December 15, 2009
What Needs To Happen Now
We are subject to many cycles within our economy. Whether we are booming or in a recession, we have seasonal, economic, rate and other cycles which affect our economy’s well being. One very important cycle that is a foundation of our weak economy and financial crisis is the credit cycle. We don’t have to tell you that banks have tightened up their lending requirements on homes, commercial properties, credit cards and more. If it is hard to borrow, it is hard for the economy to grow.
In order for this economic cycle to end, the credit cycle must ease. We know it this has not yet happened as our Treasury Secretary and Chairman of the Federal Reserve Board both have indicated that the tight credit conditions continue. The cycle continues despite the fact that the government has lent billions of dollars to banks in order to ease the financial crisis. So what will ease the credit cycle? For one, creditors need to be convinced that the catalyst of this whole crisis, real estate, is no longer depreciating. We have had some very good signs, including stable prices and rising sales for much of the year. However, with many foreclosures to come, banks are not jumping back to the table on residential or commercial real estate. That is why the government extended the home buyer tax credit and Treasury Secretary Geithner has extended the TARP program as well–to support this important asset. The government is determined to support the most important industry in America. We believe their focus is right on target in this regard.
The Markets. Rates moved up for the first time in several weeks. Freddie Mac announced that for the week ending December 10, 30-year fixed rates averaged 4.81%, up from 4.71% the week before. The average for 15-year fixed rose to 4.32%. Adjustables were mixed with the average for one-year adjustables falling slightly to 4.24% and five-year adjustables increasing to 4.26%. A year ago 30-year fixed rates were at 5.47%. “Following an upbeat employment report, long-term bond yields rose slightly and fixed rates followed,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The economy shed only 11,000 jobs in November, far fewer than the market consensus forecast, and the unemployment rate unexpectedly fell to 10 percent. In addition, revisions added 159,000 jobs to September and October. Notwithstanding, rates on 30-year fixed loans are almost 0.7 percentage points below those at the same time last year. This translates into an $81 reduction on the payment on a $200,000 loan.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Current Indices For Adjustable Rate Mortgages
Updated December 11, 2009
| Daily Value | Monthly Value | |
| Dec 10 | November | |
| 6-month Treasury Security | 0.15% | 0.15% |
| 1-year Treasury Security | 0.32% | 0.31% |
| 3-year Treasury Security | 1.26% | 1.32% |
| 5-year Treasury Security | 2.19% | 2.23% |
| 10-year Treasury Security | 3.49% | 3.40% |
| 12-month LIBOR | 1.098% (Nov) | |
| 12-month MTA | 0.481% (Nov) | |
| 11th District Cost of Funds | 1.259% (Oct) | |
| Prime Rate | 3.25% |
The number of homes for sale declined 2.4 percent in November in the metropolitan areas covered by ZipRealty Inc. In the last 25 years, the decline in November has averaged 1.8 percent. The data doesn’t include New York, but Miller Samuel Inc., an appraisal firm, reports that inventory was down 7.1 percent from the end of October and down 18 percent compared to November 2008. October was the first month since January to show a rise in bank-owned homes. The number of bank-owned properties declined over the summer because of efforts to prevent foreclosures. As time runs out for many families, the number of foreclosures is increasing. As of the end of October, banks and home-loan investors had 639,000 foreclosed homes for sale across the U.S., Barclays Capital estimates. Source: The Wall Street Journal
President Obama proposed a program last week that would reimburse home owners for installing energy-efficient appliances, windows, and insulation. Under what has been dubbed “Cash for Caulking,” home owners would get a 50 percent rebate on items like energy-efficient air conditioners, heating systems, washing machines and dryers, refrigerators, replacement windows, and insulation up to $12,000, meaning a household could spend $24,000 and get $12,000 back. There will likely be no income restrictions. Steve Nadel, director at the American Council for an Energy-Efficient Economy, who is helping to craft the legislation, says they are contemplating having contractors or retailers pay part of the cost upfront to ease the need for home owners to come up with lots of cash. Source: CNNMoney.com
The IRS has spelled out guidelines for eligibility for the home buyer credit when co-borrowers purchase a property. When a home-owning parent of an adult child co-signs for a home loan and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount. The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit. When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer. Source: Washington Post Writers Group
Kurt Galitski
Meet Kurt Galitski - The Kurt Real Estate Group, your new best friend. Distinctive Strategies that Deliver Record-Setting Results. When you combine Kurt’s passion and knowledge of the real estate market, you really gain an appreciation for what makes Kurt different. But what truly sets him apart from the crowd are his 5 distinctive strategies and his property management… For Kurt, getting into real estate was not an accident, it was a deliberate and calculated decision to deliver a better experience to home buyers, sellers, and landlords that they have ever received before. Today, you could ask any one of hundreds of clients, read his Yelp reviews, or look at his track record of being featured in Orange Coast Magazine in excess of eight consecutive years and you too will say mission accomplished. www.KurtRealEstate.com www.KurtPropertyManagement.com 877-957-6677
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