Friday, July 17, 2009

Did you miss the bus?

It's time. We're hearing a lot more news about the economy improving, but we're also seeing rates rise. Unfortunately, it seems like inflation will rear its ugly head soon. People, rates are still LOW at 5.5% but they will be going up soon. How high? Who knows! Let's put rates into perspective--over 9 years ago (5/25/00 to be exact) I bought my Smyrna house (it's on the market again, by the way!). With 20% down and a 777 credit score, would you care to guess what the current rates were? My 30-year fixed rate "plain vanilla' mortgage was at 8.25%!!! That was the best out there at the time! I refinanced to 6.5% that October (and much lower than that later on), but I just want to point out that rates are constantly changing.
What about today and what's the 'bus' comment about? You know all the people waiting for the "perfect" time to buy? Well, they missed it. In all honesty, I'd say LAST MONTH was the perfect time to buy. Why? Rates were at their lowest, the media was still reporting 'gloom and doom' and inventories were still high. Now? Gee, you might actually hear some POSITIVE news on the economy out there! Let's review--unemployment claims were lower than last month (albeit still much higher than in 2008) and temporary staffing companies are doing brisk business; retail sales rose (May figures were the largest increase in 4 months); auto sales rose last month (thanks to incentives) and manufacturers are seeing some improvement as well. As far as real estate is concerned, new home (and resale) inventories are dropping and prices are slightly up, but again we have a lot of ground to regain after 2007/2008.
What are the negatives? Summer gas prices are up (and oil is back over $70 a barrel); Georgia is still # 7 in the nation for foreclosures and many state and local government agencies face staffing cutbacks and tax revenue shortfalls. I know that MY home's price dropped in value over the past year so I appealed the county's recent valuation--you may want to do the same. I know that will hurt my county, but I am hopeful that they can make some 'strategic' cuts that will save our tax dollars (I wish the US government would do the same). Finally, the credit clampdown may stall our recovery--rates are climbing and businesses are still having trouble financing inventory. If rates continue to go up, we'll have a 'whole new ball game'. Let's hope that doesn't happen. Me? I'm focusing on the good news and hoping for the best--you (and your clients) should too (and it's STILL a great time to buy!).