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On Thursday, February 4th, over 100 Ocean County Realtors were treated to a great breakfast followed by a lively discussion about the state of the local and national economy. A lively discussion about economics? Absolutely! The subject of economics does not have to be filled with boring statistics especially when presented by Dr. Joel Naroff.
Dr. Naroff began his presentation by proclaiming that the recession is over. He went on to say that it isn't official yet, but that in the months to come the official announcement would be made. Joel compared the beginning of this economic fun to the Dot Com boom we saw in the 90's where we saw crazy growth in any company that had ".com" at the end of its name. It was very similar in the real estate market across the country with ridiculous double-digit growth that was not sustainable, ultimately leading us to the second largest recession in 100 years. It was not just the real estate industry that felt the pain but the financial world as well.
While we are slowly improving the damage done, the economy is far from healed. Dr. Naroff feels it will take a year or two for banks to build enough capital before we see them return to the "new" normal lending. (When an economist talks about lending they are referring more to the big dollar lending to corporations than to the consumer. That is a big piece of what went away during this recession) Because of this, the financial world will not be a big help in the recovery.
So where will the recovery come from? Some of it will be consumer driven. (70% of the US economy is the consumer). Dr. Naroff does not expect the consumer to shop till they drop. He expects that over all this recession will have consumer spending down and savings up, anticipating consumers to return and "shop till they are tired". He went on to describe shopping till you are tired as cautious spending with control of the purse strings.
The recovery will also need to be supported by the government as it has been been for more than a year already. There were big lessons learned after the Great Depression. In 1936 and 1937 the improving economy was shut down by a combination of tax increases and rising interest rates. Joel feels that the government learned from that lesson and will continue to support the economy until the Fed sees sustainable growth.
Moving forward Dr. Naroff feels that for most parts of the country that Real Estate prices have bottomed out, including NJ, we should see a slow move up in prices for the year. The exceptions to this will probably be Southern California, NV, AZ and Florida. He feels that these markets will still have some healing to do before things get better. His forecast is a bit better than I would have guessed anticipating the growth rate to be in the low 2% range, which is darn close to normal sustainable growth.
As he finished up, Joel was kind enough to take many questions from the audience. The group had some great questions. From this Dr. Naroff feels that the tax credit for buying a home will expire in April and will NOT be extended. He also reminded us that the Fed will stop buying mortgage backed securities soon and feels that may bump rates up about 1/4%. (I think this could actually cause rates to jump ½% or more) and over the next 18 months he would not be surprised to see Fixed rate mortgages climb into the mid to high 6's. He did put that number into perspective with some historical data as well. My own spin on that: The average rate for a 30 year loan over the past 20 years is 7.47% and over the past 40 years it is almost 9.5%. That being said, the 6's certainly are pretty darn good, don't you think?
This was one of our better attended functions. I have to thank everyone at the Ocean County Board of Realtors and everyone on the Education and Affiliates committees for putting this event together and making it such a success.
Stay tuned for OCBR's next event, you don't want to miss out!
Rob
Mortgage Banker
www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf
(732)223-1630 x102
Since 1987 I have been helping my clients fulfill their dream of home ownership!
Real Estate Mortgage Network
NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey
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Harbor Bay Spec Home Incredible Price Captiva Model with Sunroom $317,950

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This Captiva Ranch (2210 sq. ft.) features 2 bedrooms, 2 baths, 2 car garage, sunroom, gourmet kitchen, walkup attic storage, and much more. Includes $50,000 in upgrades. |
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Please call Nancy at 609-713-5194 or email at nmuldowney@vandykgroup.com for floorplan and to register.
The Muldowney Family Team Van Dyk Group |
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Last week was a bit of a bouncy one, but we ended up with a pretty nice gain of 12/32nds by the end of the week. Overall Thursday was the good day of the week with a bit of a flight to quality into the credit markets. Friday's employment report had the market confused most of the day with a mixed bag of good and bad data, and ultimately the report became somewhat of a non-event for the market.
This week There is a mixed of data and auctions to look forward too, and a bit of confusion in the European markets that may ultimately be good news for our auctions
Here is this week's Economic Calendar:
Can you say "Global Economy"? Here is this weeks wild card; Greece. There are concerns over debt defaults by Greece and a few other heavily in-debt nations that almost certainly will trigger a flight to quality into US markets. Good news when we have a few extra billion in treasuries hitting the markets this week. This uncertainty in the world is likely to cause the appetite for US securities to improve even at today's low rates. Their are a few pieces this week that could bump rates up. Bernake's testimony along with the retail sales numbers could compete for potential "biggie of the week". All together I think we will most likely have a bumpy week with an almost unchanged note by the whistle blows on Friday.
That's this weeks 2 cents worth, have a great week!
Rob
Mortgage Banker
www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf
(732)223-1630 x102
Since 1987 I have been helping my clients fulfill their dream of home ownership!
Real Estate Mortgage Network
NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey
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The signals are out there: home sales are picking up and prices are slowly ascending. However, recovery isn't obvious everywhere yet. Most markets are still seeing the cheapest homes selling fastest, while mid-range homes are taking longer, and upper-end properties are languishing.
Whether buying or selling, your best strategy in this dynamic marketplace depends on which tier your property sits. This column will begin by offering advice for that bottom tier of the most affordable homes. My next column will discuss the mid-range market, and then finally we'll get around to those most expensive properties at the top.
Most of the two million recent foreclosures have made up the bulk of the least expensive homes on the market. Bargain prices and a federal tax credit have lured investors and first-time buyers into the fray, increasing sales of $100-$250K homes by 9% over the last year. Buyers should act quickly and submit their offer with due haste. If your offer isn't accepted, keep checking back, because deals commonly fall through.
While it's hard to compete against foreclosures in the pricing category, they’re often in dire need of repairs. Sellers can increase their odds of success by offering their home in "model condition" at a fair price. Whether you’re a buyer or a seller, watch this blog for more advice on making your sale or purchase work.
Michael Sinton, CRB, CRS, e-Pro
Broker/Salesperson
For more information, contact Michael Sinton, CRB, CRS, e-Pro, Broker/Salesperson, Assist-2-Sell, America's leading discount real estate company, directly at 732-364-7434, via email at msinton@assist2sell.com or on the web at www.WeSellCentralNJ.com.
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Patrick Meehan Jr.
RE/MAX At Barnegat Bay (609) 661-1604 pat@sellitpat.com http://www.sellitpat.com Listed by: RE/MAX At Barnegat Bay |
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