Buying Your Type of Neighbors?

Buying Your Type of Neighbors?

I’m not going to go too far into what this article on www.agentgenuis.com is talking about except to say:
1. If more people in the mortgage world acted with integrity, this type of thing wouldn’t happen.
2. If more people in the mortgage world acted like professionals, this type of thing wouldn ‘t happen.

It’s a shame, and it’s not something I’d ever do.

Tom

Mortgage Market Week in Review

Hi

You know, these types of weeks are rather frustrating. Let me explain:
1. There was very little news in the market this week. The GDP report for the first quarter was revised upward, but not by much. The personal income, spending, and “inflation adjusted” spending all were up, but were up less than they were in March. Not necessarily market moving news by any means.
2. Continuing unemployment claims rose to their highest level since 2004.
3. But the bond market (and therefore mortgage rates) crept up a bit this week. Why? Mainly investor emotion.

Let me outline a couple of comments that explain it quite well:

Mortgage rates drifted up this week over market concerns that the Federal Reserve Board may raise short-term rates later this year,” said Frank Nothaft, Freddie Mac’s chief economist, in a statement. “A recent working paper published by the Federal Reserve Bank of Minneapolis suggested that the recent rate cuts run a risk of unhinging long-term market expectations for inflation.”

Well, tell me something new here? Nothing! The Fed is saying that rate cuts run the risk of inflation and the market is getting spooked by it? The Fed has said that for the last how many years (how long has the Fed been around?)

Federal Reserve Bank of Dallas President Richard Fisher added fuel to the inflationary fire late Wednesday, suggesting that the Fed’s monetary policy could change “sooner than later” if inflation expectations worsen.

Okay, once again, what’s new here? Nothing. If is the big word that the markets have seemed to ignore. IF inflation worsens, then the Fed will have to raise rates. Yup, that’s true. Is he saying that inflation is worse and they are going to have to? Nope, just a big “IF.”

When we’ve seen adjustments like this over the last 20 years, I’ve asked myself, “Has anything substantial changed in the last week? Nope, really nothing has. The economic reports this week have been mediocre. We’re dealing with market sentiment and frankly, irrational fears. Next week, the fear will probably be more fallout from the credit crunch and things will drop back down again.

(Oh, by the way, the quotes in italics above came from http://www.housingwire.com/)

Coming next week on http://straighttalkaboutmortgages.blogspot.com/: The Five Most Important Things You Need to Know About MGIC’s new Restricted Markets Policy (that takes effect on Sunday, June 1).

Have a great weekend and let me know how I can help.

Tom Vanderwell
Mortgage Officer
Office (616) 653-5375
Cell (616) 292-7559
Fax (616) 825-6085
111 Lyon St. NW
Grand Rapids, MI 49503
thomas.vanderwell@53.com

Consumer spending increased 0.2%, personal spending up 0.2% – May. 30, 2008

Consumer spending increased 0.2%, personal spending up 0.2% – May. 30, 2008

The key to this report is not that it increased .2%, but that it’s a slower rate than it was in March.

The Commerce Department said personal spending by individuals in current dollars rose 0.2% in April, in line with the 0.2% increase expected by economists surveyed by Briefing.com. March’s gain was a revised 0.4%.
The report showed personal income increased 0.2% in April, also in line with the 0.2% increase expected by economists. March’s gain was 0.3%.
In inflation-adjusted dollars, personal income remained flat from the prior month. Personal spending, in inflation-adjusted dollars, was also flat from the previous month. If inflation-adjusted personal spending is flat, that means that the increase in spending is entirely due to rising prices, not an increase in consumption.

So the economy isn’t picking up steam……

Sorry

“Had” to be a panelist on an adoption discussion group for Bethany Christian Services. Didn’t have time to post much today.

More tomorrow.

Tom

Majority of Renters Have No Plans to Purchase a Home: Survey : Housing Wire

Okay, there’s two ways to look at this report:

1. The way that Paul Jackson at Housing Wire reports it. 67% of renters don’t plan on buying a house in the next year. That’s bad because it won’t help the housing market.

Here’s how I choose to look at it:

1 out of every 3 renters is going to look at buying a new home in the next 12 months. What a lot of opportunities!

How do you choose to look at it?

Tom

Majority of Renters Have No Plans to Purchase a Home: Survey : Housing Wire

Durable goods orders show surprising strength

The Commerce Department said on Wednesday orders for durable goods — items intended to last three years or more — fell 0.5 percent in April after a 0.3 percent decline in March. Wall Street economists had expected a 1 percent drop.Orders for transportation equipment fell 8 percent as demand for civilian aircraft tumbled 24.4 percent. However, orders rose 2.5 percent with transportation stripped out, the biggest gain since July.

http://mobile.reuters.com/mobile/m/FullArticle/CBUS/nbusinessNews_uUSN2739793820080528?src=RSS-BUS

Sent from my BlackBerry® smartphone with SprintSpeed

Rent vs. Buy

David Leonhardt of the New York Times has a good article that all Realtors should know about. It addresses the rent vs. buy dilemma from a factual monetary angle, but also looks at it from the standpoint of the intangibles that have many of us spending more to live than we NEED to because we want to be able to:
Paint the bedroom pink
Cut down the tree in the back yard
_________ (fill in the blank).

He ended up buying even though:
1. He admits the market probably hasn’t bottomed and he’s okay with that.
2. He knows that he’s going to lose money in the short term (and the intangible benefits outweigh that).

Food for thought and food for discussion with clients.

What do you think?

New Home Sales Numbers

Okay, here’s an abbreviated report on new home sales for the month of April:

1. Compared to the numbers in 2007, the numbers were bad.
2. Many of the analysts are saying there was no “spring bounce” this year (or would the numbers have been worse otherwise?)
3. We aren’t unfortunately, anywhere near the end of this, so anyone who tells you that we are is either desperate, unfortunate, unintelligent, or engaged in wishful thinking.

The world is different now than it was a year ago. I’m going to focus, not on what used to be, but on what is now and what we have to do to make people’s dreams come true in today’s market.

How about you? Are you with me on that?

Tom

Buffett blames banks for credit crisis

Buffett blames banks for credit crisis: “Blame for the sub-prime crisis lies at the feet of banks who took too many risks in mortgage lending, U.S. billionaire investor Warren Buffett told newspaper El Pais in an interview published on Sunday.
‘The banks exposed themselves too much, they took on too much risk …. It’s their fault. There’s no need to blame anyone else,’ he said.”

It would be mighty presumptious of me to argue with Warren Buffett, but let me throw a couple of comments in on what he said:
1. If it’s the banks fault, then they should indeed be the ones to pay the price and that should be kept in mind as our government discusses bailout options. Someone who made a greedy and reckless financial endeavor shouldn’t be bailed out by our government.
2. Any bailout plans should determine a way to single out those who are truly are in bad straights (i.e.lost jobs etc.) compared to those who bought more house than they could afford and lied about their income, or those who speculated on real estate and got “caught.”
3. If it’s the banks fault, I think we need to look at who the accomplices to the crime are: The mortgage brokers who sold them the loans, the investment companies on Wall St. who packaged these loans, the ratings agencies who put lipstick on the pigs, the consumers who didn’t read what they were signing and didn’t work with someone they could trust…..

What do you think?

Companies may cry "uncle" on oil

A good article about how the increased oil costs are going to increase the costs of other items as well. It makes a distinction between the “must have” items where the companies can pass on the increased costs and the “discretionary” where we as consumers don’t have to buy them.

What I wonder about, which I don’t know the answer to, is what’s going to happen to inflation and price increases when people refuse to buy the items at the higher price? When consumers start saying, “I can’t afford to go to the movies, I’m going to wait until it comes out on video and rent it.” Or “I’m going to spend $200 to fix my stove rather than spend $500 on a new one.” What’s that going to do to the economy? What’s that going to do to inflation?

What’s that going to do to mortgage rates?

My guestimate is that it’s going to be a drag on the economy, it’s going to inhibit companies ability to pass on price increases, thereby lowering inflation, and it’s going to push interest rates downward.

We’ll have to see……

Companies may cry “uncle” on oil

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