their homes. Now comes the day of reckoning."
I think that the author has presented an interesting case. I will tend to take a more simplistic look though and remind myself and others that it is very easy to see only the best at times and the worst at times. It is times like this that make you stop and realize that maybe it really is darkest before the dawn and opportunities abound if we change our outlooks when we read news like this.
Friday, July 18, 2008
What the Heck is Going on Today?
Lately I have stayed away from writing about the market but that time has come. I am going to attach in my next blog my last newsletter and will in the future add my newsletters as I prepare them.
This last Sunday the RGJ.com/business section had two very good articles. One on "High-end home sales dive but bottom could be near" and the other one by Diane Cohn on local insight on "What's hot, what's not in the Reno-Sparks residential area.
When this market started to develop in the fall of 2005 at first the projections were that Reno would see a soft landing, those of us that had deep experience felt that at best we would see a real thumper of a market change (oh hindsight is wonderful, if we had only known what a "thumper" was waiting for us) and I felt that we could possibly see prices recede to early 2005 values.
As 2006 came to an end, the media was filled with the facts that maybe the market change might be a bit tougher than expected but no worries, the market change in real estate values would never affect the rest of the US economy.
By late 2006 I knew that I was wrong on my feeling about what I expected in 2005 and now knew that we could easily roll back to 2004 values (I was laughed at, but then again I was laughed at in 2005 as well).
By the end of 2006 I was beginning to think that maybe, just maybe, a disconnect was going on in the economy with real estate and the rest of the market. Along came August of 2007 and in front of the whole world Wall Street undressed and exposed the true depth of the problem and as I speed up to July of 2008 it seems now that each month we wait eagerly for the next act in the drama playing out of Wall Street and the banking industry.
Today those of us active and knowledgeable in this business realize that we are working on triage with many of our clients. Just how bad or how good the markets are is going to be will depend on your viewpoint and the depth of your pocket book.
Sales in 2002 to July were 2,475 homes and today we are at 1,745 sales. Average sales price is higher in 2008 over 2002 by about $108,000. We have 3,168 homes for sale as a reference point.
I think that both articles were well written but lacked some important information. First the foreclosure/short sale market is eroding the markets and reducing our base values and how the banks look at foreclosures is interesting. I as a broker look at a home as to how to get the best value the banks look at the foreclosed home as a cost that needs to be disposed of at the least cost to bank and recover as much as possible of the bad debt. When the foreclosure rate was maybe a
less than 1% of the overall market such thinking was fine.
To measure a market and say that it is healthy to see a solid foundation develop is questionable due to how the banks are handling their sales.
Today with upwards of 42% of the sales in June being distressed sales the banks way of doing business is outdated and fueling our decline in values and is a leading cause of our seemingly bottomless drop in values. What are the fixes to this situation?
Well there are many suggestions but the primary fix needs to come from Washington, not with bail outs but with new regulations and incentives and tax credits, and programs. There are many suggestions and one that has been brought fourth is that the banks need to be encouraged to not dump the homes but much like new home builders they need to be allowed to offer "incentives" to borrowers. Incentives that FHA will allow and be acceptable to the government loan agencies. Incentives that will keep the lawn green, the home neat and encourage the buyer to pay real market values for the home and give the buyer some very strong bank approved incentives that allow the buyer to make major repairs or improvements without adding cash to the transaction. The banks need to be able of course write off the costs of the incentives to make such programs viable to them and the buyers need to be qualified buyers. For the moment at least investors need not apply.
In regards to the high end market it was the belief of many that the money issues would never rise to affect the well off. If the market had corrected in 2006 then that would have been true but by July of 2008 the time has come for many agents and their clients to understand that the rules really have changed.
The issue is what is normal, what is a good market? What are reasonable expectations? Are we at a bottom? A bottom of what?
As of July 17th in the greater Reno market place (this does not include Lake Tahoe but that we can talk about later as they now have their hands full) here is some food for thought:
High end is over $1 million dollars.
42 homes have sold in 2008 so far for an average price of $1,323,674
294 homes are for sale today for an average price of $1,357,500
11 homes are in escrow today for an average price of $1,228,043
(note I did not use two custom built homes in these numbers).
So, how long will it take Reno to sell all our current inventory? For a reference lets use 2006 as a guide for the top of the market. In the first 7 months of 2006, just before the market died off 79 homes sold for an average price of $1,395,000 or about 11.2 homes per month.
Today we have closed 42 homes for 6 sales per month. That means that we have OVER a 3 year supply of homes. The market needs to have a supply of high end homes of less than 18 months to become healthy and 12 month or less is where we really need to be.
Now lets stop here. First 42 sales is wonderful. The market is really strong and these are good numbers why, want to know what we sold in 2002? 22 homes for a $1,280!
Writers need to stop comparing numbers to 2005-2006. The funny money, stupid markets are gone and to make comparisons against those sales is only going to keep sellers fantasy's alive that some how they can still command silly numbers for their homes.
The sad facts are this: IF you bought during those markets your numbers are based on a foundation of quicksand. If you refinanced in those markets your issues are just as shaky. To talk about bottoms and floors first the REO markets must dry up and liquidity must return to the markets In addition expectations of the return to 10% + appreciation a year must be dropped.
It is in injustice for anyone, whether the media, the public or agents to keep measuring the markets by Wall Streets insanity and the results of an out of control market that was created in 2003-2006.
So where is the opportunity, every where, really. But there are just two rules, do not buy someone else's problem and buy for the long term (5 years). Oh and stop looking at price as your only option. More on that later.
This last Sunday the RGJ.com/business section had two very good articles. One on "High-end home sales dive but bottom could be near" and the other one by Diane Cohn on local insight on "What's hot, what's not in the Reno-Sparks residential area.
When this market started to develop in the fall of 2005 at first the projections were that Reno would see a soft landing, those of us that had deep experience felt that at best we would see a real thumper of a market change (oh hindsight is wonderful, if we had only known what a "thumper" was waiting for us) and I felt that we could possibly see prices recede to early 2005 values.
As 2006 came to an end, the media was filled with the facts that maybe the market change might be a bit tougher than expected but no worries, the market change in real estate values would never affect the rest of the US economy.
By late 2006 I knew that I was wrong on my feeling about what I expected in 2005 and now knew that we could easily roll back to 2004 values (I was laughed at, but then again I was laughed at in 2005 as well).
By the end of 2006 I was beginning to think that maybe, just maybe, a disconnect was going on in the economy with real estate and the rest of the market. Along came August of 2007 and in front of the whole world Wall Street undressed and exposed the true depth of the problem and as I speed up to July of 2008 it seems now that each month we wait eagerly for the next act in the drama playing out of Wall Street and the banking industry.
Today those of us active and knowledgeable in this business realize that we are working on triage with many of our clients. Just how bad or how good the markets are is going to be will depend on your viewpoint and the depth of your pocket book.
Sales in 2002 to July were 2,475 homes and today we are at 1,745 sales. Average sales price is higher in 2008 over 2002 by about $108,000. We have 3,168 homes for sale as a reference point.
I think that both articles were well written but lacked some important information. First the foreclosure/short sale market is eroding the markets and reducing our base values and how the banks look at foreclosures is interesting. I as a broker look at a home as to how to get the best value the banks look at the foreclosed home as a cost that needs to be disposed of at the least cost to bank and recover as much as possible of the bad debt. When the foreclosure rate was maybe a
less than 1% of the overall market such thinking was fine.
To measure a market and say that it is healthy to see a solid foundation develop is questionable due to how the banks are handling their sales.
Today with upwards of 42% of the sales in June being distressed sales the banks way of doing business is outdated and fueling our decline in values and is a leading cause of our seemingly bottomless drop in values. What are the fixes to this situation?
Well there are many suggestions but the primary fix needs to come from Washington, not with bail outs but with new regulations and incentives and tax credits, and programs. There are many suggestions and one that has been brought fourth is that the banks need to be encouraged to not dump the homes but much like new home builders they need to be allowed to offer "incentives" to borrowers. Incentives that FHA will allow and be acceptable to the government loan agencies. Incentives that will keep the lawn green, the home neat and encourage the buyer to pay real market values for the home and give the buyer some very strong bank approved incentives that allow the buyer to make major repairs or improvements without adding cash to the transaction. The banks need to be able of course write off the costs of the incentives to make such programs viable to them and the buyers need to be qualified buyers. For the moment at least investors need not apply.
In regards to the high end market it was the belief of many that the money issues would never rise to affect the well off. If the market had corrected in 2006 then that would have been true but by July of 2008 the time has come for many agents and their clients to understand that the rules really have changed.
The issue is what is normal, what is a good market? What are reasonable expectations? Are we at a bottom? A bottom of what?
As of July 17th in the greater Reno market place (this does not include Lake Tahoe but that we can talk about later as they now have their hands full) here is some food for thought:
High end is over $1 million dollars.
42 homes have sold in 2008 so far for an average price of $1,323,674
294 homes are for sale today for an average price of $1,357,500
11 homes are in escrow today for an average price of $1,228,043
(note I did not use two custom built homes in these numbers).
So, how long will it take Reno to sell all our current inventory? For a reference lets use 2006 as a guide for the top of the market. In the first 7 months of 2006, just before the market died off 79 homes sold for an average price of $1,395,000 or about 11.2 homes per month.
Today we have closed 42 homes for 6 sales per month. That means that we have OVER a 3 year supply of homes. The market needs to have a supply of high end homes of less than 18 months to become healthy and 12 month or less is where we really need to be.
Now lets stop here. First 42 sales is wonderful. The market is really strong and these are good numbers why, want to know what we sold in 2002? 22 homes for a $1,280!
Writers need to stop comparing numbers to 2005-2006. The funny money, stupid markets are gone and to make comparisons against those sales is only going to keep sellers fantasy's alive that some how they can still command silly numbers for their homes.
The sad facts are this: IF you bought during those markets your numbers are based on a foundation of quicksand. If you refinanced in those markets your issues are just as shaky. To talk about bottoms and floors first the REO markets must dry up and liquidity must return to the markets In addition expectations of the return to 10% + appreciation a year must be dropped.
It is in injustice for anyone, whether the media, the public or agents to keep measuring the markets by Wall Streets insanity and the results of an out of control market that was created in 2003-2006.
So where is the opportunity, every where, really. But there are just two rules, do not buy someone else's problem and buy for the long term (5 years). Oh and stop looking at price as your only option. More on that later.
Thursday, July 17, 2008
We Want Your Thoughts!
We're launching an online business directory that will include all types of service providers to offer a well-rounded resource for our clients and those who visit our website, who are looking for painters, landscapers, plumbers, babysitters, auto detailers, you name it!
So, we need you help to compile a list of high quality service providers of all sorts. People that you trust and use regularly that you would be happy to refer to your friends and family. Email your suggestions to shauna@dmorris.com or leave a comment right here on the blog!
So, we need you help to compile a list of high quality service providers of all sorts. People that you trust and use regularly that you would be happy to refer to your friends and family. Email your suggestions to shauna@dmorris.com or leave a comment right here on the blog!
Thank you for attending
We co-hosted a small client party this week with Ancora West Advisors and it was a lovely event. Shauna did the catering, which was delicious, and Ancora provided amazing Italian wines. We'd like to extend a quick thank you to all our guests who attended. It was a pleasure to see you and we hope you had a good time! We look forward to having more events in the future and seeing more of our valued clients in "the real world."
Monday, June 30, 2008
July is Artown!
Your dance card looks like it's getting fuller by the minute, between summer camping trips, 4th of July and family vacations, you wonder how you can stuff another thing into your calendar. Well, the most exciting month of the summer is upon us with the start of Artown happening tomorrow with a bevy of events. Get ready for 31 days of art, movies, theater, dance and other amazing performances. Here's a link to the official Artown website for more information: http://www.renoisartown.com/
We hope to see you at one of many great events!
We hope to see you at one of many great events!
We Are The Champions...Well Almost
Team DMG has officially made rodeo history (according to rodeo staff)! Teammates Shauna Morris and Tova Ramos are the first all-female team to place in the Businessmen's Steer Decorating finals and Tova herself is the first female holder, ever!
The finals were a chaotic melee of steers, ropes and macho men. Because there were double the amount of teams (16) from every other night, there were two steer per cute as opposed to one, which was the seed of all the problems in the first place! Our steer in particular got twisted with our neighbor's and caused Tova, the holder, to let go of the rope. Now usually this means you can kiss your chances of finishing goodbye as your steer happily trots away around the arena, but fortunately our steer didn't try to make a break for it, instead he stopped and hung out until we caught him again and then proceeded to drag Tova across the arena by to lead rope and me by his own tail. Fortunately we got our act together and I tied that dang ribbon as fast as I could and booked it back across the arena to the final judge.
At this point, I knew we didn't get first but when I looked around I was getting either a lot of sentiments of peace or we had just taken second place, either way I was happy. The awards ceremony was completely disorganized and I overheard the fellow who was in charge of passing out the prizes say, "I have no idea what I'm doing! Why do I have three prizes when there's only two winners?" Needless to say we didn't get our prize in a big ceremony and then became confused on where we placed when we kept getting conflicting reports from just about everyone. Were we second or were we third?
All-in-all we came in third, but we were very impressed with ourselves, especially after having lost the steer and getting dragged across the dirt. Our prize was a sterling silver money clip with the Reno Rodeo logo in jeweler's bronze and on the back it was engraved with "2008 BSD Third Place." They're beautiful and highly functional, which makes it even better. I was given the third money clip to "give to my sponsor" so David too has a handsome money clip to call his own.
I'm already geared up to participate next year and take home the second place pocket knife and then come back for a third year and take the mother-of-them-all, the Reno Rodeo belt buckle! Keep your eyes peeled for the DMG knockout team and come out and give us your rowdiest support!
Wednesday, June 25, 2008
Hands-Free Mandatory in California
California is cracking down on cell phone use in vehicles. Click on the link below for answers to frequently asked questions. Be sure you have bluetooth or other hands-free device for you cell phone, the new laws take effect July 1, 2008.
http://www.chp.ca.gov/pdf/media/cell_phone_faq.pdf
http://www.chp.ca.gov/pdf/media/cell_phone_faq.pdf
Reno Rodeo
Our very own Shauna Morris participated in this year's Reno Rodeo in the Businessmen's Steer Decorating competition (sponsored by the David Morris Group of course), with teammate Tova Ramos. They were pitted against men twice their size, most of them veterans of the competition, not to mention being faced with wrangling a 300 pound steer! Low and behold they whipped the pants off their competition by a mile and took first place, much to everyone's surprise. They earned a place in the finals on Saturday, June 28 at 6:00 PM. Come out to cheer them on for the title of Steer Decorating Champion!
Wednesday, June 11, 2008
Historic Marsh Home
Here is a sneak peak of our recent listing on Marsh Avenue. This is a truly unique property built in the 1930's, designed by Frederic De Longchamps. One of the most beautiful, historic and unique homes in Reno. Give us a call for more exciting details, 775-828-3292.
Friday, May 16, 2008
Smoke Before Fire
We all know “where there’s smoke there’s fire,” and you must proceed with caution. The news is getting better on the outlook of our local real estate market every month, which is great but a slow process.
It’s a percolate up situation. The market is starting to repair, from the bottom up. If you look at the numbers we’ve accumulated so far this year, you’ll see a decline in the Months Supply of Inventory (MSI), which is a good thing; we ended 2007 with nearly 17 months of inventory, where five months is considered “normal,” now we’re down to approximately 11 months of inventory. In light of the number of listings sold going up, we are steadily catching up.
This is good news for sellers because it is bringing down buyer options to a healthier, more competitive level. Just after the housing bubble, when there was seemingly endless inventory, buyers were overwhelmed with options and had control of the prices. With supply so high, prices dropped (aided and abetted by the mortgage collapse yielding distressed properties) and if one seller wouldn’t accept a low offer, the buyer could just walk down the street and find someone who would.
Fortunately now, sellers have a little more strength in their corner as our market works its way through this adjustment. As a result, the real “deals’n’steals” are moving out of the market, making way for the owner-occupied homes that are in great condition, but still priced competitively with REO (bank-owned properties) and short sales. Not only are these homes well maintained, but now they’ll have even more reason and ability to fight for their price. With buyers’ options becoming more limited they will have to be prepared to pay Fair Market Value for these superior properties and accept that it won’t be an REO steal.
Even the Wall Street Journal is getting on board with the good news. “The Housing Crisis Is Over” was the title of an article on May 6th from WSJ.com. In spite of depressing headlines the article asserts “that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.”
If you also read our snail mail newsletter you’ll see the same opinion promoted but with the caution that the bottom does not mean housing bubble prices are on the horizon. Prices will continue their steady climb, but don’t expect to see those same outrageous numbers from 2005-2006 for another decade or so.
So, if you’re a buyer, get out there and buy! Don’t wait, or else the “bottom” you’ve been waiting so desperately for might just pass you by. If you’re a seller, hang in there, there is light at the end of the tunnel.
It’s a percolate up situation. The market is starting to repair, from the bottom up. If you look at the numbers we’ve accumulated so far this year, you’ll see a decline in the Months Supply of Inventory (MSI), which is a good thing; we ended 2007 with nearly 17 months of inventory, where five months is considered “normal,” now we’re down to approximately 11 months of inventory. In light of the number of listings sold going up, we are steadily catching up.
This is good news for sellers because it is bringing down buyer options to a healthier, more competitive level. Just after the housing bubble, when there was seemingly endless inventory, buyers were overwhelmed with options and had control of the prices. With supply so high, prices dropped (aided and abetted by the mortgage collapse yielding distressed properties) and if one seller wouldn’t accept a low offer, the buyer could just walk down the street and find someone who would.
Fortunately now, sellers have a little more strength in their corner as our market works its way through this adjustment. As a result, the real “deals’n’steals” are moving out of the market, making way for the owner-occupied homes that are in great condition, but still priced competitively with REO (bank-owned properties) and short sales. Not only are these homes well maintained, but now they’ll have even more reason and ability to fight for their price. With buyers’ options becoming more limited they will have to be prepared to pay Fair Market Value for these superior properties and accept that it won’t be an REO steal.
Even the Wall Street Journal is getting on board with the good news. “The Housing Crisis Is Over” was the title of an article on May 6th from WSJ.com. In spite of depressing headlines the article asserts “that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.”
If you also read our snail mail newsletter you’ll see the same opinion promoted but with the caution that the bottom does not mean housing bubble prices are on the horizon. Prices will continue their steady climb, but don’t expect to see those same outrageous numbers from 2005-2006 for another decade or so.
So, if you’re a buyer, get out there and buy! Don’t wait, or else the “bottom” you’ve been waiting so desperately for might just pass you by. If you’re a seller, hang in there, there is light at the end of the tunnel.
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