First the wrap up on the week, then the move forward ideas and suggestions.
Our benchmark FNMA 5.5% mortgage bond was in the red most of the day before recovering losses late in the session to move 6bp higher to close at $100.25. Mortgage bonds moved lower and stocks higher initially following a worse than forecast Jobs Report. Payrolls in September were worse than forecast with a loss of 159,000 jobs vs. the estimated loss of 104,000. That makes 9 consecutive month of job losses. Investors had been expecting an even worse number and the bad jobs data made it more likely the $700 billion bailout bill would be passed today so the equity markets were viewing this as a positive. It was a case of 'buy the rumor, sell the news' as the stock market traded substantially higher leading up to the House vote then hit a U-turn after the House passed the measure by a final vote of 263-171. The Dow, up more than 300 points prior to passage, gave up all of its gains and fell another 157 points to close at 10,325. The NASDAQ Composite Index shed 29 points to close at 1,947 while the broader S&P 500 Index lost 15 points to end at 1,099. Ahead of bill's passage, investors purchased as prices increased and then jumped into profit taking mode post passage and this is somewhat disturbing as all rallies are sold into to lock in quick gains. This signals that the consensus amount the big investors is that the economy still faces significant challenges due to the credit freeze and job losses. Job losses have been increasing at an accelerated pace over the past nine months indicating a recession could linger longer and be deeper than originally thought. At least overnight dollar LIBOR loans fell below the Fed's 2.00% target rate for the first time since Sept. 14, 2007 by dropping to 1.996%. However, longer duration LIBOR rates still show the credit markets remain frozen as banks pretty much refuse to lend to one another for longer than a day due to concerns the banks they may lend to might fail. This past week alone, six banks scattered throughout Europe and the U.S. required government help to keep them from failing. The Libor-OIS spread, a measure of cash available for loans among banks, jumped to 2.84% from 2.607%, a new record. Oil closed at $93.88 nearly unchanged.
AND NOW FOR THE GOOD NEWS FOR ALL OF US THAT ARE TRUE REAL ESTATE PROFESSIONALS.
Now, more than ever, our job is not only still necessary as people will always need to buy and sell houses and will always need to finance those purchases as this is the largest investment that most people will ever make. Our role, whichever side of the transaction we're on, is on that is "boots on the ground" so speak. We're in the trenches and that means we are in direct contact with the end user, our client. Our clients inevitably will always read the papers, watch the news, listen to radio talk shows, talk to their friends and colleagues, and so forth that are perpetuating misinformation, disinformation, and injecting an increased level of fear and anxiety that will make our job of actually closing that sale all the more difficult. The theme, if you've been reading my blog lately, has been the fact that the problem is not the product. The product itself is good. The problem is the fear and unknown that comes with making an investment that is more important than any other investment 90% of Americans will make.
That means your job as a Realtor is not to sell a house. Not at all is that what you are out to do. Houses sell themselves to their suitable buyer. My job is not to sell an interest rate, interest rates are not something that I have control over. Your job is to sell an idea and to sell a belief that this house, this particular house, is the one that is right for your clients family. That this very house is not going to lose value and put them in the position that they see people in on the front page of the paper or on the nightly news. My job is to ensure them that I am utilizing the tools at my disposal to properly advise them to make sure that their house works for them the way that it should as an asset. To show them how structure, not rate, and how fees, not product, are the tools and the costs that need consideration in the moment of purchasing a home and how a game plan for post closing is more important than anything we work on prior to the closing table. It's the relationship and trust that we're so obligated to work on. Not the sale. The actual sale itself is the most insignificant part of the transaction. If you do your job, and I do mine, prior to the sale, the sale is a byproduct of our work, not the objective.
I enjoy what I do and that pays dividends in the form of my borrowers enjoy working with me. When everything is explained and the process takes on the transparency that it requires, the fear and anxiety is eliminated. When the anxiety and fear is eliminated, the process of closing on the purchase of a new home is a refreshing process for all involved and that perpetuates my business and the business of my Realtor partners regardless of the economic conditions and housing bubbles and credit crunches and whatever other hot button buzz words you want to tag it with. The same is true for all of you agents and attorneys, and financial planners, and so forth. Building your base of business on relationships and not volume and income objectives is sustainable and ends up taking care of the volume and income by default. Call me if you want to, I'm happy to help when I can.
Take care and go sell some houses!
