Short & Sweet...

I guess my main economics news is that we really need to get those buyers off the fence-rates will most likely continue to go up over the course of the Summer; I expect we'll see 7% for the 30-year by Fall. Lenders still have tight standards for loans; the main 'traffic' I am hearing about relate to short-sales or foreclosures. I guess those monster law firms are rolling in clover since they have a lock on the foreclosure business. Other than that, we're here and ready to handle your closing business, be it residential (purchase OR refinance) and/or commercial. Why us? Excellent service, prompt return calls/emails and honest answers. How can I help YOU?

Another thought on oil prices-if the dollar had remained strong in relation to other currencies, a barrel of oil would only be around $70-80. Rate cuts helped our economy, but hurt the dollar. Expect rising rates!

Spending and small towns

I find it interesting to read articles about the "Economic Stimulus Checks" that have been paid to-date. As you remember, this wealth redistribution program was supposed to push people to spend money to boost our economy. Well, just like ethanol, it has resulted in some unintended consequences again! Not that this is a bad thing, but it's not what the politicos really wanted--People have increased costs; most are using it as a cost of living boost. Sure, some people finally got that 32" Flatscreen, but most are simply filling their tanks or their grocery buggies. Speaking of economic stimulus, we really didn't find much at the outlets over the holiday weekend, though Joey found 2 pairs of Nike shoes for only $30 each and my daughter bought yet another Webkin (parents in the know understand... probably one of the best marketing coups I have ever seen! Makes 'beany babies' pale in comparison). I do have to praise small towns though-we stayed at our friends' place near Ellijay, but also went up to Blue Ridge. It turned out that they had an arts & crafts festival so we got to wander around and see some neat stuff. We also had the BEST Kettle Corn I have ever had in my life! Perfect balance of sweet/salt-I still keep thinking about it : ) Another anachronism? We saw the new Indiana Jones movie at the Swan Drive-in (one of FOUR still open in GA). Great time, the grounds were packed in! Sounds like Indy will rake in the highest $$ for the Summer. So see, SOMEONE is having success!

Atlas Shrugged? Economic/Political Ranting

Why a railroad photo? Well, you could look at it as symbolic of the rails traveling into infinity and 'into the great unknown'. Or you can think about how many of our goods travel by rail (vs. by truck, which is less efficient). How about feeling 'railroaded' by our government? Have you read Atlas Shrugged by Ayn Rand yet? I suggest you buy it soon as I am convinced that day by day we are moving towards the scenarios spelled out in that massive novel. Yes, it's brutal to get through about the first 100 pages (and John Galt's 100+ page "speech" is painful as well) but it truly seems that the overall theme of the book is coming to fruition. For example, we all know that oil prices are through the roof (try owning a diesel; I just paid $4.60/gallon). Why? As noted, supply and demand-we don't have great supplies (OPEC restrictions, Nigerian unrest, Venezuela's nutso 'leader', etc.) and demand is huge (i.e. CHINA & INDIA). Yes, the oil companies are making huge profits, but in all reality, the government is making more (through taxes) per gallon of gas than the oil companies are. Some fool from Congress wants to set up a "Reasonable Profits Board". Today the oil companies, tomorrow he'll be after YSP or trying to set your commissions! A plotline straight out of the book... By the way, if you have ANY mutual funds, YOU have most likely profited from oil profits too! My new 'cause' (now that I can get wine in GA) is to produce more oil/gas from DOMESTIC sources. ANWAR anyone?

Random article on Ethanol

This article spells out the misguided ethanol subsidies. One thing to note is that we have barriers to importing sugar cane--ethanol produced from sugar cane is MUCH cheaper than producing it from corn! Brazil is more or less self-sufficient due to their use of ethanol from sugar cane. Sigh.... our government at work. Unintended consequences at work!!!

While I'm at it, make sure your Presidential candidate supports the FAIR TAX!

MORE fun w/Economics: What is the FED up to?

The Fed has steadily cut short-term interest rates since Sept. 07 but this doesn't affect mortgage rates as people seem to think (well, they usually go UP!). Cutting the "Federal Funds" rate effectively lowers the Prime Rate, which can affect most Home Equity loans as well as credit card rates (not that they will actually lower your interest rate w/o you asking!). These cuts also make it easier for companies to purchase/finance equipment and inventory. Likewise, they have made more funds available to banks in order to provide liquidity. The markets wer spooked by one of Wall Street's larger investment houses' liquidity concerns. The Fed/JP Morgan stepped in to save the day (too little/too late?) and the markets are still in flux. Add in the higher costs of gasoline (though recent inflation reports actually dropped a bit) and you have a pretty rough mix. The Fed traditionally cuts rates to spike economic activity and raises rates to combat inflation. Energy costs and higher commodity prices threaten to slow their pace of cuts (another cut is widely expected next week). One interesting correlation is that bad news for the economy can be linked to lower interest rates (now @ 5.75% or so) Stop sitting on the fence waiting for 5%-make your move NOW as credit is still available. The issue today is can you still QUALIFY for a loan? Yes, lenders have already taken the subprime hit-they will do anything to not originate any NEW ugly loans. Common sense is gone, fear has taken over. MORE info from GSU's chief economist (yes, a REAL Economist, not a "faker" like me : )

Economics? But isn't that boring?

I know, Economics ARE boring-however, whether you're dealing with Buyers or Sellers (or if you are an IDIOT who is RENTING), you need to read this. As a closing attorney, I am a cheerleader for the real estate biz--chances are, if you're reading this, so are you! We all have a vested interest in things turning around. With that being said, you COULD choose not to believe what I'm going to say (remember-as a real estate pro people will think YOUR opinion is 'suspect' as well). Why? We say/WANT the market to do well but here are the FACTS: home sales are UP & sales prices are DOWN. Guess what? This trend WILL continue. Stats? Check out S&P Case-Shiller indices, the Wall Street Journal, Business Week, the NAR/NAHB & more. See the USA Today story linked HERE for more info (though a recent report wasn't as rosy for NEW homes). Why are prices still falling? INVENTORY. Yep, that evil "supply & demand"-you can't escape Economics! Too many homes = price drop. If you want to sell today, you may need to drop your price. If you have buyers sitting on the fence waiting for that price drop, there's another negative fact-rates are going to go UP. We are at historic lows right now; we're still around 6%. A $250K loan at 5.75%=$1198. IF you waited for a drop to $230K but rates go to 6.5%, suddenly you'll pay $1246. Is it really worth waiting? Another factoid for nervous nellies-stocks lost more $ in the last few months than housing did in the last year! Housing WILL rally-buy NOW!

Home sales down... DUH!

This is from the "But wait, there's more!" department. Yes, home sales are down and home prices are down. Again, I blame most of our current home sales crisis on the media--from back in the fall of 2006 with their doom and gloom of "Housing Bubble" ("The sky is falling, the sky is falling!") That caused a wholesale HALT of the real estate market. From there, yes, the sub-prime mess surfaced and now we're in the credit crunch period so all is truly a mess. BUT, sales prices aren't as bad as the media keeps screaming. Remember folks, just like "Location Location Location" all real estate is local... ATL market has only dropped 3.4% over the past year. Yes, nationwide the drop is higher (9.8% for the S&P/Case-Shiller composite based on their 10 large city metropolitan area, 9.1% for their 20 city composite). If you live in Miami, a 17.5% drop is horrific (unless you want to buy that million-dollar oceanfront condo for much less!) or better yet, Charlotte, NC with a 2.3% GAIN in sales prices! Way to go Charlotte! For all the cities, click HERE and look for the press release.

Look folks--rates are low, houses are priced to sell--before the Spring Fever hits ATL, get out there and BUY. If you wait, you WILL pay more... You heard it here first : ) Cheers, Bo