Localism: Columbia, SC

Today; signals from Berhanke on potential Fed moves.

Tue, 07 Oct 2008 20:12:58 -0500

The FNMA 5.5% bond jumped around in a 53bp range today but was under profit-taking pressure because of the recent jumps. All surges have to have little retreats in order to sustain themselves and that's pretty much what we saw today. The bond wrapped up the day trading 19bp lower to close at $100.62. Only one or two lenders repriced from for the worse compared to their initial rate sheets of the morning and that was due in large part to the fact that most of the real damage was done early as we still closed up 28bp from the initial open, just down on the day overall and really no change from when most lenders came out with pricing. The stock market made a feeble attempt to rebound from yesterday's slaughter and the Fed tried to assist markets with a drastic and very far-reaching move when it announced that it would set up a special facility to thaw frozen credit pipes by acting like an investor to buy commercial paper used by companies to finance daily operations. Australia's central bank took things further than expected with it's 1% cut in it's funds rate. It was Australia's largest cut in 16 years and it took global equities markets completely by surprise. Investors will now be banking on other central banks to follow their lead with cuts of their own. The Bank of England is expected to cut it's benchmark rate later this week during it's meeting and both the Fed and the European Central Bank are expected to cut rates very soon as well. The estimated cut across the board by the fed is a .75% cut later this month. With inflation viewed (per the FOMC meeting minutes released today) as being "in check" or less of a threat than the currently dysfunctional system of global markets, this is all the more likely a move by the Fed. The stock market sold off hard during the last half hour of trading with all three indices's falling to 5 year lows. The dow plunged 508 points to close at 9,447, the S&P dropped like a rock losing 60 points and closed at 996 while the NASDAQ was drilled with a 108 point loss to close at 1,754. The US 10-yr note fell victim to the same profit taking that mortgage bonds did and closed down 38 bp at $104.06

What does all this mean for us? i.e. Realtors and their clients. What it means is that there will be bumps along the way but at some point over the next 90 or so days, we should see a very substantial drop in rates and that means that we're going to have more affordable housing and that should help spur demand for those that have been on the side lines while everything has been so unsettled. Get on the phone to all prospective buyers, have them 100% pre-approved with a mortgage professional even if they haven't looked at the first house yet. That way, you get your price range dialed in, you set your 'target rate' and then when that price spike hits, you snag a solid contract for your client by being able to offer a cash buyer, in essence, and a quick close. At this point, most of the work will be done if it's one of my borrowers. The hurdles will have been cleared, those last minute "gotchas" will be taken care of and then it's a matter of just getting title work and appraisal and you can close in 10 days. Why wouldn't you want that? It'll make you like a hero when you put a family in the house they want at the rate they want and the payment they want. It's the only way that you can take some level of ownership and control on what is otherwise a volatile market. If you get on a "rate watch" even for purchases, then "what will rates be tomorrow?" is no longer a variable in your clients decision making process. In other words, we've eliminated another layer of that fear and if you've been following along, fear is what kills deals, not mortgage rates, not properties, not payments, not "wishy washy" buyers, etc., fear kills sales. Period. If you can't close a sale, it's your fault for not eliminating fear and having the clients expectations properly set and the proper plan in place. So get them with someone like me before you ever get in the car with. Have a meeting of the minds, (you, the client, and me) and sit down to hash it all out between the group in person and face to face. Then you get all the unknowns out of the picture and you close on houses at a pace that other Realtors will envy in a market like this. You'll look like a genius and you'll double your referral business.

Try it out, what else do you have to lose these days?

When $700 Billion just isn't enough.

Mon, 06 Oct 2008 19:55:46 -0500

Crazy week last week, global markets didn't get that 'rejuvination' needed over the weekend apparently. The Dow fell as much as 800 points during today's trading before mustering up a rally to close "only down 370 points" on fears that the bailout package may have been too little too late to stem any economic downturn. Bonds of course saw the benefit as investors found the safe haven of the bond market for their dollars. Our benchmark, the 5.5% FNMA mortgage bond, traded in a 68bp range and ended up closing at $100.81 which was 56bp higher than we started the day. This what I was calling for last week as we are trending higher but not as high as we should be when all is taken into consideration. The 10 yr T closed out the day up 110bp so there is still a bias to the "safer" government insured money. But as we all know, as of a few weeks ago with the Fed take over of Fannie and Freddie, that's in essence what our mortgage backed securities are anyway. So the yield is higher on mortgage bonds but investors are still hung on the "safety" of t-bills. This, as it has to, will prove only an initial reaction to the volatility and at some point the demand for mortgage bonds is going to be driven up, along with price, which will push rates down.

The Dow lcosed at 9,955 (down 370) for the first time in 4 years. The nasdaq followed suit and plunged 84 points to close at 1,862 and the broader S&P slimmed down by 42 points to close at 1,056. Fed meeting minutes are out tomorrow, so expect a little activity there but otherwise this is a quiet week in economic reporting so it's going to be mainly technical movement and the economy is down almost 1 million jobs, stocks are plunging, and it's bleak economically speaking in the short run. But!......

This is good news, as bad as everything else may seem to you right now, considering a drop in rates is going to, BY DEFAULT, make houses cheaper for buyers at the same sales price they currently are listed at. Meaning sellers will derive their needed benefit of a higher sales price and buyers will get the same monthly payment. I cannot stress enough how much the housing industry needs lower rates. We're still at, historically speaking, very low rates. But a market like the one we're in, globally, not locally, is going to need something to kick it in the rear to get things moving again. Housing markets are the best medicine my friends because as I can attest, and many of you as well, when you buy a home that's not where it ends. There are many trips to the local hardware store if my wife is involved.....so that's spending and that's consumer spending in more than one area. That multiplied by all the home buyers that this lower rate environment can create equals economic recovery so don't underestimate what you do as Realtors and what I do in the financing side. It's vital to our economy and that's the bottom line.

Call me, lets stimulate the economy, it'll be fun and we'll make sure to take all the credit on the other side of this when we can laugh about it all and talk about "08' when things were so bad..." This is when careers are made so keep plugging away.

The Stadiums Are Full

Mon, 06 Oct 2008 09:33:49 -0500

Over the weekend I watched probably 10 games on TV. Baseball, college football and NFL and I noticed that all the stadiums were packed with 40,000 to 80,000 fans each. Obviously the word that we're in a recession hasn't reached these people yet.

I love it!

Terry Edwards in sunny SC

FeaturedColumbiaHomes.com

Columbia SC Real Estate, Market Report September 2008

Mon, 06 Oct 2008 08:01:30 -0500

Columbia SC Real Estate, Market Report September 2008

Home Sales Report
	Sold Residential Listings

	9/01/2008 - 9/30/2008
	Area(s) = 3, 4, 5, 6, 7, 8, 9, 15

Price Class	0-2 Bedrm	3 Bedrm	4+ Bedrm	SF Total	0-1 Bedrm	2 Bedrm	3+ Bedrm	Condo Total	Total Units
Price Class	0-2 Bedrm	3 Bedrm	4+ Bedrm	SF Total	0-1 Bedrm	2 Bedrm	3+ Bedrm	Condo Total	Total Units
29,999 or Under	3	3	0	6	0	1	0	1	7
30,000 - 39,999	0	5	0	5	0	3	1	4	9
40,000 - 49,999	1	3	0	4	0	0	0	0	4
50,000 - 59,999	2	10	0	12	0	0	0	0	12
60,000 - 69,999	0	3	2	5	0	0	0	0	5
70,000 - 79,999	3	4	1	8	1	0	0	1	9
80,000 - 89,999	4	8	1	13	1	3	0	4	17
90,000 - 99,999	3	8	3	14	0	1	0	1	15
100,000 - 119,999	2	19	3	24	0	1	0	1	25
120,000 - 139,999	4	37	8	49	0	0	0	0	49
140,000 - 159,999	3	24	16	43	0	0	0	0	43
160,000 - 179,999	1	14	11	26	0	0	0	0	26
180,000 - 199,999	2	6	6	14	0	0	0	0	14
200,000 - 249,999	4	13	17	34	0	1	0	1	35
250,000 - 299,999	0	6	12	18	0	0	2	2	20
300,000 - 399,999	0	2	14	16	0	2	1	3	19
400,000 - 499,999	0	1	5	6	0	0	0	0	6
500,000 - 749,999	0	0	1	1	0	0	0	0	1
750,000 - 999,999	0	0	0	0	0	0	0	0	0
1,000,000 and Over	0	0	0	0	0	0	0	0	0
Total Units:	32	166	100	298	2	12	4	18	316
Total $: (x1000)	3718	22492	22205	48415	161	1460	942	2564	50979
Median $: (x1000)	99	130	199	145	80	88	294	88	135157
Average $: (x1000)	116	135	222	162	80	121	235	142	164450

Days on Market	SF	Condo	Res Total
Days on Market	SF	Condo	Res Total
0 - 30	109	7	116
31 - 60	47	2	49
61 - 90	51	2	53
91 - 120	26	1	27
121+	68	6	74

Financing	SF	Condo	Res Total
Financing	SF	Condo	Res Total
Assume	0	0	0
Cash	26	3	29
CONV	122	14	136
FHA	102	0	102
FLB	0	0	0
FMHA/RECD	0	0	0
Land Contract	0	0	0
Lease/Purchase	0	0	0
Other	3	0	3
Owner Financed	0	0	0
SHA	2	0	2
TRADE/EXCH	0	0	0
VA	46	1	47


	Home Sales Report
	Current Active Listings

Price Class	0-2 Bedrm	3 Bedrm	4+ Bedrm	SF Total	0-1 Bedrm	2 Bedrm	3+ Bedrm	Condo Total	Total Units
Price Class	0-2 Bedrm	3 Bedrm	4+ Bedrm	SF Total	0-1 Bedrm	2 Bedrm	3+ Bedrm	Condo Total	Total Units
29,999 or Under	9	11	0	20	0	1	0	1	21
30,000 - 39,999	9	8	2	19	2	14	0	16	35
40,000 - 49,999	11	19	3	33	3	11	2	16	49
50,000 - 59,999	7	29	4	40	0	4	0	4	44
60,000 - 69,999	8	45	10	63	0	1	0	1	64
70,000 - 79,999	10	42	6	58	0	6	0	6	64
80,000 - 89,999	14	54	12	80	1	8	4	13	93
90,000 - 99,999	24	43	6	73	3	8	3	14	87
100,000 - 119,999	33	139	19	191	5	7	2	14	205
120,000 - 139,999	20	223	51	294	6	12	2	20	314
140,000 - 159,999	19	168	84	271	2	12	4	18	289
160,000 - 179,999	9	131	94	234	0	2	2	4	238
180,000 - 199,999	6	112	66	184	14	3	8	25	209
200,000 - 249,999	27	160	132	319	7	17	0	24	343
250,000 - 299,999	8	75	99	182	7	30	4	41	223
300,000 - 399,999	2	71	133	206	11	25	3	39	245
400,000 - 499,999	0	25	116	141	1	5	7	13	154
500,000 - 749,999	7	19	97	123	0	3	5	8	131
750,000 - 999,999	1	3	43	47	0	1	11	12	59
1,000,000 and Over	0	2	30	32	0	0	6	6	38
Total Units:	224	1379	1007	2610	62	170	63	295	2905
Total $: (x1000)	32201	242593	354475	629270	12868	34296	28406	75571	704841
Median $: (x1000)	107	149	259	175	189	172	306	198	179000
Average $: (x1000)	143	175	352	241	207	201	450	256	245913

Weekly Wrap and Strategy For Us All Moving Forward

Sat, 04 Oct 2008 11:08:52 -0500

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!