Mark MacKenzie

The day after the election, the Dow plunges nearly 500 points.

I am in no way suggesting Obama getting elected had anything to do with this sell off as the market did rally yesterday in anticipation of his getting elected.

Quite frankly I have never understood Wall St. rally's or sell offs. Often times the market is up when I think it should be down and down when I think it should be up. Which is a reason why I stick to more predictable and less emotional investments.

I do however find that this sell off unfortunately brings a dose of reality back to the country on what had been a euphoric day for millions of Americans - even those that didn't vote for him; including myself.

The reality is that despite Obama's vision for a "yes we can" America, I believe we are all in for a very sobering 2009.

The problems facing our country, problems like a fragile banking and financial system, rising job losses, and a depressed housing market, are still the same problems today as they were yesterday. They haven't gone away, regardless of who got elected.

Today is a historic and proud day for America, but with that historic accomplishment and pride comes a lot of responsibility for all of us, not just President Elect Obama.

Americans can't afford to blink or exhale, and we won't be able to for a while.

It is incumbent on all of us to work harder, smarter, and faster; the future of our country depends on the American worker, not Washington.

I'll admit it.

I voted for John McCain.

I wrote a blog post a couple of days ago how I liked Obama more but that I was going to vote for McCain because of his tax policies. Because I believe that McCain's tax policies were what America was built on. That you provide incentives for people to achieve. You don't penalize or tax success.

The majority of Americans disagree with me, and that is fine. I respect America's decision and I now support Barack Obama as our next President, implicitly and absolutely.

What I am most proud of is this:

There was no Bradley effect.

The election was not decided by race.

The election was decided by American voters, not judges or secretaries of state.

Every person that wanted to vote and was registered to vote, voted.

Every vote was counted.

Yesterday's election is what makes America great. The American people decided they wanted change. They voted for the candidate that they thought would be an ambassador of change. And the majority of American people, over 52%, received the outcome that they wanted. This is what democracy and our country is all about.

Now, as Barack Obama pointed out, this is not the end, but the beginning for this process for change to occur.

Ultimately, it is the still the responsibility of the American people to bring about the change they want to see in our country and in our lives. It is the American people that are America's greatest resource, not just our leaders in Washington.

So despite my candidate not winning last night, I still believe in the "yes we can" spirit more today than I did yesterday. And that is a good thing.

Mortgage rates.

Mortgage rates?

Mortgages rates???

We are in the middle of the greatest housing market crisis since the great depression, the 30-year fixed rate mortgage is well below historic averages and still near historic lows, and the NAR President is thinking that lowering mortgage rates is going to fix everything? This is the equivalent of trying to put out a forrest fire with a garden hose. The problem is much, much bigger than the solution.

So I am on the Realtor.org web site today looking for some data and I stumble upon an "open letter" dated October 31 of 2008 from NAR President Richard Gaylord to U.S. Treasury Secretary Henry Paulson calling on him to refocus efforts by the FHFA to bring stability to the mortgage backed securities market.

Fair enough.

Gaylord contends in this letter that if mortgage rates were to be lower, by just 1 percentage point, the result could be an additional 840,000 additional home sales and that this would translate into a 20% decline in the month's supply of housing from 9.9 to 7.5.

OK, time out.

The problem we are facing is not an interest rate problem, it is a property value (supply and demand) and loan underwriting problem. Just as the economic crisis is not a federal funds rate or discount rate problem, it is a value and confidence problem. Lower rates may prevent markets from detoriating further, but they are not by themselves going to fix this.

Mortgage rates at 6.5%, or whatever a 30-year fixed rate mortgage is going for today, is not an issue in the absence of property value declines. If somebody wants to refinance into a 6.5% mortgage rate, God bless them, that is a good rate historically speaking. The problem is that they can't refinance into this rate because the property they purchased a couple of years ago is not worth what they need it to be worth in order to refinance. The property won't appraise for the value that the owners need it to, this is why we are seeing foreclosures. It has very little to do with mortgage rates. You can drop mortgage rates to 4% but if their loan is for $250,000 and the property will only appraise for $200,000, the refinance is dead.

What didn't make any sense with Gaylord's letter is the prediction that an additional 840,000 homes could be sold and that the month's supply of housing would be reduced (this is the important point) if mortgage rates were a point lower.

So I went ahead and did the math using some common sense logic.

First of all, you can't reduce the month's supply of housing unless a new buyer enters the market. This buyer can be an investor or a first time home buyer, but nobody can sell their home unless a new buyer enters the market. It is this buyer that jump starts the chain reaction of buying and selling in the real estate "food chain." In other words, unless there is a new buyer that enters this food chain, home sales will remain static and the month's supply of housing will remain swolen.

So for Gaylord to claim that there will be an additional 840,000 home sales and that the month's supply of housing would decline from 9.9 to 7.5, this would mean that 840,000 new buyers will enter the market for the sole reason that mortgage rates are at 5.5% and not 6.5%.

Here is some perspective on this, in the 2Q of 2008 there were 75.7 million homes that were owner occupied. The homeownership rate in the 1Q of 2008 was 67.8%. This is the most recent data from the Census Bureau. Gaylord and NAR are suggesting that the month's supply of housing would decline and that an additional 840,000 home sales would result if mortgage rates were lower. The "net" effect would be that 76.54 million homes would be owner occupied. This would equate to a homeownership rate of 68.5%. The last time homeownership rates were this high was during the sub prime lending era. Historically, homeownership rates have been between 64-66%.

Now, maybe not all of these home sales would be first time home buyers, maybe some of them would be investors. Fair enough. I think a lot of them would have to be investors to get this type of surge in sales.

But here is the reality of all of this, lower mortgage rates are not going to substitute for down payments that some first time homebuyers don't have and now need effecive October 1st. Lower mortgage rates won't help a potential new home buyer that lost their job. Lower mortgage rates won't help most homeowners refinance. And lower mortgage rates won't help homeowners sell a home that is worth less than what they owe on it.

This is not a motgage rate problem. Mortgage rates are affordable. This is a supply and demand problem. So rather than the NAR dilute their lobbying efforts on weak and ineffective proposals that won't have the impact that we need them to, I would like to see President Gaylord make some bold and ambitious proposals to confront this housing crises.

I detail mine here: www.ItsTheHousingMarketStupid.com

I like Obama more; but this is why I am going to vote for McCain.

I have sat back and watched, listened, and read about these two candidates for over a year.

I really like Obama. He is a wonderful speaker. He has an amazing story. He looks Presidential. He has run an incredible campaign that has inspired and energized millions of Americans. I like his wife Michelle. I believe that Obama is as patriotic as any other red blooded American. He would be the first African-American President of our country - which I would love to see. I respect the fact that he didn't vote for the war in Iraq, it tells me he can make "unpopular" decisions. I admire that he wants to help Americans that are struggling. I believe that he has good judgement and although he does not have a lot of executive experience, I do think he would conduct himself very well as President because he is a really smart guy. I even like his straight-shooting running mate Joe Biden.

I really like Barack Obama.

And if he is elected I will be disapointed, but I will get back to work the next day just as I had on Tuesday.

I am going to vote for John McCain instead.

The reason I am going to vote for John McCain is because of one fundamental difference between the two candidates - taxes and the American dream. And I am not talking about Joe "The Plumber".

The fundamental difference between the two candidates is that Obama wants to increase taxes on the "wealthy" and provide a tax break to the rest of Americans. It appears the definition of "wealthy" is a moving target, but that is neither here nor there. It is the principle of this policy that I disagree with.

I have always believed that when the government wants you to do something (under Obama it would be for Americans to make less than $250,000 a year), they offer a tax break. And when they don't want you to do something (under Obama it would be for Americans to make more than $250,000 a year), they tax you on it. Pretty simple concept.

It is this tax concept of Obama's that goes against everything that I believe that America represents. We are an industrious nation of leaders, winners, achievers, and innovators. These are the principles that America was founded upon. We want to encourage these principles, not stifle them.

And it is because of these principles that I am voting for McCain.

After following the Presidential campaigning for over a year, voting in the primaries, watching the interviews, listening to the debates, and reading the articles, I finally made up my mind last week about who I am voting for.

The reason I waited so long was because I wanted to have as much information as possible to help me make a decision. I didn't want to rush to a judgement.

I don't vote for the party, or the candidate's personality, but rather the principles of the person.

So tomorrow, I will stand in line, for as long as it takes, to have my voice heard, and vote.

This is the one time in my life where I actually don't mind standing in line. In fact, the longer I need to wait in line, the more I realize how important and significant my vote really is and how thankful I am to live in a country where I have an opportunity to do this.

I believe in overnight mail, and microwaves, and cell phones, and faxes, air travel, and having Olympic track and field records broken. I like speed and effeciency. I often crave it.

But tomorrow is the one day that I will put all of this speed and effeciency on hold, and I will stand in line, for as long as it takes, when I could have already mailed my ballot in, and I will vote.

I suggest you do the same. :)