I Dedicate This Song to Our Leaders in Washington

This song says it all - "Staying Alive". That's what we are doing until we get out of this multi-dimensional economic mess we're in. The lyrics go on to say "I'm going nowhere, somebody help me, somebody help me yeah!"

The Real Reason The Bailout Plan Failed to Pass In Congress

An array of forces lined up against bailout
By JIM KUHNHENN – 21 hours ago

WASHINGTON (AP) — In the end, the financial markets didn't stand a chance against voter antipathy, partisanship and election year politics.

The defeat of the extraordinary $700 billion financial rescue package represented a perfect collision of the forces of modern politics — a fast-moving Internet campaign, vulnerable incumbents, a weakened and unpopular president, and a roiling presidential campaign — all working against the so-called Titans of the Universe.

Polls showed widespread public opposition to the plan — the biggest federal intervention in financial markets since the Depression — and many Republicans saw such an enormous set-aside of taxpayer money as an unnecessary intrusion into free markets. Of the 19 most-endangered House incumbents, 13 voted no.

"This is one of those scenarios where nobody really wanted to do it," said House Republican Whip Roy Blunt of Missouri, who played a leading role in the final negotiations.

Such a roaring confluence of opposition could only have been overcome with strong party discipline and presidential power. But a weakened and unpopular President Bush and lawmakers forced to weigh the vote against their political careers conspired against success.

Outside Congress, however, furious pressure built up against the bill in e-mail campaigns and on Internet Web sites. The Club for Growth, a conservative free-market oriented group, warned lawmakers that it would count a vote in favor of the legislation against lawmakers seeking the group's support. Club for Growth is viewed with apprehension by many Republicans because it has been known to support challengers running against GOP incumbents.

Longtime conservative activist Richard Viguerie warned that lawmakers who voted for the rescue package would be targeted for defeat. "Republicans and Democrats alike who support this monstrosity will face the wrath of the voters if they stand side-by-side with predatory politicians and bureaucrats and their greedy friends who got us in this mess," he said.

The opposition on the House floor came from an unlikely coalition of conservatives and liberals. The progressive grassroots group MoveOn.org aired an ad blaming the financial crisis on John McCain and his allies.

All those forces worked against powerful special interests. The U.S. Chamber of Commerce and a diverse group of industry lobbying organizations ranging from the National Association of Realtors to the American Hotel and Lodging Association pressed Congress to back the bill, pointedly noting that they too would consider this a key vote when ranking members.

The vote also represented an extraordinary rejection of Bush, who personally called wavering lawmakers and delivered a last-ditch public appeal Monday morning, as well as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.

"Despite days of negotiating, this is still the same bailout bill, written by a Wall Street guy with a Wall Street solution to a problem created on Wall Street," said Rep. Mike Rogers, R-Mich. "This bill was still a blank check to Henry Paulson."

The vote also did nothing for the presidential contenders, Democrat Barack Obama and Republican John McCain. Both stepped into the fray last week and boasted of exercising leadership in the negotiations. Not only did a majority of McCain's Republican colleagues vote against it, so did all his fellow Arizona lawmakers. Obama was unable to sway many House liberals, including a majority of the Congressional Black Caucus.

House Republican leader John Boehner of Ohio, in a crowded Capitol corridor after the vote, accused House Speaker Nancy Pelosi of delivering a partisan pre-vote speech that caused some Republicans to refuse to back the proposal.

Blunt said the speech could have cost the bill about 12 Republican votes. He did not identify those lawmakers.

Pelosi earlier had delivered a tough attack on Bush economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets — a pointed critique not much different than what she has been saying for days.

But Boehner said Pelosi's speech "poisoned our conference, caused a number of members that we thought we could get, to go south."

House Banking Committee Chairman Barney Frank, D-Mass., known for his quick, often acerbic wit, said the GOP leaders' complaints meant that some Republicans "decided to punish the country" because their feelings were hurt.

"Give me the names of those 12 people and I'll go talk uncharacteristically nice to them," he said.
Associated Press writers Andrew Taylor and Tom Raum contributed to this article.

The Bailout Failed -So, What's Next??

U.S.News & World Report
Bailout, Take II: What the Feds Do Next
Monday September 29, 6:07 pm ET
By Rick Newman

OK, so that didn't work.

After a bunch of all-nighters in Washington and some premature back-slapping, we're right back where we were a couple of weeks ago, after Lehman Brothers declared bankruptcy and the government lent AIG $85 billion. There's no one-size-fits-all bailout plan, after all. That $700 billion in taxpayer money remains under lock and key. Glum investors are now the ones bailing out, fleeing stocks and bonds and seeking safer ground.

But there are still some levers the government can pull. Working through the mess just won't be as orderly or predictable as it would if there were a single plan and a big pot of money. Here's what's likely to happen next:

Another try at a big bailout plan. A lot of those constituents who have been calling Congress to complain about rescuing fat cats are going to rethink their indignation as they watch the stock markets--and their own portfolios--sink. Lawmakers who voted against the bailout plan are going to have to explain why they're letting the markets collapse. The more uncomfortable voters get, the more likely Congress will be to pass some kind of sweeping relief plan. This is far from over.

More piecemeal bailouts. Before the big $700 billion bailout plan even existed, the Fed and the Treasury Department were already patching leaks in the financial system--one trouble spot at a time. The idea behind an umbrella bailout plan was to overhaul the whole system, establishing public standards and treating every ailing company more or less the same, before a bunch of leaks became a gusher. That would have eliminated the guesswork over whether a struggling company meets the criteria for a rescue--like AIG--or falls short, like Lehman Brothers.

Now we're back to guessing. The feds still have the wherewithal to lend money, buy bad assets, or take other measures to keep ailing companies afloat. What they don't have is a single plan that applies to all companies and the authority to soak up vast amounts of bad assets. So those weekend meetings at the New York Fed, with supplicant CEOs pleading for help, are likely to continue.

More failed companies. Duke University finance Prof. Campbell Harvey predicts there could be 750 to 1,000 bank failures over the next six months because of billions in bad assets stemming from the housing meltdown. Scarce credit also threatens other types of companies that are already struggling and desperately need capital, such as the Detroit automakers and some of the airlines. The government will be able to deal with some of those companies one at a time, but without a comprehensive plan, others will fall through the cracks.

Manic markets. Investors were hoping that a big bailout plan would offer some predictability about how the government will deal with struggling companies. Their crystal ball is once again very dark. That means wild swings in stock prices as big investors try to get out of the market ahead of bad news, and get back in if it looks like the feds will ride to the rescue. One of the most volatile sectors is likely to be regional bank stocks as investors worry that banks like Sovereign Bancorp and National City might be the next to fail.

Patchwork regulation. There's already a system in place for dealing with failed banks--led by the FDIC--but that may not be enough to handle the damage that's unfolding. Even without a big bailout bill, Congress may have to set up a new agency to deal with dozens or hundreds of bank failures, one similar to the Resolution Trust Corp. formed in the late 1980s. We could see a whole slew of lesser regulations, too, like restrictions on certain lending practices and higher federal coverage limits on bank deposits.

Continued government intervention. The Federal Reserve continues to pump huge sums of money into the global banking system in a desperate effort to prompt banks to loosen their grip on loans to companies, consumers, and one another. For now, that seems to be having little effect as banks absorb the startling news from Washington and hunker down. That may lead the Fed to pump out even more money and take other important steps, like cutting interest rates. Sooner or later, that will probably help loosen things up. Until then, however, it's apparently up to the markets to fix themselves. Plan accordingly.

The Joker Gives His Opinion on the Bailout Plan - Brilliant!

Here's a Take On The Failed Bailout Vote

Good (But Too Short) Video About How The Financial Crisis Evolved

Do We Have A Deal?

Hmm... I hope we have a deal. I hope it makes sense and I hope it works. The American taxpayer will have to live with this for a very long time - and so will our children!

First Presidential Piano Duel

Good Comic Relief! Enjoy!

Full Video of 1st Presidential Debate of 2008

Candidates Face-Off Over Economic Recovery Plan During First Presidential Debate

Bailout Plan Deal Back on Track??

Michael Bloomberg Speaks About the Possible Future Effects of the Current Economic Crisis

Part 2 of the interview with Bloomberg posted on this blog. This is an excellent corollary to the previous posted interview. Enjoy!

Michael Bloomberg Speaks Out On Origins of Housing & Economic Crisis- Part 1

This is a very good synopsis of why we are where we are concerning the housing and financial crisis. Well worth watching...

A Major Milestone of the Week

Wrap-Up of the Week's News and Stock Market Activity

Batman vs. Jaws

Oh my! I can't believe this was the Batman of my childhood. It's a far cry from Christian Bale in Batman Begins and The Dark Knight.

WaMU Assets Seized by Government Regulators and Sold to JPMorgan.

This represents the largest bank failure in U.S. history. Over the previous 9 days WaMu customers withdrew $16.7 billion which caused the bank to fail. Most of the deposits withdrawn were over the FDIC limit of $100,000.

Washington Mutual (WaMu) is the the 13th U.S. bank to fail this year and the ninth to fail since July. WaMu had combined assets of $307 billion and total deposits of $188 billion.

WaMu collapsed as its credit rated plummeted to junk and its stock price tumbled. WaMU stocks declined 95% during the past year. With losses in the amount of $19 billion based upon bad mortgage loans, Washington Mutual puts itself up for sale last week. On September 8th, Kerry Killinger, the long time CEO was replaced with Alan Fishman. Fishman was given a $7.5 million signing bonus and a $1 million salary - not bad for working just a few weeks!

After a few days of bidding on WaMU, JP Morgan Chase & Co. emerged as the buyer with the best offer for a price of $1.9 billion. JP Morgan will not acquire WaMu's liabilities as a result of the sale. JP Morgan is in a very good position as a result of the sale by becoming the biggest U.S. bank, as measured by deposits.

The FDIC brought about the purchase of WaMu by JP Morgan and fortunately did not have to bare the costs of the takeover of the bank's assets. The FDIC noted that this was a major victory.

The failure of WaMU is the latest of what is becoming a long line of failures and bailouts experienced of late with the likes of Lehman Brothers, IndyMac, Bear Stearns (also absorbed by JP Morgan Chase), American International Group (AIG), Merrill Lynch, Fannie Mae, and Freddie Mac.

-Written by Ross Gill

Jetman - The Ultimate Extreme Sport

Bailout Agreement Now Stalled

Quote of the Week

"Emphasize the error, not the person committing it."

— Terri Lonier: Authority on entrepreneurship

Lawmakers Reach Bailout Agreement

President Bush Speaks to Nation of Looming and Dire Economic Crisis

President Bush on Wednesday evening told Americans and lawmakers that failure to pass the proposed $700 billion financial rescue plan will risk erasing retirement savings, cause increasing home foreclosures and job losses. He said: "Our entire economy is in danger".

In his 12-minute prime-time speech the President said: "Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold". In the last few days President Bush has received a lot of input and feedback from lawmakers about the proposed bailout plan. The stakes are high and the President has had to agree to many changes to the plan brought forth by both conservative and liberal lawmakers. However, President Bush says he draws the line at regulations that would hurt economic growth.

The President urged that the tough-sell and very expensive bailout must be enacted ASAP. He said during his speech: "Ultimately, our country could experience a long and painful recession." "Fellow citizens, we must not let this happen."

Last week the White House and Congress agreed to the bailout. Since that time, there has been widespread criticism of lawmakers for lack of foresight concerning the housing crisis, handling of the economy, as well as the bailout plan itself. Many find the price tag very difficult to digest while others oppose the magnitude of government intervention in the private-sector economy.

Conservative lawmakers find it very difficult to agree to taxpayer money being used to help save businesses that got them in trouble in the first place. Many Democrats have come out in the last few days expressing their distaste for CEOs of failed companies who could be inadvertantly rewarded with generous income, bonus and severance packages.

President Bush stated: "With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all." "These are not normal circumstances."

Here is a link to a transcript of the President's speech: http://www.iht.com/articles/2008/09/25/business/24textbush.php?pass=true

NAR President and Chief Economist Speak Out About Current Crisis

Star Wars Vs. Star Trek

If you are like me and like both Star Trek and Star Wars, here's the ultimate encounter:

Good Wrap-Up of Today's News

Treasury Secretary Paulsen Talks to Senate Banking Hearing Committee About Need for Intervention To Save Economy & Housing Market

Fed Chairman Talks About Serious Threats to Economy

This video is very much worth watching. It's worth the 7:29 minutes it takes to watch it.

Habitat for Humanity Founder Blames Unchecked Spending Habits for Mortgage Crisis

The founder of Habitat for Humanity Millard Fuller blames the mortgage crisis on people who spend more than they can afford.

"What we have got to do is get back to the basics in difficult economic times like this and explain to people that you will not wither up and die if you don't have that wide-screen TV," Fuller says.

Fuller also blames lenders who set adjustable-rate mortgages it knew buyers couldn’t afford to pay. He says such firms should be “ashamed” to make such arrangements with buyers. “What they were doing was irresponsible,” he says.

Source: The Associated Press, Jon Gambrell (09/11/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 9/11/08

HUD Announces Revised Downpayment and Maximum Mortgage Requirements

On September 12, 2008, the US Department of Housing and Urban Development (HUD) released Mortgagee Letter 2008-23 outlining new downpayment and maximum mortgage requirements as found in the Housing and Economic Recovery Act of 2008 (HERA).

This letter implements three new requirements:

1) Mortgagor will pay in cash or cash equivalent not less than 3.5 percent of the appraised value of the property;

2) The variable loan-to-value (LTV) limits that were based on the combination of property value and average state closing costs (known as "downpayment simplification") is eliminated; and

3) The Federal Housing Administration (FHA) insured first mortgage is limited to 100 percent of the appraised value and requires the inclusion of the upfront premium within this limit. The revised requirements take effect for all new FHA case number assignments on or after January 1, 2009.

The mortgage letter states that closing costs may not be used to help meet the minimum 3.5 percent downpayment requirement. The LTV is 96.5 percent (the reciprocal of the 3.5 percent downpayment requirement). However, when combined with an FHA first mortgage, government subordinate liens are not limited to 100 percent. Sellers are still permitted to provide financing concessions of up to 6 percent of the sales price. Refinances, including FHASecure, are not subject to the 3.5 percent downpayment requirement as there is no "downpayment" on a refinance.

Economic Update and Overview of Current Housing Market Conditions by Lawrence Yun, Chief Economist of The National Association of Realtors®

Economist's Commentary on Government Takeover of Fannie Mae and Freddie Mac

Written by Lawrence Yun, Chief Economist of The National Association of Realtors®

You wake up one Monday morning to find Fannie (FNMA) and Freddie (FHLMC) no longer exist - that was a scenario that NAR staff have been contemplating over the past month. Well, the government has in effect taken over Fannie and Freddie this weekend and it is in fact Monday morning. The federal government had no choice because the capital situation of two organizations was insufficient to face the upcoming realities of rising mortgage defaults. Now what?

Mortgage rates will trend down over the short run. But how much of a decline will depend on how actively the government - more specifically the Treasury Department and the FHFA - loosens their mortgage liquidity spigot. For over the next 12 months at least, the FHFA has the authority to purchase more than the normal amount of mortgages from lenders to put into their portfolio holdings. That means all conforming loans, including the newly conforming jumbo loans up to $625,000, will qualify for purchase by the FHFA. That will help drive down mortgage rates. In about two year time, when the housing recovery is assumed to be well underway, the government will trim its mortgage portfolio. Then Fannie and Freddie will be completely restructured. It will be up to the next administration and Congress to determine that structure in for which NAR will make our 1.3 million voices heard.

The credit spread between the 10-year Treasury and the 30-year mortgage rates has greatly widened in recent past months due to uncertainties surround the fate of Fannie and Freddie. The typical historic spread has been about 150 to 180 basis points. That means if the 10-year Treasury yield is 4%, then the 30-year mortgage would be about 5.5% to 5.8%. Rather, we have seen the spread at 250 to 300 basis points in recent months. With the government takeover, the spread will surely narrow and hence result in lower mortgage rates.

One legitimate concern is over taxpayer bailout. It is certainly possible that the Treasury will be forking over federal dollars if the default situation worsens. It is also possible for the Treasury and the taxpayers to come out ahead if the mortgage defaults slow down. The defaults will depend heavily on the direction of home prices and the home prices, in turn, are driven heavily by whether or not housing inventory gets trimmed. Assuming there are notable declines in mortgage rates from the federal takeover, then the demand for homebuying will return to the market place and help lower inventory. Therefore, it is very possible that this unprecedented move by the federal government may not cost the taxpayer a dime.

We should also be mindful that even if some taxpayer funds are used in the end, it was just not permissible to have Fannie and/or Freddie go under without any government backstop. The global economy would no doubt have entered one of the harshest recessions in recent memory. Loss of income and jobs would have been brutal, unnecessary collateral damage to ordinary people from the mistakes of the flawed mortgage lending model (which included no down-payment, no documentation, unloading the risk to the secondary market after originations, exuberant credit ratings by Moody's and Standard and Poor's, etc.)

Over the long term, after the above time-out phase of government activism, we need to ensure continuous flow of capital into the mortgage market to help consumers. The restructuring of Fannie and Freddie must meet this important criterion. The final restructuring will combine many innovative ideas, including:

*Counter-cyclical mortgage intervention which loosens the liquidity spigot in times of need and tightens when the housing market heats up.

*Covered bond market - which is the European way of funding mortgages

*Sound underwriting standards to assure a sustainable, healthy housing market (it is in no one's interest to have an unprepared homebuyer that ultimately leads to a foreclosure)

*Clearly separating out the public and private mission of the Fannie/Freddie or new entities. A model of private profits for the shareholders and losses for the taxpayers does not pass any common sense test.

Fed Unlikely to Change Interest Rates

The Federal Reserve is widely expected to leave the federal-funds rate unchanged at 2 percent when it meets Tuesday.In the wake of the Lehman Brothers bankruptcy announcement, some analysts are predicting that there might be a rate cut, but most observers say the Fed has resisted responding to recent market turmoil with rate cuts and is most likely to continue that policy.The U.S. economy expanded at a healthy 3.3 percent annual rate in the second quarter, but many are expecting economic growth to slow to a crawl by the end of the year.

Source: The Wall Street Journal, Sudeep Reddy (09/15/08)

This article is from Realtor Magazine Online edition Daily Real Estate News for 9/15/08

President Bush Speaks Out About Latest Wall Street Crisis

Bloomberg News Segment Gives Very Good Analysis of Today's Market Activity and the Latest Wall Street Crisis

Here's the link to the video:

http://www.youtube.com/watch?v=w4wv2_0qXhE&feature=user

AIG Shares Plunge

Here's a link to a great video regarding what is going on with AIG:

http://www.youtube.com/watch?v=7HFNj0obGHg&feature=user

9/15/08 - Financial Services Industry & Wall Street Hammered

Here's a link to a great Bloomberg News wrap-up of what's happened today on Wall Street:

http://www.youtube.com/watch?v=tHdu3VUv6XU&feature=related

Lehman Bros. Bankrupt & Bank of America To Acquire Merrill Lynch

Assessing the Lehman Brothers Collapse

Aftermath of Hurrican Ike

Hurricane Ike

This is Why Your Mother Always Told You to Sit Properly in a Chair

Twilight Open Houses - A New Idea for New Times

More real estate agents are scheduling open houses on Thursday nights, hoping to attract more attention from home shoppers.

For example, Jerry Feldott of Naperville, Ill.-based Feldott & Associates Ltd. notes, "Executives that are looking for houses are usually extremely busy on the weekends.

It won't replace Sunday [but] our industry has to make some changes because our client base is changing." Given that many people have to work the next morning, experts say Thursday open houses bring out the most serious buyers. Others say evening open houses allow buyers to see homes in a more "romantic" light.

To generate buyer interest, agents holding open houses on weekday evenings are serving food, handing out flyers at public transit stations, and advertising with door hangers.

Source: The Chicago Tribune - Written by Mary Ellen Podmolik 8/29/08

This article is from NYSAR Comminications Central 9/10/08

Selective Listings - Stick With The Winners!

Real estate professionals in the current market would be wise to take only productive listings, as their reputations could be damaged if they list any home at any price and clients become unhappy that their properties have not sold.

They are advised to list only the homes of truly motivated sellers and ensure that the residences are market ready, meaning that they are clean, well maintained, and have strong curb appeal.

Additionally, they should conduct research on the local market and know which types of homes are in high demand, which price ranges are the most attractive to buyers, how many dwellings are presently on the market, whether sales are going up or down, and how long homes are sitting unsold.

Agents and brokers are more likely to earn the respect of sellers, get future business and referrals if they present them with facts and are honest about the likelihood of a sale.

This article is written by Jim Crawford of Realty Times 8/28/08

This article is from NYSAR Communications Central dated 9/10/08

Will the Government Bailout of Fannie & Freddie Make a Difference?

Will the government takeover of Fannie Mae and Freddie Mac make a substantial difference in the housing market?

"It's enough to turn the starter, but I don't know that it keeps the engine running," says A.W. Pickel, chief executive of LeaderOne Financial Corp.

In just one day, the average 30-year mortgage rate fell by half a percentage point to about 6 percent. Another half a percentage point drop is widely expected. That would bring home mortgage interest rates back to levels last seen in January.

The industry rule of thumb is that sales rise 10 percent for every 1 percent drop in mortgage rates, says Tim Eller, CEO of Centex Corp., the No. 3 U.S. home builder.

This weekend will be the first time real estate practitioners have open houses after the mortgage rate cut. Some professionals have high hopes.

"I think half a point gets the people out looking. One point makes them commit," says Phil Immel, broker associate with Prudential California Realty-Orange County and founder of RealEstateGuru.com.

Source: Reuters News, Lynn Adler (09/09/2008)

This article is from Realtor Magazine Daily Real Estate News for 9/9/08

Why Autumn is a Great Time to Buy!

This fall could be a particularly great time for first-time or buyers long out of the market to jump in, say a variety of real estate professionals.Here are the reasons why:

*Prices are probably as low as they are going to go as the market stabilizes, thanks to the government takeover of Freddie Mac and Fannie Mae.

*Interest rates are likely to decline as Freddie and Fannie get government help.

*The Federal Housing Administration recently boosted its loan limits to $729,750 in expensive areas. It's going to take some of that back come Jan. 1, when the loan limit will shrink to $625,500.

The FHA allows down payments of as little as 3 percent, but that will rise to 3.5 percent as of Oct. 1. People scraping dollars together for a down payment should try to set their closing for the end of this month.

*The tax credit will shave $7,500 off a first-time buyer’s federal tax bill due April 15. Buyers who don't owe tax, will get the money as a refund.

The government's definition of a first-time buyer is anyone who hasn’t owned a home in the last three years.

Source: The Washington Post, Elizabeth Razzi (09/07/08)

This article is from Realtor Magazine Online Daily Real Estate News for 9/9/08.

Housing Market Forecast By The National Association of Realtors®

The level of home sales is expected to show little movement in the months ahead, according to the latest projections by the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, fell 3.2 percent to 86.5. In June, the Index was at 89.4, which was a 5.8 percent jump from May. The July index remains 6.8 percent below July 2007 when it stood at 92.8.

Lawrence Yun, NAR chief economist, says home sales continue to edge up and down. “Pending home sales are oscillating month-to-month, with the long-term trend essentially flat,” he says. “Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings.”

Looking at middle-ground assumptions, existing-home sales are projected to total 5.01 million this year before rising 6.9 percent in 2009 to 5.35 million. After declining an average of 4 to 7 percent this year, home prices are forecast to rise by 2 to 4 percent next year.

New-home sales will total about 508,000 in 2008 and 463,000 next year, down significantly from 775,000 in 2007. With builders motivated to clear inventory, housing starts, including multifamily units, will probably fall 17.1 percent in 2009 to 801,000 units from 966,000 this year.

Regional Markets Stable

Even with the latest pullback, pending home sales have been fairly stable on a national basis for nearly a year, with dramatic local market differences continuing, according to NAR.

“Contract signings have been steaming ahead, nearly doubling in activity from a year before in several California and Florida markets,” Yun says. “The outer Washington, D.C., exurbs also are coming around very strongly. The Northeast region retreated following a robust gain in the previous month, and soft activity was observed in the broad midsection of America despite very affordable conditions.”

Here's how the PHSI fared across the United States:

Midwest: rose 2.8 percent to 81.6 in July but remains 2.4 percent below a year ago.
South: unchanged, holding at 93.7, but is 13.4 percent below July 2007.
Northeast: fell 7.5 percent to 73.6 in July and is 13.2 percent below a year ago.
West: dropped 10.6 percent to 90.3 but is 6.5 percent higher than July 2007.

Factors Influencing the Market

NAR President Richard F. Gaylord says there’s been a surge in FHA mortgage applications.

“Unfortunately, many people in high-cost areas aren’t familiar with FHA programs, which is why we produced a toolkit so REALTORS®, lenders, and other real estate professionals can familiarize themselves with this increasingly valuable program,” he says.

“FHA is taking a more active role in serving a broad cross section of home buyers, but it will take some time to fully get up to speed. We’re working with regulators to improve the process, and the good news is that this is becoming a big help to first-time buyers,” Gaylord says.

Yun says there are many ambiguities in the marketplace.

“The economy is producing more, yet cutting jobs. A first-time home buyer tax credit and lower interest rates on newly conforming jumbo loans favors consumers, yet buyer confidence remains low,” he says. “Even with the Treasury Department’s direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent. The housing market outlook is very cloudy.”

Yun mentioned that the speed and timing of a recovery depends on local market conditions.

“Based on local market fundamentals, I expect robust home price growth in places like Denver and Houston over the next two years,” Yun says. “In addition, the frequent reporting of multiple bids in California and Florida may be signaling a bottom in home prices in these areas. Nationally, home sales are stable now but are expected to increase in coming quarters.”

Other factors influencing the housing market:

Mortgage rates: The 30-year fixed-rate mortgage, which also has been moving up and down, should trend up to 6.6 percent by the end of this year, edging up to 6.7 percent in 2009. NAR’s housing affordability index is likely to remain favorable throughout 2008, averaging 13 percentage points higher than last year.

Growth in the U.S. gross domestic product: The GDP is forecast to remain positive with a growth rate of 2.0 percent for all of 2008, and 2.0 percent also next year. The unemployment rate is estimated to average 5.8 percent over the coming year.

Inflation: As measured by the Consumer Price Index, inflation is anticipated at 3.8 percent this year and 1.6 percent in 2009. Inflation-adjusted disposable personal income is projected to grow 1.8 percent in 2008 and 2.1 percent next year.

This article is from Realtor Magazine Online Edition Daily Real Estate News for 9/9/08

A Dedication To The Hurricanes of 2008

To all the hurricanes (Arthur,Bertha,Cristobal,Dolly,Edouard,Fay,Gustav,Hanna,Ike) we've had so far this year, I dedicate this song:





Thank you Lena Horne!

WaMu CEO Gets The Boot

A big shake up at Washington Mutual, the biggest U.S. Savings & Loan, as the CEO of 18 years is fired after he steered bank into investing into subprime loans with $6.3 billion in losses causing bank stock to plummet 90% over the last 12 months. Here's the link to the story:

http://video.google.com/videoplay?docid=2921246041637665947&ei=V0vGSIOvFov8-gGr0qjZDg&q=washington+mutual&vt=lf

The bank is now also under scrutiny by federal regulators. CEO Kerry Killinger caused bank to skyrocket from a small bank in 1992 to the nationally prominent lender it has become. Here is a link to this story:

http://www.king5.com/video/featured-index.html?nvid=280313

Fannie Mae, Freddie `House of Cards' Prompts Takeover

This article was written by Dawn Kopecki for Bloomberg News. Sept. 9 (Bloomberg) --

Fannie Mae and Freddie Mac used accounting rules that created a ``house of cards'' as the housing market descended into its worst slump since the Great Depression.

While the two largest mortgage-finance companies met regulatory requirements for their capital, reviews by the Treasury, the Federal Housing Finance Agency and the Federal Reserve found they probably wouldn't weather the highest delinquency rates on record, lawmakers and regulators said.

``Once they got someone looking closely at Fannie and Freddie's books, they realized there just wasn't adequate capital there,'' U.S. Senator Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee, said after a briefing by Treasury officials. ``They found out they had a house of cards.''

Treasury Secretary Henry Paulson and FHFA Director James Lockhart seized control of Fannie and Freddie less than a month after Lockhart, whose job is to oversee the companies, declared them ``adequately capitalized'' under law. The discrepancy highlights the flaws in legislation and in the regulatory oversight of Fannie and Freddie that didn't demand they keep more assets as a cushion against losses, according to Joshua Rosner, an analyst with Graham Fisher & Co. in New York.

``Fannie and Freddie's accounting during the housing crisis appears to have been more fantasy than reality,'' said Rosner, who first highlighted problems in 2003, before the two companies were forced to restate about $11.3 billion in earnings.

`Not Adequate'

Washington-based Fannie had $47 billion of regulatory capital as of June 30, about $9.5 billion above what FHFA required, according to company filings. McLean, Virginia-based Freddie's capital stood at $37.1 billion, a cushion of about $2.6 billion over FHFA's standard, filings show.

``They met the legal definition,'' Lockhart said in an interview with Bloomberg Television yesterday. ``As I have been telling lawmakers for a long time, that legal definition was not adequate.''

As their stock prices declined and yields on their debt rose to the highest in at least 10 years above benchmark rates, the FHFA saw ``big questions out there,'' Lockhart said.

``The issue is that the exposures are continuing and continuing to grow and it looked like in the future there were going to be significant issues and they were going to have capital problems,'' Lockhart said.

Lockhart said he brought in financial examiners for the Federal Reserve and the Office of the Comptroller of the Currency to help with a review of the companies' finances. Treasury also sought help from Morgan Stanley officials, who prepared a report after trawling through the accounts.

`Too Low'

After looking through the finances, Fed examiners deemed their capital reserves too low, Dallas Fed President Richard Fisher said yesterday.

``We concluded that the capital of these institutions was too low relative to their exposure,'' Fisher said in response to an audience question after a speech in Austin, Texas. Further, ``that capital in and of itself was of low quality.''

Fannie counted $20.6 billion in so-called deferred tax credits toward its $47 billion of regulatory capital as of June 30, according to company disclosures. Freddie applied $18.4 billion in deferred-tax assets toward its $37.1 billion in regulatory capital in the second quarter.
Fannie and Freddie have posted four straight quarterly net losses totaling a combined $14.9 billion and have said they anticipate more. The tax credits don't have any value unless the companies are generating profit.

`Not Even Real'

``That's not even real money,'' Shelby said.

Senator Christopher Dodd, a Connecticut Democrat and chairman of the Senate Banking Committee responsible for oversight of the companies, said yesterday he plans to hold hearings on why the Bush administration didn't act sooner.

``Why weren't we doing more, why did we wait almost a year before there were any significant steps taken to try to deal with this problem?'' Dodd said in a Bloomberg Television interview. ``I have a lot of questions about where was the administration over the last eight years.''

Market Value

After more than eight years of debate, Congress passed a law in July expanding Lockhart's authority to raise capital requirements, curb growth and to take over the companies' operations in a conservatorship or liquidate their assets under receivership. The legislation also gave Paulson temporary power to inject unlimited sums of taxpayer money into the companies.

The companies just four years ago admitted to $11.3 billion in earnings misstatements that led to $525 million in federal fines, tighter regulatory controls and the ouster of the CEOs.

Paulson said he stepped in to prevent a collapse of the companies, protecting investors owning more than $5 trillion of Fannie and Freddie corporate debt and mortgage-backed securities while potentially sacrificing holders of the common and preferred stocks.

The companies yesterday lost the majority of their market value, with Fannie falling 90 percent to 73 cents in New York Stock Exchange composite trading, its lowest level since 1982. Freddie dropped 83 percent to 88 cents, the lowest since the regular common stock began trading 20 years ago.

The stocks rebounded in European trading today. Fannie rose 12 cents, or 16 percent, to 85 cents by 9:44 a.m. in Frankfurt, and Freddie gained 8 cents, or 9 percent, to 96 cents.

Here is the link to the article on Bloomberg New's website: http://www.bloomberg.com/apps/news?pid=20601087&sid=a3pTtizqxtcA&refer=home

Good Report About the Take Over of Fannie Mae & Freddie Mac

Government Take Over of Fannie Mae and Freddie Mac

Some Great Tips for Achieving Success - A Must Watch!

Quote of the Week

Let us never negotiate out of fear. But let us never fear to negotiate."

— John Fitzgerald Kennedy: was the 35th President of the U.S.

Lawrence Yun Interview About Housing Market Come Back

Kiplinger's Outlook for Housing Market For The Rest of 2008

The Perils of Solitaire Chess

Simon's Cat

Cats Taking Over Foreclosured Properties

The L.A. Times Blog ran an article recently titled "Cats on Bank Owned Roof: Bobcats Claim Foreclosed Home" written by David Kelly. It said that bobcats have moved into a foreclosed home in Lake Elsinore, CA.

Neighborhood residents first spotted the felines on August 27th and are having mixed reactions about this home turning into the neighborhood animal park.

The bobcats appear to be a family as some have seen young ones lolling around the property along with their parents. Here's a link to the story: http://latimesblogs.latimes.com/laland/2008/09/bobcats-on-a-ba.html

I wonder if the bobcats have been properly qualified by a local real estate agent to purchase the home. Good luck foreclosing and evicting these tenants!

Where Are Lenders Getting Credit Scores?

Consumers often mistakenly believe that mortgage lenders use only credit scores from Equifax, Experian, TransUnion, and Fair Isaac's myfico.com to gauge creditworthiness.

However, Consumer Reports recently found that lenders also use NextGen FICO scores, FICO Expansion Scores, and Industry Option FICO scores — which take car loans into consideration — as well as custom formulas.

Given that these credit scores or scoring models are not available to consumers, experts say that consumers should not rely solely on available credit scores to determine their likelihood of getting a loan. They would be wise to make timely bill payments, make more than the minimum payment, hold down credit card balances, and retain old accounts.

Additionally, experts say it might be worth keeping tabls on other credit scores, such as Experian's PLUS scores, which are not yet sold to lenders but could be in the future.

Source: Allentown Morning Call (PA) (09/02/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 9/4/08

Craigslist Real Estate Scam Exposed

A Las Vegas man claiming to be a licensed real estate practitioner and a female assistant have been arrested and jailed for renting out vacant homes belonging to seasonal residents.

Emilio Gonzales and Melissa Cowan advertised properties for rent on CraigsList. They asked potential renters to sign leases and took security deposits totalling several thousand dollars. Rents were collected in cash at various locations the pair specified.

The scam fell apart when the real owners showed up and found people living in their vacation homes. Police arrested Gonzales and Cowan by following a tenant to the agreed upon spot to pay rent. The two are being held on burglary, conspiracy and fraud charges.

Source: KVBC-TV (09/04/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 9/5/08

Freddie Mac To Avoid NY Subprime Loans

Beginning September 1, mortgage giant Freddie Mac says it will no longer buy New York subprime housing loans.

According to Freddie Mac Spokesman Brad German, a new measure signed into law by Governor David Paterson removes important controls the company had over borrowers.

“Our analysis indicated the new law added some 20 requirements that [mortgage] brokers and lenders had to adhere to in making these subprime mortgages...the result, any risk would be in the hands of agents and [mortgage] sellers we were not in a position to oversee.” While the effects of the Freddie Mac decision are unclear, it could potentially cut the supply of money available to buyers.

Meanwhile, a spokesperson for Governor Paterson has said that the new law actually makes Freddie Mac’s investments in New York safer.

This article is from NYSAR Communications Central Governmental Affairs Update for August 22, 2008

The Latest on NYRI

The New York Regional Interconnect (NYRI) has given 114 additional pages of information to the NYS Public Service Commission in its request to run a 190 mile power line from near Utica to Orange County in the Hudson Valley.

NYRI’s supplemental data serves to clarify information from when the Public Service Commission rejected the last submission in June.

In its rejection letter, the Commission said the previous submissions lacked information on the historic landscape listed or eligible to be listed on the National Register of Historic Places along the proposed route of the power line. A spokesman from the NYS Public Service Commission said if the application is deemed sufficient with the new information, the formal review process including public hearings may begin.

To follow this issue more closely, visit the State Public Service Commission website.

This article is from NYSAR's Communication Central Governmental Affiars Update for August 22, 2008

Housing Becomes a Touchy Point Between Obama & McCain

Presidential candidate John Mc Cain triggered a media fuss a few weeks ago when he couldn’t immediately answer a question about how many homes he and his wife own.

Property records reviewed by The Associated Press show McCain and his family appear to own at least eight homes and condos in three states.

Democratic candidate Barack Obama tried to make a little hay out of the news, saying that McCain was out of touch with Americans who were struggling to pay the mortgage. But the McCain campaign was quick to point out that Obama has his own questionable housing background, having bought his Hyde Park, Chicago home from a seller who had been convicted of influence peddling.

Source: The San Francisco Chronicle (08/22/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for August 22, 2008

Affordability Effort at Risk of Backfiring

Some real estate experts and economists are determining that the government’s plan to provide affordable housing is a bad idea.

The program, which passed Congress a few weeks ago, offers local governments $4 billion to buy, repair, and resell homes lost to foreclosure. Real estate experts and economists point out that the government will now be competing with lenders and private homeowners who have been struggling to sell in a depressed market.

In California, for example, most of the foreclosed homes are in areas such as the Central Valley, the Inland Empire and the Antelope Valley, locales known for their large stock of low-cost housing. If anything, these areas are becoming more affordable because of foreclosures, and sales have picked up in large part because of the availability of these homes at discount prices.

"Those foreclosures are being purchased at a very rapid rate, and they are going to families who have been previously price-excluded out of the market," says Mark Boud, a consultant who runs Real Estate Economics in Irvine.

In Palmdale and Lancaster, among the state's cities with the highest percentages of foreclosed homes, Joe Mayol, an associate with Keller Williams, says he's selling foreclosed homes at the rate of five a week."One comes on the market, and it's gone seven days later," Mayol says.

"Things are starting to turn around," says Pamela Vose, chief executive of the Greater Antelope Valley Association of REALTORS®."I think if the government had wanted to buy homes a few months ago, maybe it would have helped, but if they're going to start six months from now or later, it can only hurt."

Source: Los Angeles Times, William Heisel (08/20/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for August 20, 2008

New York is #1 Again - However, Don't Cheer Too Loudly

A slowing housing market isn’t stopping closing costs from rising, according to a study by Bankrate.com.The 2007 average closing cost of $2,736 has gone up to an average of $3,118 in 2008, a 14 percent increase. New York City at $4,016 is the most expensive place to close. North Carolina is the least expensive area with an average fee of $2,650.

Here are the top 10 most expensive states to pay closing costs.

New York: $4,016
Texas: $3,975
Florida: $3,683
Oklahoma: $3,558
New Mexico: $3,465
New Jersey: $3,432
Pennsylvania: $3,411
Alaska: $3,409
Colorado: $3,358
California: $3,321

Source: Bankrate.com (08/07/08)

Homes Sales Rise Based Upon Lower Prices

Existing-home sales rose from the first quarter in 13 states, largely from buyers responding to discounted home prices, according to the latest quarterly survey by the NATIONAL ASSOCIATION OF REALTORS®. Nearly one-quarter of metropolitan areas showed rising home prices in the second quarter from a year ago, with greatly mixed conditions continuing around the country.

In the second quarter, 35 out of 150 metropolitan statistical areas 1 showed gains in median existing single-family home prices from the second quarter of last year, while 115 had price declines. NAR’s track of metro area home prices dates back to 1979.

NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said foreclosures are distorting the price data. “In many areas with large concentrations of foreclosure sales, homes are being purchased below replacement cost values,” Gaylord said. “Many buyers with long-term expectations are getting exceptional value in the current market. Once the inventory is drawn down, price pressure will return because the costs of construction are rising – today’s buyers are very well positioned to build wealth over time.”

A separate recent study by the National Bureau of Economic Research, “Housing Supply and Housing Bubbles,” shows construction costs in 2007 were higher than home prices in 33 out of 79 metro areas studied.

Because foreclosures and short sales are accounting for about one-third of transactions, there is a downward pull to the national median price. In the second quarter, the median existing single-family home price was $206,500, down 7.6 percent from the second quarter of 2007 when it was $223,500. The median price is where half of the homes sold for more and half sold for less.

A Closer Look

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 4.91 million units in the second quarter, down 0.8 percent from 4.95 million units in the first quarter, and were 16.3 percent below a 5.87 million-unit pace in the second quarter of 2007.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 6.09 percent in the second quarter from 5.88 percent in the first quarter; the rate was 6.37 percent in the second quarter of 2007.

Lawrence Yun, NAR chief economist, said a clear cause-and-effect response has developed in the housing market. “The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops,” Yun said.

Compared with the first quarter, existing-home sales increased 25.8 percent in California, 25.0 percent in Nevada, 20.5 percent in Arizona and 10.1 percent in Florida. “Buyers in these areas are responding to deeply discounted home prices.”

The largest sales gain during the second quarter was in Idaho, up 51.7 percent; Virginia sales rose 10.5 percent.The steepest declines in single-family home prices in the second quarter were in the Sacramento-Arden-Arcade-Roseville area of California, where the median price of $229,500 dropped 35.6 percent from a year ago, followed by Cape Coral-Fort Myers, Fla., at $178,100, down 33.1 percent from the second quarter of 2007, and Riverside-San Bernardino-Ontario, Calif., where it dropped 32.7 percent to $265,200. “Each of these areas has seen a strong buyer response in recent months to the big cuts in home prices,” Yun said.

Sharp price declines, in excess of 20 percent, also were reported in the Los Angeles-Long Beach-Santa Ana area; the Anaheim-Santa Ana-Irvine, Calif., area; Las Vegas-Paradise; and Phoenix-Mesa-Scottsdale.

“Areas with affordable housing and healthy local economies continue to see price growth,” Yun said. In the second quarter, the largest single-family home price increase was in the Yakima, Wash., area, where the median price of $162,300 rose 8.9 percent from a year ago. Next was the Binghamton, N.Y., area, at $120,900, up 8.7 percent from the second quarter of 2007, followed by the Amarillo, Texas, area, where the second-quarter median price increased 7.2 percent to $124,600.

Yun said home price conditions reflect comparisons from 12 months ago. “Prices having fallen sharply and quickly in very distressed markets, but most or all of the price declines may have already occurred in these areas since buyers have now returned to those markets,” he said. “Furthermore, the momentum of buying is likely to continue in light of the housing stimulus package that was recently enacted. About 2.5 million first-time buyers are expected to take advantage of the $7,500 tax credit between now and the middle of next year.”

Median second-quarter metro area single-family home prices ranged from a very affordable $71,700 in the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to nearly 11 times that amount in the San Jose-Sunnyvale-Santa Clara area of California, where the median price was $755,000. The second most expensive area was San Francisco-Oakland-Fremont, at $684,900, followed by Honolulu at $636,000.

Other affordable markets include Elmira, N.Y., at $76,400, and the Saginaw-Saginaw Township North area of Michigan with a second-quarter median price of $80,300. In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $220,000 in the second quarter, down 3.0 percent from $226,900 in the second quarter of 2007. Seventeen metros showed annual increases in the median condo price and 37 areas had price declines.

The strongest condo price increases were in the Syracuse, N.Y., area, where the second quarter price of $144,900 rose 17.8 percent from a year earlier, followed by the New Orleans-Metairie-Kenner area of Louisiana, at $192,100, up 15.9 percent, and the Houston-Baytown-Sugar Land area of Texas, where the median condo price of $141,100 rose 9.9 percent from the second quarter of 2007. Areas where condo prices declined mirrored the pattern seen with single-family homes.

Metro area median existing-condo prices in the second quarter ranged from $107,500 in the Wichita, Kan., area to $523,500 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was Honolulu at $330,000, followed by Los Angeles-Long Beach-Santa Ana at $327,800. Other affordable condo markets include Greensboro-High Point, N.C., at $109,600 in the second quarter, and the Indianapolis area at $113,500.

Across the Region

Northeast: The median existing single-family home price fell 9.6 percent to $269,000 in the second quarter from the same period in 2007. After Binghamton, the strongest price increase in the Northeast was in Elmira, N.Y., up 6.6 percent from the second quarter of 2007, followed by Buffalo-Niagara Falls, N.Y., with a median price of $108,200, up 4.7 percent.

Midwest: The median existing single-family home price in the Midwest declined 0.9 percent to $161,500 in the second quarter from the same period in 2007. The strongest metro price increases in the Midwest were in the Decatur, Ill., area, where the median price of $94,200 was 6 percent higher than a year ago, and Des Moines, Iowa, at $156,600, also up 6.0 percent, followed by Peoria, Ill., at $124,800, up 3.7 percent from the second quarter of 2007.

South: The median existing single-family home price was $177,000 in the second quarter, down 4.1 percent from a year earlier. After Amarillo, the strongest price increase in the South was in the Charleston, W.V., area, at $136,600, up 7.1 percent from a year ago, followed by Corpus Christi, Texas, with a 6.2 percent gain to $144,400, and Greenville, S.C., at $160,300, up 5.1 percent.

West: The median existing single-family home price was $290,600 in the second quarter, which is 17.4 percent below a year ago. After Yakima, the strongest metro price increase in the West was in the Salt Lake City area, at $234,200, up 0.5 percent from a year ago; all other metro areas reported for the West were down from the second quarter of 2007.

This article is from Realtor Magazine Daily Real Estate News Online Edition for August 14, 2008

ZipRealty Says Housing Inventory is Declining

ZipRealty Inc. says housing inventories in the 29 cities in which it does business have dropped 0.5 percent in July compared with June.

Zip attributes the decline to sellers pulling homes off the market.In another report issued last week, Barclays Capital predicted the housing market will bottom out by year end in part because housing construction has fallen below the pace of population growth and price declines have made housing more affordable.

Here’s a partial list of the metro areas served by Zip and the percentage of inventory declines in those cities:

Boston: – 4.2

Chicago: +0.3

Dallas: -0.8

Houston: -1.3

Las Vegas: +0.6

Los Angeles: -2.4

Miami-Fort Lauderdale: -0.8

Minneapolis: -1.8

Orange County, Calif.: -1.6

Orlando: unchanged

Phoenix: +6.1

San Francisco Bay: -1.1

Sacramento, Calif.: +6.9

Seattle: +1.4

San Diego: -0.6

Tampa, Fla.: -0.5

Washington, D.C.: -2.6

All metro areas: -0.5

Source: The Wall Street Journal, James R. Hagerty (08/13/2008)

This article appeared in Realtor Magazine Online Edition Daily Real Estate News for August 14, 2008

Housing Market Stabilizing Soon According To Greenspan

Former Federal Reserve Chair Alan Greenspan in an interview with the Wall Street Journal this week says he expects U.S. home prices to stabilize in the first half of 2009.

"Stable home prices will clarify the level of equity in homes, the ultimate collateral support for much of the financial world's mortgage-backed securities. We won't really know the market value of the asset side of the banking system's balance sheet – and hence banks' capital – until then," he said.

Greenspan had a one-word description for the government’s response to Fannie Mae and Freddie Mac’s problems – “Bad.”

“[Congress] should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted – with necessary taxpayer support to make them financially viable – as five or 10 individual privately held units," which the government would eventually auction off to private investors, he said.

Source: The Wall Street Journal, David Wessel (08/13/08)

This article is from Realtor Magazine Online Daily Real Estate News for August 14,2008

New Index Says Home Prices Rising

A new home price index published for the first time this summer by Integrated Asset Services showed that home prices rose 1.1 percent on a national level in June compared to May, although prices dropped 11.5 percent over the previous year.The IAS360 House Price Index indicates that Midwest prices increased 4.7 percent in June, resulting in a 0.2 percent decline compared with the previous year. Prices in the West fell 0.5 percent in June and were down 16.9 percent compared to a year ago.The index is not adjusted for seasonal forces, such as the typically stronger spring and summer selling season and appears more volatile than other indexes, observers say. Denver-based IAS specializes in residential real estate valuations and the disposition of bank-owned properties.

Source: Reuters News (08/12/2008). This article is from Realtor Magazine Online Daily Real Estate News dated 8/13/08

Great Advice About Advertising

In just seven months, real estate marketing coach Jennifer Cummings helped Christina Martinez, the highest-producing real estate agent in the country, boost her commissions to $7 million from $4 million.

Cummings believes the secret to success is for agents to move from "advertising," or generating attention and promoting images or brands, to "marketing," which involves motivating someone to make a purchase. She recommends that agents discover the prospect's needs, build trust, and lead them to the point where they are ready to make a commitment. Cummings also urges agents to market to a specific group, determine whether they will use the Internet or print as their medium of choice, and figure out what message they want to send, then identify the needs and wants of their target audience.

Additionally, agents should create a hook to grab the reader's attention, such as "Save up to $100,000 on Your Next Mortgage!," and ensure that their marketing materials are written in a conversational tone. They should employ bullet points, headlines, and subheadlines to make their content easy to read and provide a way for prospects to contact them to receive special reports or checklists.

This article was written by Bernice Ross and appeared in Inman News on 8/1/08 and was reprinted by NYSAR Communication Central Marketing and Technology Tips dated 8/11/08

A Win-Win Situation

Written by Lawrence Yun, Chief Economist, NAR Research

The recently passed - and signed -- housing stimulus bill means a housing recovery is on its way. This legislation will go a long way to help stabilize the housing market and make the dream of homeownership more attainable for many Americans. In addition, more families will be able to refinance into safer, more affordable mortgages, in many cases helping those households avoid a devastating foreclosure.

There are many facets to the recently enacted law. The one that I am most excited about is the home buyer tax credit. Up to $7,500 will be given to first-time purchasers as they file their income tax returns. The amount will be phased out above a certain income level and is to be no more than 10 percent of the home purchase price -- though first-time buyers will qualify for the full amount. (See page 8 for more details.) This is in fact almost like a "credit" -- the amount is equivalent to cash on tax returns. For example: you do your normal tax return and find that you owe $1,000 next year. You then apply the $7,500 credit and the government will send you a tax refund check for $6,500.

Yes, it's not all candy and roses. This credit has a time window and will not be available after July 2, 2009. And technically it is not a full credit because households will have to pay back this amount over a 15 year time period after the second year. In addition, the payback provisions have many conditions. (NAR Research will continue to analyze those.) But the worst-case scenario is that households would need to pay back the $7,500 over a 15 year time span beginning in 2010. In the case of the 2010 tax filing, taxpayers who took advantage of this home buyer credit would need to pay $500.

Even in this worst-case scenario, the tax credit is still a huge benefit to home buyers. Here's why. Money loses value over time - today's dollar is worth more than tomorrow's and certainly far more than it will be worth 15 years from now. That is due to inflation and the loss of interest income one could gain by squirreling it away. For instance, a winning strategy for the smart consumer would be to pay off a high-interest credit card debt with the tax credit money.

In addition, the tax credit it will likely have a big impact in getting the housing market moving again and so will contribute to lessening the foreclosure pressure. As foreclosures retreat, fewer need to be written down by banks and other lenders. Credit markets strengthen and mortgage capital flows more freely. The availability of loans grows, meaning more mortgages on more home sales. Increased home sales tend to foster improving home prices. Homeowners across the country will benefit as home prices strengthen. The economy will also improve - with higher aggregate income for U.S. workers and a lower unemployment rate. Basically, it's win-win.

I estimate nearly 3 million home buyers will have taken advantage of this benefit by the time the tax credit expires next year. These first-time buyers will also stimulate sales for trade-up, trade-down purchasers as they will be able to sell their homes.

The timing for all this is good, as the housing market is already poised to make a bit of a turnaround. Yes, on a national basis existing home sales fell in June to their lowest level in 10 years (4.86 million units, seasonally adjusted annualized rate). But even so, the pace is not too far off the 5 million sales mark. Furthermore, pending home sales rose in June, pointing to more closings in the months ahead. In addition, there were significant local market variations. Sales have continued to ramp up in markets where prices have come down by 20 percent to 30 percent. Bargain hunters and first-time home buyers who had been priced-out during the boom years have returned to the market. Sales are rising strongly on a year-over-year basis in a number of markets: Ft. Myers FL, Las Vegas NV, Riverside CA, Sacramento CA and Prince William County, VA. Other markets beginning to experience rising sales include Orlando, Phoenix, and Oakland.

I am also hopeful that home prices will soon begin to stabilize. The latest data on prices showed a mild deceleration from the recent past. The national median existing home price in June was $215,100, which is a decline of 6.1 percent from one year ago. The declines in the four previous months had been -8.4 percent, -8.0 percent, -8.5 percent, and -6.6 percent. Regionally, the price decline was the sharpest in the West region, falling 17.2 percent - this also explains the overall sales increase in that region. Prices declined 12.6 percent in the Northeast and 2.4 percent in the South. The median price actually rose in the Midwest by 2.8 percent. The speedy price declines of 20% to 30% in a short 12 to 18 month-span in some of the hard-hit markets have been very painful for homeowners who bought during the peak years. But the price declines and the recent rising sales in these regions suggest most of the price declines may have already occurred.

Overall, the market is ready to start recovering. The tax credit should prove to be a big shot in the arm for first-time buyers. In addition to the tax credit, the stimulus package permanently raises the loan limit for FHA and GSE loans, thereby saving consumers thousands of dollars in mortgage interest costs. NAR, of course, has been working diligently for years for some of the provisions in the housing stimulus package - all that hard work has paid off and both home buyers and sellers will benefit.

This article is taken from Real Estate Insights - A publication provided by NAR. This article was published August 2008.