tag:blogger.com,1999:blog-18967282024-02-08T12:47:50.699-08:00Real Estate Finance & Mortgage Planning, John Glynn, CMPS<a href=http://cmpsinstitute.org/public/why_you_need><img src=http://www.cmpsinstitute.org/images/banners/horiz_banner_white.gif> </a>johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.comBlogger213125tag:blogger.com,1999:blog-1896728.post-79583722981041837772011-02-01T23:56:00.000-08:002011-02-02T00:01:14.545-08:00We've Moved!pssst! wake up!<div><br /></div><div>Hey there, sorry it's been so quiet for so long. I've been working on a new website, and things got a little hectic there this past year.<br /><br />I'm finally up and running, and wanted to let you know that no more posts would be coming through at this site. </div><div><br />The new site is <a href="http://BayAreaRealEstateFinance.com">BayAreaRealEstateFinance.com</a></div><div><br /></div><div>I've still got a lot of work to do on the site, but I expect to be rolling new content through there going forward.<br /><br />So <a href="http://bayarearealestatefinance.com/">head on over</a>, and sign up for RSS or email updates. Let me know what you think, I'd love the feedback. </div><div><br /></div><div>Thanks!!</div>johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-48189708250408296772010-05-14T14:40:00.000-07:002010-05-14T14:48:34.324-07:00I'm Workin' on it!Hi - thanks for stopping by!<br /><br />I'm working on a new site, and have been kind of quiet over here lately - sorry! If you're interested in hearing about the new site when I launch it, <a href="mailto:%20jglynn@gmail.com">send me an email</a> and let me know...<br /><br />Thanks!johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-11158364534374224952010-02-17T09:36:00.001-08:002010-02-17T09:41:21.173-08:00How To 'Greece' A Credit CrisisI love the parable offered by David Kotok at Cumberland Advisors in a recent market commentary, a link to which you will find below.<br /><br /><span style="font-style: italic;">“My Big, Fat, Never on Sundays Story.”</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">It is the month of February, on the shores of the Adriatic Sea. It is gray and raining. The little Greek town looks totally deserted. </span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">It has been many months of tough times; everybody is in debt and everybody lives on credit. The government has run out of money and the unions are constantly striking but getting nothing because there is nothing left to be gotten.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">Suddenly, a rich German tourist comes to the village. He enters the town’s only hotel, lays a 100 euro note on the reception counter, and goes upstairs to inspect the rooms in order to pick one.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">The hotel proprietor takes the 100 euro note and runs to pay his debt to the butcher.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">The butcher takes the 100 euro note and runs to pay his debt to the pig grower.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">The pig grower takes the 100 euro note and runs to pay his debt to the supplier of his feed and fuel.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">The supplier of feed and fuel takes the 100 euro note and runs to pay his debt to the town's prostitute, who, in these hard times, provided her services on credit.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">She runs to the hotel to pay for the rooms she rented on credit when she brought her clients there. She hands the proprietor the 100 euro note.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">He lays the note back on the reception counter so that the rich tourist will not suspect anything.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">A minute later, the wealthy German comes down the stairs, announces he did not like any of the rooms, puts the 100 in his pocket, gets into his Mercedes, and drives away.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">There were six financial transactions. No one earned anything. Nothing was added to GDP. However, the whole town’s debt-GDP ratio changed dramatically. The village folks are now out of debt and look to the future with a lot of optimism.</span><br /><span style="font-style: italic;"> </span><br /><span style="font-style: italic;">Oh, if it were only so easy?</span><br /><br />You can see more context to this in the commentary piece, and also other fantastic coverage of the sovereign debt issues, and whatever else may be going on in the market at the given moment at the<a href="http://www.cumber.com"> Cumberland Advisors website</a>.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-9413434359270054842010-02-10T19:43:00.000-08:002010-02-10T19:52:19.031-08:00Quote - Got Me Thinking...I came across this quote in a recent investment newsletter (you can read it <a href="http://www.investmentpostcards.com/2010/02/02/if-pigs-could-fly/">here</a>). It's worth pausing on to consider the relevance in today's environment. Not making a political statement; I'm more optimistic than this.... just waxing philosophical... let me know what you think.<br /><br /> <span style="font-style: italic;">"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy..." </span><br /><br /><div style="text-align: center;"> - Alexnder Fraser Tytler, Scottish lawyer and writer, 1770<br /></div>johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com1tag:blogger.com,1999:blog-1896728.post-25989951326541050172010-02-10T14:16:00.000-08:002010-02-10T14:22:08.813-08:00White Collar Thuggery - "Give me your Breitling! And the Rolex!"Financial ruin isn't pretty. No question, the burst bubbles of the credit and real estate industries have put more than a few people out on the street. The ugly, sputtering, desperate last spasms of a business persona failing to cling on is <a href="http://www.boston.com/news/local/massachusetts/articles/2010/02/09/case_of_alleged_extortion_with_an_upscale_twist/">exemplified by this story</a> from the Boston Globe. I love the juxtaposition of the behavior - shake downs, threats, extortion - with the high class imagery of designer watches and fancy restaurants.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-86331592109109633012010-02-01T00:13:00.000-08:002010-02-01T00:19:27.025-08:00Another Piece of Evidence to Support the 'Evil Banks' ArgumentWow. This is pretty ugly. Caught on tape, here is a conversation between a real estate agent trying to <a href="http://www.jeremybrandt.com/short-sale-fraud-recording/">facilitate a short-sale</a>, where there are two lenders on the property.<br /><br />Bank one is going to accept partial payoff, meaning they will not recover 100% of the loan out on the property. But they do get 100% of the proceeds of the sale.<br /><br />Bank two doesn't get a dime. Therefore, they have zero incentive to approve the sale, and in fact, they have an incentive not to - it helps them avoid digesting the loss on their current balance sheet.<br /><br />So how do these deals get done? Well one way, as in this <a href="http://www.jeremybrandt.com/short-sale-fraud-recording/">recording</a>, is for the 2nd lender to bribe the real estate agent and demand that they pay them privately. Which is a violation of federal real estate settlement practice laws.<br /><br />In a good showing for real estate agents, this one is clearly aware of and concerned about the conflict and the related ethical issues. Listen to how the bank administrator tries to bully them into complying.<br /><br />Not pretty. Watch for more of this to bubble up to the surface and hit the news. There's a lot of murmuring about this practice going on right now.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-80580118573324034592010-01-31T20:27:00.000-08:002010-02-01T00:12:29.430-08:00Why Your Lender Will Not Approve Your Loan ModificationLoan Modification has been all over the news for the last two years, as the Credit Crisis /Housing Bubble / Mortgage Meltdown debacle has played out and left many a homeowner trapped with a burdensome loan on an un-lendable property or in an un-lendable circumstance.<br /><br />I've been right there with you trying to see past the smoke and mirrors to find out if modifications actually work. And when most inquiries end up being answered by snake oil salesmen, it's pretty easy to get discouraged. The media has made a sport out of exposing some of the worst con artists out there preying on vulnerable, desperate homeowners.<br /><br />But when the White House came out with a "Home Affordable Modification Program" (HAMP) last year, there was some promise in the idea of a sanctioned and systematic approach to the process. And then the numbers just didn't show up. Sure, there have been some modifications, but not nearly as many as there are distressed homeowners. Banks are not just handing these out.<br /><br />So why not? Because tt's a waste of money. A lost cause. The <a href="http://www.bos.frb.org/economic/ppdp/2009/ppdp0904.pdf">Boston Federal Reserve</a> puts it to numbers in a recent paper. You don't have to even read past their title to get into the arguments, but there are some interesting data in the paper for the statistically-inclined.<br /><ul><li><span style="font-weight: bold;">Securutization </span>makes it logistically difficult for lenders to identify the end-invesors and modify terms</li><li><span style="font-weight: bold;">Redefaults </span>occur in roughly 1/3 of modified cases, thereby rendering the effort wasteful</li><li><span style="font-weight: bold;">Self-cure</span> occurs in roughly 1/3 of untouched delinquent cases. Another 'why bother?' argument...</li></ul>I find the self-cure idea particularly interesting, as it doesn't paint the picture of a vortex of distress in the housing sector like you hear from other sources. It may be a little early to tell still, but i's going to be something to keep an eye on.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-45917409511825584692009-12-31T12:27:00.000-08:002009-12-31T12:35:08.562-08:00Looking Ahead at Mortgage RatesThe NY Federal Reserve is, and has been, the biggest buyer of Mortgage-Backed Securities for all of 2009. This helps push mortgage rates lower, and that's why they allotted for a 1.25TN budget over a 15 month period. It is set to expire at the end of Q1 2010.<br /><br />This week, their <a href="http://www.newyorkfed.org/markets/mbs/">purchasing volume is down</a> significantly. ~9BN this week. For the past few months, they had been closer to 16BN per week, and a few months earlier they were consistent at 25BN per week.<br /><br />It makes sense that as they near the end of their budget, they will slow the volume. Otherwise, their departure from the market would create a demand vacuum.<br /><br />Many speculate that mortgage rates will quickly return to the levels that predated the Fed buying campaign. But I don't think it will be that severe - that environment had a number of different dimensions that do not apply today. That said, it's helpful to note what has happened to rates this week (up) as the Fed's buying changed (down).johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-7452224230760287652009-12-30T15:44:00.000-08:002009-12-30T16:00:17.195-08:00Strategic Default and the Fading Stigma of Foreclosure<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_D0pbQ1MgxbE/Szvph_TA20I/AAAAAAAAAVE/mSu8HLGX-UY/s1600-h/defualt.gif"><img style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer; width: 165px; height: 260px;" src="http://1.bp.blogspot.com/_D0pbQ1MgxbE/Szvph_TA20I/AAAAAAAAAVE/mSu8HLGX-UY/s320/defualt.gif" alt="" id="BLOGGER_PHOTO_ID_5421183346606660418" border="0" /></a><br />It's important to pay attention to the sociological dimensions of the financial crisis (aka Great Recession) as it continues to evolve.<br /><br />I think <a href="http://www.socketsite.com/archives/2009/12/rent_versus_buy_default.html">this article on SocketSite</a> touches on a very interesting point. Social dynamics are at play as well as financial ones on the path to a mortgage loan default and foreclosure. But as the 'bug' spreads, and more and more of us know people who have faced foreclosure, it becomes less of a Scarlet Letter. And that implies that the social reasons to avoid foreclosure get weaker as it becomes more prevalent around us. It's a snowballing effect.<br /><br />So before we are able to truly bottom, we need to combat this force as well as the purely economic ones.<br /><br />Note - the study referenced here suggests that 1 in 3 California mortgage defaults in 2008 were strategic, which represents a 16x increase from the rate only 4 years earlier.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com1tag:blogger.com,1999:blog-1896728.post-29529179578276265492009-12-18T13:48:00.000-08:002009-12-18T13:52:30.156-08:00Price Discrimination and LandlordingYou've got to wonder about the owner who rented out <a href="http://www.theboombox.com/2009/12/14/lil-wayne-cant-sell-miami-pad-due-to-overwhelming-smell-of-mar/">this home</a>. There are a lot of 'accidental landlords' out there, and maybe this is an upside-down, about to be foreclosed upon investment. But no matter what, I hope this homeowner charged a premium for rent based on tenant selection.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-35633937777486323302009-12-08T15:30:00.000-08:002009-12-08T15:31:45.335-08:00Unemployment Over Time - Nice VisualHere's a great visual representation of the <a href="http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html">unemployment trend</a> over the past few years, laid out by county for the entire US. Takes about 15 seconds to get the point across.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-41429836500006623792009-11-25T11:00:00.000-08:002009-11-25T11:35:41.298-08:00Are You Getting Tired of Being Outbid?<span style="font-weight: bold;">The Currently Frustrating First Time Buyer Landscape</span> It has been an amazing transformation in the housing market - multiple offers scenarios are back in a major way, primarily on lower-end price ranges. Just a few months ago, it seemed there were 20 listings for every willing home buyer.<br /><br />Not any more.<br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/_D0pbQ1MgxbE/Sw2G7XddxmI/AAAAAAAAAUg/_PGxWrBCGMI/s1600/frustrated+seeker.jpg"><img style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer; width: 200px; height: 133px;" src="http://2.bp.blogspot.com/_D0pbQ1MgxbE/Sw2G7XddxmI/AAAAAAAAAUg/_PGxWrBCGMI/s200/frustrated+seeker.jpg" alt="" id="BLOGGER_PHOTO_ID_5408127082009839202" border="0" /></a><br />Today, first time buyers are FRUSTRATED when they make an offer and lost in the piles of offers, which in some cases are 30, 40 even 70 other offers! And within those offers, many of the would-be buyers are investment groups, buying with cash. It's big money squeezing out the smaller money. Just like that. First time buyers are getting boxed out.<br /><br />This is frustrating when you think of the psychology of the today's first time buyer. They're overcoming quite a lot of fear and uncertainty after watching the devastation that has hit the housing marketplace in the past few years. Is <span style="font-style: italic;">now </span>the time? Think of the nerves this requires! And on top of that, there's a sense that these buyers deserve a shot, since they weren't a contributing factor in this whole messy episode in the first place. Right or wrong, I can understand that feeling.<br /><br />Frustrating.<br /><br /><span style="font-weight: bold;">Get Ready For a New Resource</span><br /><br />Fannie Mae's "First Look" program is about to come online. Fannie Mae has a large inventory of foreclosure homes, just what the investor groups are after. But that's also what a lot of first time buyers see as good price opportunities. Here's how First Look is going to help:<br /><br />* reducing deposit requirements to as little as $500<br />* renegotiate offers after appraisals<br />* up to 45 days to complete transaction, up from usual 30 days<br /><br />Fannie Mae's intent is to provide easier access to this inventory for owner occupants. This is not restricted to first time buyers, but it will absolutely affect that sector of the market if the program comes around as intended.<br /><br />If you have any questions about this, feel free to <a href="mailto:%20jglynn@gmail.com">email me</a>.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-87262077075367937352009-11-13T08:33:00.000-08:002009-11-13T11:44:15.111-08:00Rewind: Retirement Overconfidence, April 2006In April 2006, I was in Chicago preparing to give a best man toast at a wedding. I jotted down some notes on something I had with me for reading material. And this morning, cleaning out some stuff in my office, I came across the notes, turned them over to see what I had written on.<br /><br /><div style="text-align: center;">"<a href="http://www.msnbc.msn.com/id/12151755">Workers have Retirement 'Overconfidence</a>'"<br /></div><br /><div style="text-align: left;">Wow. This was 3.5 years ago, and the study that the above article references indicated that 68% of workers surveyed reported that they were confident about their retirement savings. It also suggested that 53% of them had less than 25k saved for retirement.<br /><br />That sounds like a horrible mis-match, but to me, that's only ~21% that are delusional for certain (assuming the 32% NOT confident are all in the group that has less than 25k saved so far.)<br /><br />But 77% had less than 100k saved for retirement. When we retire at ~67, and live to 78 (<a href="http://www.google.com/publicdata?ds=wb-wdi&met=sp_dyn_le00_in&idim=country:USA&q=us+average+life+span">78 is the US life expectancy as of 2007</a>), that 100k isn't going to provide much of a Winnebago budget if it has to last for 11 years.<br /><ul><li>SIDE NOTE- <a href="http://blog.cleveland.com/medical/2008/05/does_roizens_vision_of_longevi.html">And at least one prominent US doctor</a> believes the first person to live to age 150 is currently a man in his mid-50s. Read that again. Do you still want to plan to retire in your 60s? </li></ul><span style="font-style: italic;">So where are they now</span>? I'd love to see what the current survey says. How many are confident about their retirement planning now that we've passed into this era of economic crisis. How much has it affected confidence? (How much has it affected savings?). And how will it shape our expectations, planning, and savings habits going forward?<br /></div>johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com1tag:blogger.com,1999:blog-1896728.post-17487013710131172712009-11-09T10:07:00.000-08:002009-11-09T10:21:52.467-08:00Tax Credit Expansion and Extension - Best FAQ Resources<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_D0pbQ1MgxbE/SvhdnMcJNpI/AAAAAAAAAUY/1VmF8ZUQ0J0/s1600-h/horse.jpg"><img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 200px; height: 141px;" src="http://4.bp.blogspot.com/_D0pbQ1MgxbE/SvhdnMcJNpI/AAAAAAAAAUY/1VmF8ZUQ0J0/s200/horse.jpg" alt="" id="BLOGGER_PHOTO_ID_5402170680966461074" border="0" /></a><br />Take your pick:<br /><ul><li>Straight from the horse's mouth: <a href="http://www.irs.gov/newsroom/article/0,,id=206291,00.html">IRS </a><br /></li><li>User-friendly page from the <a href="http://www.federalhousingtaxcredit.com/">National Association of Home Builders</a> </li></ul>The NAHB site was put up in a hurry. They want to sell you homes. Great motivation to put together a clear communication on the subject. Check it out.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-64015539035593178102009-11-09T10:00:00.000-08:002009-11-09T10:07:36.518-08:00Weekly Rate Survey on Mortgage-xI participate in a weekly survey on mortgage-x. For the upcoming week, I said:<br /><br />Vote: Over the next 30 days rates will decline slightly; over the next 90 days rates will remain unchanged.<br /><br />Comment by John C. Glynn: No signs of inflation anywhere, and wide profit margins from lending institutions; there's fat to be cut even if the inflation specter pops up. I see a lid on rates for a while."<br /><br />See what <a href="http://mortgage-x.com/general/rate_trend.asp">others say</a>.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-91983778521219036382009-11-06T11:08:00.000-08:002009-11-06T11:47:06.143-08:00Tax Credit Update - Move-Up and First Time Buyers (APPROVED)Obama has just signed the tax credit expansion/extension into law. It affects first time buyers, and now some move-up buyers as well.<br /><br />Last week while this was still making its way through Congress, <a href="http://community.icontact.com/p/jglynn/newsletters/mmgw/posts/id-love-your-feedback-on-this">I asked readers</a> to comment on how such a change might affect them. I received a good number of responses. Here are some highlights:<ul><li>68% of responses were generally positive in response to the credit</li><li>37% indicated specifically that this credit would have positive implications for our general economic health</li><li>16% indicated that this specifically urges them along in plans that were loosely taking shape as-is</li><li>0% of responses contained comments that this would dramatically change their plans</li><li>26% of the responses had comments suggesting the size of the credit cause the credit to be ineffective</li><li>11% of the responses had comments suggesting that the credit was reaching too far up the socioeconomic ladder; either the Move-Up Buyer was being wrongfully rewarded, or that the income limits were too high<br /></li><li>16% indicated specifically that this credit would have negative implications for our general economic health</li></ul>And as a side note:<br /><ul><li>37% of responses had something sarcastic to say<br /></li></ul>Thanks to all who took the time to read, and especially to respond.<br /><br /><br />Some key points of interest with the new revision:<br /><ul><li>Income thresholds are raised</li><li>Move-Up buyers can claim a tax credit of up to $6500</li><li>Dates have been extended into mid-year 2010<br /></li></ul>If you're buying a home next spring, here are some key qualifying dates to remember.<ul><li>April 30, 2010 : You must be under contract for your new home</li><li>June 30, 2010 : You must be closed on your new home</li></ul>And if you are now trying to figure out how this credit might now apply to your specific situation, the IRS has a <a href="http://www.irs.gov/newsroom/article/0,,id=206291,00.html">basic info page</a>, and also a <a href="http://www.irs.gov/newsroom/article/0,,id=206294,00.html">scenario page</a> that has just about every possible angle.<br /><br />Keep me posted - I'm really interested to see if this has an impact on our markets. If you're interested in reading my view, I explored it <a href="http://johncglynn.blogspot.com/2009/10/why-tax-credit-for-move-up-buyers-is.html">right here</a>.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-19778683865741691422009-10-29T23:50:00.000-07:002009-10-30T00:18:13.091-07:00Why A Tax Credit For Move-Up Buyers Is Important<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/_D0pbQ1MgxbE/SuqR7bD3nFI/AAAAAAAAAUQ/fA_qVzYlL20/s1600-h/move+up.jpg"><img style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer; width: 320px; height: 298px;" src="http://1.bp.blogspot.com/_D0pbQ1MgxbE/SuqR7bD3nFI/AAAAAAAAAUQ/fA_qVzYlL20/s320/move+up.jpg" alt="" id="BLOGGER_PHOTO_ID_5398287553419254866" border="0" /></a><br />Today I posted a question on Facebook - asking for input from existing homeowners on the appeal of a tax credit that would not be restricted to first-time buyers. There is currently a proposal on the table that:<br /><ul><li>Extends the deadline for the first-time $8000 buyer credit</li><li>Increases the income caps on accessibility of the credit</li><li>Adds a $6500 credit for move-up buyers</li></ul>While I've seen many first-time buyers get excited about the $8000 credit, and especially in recent weeks as the deadline approaches, my gut sense was that the $6500 move-up credit would make far less impact in encouraging people to move than an $8000 credit encourages a renter to ditch their landlord.<br /><br />Most of the responses I got were pointing at political aspects of this (which I don't care to get into here), but it did elicit a few private messages from people who said they would consider it. None of these people was previously insistent upon staying still, so it's hard to tell if the allure of a $6500 credit would make anybody budge who wasn't already oriented that way...<br /><br />But then I recalled a very interesting article that I read a few weeks back from <a href="http://pragcap.com/housing-more-trouble-ahead">the Pragmatic Capitalist</a>. In this post, they take data to the theory of market lock-up, and explore the level of equity most homeowners need to be in a position to sell and buy. They look at how many homeowners are 'trapped' and unable to become a move-up buyer even if they wanted to. It's not an optimistic outlook, so remove all sharp objects from the area before reading.<br /><br />The move-up buyer credit goes straight at the problem raised by the Pragmatic Capitalist. Maybe $6500 isn't enough to grease every jammed-up gear in the system, but it's got to help some scenarios. I'd argue it could be the last nudge needed to spark a few transactions currently stuck. As with everything economic, it affects the margins.<br /><br />Add to this conversation the <a href="http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2007/GCBF-+March+2007.htm">Plankton Theory</a> as it applies to Housing (discussed frequently by Bill Gross and Paul McCulley of PIMCO)- which stresses the importance of first time buyers (the plankton) to continuously bring new money to the market so that the bigger fish (move-up buyers) and whales (McMansions) can have something to feed upon.<br /><br />If we have low inventory at the first-time buyer level (we do, as evidenced by reports of 20-40 offers per listing), and a move-up buyer creates lower-end inventory, than the enticements need to be hitting this move-up market. The first-time buyer needs inventory, not a tax credit.<br /><br />So if it works, it encourages market activity in the middle and upper price brackets, essentially adding fluidity to the market. I like it.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.comtag:blogger.com,1999:blog-1896728.post-40031164198779669442009-10-26T23:00:00.000-07:002009-10-26T23:03:11.412-07:00Best Real Estate Commercial EverThere are so many things to love about this ad.<br /><br /><object height="340" width="560"><param name="movie" value="http://www.youtube.com/v/q-RLqLx1iYI&hl=en&fs=1&"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/q-RLqLx1iYI&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="340" width="560"></embed></object>johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.comtag:blogger.com,1999:blog-1896728.post-64169542567633785582009-10-21T10:28:00.000-07:002009-10-22T08:48:17.709-07:00Another Angle on the Housing Crisis<a href="http://www.twitter.com/econtalker">Russ Roberts</a> made an interesting remark in a podcast I recently listened to, in which he was talking with <a href="http://www.econ.yale.edu/%7Eshiller/">Robert Shiller</a> of Yale University and the well-known <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,2,1,0,0,0,0,0.html">Case-Shiller Home-Price Index</a>.<br /><br />He stated that one of the often overlooked benefits received by the droves of consumers who over-bought houses and helped carry the economy into crisis, was the fact that they got to (and in many cases still do) enjoy being able to live in a bigger, nicer home than they otherwise would have. <br /><br />It's worth thinking about. In the end, it may not work out so well for everyone. But what about all the time spent enjoying the lifestyle?johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.comtag:blogger.com,1999:blog-1896728.post-38809161421479050102009-10-15T10:18:00.000-07:002009-10-15T10:32:04.583-07:00Where'd That Buyer's Market Go?Didn't it just seem like there was a massive swing from a seller's market to a buyer's market? Leading up through about 2005 or 2006, it seemed buyers were constantly facing multiple-offer situations, and frequently watching homes sell above the asking price. Not all markets, but it was common in the Bay Area. Sometimes the seller priced deliberately low to try and incite a bidding frenzy.<br /><br />Then, the bubble burst. Foreclosures and short sales hit the scene. And we had 20 listings for every buyer. Low-ball bids, high inventory were commonplace. It was a complete inversion of the seller's market, as the buyer now had all the levers.<br /><br />And in recent months, we've heard some pretty wild stories about some segments of the market. What is interesting to me is the lower end homes, first-time buyer price range. This market is back to full on mania! Much of the inventory is controlled by banks, the prices are low/affordable. And investors with cash have come out of the woodwork to pick up these places. First time home buyers are racing to buy before the $8000 tax credit expires.<br /><br />We are hearing of cases with 20 offers. 30 offers. 40 offers... listings stating that "all non-cash offers will be dismissed". Buyers are taking a shotgun approach, putting offers out on several homes, hoping one 'sticks'. <a href="http://www.cnbc.com/id/33310096/">Crazy stories</a> about Realtors stealing keys so other agents cannot show listed homes, and the other agents breaking in to the home to show to their clients... !!! Madness.<br /><br />It's amazing to me that we would see the market go from one extreme to the other so quickly. No time spent in the middle, no 'equilibrium'. But we'll straighten this out eventually. And it will last for a while before the next tilt happens.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.comtag:blogger.com,1999:blog-1896728.post-63558784817772822582009-09-30T09:05:00.000-07:002009-09-30T09:16:14.442-07:0035 Billion in Housing Aid - Coming to State Housing Finance AgenciesThere's some interesting news about an expected <a href="http://online.wsj.com/article/SB125409967771945213.html?mod=WSJ_hps_LEADNewsCollection">35 Billion</a> lifeline about to be extended to the various state run Housing Finance Agencies, including <span class="blsp-spelling-error" id="SPELLING_ERROR_0">CalHFA</span>. These agencies offer below-market financing for housing to first-time buyer families and individuals, with some restrictions on income and property value.<br /><br />I have a substantial amount of experience with the <span class="blsp-spelling-error" id="SPELLING_ERROR_1">CalHFA</span> program, and when this program is healthy, it is effective.<br /><br />Late in 2008, <span class="blsp-spelling-error" id="SPELLING_ERROR_2">CalHFA</span> suspended it's lending programs due to a lack of funds. This 35 Billion infusion - which is ~2 times as much as the expected total <span class="blsp-spelling-corrected" id="SPELLING_ERROR_3">expenditure</span> for the 8k first time buyer tax credit - will likely help open that program back to a level where it can be effective. It's worth keeping an eye on.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.comtag:blogger.com,1999:blog-1896728.post-19859047891560828662009-09-28T15:12:00.001-07:002009-09-28T15:20:07.111-07:00Are Home Sales Up? Depends On Your Price PointReal estate is all about micro markets. In the San Francisco Bay Area, homeowners might be celebrating the recent trend to higher sales volume in recent months. But that data comes from national sources. How much of the Bay Area falls into the brackets below, where we are seeing increases in volume? Thanks to Steve Harney for the info:<br /><br /> <div style="color: rgb(14, 86, 111); text-align: center;color:#e0d5c5;;" bg><span style="font-size:85%;">Below $100000 - sales up 38.8%<br /></span></div><div style="text-align: center;"><span style="font-size:85%;"><span style="color: rgb(14, 86, 111);"> 100k-250k - sales up 8.7%</span></span><br /><span style="font-size:85%;"><span style="color: rgb(14, 86, 111);">250k - 500k - sales down 6.2%</span></span><br /><span style="font-size:85%;"><span style="color: rgb(14, 86, 111);">500k - 750k - sales down 8.9%</span></span><br /><span style="font-size:85%;"><span style="color: rgb(14, 86, 111);">750k - 1MM - sales down 10.6%</span></span><br /><span style="font-size:85%;"><span style="color: rgb(14, 86, 111);">1MM - 2MM - sales down 23.3%</span></span><br /><span style="font-size:85%;"><span style="color: rgb(14, 86, 111);"> 2MM+ - sales down 32.4</span></span><br /><br /><div style="text-align: left;">Not to be a wet blanket though... This data does not show the volume of sales in these brackets, and the bulk of housing likely falls into those lower price brackets. Activity at the lower end means future liquidity at the higher end. It's the "plankton theory" of housing: If a homeowner want's to buy a higher priced home, they need to sell their lower priced home to somebody. There's a food chain. First-time buyers, aka the "plankton" have to get into the market to support the ripple up the chain for move-up buyers. So I would expect that this activity will work its way up through higher price brackets in coming months.<br /></div></div>johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.comtag:blogger.com,1999:blog-1896728.post-58991063523572206812009-09-04T12:50:00.000-07:002009-09-04T12:51:34.242-07:00Ayn Rand - Liberty vs SocialismThis is worth a spin...<br /><br /><object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/s1RxKW-P5V8&hl=en&fs=1&"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/s1RxKW-P5V8&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.comtag:blogger.com,1999:blog-1896728.post-6305610094447976672009-08-18T17:29:00.001-07:002009-08-18T17:33:34.686-07:00Slideshow of 100 Abandoned Homes in DetroitThis is a <a href="http://www.flickr.com/photos/kbauman/sets/72157600059407224/show/">view of disaster</a> through an artistic lens. There are some downright gorgeous shots in here, every one of them representing a story of tragedy, loss, failure, and hurt. A sign of the times, Detroit has had as many headlines as any other city as a representation of the worst economic conditions in our nation in 'The Great Recession'.<br /><br />Remember the mood only 6 months ago? While I think the recovery rally cries are a bit premature, it certainly does not feel as likely as it once did that we could see a full wide-scale meltdown or economic collapse.<br /><br />We'll come back, and the beginning of that long process is underway. I'd love to see these same 100 photos updated in a few years.johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com0tag:blogger.com,1999:blog-1896728.post-67766132666245617862009-08-17T22:41:00.000-07:002009-08-17T22:45:54.996-07:00Weekly Mortgage Interest Rate Survey on Mortgage-xI participate in a weekly survey on mortgage-x. For the upcoming week, I said:<br /><span style="font-size:85%;"><br /></span><span style="font-family: verdana;font-family:Arial;font-size:100%;" ><span style="font-size: 9pt;"><span style="color:olive;"><span style="color: olive;">Vote:</span></span> (<img src="http://mail.google.com/mail/?ui=2&ik=d2a863ea30&view=att&th=1232b03008b1ee4e&attid=0.1&disp=emb&zw" width="9" border="0" height="12" />) (<img src="http://mail.google.com/mail/?ui=2&ik=d2a863ea30&view=att&th=1232b03008b1ee4e&attid=0.1&disp=emb&zw" width="9" border="0" height="12" />) Over the next 30 days rates will decline slightly; over the next 90 days rates will decline slightly.<br /><br /><span style="color:gray;"><span style="color: gray;">Comment by </span></span><span style="color:maroon;"><span style="color: maroon;">John C. Glynn:</span></span> A second-guessing of the 'recovery' will put pressure downward on rates, but be careful about the implications of an unwinding Federal Reserve with their asset purchase programs designed to lower rates - they are coming to an end.</span></span><br /><br />Find out what othe<span style="font-size:100%;">rs are</span> saying by clicking <a href="http://mortgage-x.com/general/rate_trend.asp">here</a>. (hint, looks like I am running with the pack this week...).johnhttp://www.blogger.com/profile/14694514923353097488noreply@blogger.com