I think it is important for those who read this blog to look at the economy on a broader scale and understand that housing affects many other parts of our economy, and is affected by many other parts of our economy. These things should be considered when understanding the market as a whole. To do this, I have recruited a client and friend of mine who knows the market very well, all aspects, and he does not focus on housing. If you read his bio, he is something of a celebrity appearing weekly on television for his thoughts on the economy and the stock market. I think that my clients and readers of my blog should have nothing but the best, so I give you, Ryan Detrick, AmyBSells Chief Economist extraordinaire…

Let’s talk about the economy. As we all know things aren’t that great, but is it really that bad? Well, two weeks ago ex-Fed President Alan Greenspan put it simply, “the US economy is on the brink of recession.” Yes, housing and banking have been without question two of the weakest areas - but manufacturing has held up extremely well and consumer confidence is slowly improving. This coupled with an economy that lost 51,000 jobs last month - and in my opinion you have a weak, but not collapsing economy.

Taking a closer look at the economic data - manufacturing has remained strong. Much of this is due to the lower US dollar and strong foreign demand. In fact, earlier this month the ISM manufacturing survey came in at 50.0 - suggesting flat growth over the past year. Anything over 50 suggests growth and this number was much better than expected. Personal spending remains strong and the recent consumer confidence survey showed steadily increasing confidence. Given consumer spending is nearly 70 percent of overall GDP - we need consumers to continue to spend to keep our economy afloat.

On the downside, we have year-over-year inflation growing at nearly five percent (a two decade high) and GDP growth in the second quarter of only 1.9 percent. When inflation is growing faster than what you can make in a money market (around 2 percent), economic conditions are tough - plain and simple. And finally, with oil about 60 percent higher than it was a year ago, the ‘oil tax’ is alive and well and hurting everyone.

Last week the Fed kept short-term interest rates at 2.00 percent. Earlier in the year the consensus was they would be forced to increase rates, but as the economy continues to muddle along - this isn’t the case. In fact, last week the Fed took a more neutral tone in terms of what they plan on doing with rates (meaning they aren’t looking to hike or cut rates anytime soon). There are two schools of thought in regards of interest rates. One, the Fed needs to increase rates to thus prop up the US dollar and this should push oil lower (remember the dollar and oil trade inversely). The other school of thought is they should leave rates where they are to potentially spark the weakening economy. Without a doubt the Fed is in a tough place, but my personal opinion is they should leave short-term rates at 2.00 percent and stop worrying about oil and inflation. As long as we continue to see banks going under and weak housing numbers, their main concern needs to be improving the overall economy. Also does anyone really expect higher interest rates during an election year? I for one don’t.

The bottom line is things aren’t good for the average US consumer. With higher inflation, higher oil, a slowing economy, and a weak stock market - things are tough out there. One thing to remember is we’ve had recessions before and we’ve always come out of them stronger than we were before. I don’t expect the current environment to be anything different.

About Ryan Detrick

Ryan Detrick, CMT, is the Senior Technical Strategist at Schaeffer’s Investment Research in Cincinnati, Ohio. He joined Schaeffer’s in September 2003 and recommends trading strategies for Schaeffer’s clients, and has over eight years of financial industry experience in the investment and financial services area. Strengths include short-term trading with an eye toward timely technical- and sentiment-based market and trading strategies. Mr. Detrick is frequently quoted in various print media outlets such as The Wall Street Journal, BusinessWeek, USA Today, Reuters, Bloomberg, The Associated Press, and others. He has also participated in broadcast television and radio appearances including numerous appearances on CNBC and Bloomberg television and radio. Received a BA in Finance from Xavier University and an MBA in Finance from Miami University.

This article published today in the WSJ suggests that the economy is waiting on housing prices to stabalize before things will get better. What is their prediction for this to occur: Not likely to happen soon! Looks like they think more than a year to stabalize with suggests that home prices have further to fall until our economy will be in a balance. This after uncertainty surrounding the future of Freddie Mac and Fannie May.

Home Prices Hold Key
Credit Crisis Will End When Assets Stabilize
By DAVID REILLY
August 13, 2008; Page C18

Back to the bunker.
That was the message after J.P. Morgan Chase warned of $1.5 billion in mortgage-related losses in the still-nascent third quarter and after a pair of prominent analysts downgraded Goldman Sachs Group.

The moves reminded investors that, despite a brief rally in stocks since mid-July, credit markets are as unsettled as ever. And that will continue until the price of houses, the key asset underlying many credit products, starts to stabilize.

That doesn’t look likely to happen soon. Housing inventory has hit about 11 months’ worth of sales and is likely to peak at around 13 months’ some time in early 2009, according to Credit Suisse. Mortgage company Freddie Mac recently increased expectations for national peak-to-trough home-price losses to between 18% and 20% from 15% previously.

Read more…

From the MSNBC Article: http://www.msnbc.msn.com/id/25821231/

No sign yet of a bottom in home prices
Rising foreclosures, big new-home inventory push recovery into next year
by Paul Sakuma / AP file

When will home prices stop falling?

The answer is critical to millions of American homeowners who are watching their home equity melt away or are unable to move because falling values have sent potential buyers to the sidelines. Even if you don’t own a home, the question is central to your chance of getting a good night’s sleep if you’re worried about your job, your bank account or the investment in your 401(k).

In the latest evidence that prices are still sliding, the National Association of Realtors reported Thursday that the median price of existing homes sold in June fell to $215,000, down 6.1 percent from a year ago. Sales fell 2.6 percent from the month before — far more than analysts had expected.

Richard Gaylord, president of the Realtors, said a recent survey found that nearly one-quarter of potential home buyers are “waiting on the sidelines.” A major housing package passed by the House Wednesday after months of debate could help boost the market by offering a credit to first-time home buyers, the group said.

The Wachovia economist further suggests that the nationwide priced drop will go from last years decrease of 6.1%, to falling an average of between 22 and 29 percent. So, we have a while to go. Now is the time to sell if you are going to sell, and not a good time to have unrealistic pricing expectations. The market is stressed today July 27th, 2008, but who knows what will happen in a month, will rates go up even 1% it will take buyers out of the market, and if prices continue to slide down as they are expected to do, your home will be worth less.

Another economist quoted in this article suggests that “Bottom line, we probably have a year or more to grow into a better balance in the housing market,” meaning until prices come into alignment from when housing prices peaked in 2006.

Yet another Merill Lynch economist estimates that excess inventory of new homes and condos is nearly 30 percent higher than historical levels.

My professional recommendation for the outlook on selling housing in Cincinnati is this: If you don’t have to sell, don’t sell until prices have stopped decreasing. If you have to sell, do it now and get it sold quickly, listen to an experienced Realtor’s pricing suggestions. Pricing comparables need to be recent (less than 90 days ago) and take into consideration your competition. Always hire a Realtor that knows the area and sells more than 10 homes a year!  An experienced and practiced Realtor who knows the area will be the best thing for any seller. With the time it takes to sell a home these days, be sure that that Realtor has individual time for pricing and preparing your sale. Someone with 30 or 60 listings does not have time for your individual needs! If you can, interview more than 1 Realtor to see the differences in knowledge in pricing and aggression in marketing.

Call or email Amy Broghamer if you find you need to sell, 513-377-3637. In this year’s Hyde Park area market, I am selling homes in an average of 35 days and selling at an average of 97% list price, I sell more than 30 homes a year and am in the top 2% of Cincinnati Realtors. I only carry 15 listings at a time or less, all price ranges, for motivated sellers. Let me know if you would like a private consultation!

From the International Harold Tribune:

Life on the fringes of U.S. suburbia becomes untenable with rising gas costs
By Peter S. Goodman
Published: June 24, 2008

ELIZABETH, Colorado: Suddenly, the economics of American suburban life are under assault as skyrocketing energy prices inflate the costs of reaching, heating and cooling homes on the outer edges of metropolitan areas.

Just off Singing Hills Road, in one of hundreds of two-story homes dotting a former cattle ranch beyond the southern fringes of Denver, Phil Boyle and his family openly wonder if they will have to move close to town to get some relief. Read more…

The article illustrates a trend that I see every day in my Real Estate profession. We are seeing less people interested in moving out to the suburbs. In Cincinnati this would be outside of 275, and choosing instead to remain closer to the city and their jobs, to save money and spend more time with their kids and families versus the car.

With rising gas prices and longer hours at the office, people who moved outside of 275 are migrating back inside the loop! I have seen this several times in the last year with a few young families. I am also seeing homes outside of this 275 loop taking more than twice as long to sell on average and they are getting far less than the usual 95% list to sale that we are seeing inside the loop in areas like Hyde Park, Mt. Lookout and Oakley. Buyers, consider the warnings in this article from the Herald Tribune on the results of moving further outside the city. Keep in mind the article was originally published June 24, since then gas prices have risen even more! If you have any specific questions about values and time on the market inside or outside of the 275 loop, please give me a call at 513-377-3637.

http://www.iht.com/articles/2008/06/24/business/exurbs.php

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Here are a few suggestions, to help raise Customer’s FICO scores! The most important credit history is the last 12 months! Here are a few:

1. Pay your bills on time. This is the biggest single item. Set up an auto draft from your checking account, pay on line, snail mail on the 1st so it is received by the 15th. If you’ve had problems in the past, work with the creditor to bring your account current.
2. Dispute inaccuracies. This is huge, especially with medical collections. Because of all the privacy laws, we can not even tell you the name of the doctor, hospital……… The credit bureaus have 45 days to respond to a dispute. We have also seen lots of Junior issues. Do not name your son the same name as yours! Just kidding, but this creates lots of problems if Dad has horrible credit and it ends up on Junior’s file! If they can not resolve, they will remove the item from your credit report. People do not have 45 days when they have enter into a contract to purchase a home.
3. Keep your credit card balances well below the limit. If your limit is $10,000 and you have a balance of $9,000, even if you pay on time, this hurts your credit score. Call your creditor and ask if they can raise your credit limit for you.
4. Use credit.  But try to pay more than the required balance, or pay off your credit cards monthly if possible.
5. Don’t open a lots of accounts at the same time. This will lower the average age of your established credit history and will hurt your score.
6. Closing accounts do not increase your credit score. I have actually seen this to hurt a person’s credit. Please close accounts if it from a security issue.

Once you are satisfied that you are working with a top-quality professional mortgage advisor, here are the rules and secrets you must know to “shop” effectively.

First, IF IT SEEMS TOO GOOD TO BE TRUE, IT PROBABLY IS. But you didn’t really need us to tell you that, did you? Mortgage money and interest rates all come from the same places, and if something sounds really unbelievable, better ask a few more questions and find the hook. Is there a prepayment penalty? If the rate seems incredible, are there extra fees? What is the length of the lock-in? If fees are discounted, is it built into a higher interest rate?

Second, YOU GET WHAT YOU PAY FOR. If you are looking for the cheapest deal out there, understand that you are placing a hugely important process into the hands of the lowest bidder. Best case, expect very little advice, experience and personal service. Worst case, expect that you may not close at all. All too often, you don’t know until it’s too late that cheapest isn’t BEST. But if you want the cheapest quote – head on out to the Internet, and we wish you good luck. Just remember that if you’ve heard any horror stories from family members, friends or coworkers about missed closing dates, or big surprise changes at the last minute on interest rate or costs…these are often due to working with discount or internet lenders who may have a serious lack of experience. Most importantly, remember that the cheapest rate on the wrong strategy can cost you thousands more in the long run. This is the largest financial transaction most people will make in their lifetime. That being said – we are not the cheapest. Of course our rates and costs are very competitive, but we have also invested in the systems and team we need to ensure the top quality experience that you deserve.

Third, MAKE CORRECT COMPARISONS. When looking at estimates, don’t simply look at the bottom line. You absolutely must compare lender fees to lender fees, as these are the only ones that the lender controls. And make sure lender fees are not “hidden” down amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they are third party fees – they are often under-quoted up front by a lender to make their bottom line appear lower, since they know that many consumers are not educated to NOT simply look at the bottom line! APR? Easily manipulated as well, and worthless as a tool of comparison.

Fourth, UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND. This means that you can have any interest rate that you want – but you may pay more in costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all – but understand that this comes at the expense of a higher interest rate. Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are. A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.

Fifth, UNDERSTAND THAT INTEREST RATES CAN CHANGE DAILY, EVEN HOURLY. This means that if you are comparing lender rates and fees – this is a moving target on an hourly basis. For example, if you have two lenders that you just can’t decide between and want a quote from each – you must get this quote at the exact same time on the exact same day with the exact same terms or it will not be an accurate comparison. You also must know the length of the lock you are looking for, since longer rate locks typically have slightly higher rates.

Again, our advice to you is to be smart. Ask questions. Get answers.

As you can imagine, we wouldn’t be encouraging you to shop around if we weren’t pretty confident that we feel that we can give you a great value and serve you the very best.

Please call us with any further questions you may have at this time – we are ready to work for your best interest!

In my business, I had not done an FHA loan until 2008.  Since rules in lending have changed, just about every home I have sold in 2008 (20) has gotten a FHA loan with some seller assistance or help with down payments etc.  A completely new face in lending.  Now, with these possible changes eliminating this program, this will truly hurt the market again, allowing less buyers (only those with substantial savings to afford the 3% down payment) to purchase a home.  That means, if your home is on the market NOW, get it SOLD!!!  If your price range is around or under $250, you are attracting FHA buyers, and the loan they are intending to get may not be a possibility by the end of the summer, reducing the buyer pool dramatically!

If you have your home for sale now, market it aggressively and offer closing costs to get the home sold before this program is pulled from the shelves.
If you are a buyer looking to buy a home, get out there and make a decision.  This loan and this assistance may not be there for you at the end of the summer, and then you are stuck renting for another year until the market changes or until you can save the money for the down payment.

This summer is the time to make things happen if you are buying or selling.  With lending rules and products changing weekly, you never know what tomorrow will bring.  Give me a call if you have any questions about the state of lending or what an experienced Realtor can do for you in this market to capitalize on your options.  Experience isn’t expensive, it’s priceless!

Full article here.

Amy Broghamer 513-377-3637

This year, I want to help a school that would otherwise receive NO help if it weren’t for my charity.  I want to make the greatest educational impact possible and help the KIDS directly.  I want them to start the first day of school with a sense of excitement and enthusiasm for learning, so they can become productive members of our community in the future.

So, with your help and generous donations, this year we will be supplying 200 children at a school in Oakley with the school supplies they need to make a great start for a successful school year.  This school was selected very carefully, and you can read about some of the student and school demographics in the Donor Letter below, and in the press releases.  There, you can donate, see what we have and what we need, and see how close we are to reaching our goal of raising $10,000 to assemble school supplies for 200 needy children.  Please visit the Web site to learn more or call me directly with any questions (FAQ) or ideas.

Thank you for your time, consideration and generosity!

DONATE

Amy B.
Phone: (513) 377-3637
Contact

Loans and lending institutions are allowing more buyers to qualify for our glut of inventory, helping our supply of housing reduce as well. They are making aggressive changes towards helping more qualified buyers enter into a mortgage that they can afford, and thus aiding in inventory reduction as well. Things will continue to change and shift in this market. The one thing I know for sure, it will be too late to take advantage as buyers the minute the word gets out that the market is on rebound. Get out there and buy your house or your investment property today! There are some amazing homes and great rates, do your part to reduce our inventory and balance our market back out!

Press Release

Cincinnati Area Board of Realtors®

May 23, 2008

1,635 Homes Sold in April

Up 3 Consecutive Months

Local Realtors sold 1,635 homes last month, marking the third consecutive month of increased sales this year. The inventory of unsold homes also improved, shrinking to 9.49 months compared to 9.75 months from March and 13.31 months from January.

Nationwide, April home sales seasonally adjusted were down 1% from March. They were off 17.5% from a year ago.

“Clearly, we’re making progress in reducing inventory,” said Karen Schlosser, president of the Cincinnati Area Board of Realtors, who noted a balanced market is five to six months of homes for sale. “With the spring housing market taking shape, we’ll continue to sell more homes and experience inventory reduction.”

Local Realtors participated on May 4 in a project called Super Sunday, where Realtors had 2,837 open houses for the public that day. Schlosser said that based on the response from Realtors, that did spur additional home sales.

The average mortgage interest rate last month for a fixed-rate loan was 6.14%. That compares to 6.33% one year earlier. It’s now 6.35%. Schlosser said the higher maximum FHA lending amount of $337,500 in the tri-state area will help many buyers in their quest for home ownership.

Summary of Single Family and Condominium Sales

Multiple Listing Service of Greater Cincinnati

Cincinnati Area Board of REALTORS®

April Monthly Home Sales

Year-to-Date Home Sales

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This year, as in the past, Long Cove will be hosting Homearama in Deerfield Township from June 7 through the 22nd. This year, the HBA touts 10 spectacular models of excellence ranging from $1.6 million to $2.4 million. The 10 homes will be located along the Deerfield Township development of Long Cove, and its more than a mile of waterways. Local custom builders such as Kurlemann Custom Building Group, Robert Lucke Homes, Rookwood Building Group, Marino Homes, deStefano Custom Builders,
Hensley Custom Building Group, Daniels Homes, Artisan Estate Homes, Eagle Custom Homes and Spencer Hill Estate Homes will be presenting worthy options for your vote for best of show, or your purchase, if you are so inclined. 3 of the 10 homes have already been sold, but the other 7 are ripe for the taking! If you have an interest in purchasing one of these homes, please contact me, Amy Broghamer at 513-377-3637 for discrete, red carpet service and attention during your transaction.
Some of the fine details and marvels you will see this year include a house with 3 staircases, an English Pub, a sunken shower, a “Green” home, a dog suite, Wii gaming area, a 4 car garage, and a 40 foot entry turret. Which will be your favorite, please stop back by the blog after your tour and tell us which one you like the best!

The show is open Monday through Friday from 4-11pm and Saturday and Sunday from Noon -11pm. Admission is $12. Directions: I-71 to Mason Montgomery /Fields Ertle Road, Exit north on Mason Montgomery Road to left on Irwin Simpson Road. Follow signs to Homearama Parking. Visit www.homearama.cc for more info.