Today's News A Mixed Bag O' Nuts

Free for all today; pick one and run with it!

May new home sales dropped .6 percent (sales prices up from April though)
Durable Goods orders rise 1.8% in May (vs. expected decline of .6%)
Mortgage Applications RISE 6.6% for the week ending 6/19/9
(My fave:) Fed mulls tweaks to economic revival programs
Energy prices drop as gasoline supplies surge

Here's the deal--we are seeing a lot of positive things out there. Yes, rates are up a bit and inflation is still a threat. The Fed has to walk a razor's edge in terms of encouraging our economy but not ignoring the fact that inflation could absolutely kill our recovery. The Fed continues to auction bonds and there is a fear that demand may fall due to lower yields. If you raise yields, you will more or less raise long-term financing rates as the two are closely tied. So again, I push you to purchase or refi NOW and don't be greedy about that extra .25 point as you may face something much worse in the near future.

With that being said, the economy should begin to emerge out of our recession in the Fall, but (this is a big but) unemployment will continue to climb well into 2010. Economist Lynn Reaser (VP of National Association for Business Economics) was quoted saying "The Fed is sending the message that the economy is making progress toward a path of recovery, that the credit markets appear to be healing and inflation is not going to be a problem." I hope she's right (and other economists' prediction that we could see improvement in the July-Sept quarter). Hang in there!

Random thought on Buying a Car

My Dad decided he was going to buy a Volkswagen Van last week. Turns out he called a dealer in a nearby town and some fool tried to get him to 'come in and talk' before giving him a price. My dad is not online and doesn't have the patience (or skills) for internet research. He's not afraid of calling around to get a price, however, and I'm amazed that this guy pulled the old 'let me ask my finance manager' routine.

He ended up calling another dealer in a bigger city and they simply gave him a price. After calling Costco to find out if they had a better deal, he tried one more dealer (as dealer #2 didn't have an option/color combo he wanted). After all was said and done, he got the deal he wanted on the car he wanted and idiot #1 in Evansville Indiana will NOT be getting his business! I wish I was so 'flush' that I could turn away customers!

Are you (or your staff) turning away sales? I'm sure not! While we're a small firm, it makes me wonder how larger organizations are faring--are they unwittingly turning away business due to outdated practices/poorly trained staffers? I hope so as our customers get to see the value of our SERVICE! Thanks for your support!

Headlines of the day tell an interesting story

I really don't need to do more than quote the headlines to give you an idea of what is going on. From the Atlanta Business Chronicle's email update: "EXISTING HOME SALES RISE" AND "REPORT: HOUSING PRICE DECLINES SLOW" Both good news, right? Absolutely! But remember this one as well: "MORTGAGE APPLICATIONS FALL, RATES RISE". Here's the takeaway from all this--the more 'cheerful' news about the economy will (hopefully!) get people off the fence. However, what really needs to happen is to get these people hopping NOW as rates will continue to go up as the markets improve. It's a fact-rates tend to go down when 'bad things' happen so take advantage of what's left of the economic malaise affecting our country. Don't wait for North Korea to rattle their sabres and spook the market-it's time to act now (and my usual caveat applies-rates may go up/down/remain the same, but will your LENDER or program be there when you decide to get a loan? I sure hope so!)

Cheers! Bo

Read this headline: "Mortgage rates rise as outlook improves"

What does that mean? It means GET OUT THERE AND LOCK NOW and/or BUY NOW! For the article, go to the Atlanta Business Chronicle's site or click here. Good luck! Time is of the essence!

Uh Oh...

Well darn. Bad news/Good news: The NAR (National Association of Realtors, a big cheerleader for our industry) says that "used" home sales fell 3% from February to March. Looks like we're not out of the woods yet (not that we expected that 'poof' the real estate market was going to just go gangbusters this Spring). On the good news part of this posting, sales prices were up a bit from February, though still DOWN. (2008 sales prices were $200K, in February 2009 they were $168K, in March $175K). SO, hopefully April showers will bring May BUYERS! Hang in there...

Go buy THIS house!

Of God, BMW Safety, German Engineering and "Buy American"

It's interesting to read about the failings of the US auto industry. Of late we (the US Government, a/k/a the taxpayers) have pumped money into the major US companies only to hear that GM may still be forced into bankruptcy and Chrysler's possible Fiat merger may be off. Common thread? Unions... If wage concessions don't happen (and fast) bankruptcy will loom large for GM and Chrysler runs the risk of being split up and sold in pieces. I have owned a few Chrysler products and enjoyed them and I actually have a lot of respect for US auto makers right now. My son and I visited the NY Auto Show preview on our recent Spring Break trip and found several hot looking models (and I actually mean the cars!). Cadillac had a cool CTS wagon that caught our eyes and the Pontiac G8 is a hot rod. The upcoming Ford Fusion Hybrid gets an astonishing 40 MPG I've heard and the new Focus will finally be a decent looking European model. What does all this mean? IF the industry survives the economic downturn, there are many great vehicles to consider. Prices are low, dealer price concessions are high and again, quality is up. After you buy your home (or refi your mortgage) go buy a car!

Our 'fleet' of autos contains nothing newer than a 2000 model year and all have mileage over 100,000 miles. They are also all older German luxury cars and we do pay a premium for parts and service. You know what? If I could, I'd replace them with an expensive German car all over again. Why? In a word-SAFETY. On her way to work last Monday, my wife was in an offset head-on collision (she's safe, by the way, just banged up and sore) in our 2000 BMW Z 3. The car was a total loss, but it did exactly what it was designed to do and that was protect Susie at all costs. Thanks to divine intervention and great safety features she was safe. The car, well, not so much. See for yourself; both airbags blew and the seat-belt tensioners did their trick and the engine dropped down so that it did not intrude into the passenger compartment (the driver's door opened and closed fine even after the wreck!). I have personal knowledge of 3 horrific BMW wrecks and each time the driver walked away safely, my wife included (well, if we can get her neck/chest/ankle to not be so sore). If you have the wherewithal to purchase a German car I'd say go for it. Our cars are all used and were bought from family members so we got good deals. If you seek safety (AND sporty/luxury) don't just look to Swedish imports; try the Germans... My 2 cents.

Either way--go buy stuff; the economy needs you!

Newsletter Comments from 3/31: Thoughts on the Economy

Rates are low, purchases are up, sales prices are creeping up--does this mean we're out of the woods? NO. Today's news notes that January 2009 sales prices were actually at a record low (per Case-Schiller index) and it's true that many foreclosures are still 'waiting in the wings' to further lower prices. If you are a buyer, you're in great shape. If you're a seller, it can be tough to stomach! The National Association of Realtors (yes, that's real-TOR, not real-A-tor!) predicts median prices to fall almost 5% this year, with a gain of almost 4% in 2010. Yes, they are ordinarily 'optimistic' but it seems plausible now that we've seen some slight rise in pricing in February. One month does not a trend make, however!
What can really kick-start our economy? First-time homebuyers--Yes, I know that this is contrary to my last rant-I have since learned that 40% of homes sold in 2008 went to 1st-timers. If they realize that they can 'pocket' an $8,000 Federal tax credit (versus last year's $7,500 "loan") if they buy this year AND if Gov. Perdue signs HB 261 (giving ANY home purchaser a $3,600 GA tax credit for 2009) we should see a lot more activity. If ANY of this is news to you, let me know and I will fill you in. Please pass this info along to ANYONE considering a home purchase-it may be just enough to have them overcome a) fear of falling values and b) greed (yes, greed). It's human nature to fear that you didn't get as good a deal as someone else, right? Yes, someone may get a lower price for a new home than you, but does the house suit YOUR needs TODAY? Isn't that enough to keep you from paying your landlord's mortgage?? Same scenario with rates-you MAY save a few dollars by waiting, but you may lose your chance at a low rate completely!
I get the awesome opportunity to hand someone the keys to their new house. I have been hugged, have seen tears of joy and even endured some piercing screams. It's why I've always said I practice happy law rather than focusing on negatives in life. I hope you can come see us soon and witness the spectacle!