Foreclosures are like a plague of locusts, destroying the heart of American cities. Somebody make it stop, please.....
March 6 (Bloomberg) -- U.S. mortgage foreclosures rose to an all-time high at the end of 2007 as borrowers with adjustable-rate loans walked away from properties before their payments increased, the Mortgage Bankers Association said today.
New foreclosures jumped to 0.83 percent of all home loans in the fourth quarter from 0.54 percent a year earlier. Late payments rose to a 23-year high, the organization said in a report today.
"We're seeing people give up even before they get to the reset because they couldn't afford the home in the first place," said Jay Brinkmann, vice president of research and economics for the Washington-based trade group.
The Bush administration is urging lenders to avert foreclosures by modifying mortgage terms amid the worst housing slump in a quarter century. The Federal Reserve has slashed its benchmark interest rate twice this year to try to avert the first recession since 2001. The central bank yesterday said the net worth of U.S. households decreased by $532.9 billion during the fourth quarter as home values fell.
Risk is back.......
March 5 (Bloomberg) -- The extra yield that investors demand to own agency mortgage-backed securities over 10-year U.S. Treasuries reached the highest since 1986, boosting the cost of loans for homebuyers considered the least likely to default.
The difference in yields on the Bloomberg index for Fannie Mae's current-coupon, 30-year fixed-rate mortgage bonds and 10- year government notes widened about 12 basis points, to 215 basis points, or 79 basis points higher than Jan. 15. The spread helps determine the interest rate homeowners pay on new prime mortgages of $417,000 or less. A basis point is 0.01 percentage point.
Some owners have been selling the debt ``to make room for the cheaper alternatives or to lighten up because they anticipated further unraveling'' in the financial markets, UBS AG analysts led by Laurie Goodman wrote in a report yesterday. Agency securities, which are guaranteed by government-chartered companies Fannie Mae and Freddie Mac or federal agency Ginnie Mae, were the ``most liquid'' bonds they could sell, they wrote.
Realtor.org are now offering scripts for realtors to handle all those difficult objections from buyers and sellers regarding the state of today's market. The scripts are so ridiculous that they are reproduced here with no more comment from me. Read and enjoy.....
Say the Right Thing
Use these scripts to handle the sticky questions from prospects and you’ll never be left speechless again. If you’re not prospecting because you’re not sure what to say, fear no more. Here are techniques for handling today’s most common objections from prospective clients.
1. “All I read about in the papers are how real estate prices are falling. Why would I want to buy now when I’ll be able to get a better deal later on?”
You: “It’s true that real estate prices have declined slightly nationwide in the last couple of months, but that’s after an increase of some 88 percent in the last 10 years. In fact, according to the NATIONAL ASSOCIATION OF REALTORS®, 2007 is the fifth best year in the history of real estate in the United States. You do intend to live in your new home for a while, don’t you?”
Buyer: “Yes, we want our 10-year-old to finish high school before we move again.”
You: “Even if home prices fall slightly over the short term, you’re still likely to come out ahead if you live in your home for eight or nine years, as you plan to do. Historically, housing prices have risen about 6 percent a year, according to NAR.”
(You should cite your own market’s price figures in this answer, especially if you’re in a market with stable or rising prices. If that’s the case, emphasize that all real estate is local.)
Buyer: “Still, it wouldn’t hurt to wait a while, would it?”
You: “One big reason to buy now is that interest rates are still near historic lows. But if oil prices and other rising costs push up inflation, as some economists think they will, interest rates will probably go up, too. That can make your monthly mortgage payment higher and affect how much home you could buy.
Buyer: “Yes, that’s a good point.”
You: “Another reason that it’s a great time to buy is that there’s a big inventory of houses to chose from right now. A couple of years ago, when the market was overheated, I had buyers who would just buy the first thing they saw because they were so afraid of not getting any home at all. Now you have the option of more time and a bigger choice so you’ll get the best home for you. And because of the large inventory, you’re in a better position to negotiate a price discount with the seller than you will be when the market begins to strengthen.”
2. “Prices are falling. It’s just not a good time to sell.”
You: “It’s true that home prices have fallen about 6 percent this year, (substitute statistics for your area), but that was after an increase of some 88 percent in the last 10 years, so you’re still way ahead.”
Seller: “I still think it’s best to wait until prices rise again.”
You: “If you don’t have to sell, of course, you have the option to wait, but because of the high inventory of homes, it may be a couple of years for prices to start going up again. Can you wait that long?”
Seller: “I guess we could, but we really hoped to move closer to our children in Texas and buy a house before next winter.”
You: “If you’re going to be a buyer, it’s a great time to sell because you’ll make up on the buying side what you don’t get on the selling side. In addition, interest rates are still near historic lows, which may not be the case too much longer, so more buyers will be able to afford your home.”
Seller: “You’re probably right, but what if my home won’t sell?”
You: “It’s true that the days it takes the average home to sell has gotten longer (use your market figures). But I’ve learned that no matter what the market, it takes the same three things to sell — presentation, promotion, and price. Just price your house right against your local competition, and you’ll be able to sell it in a reasonable amount of time.”
3. “My last sales associate had the listing for 90 days and didn’t do anything with it. So why would I want to list with you?”
You: “I know it can be frustrating in today’s slower market, since you want to sell your home promptly. What specifically do you feel your sales associate failed to do.”
Seller: “He didn’t advertise it enough, and he didn’t hold enough open houses.”
You: “That’s interesting. I know your sales associate, and I’m sure he worked hard for you. But maybe I can suggest a few ways that might help attract more buyers to your home. For example, I give each home its own dedicated Web site, which prevents it from getting lost in the high number of listings on the market today when it can take an average of 120 days (substitute local figure) to sell the average home.”
Seller: “That sounds good. What else would you do?”
You: I got a chance to look at your home when it was listed, and I think you could increase its appeal to buyers by using a professional stager. She would come in and spend a couple of hours helping you get your home buyer-ready. This wouldn’t cost you anything; it’s part of my service. I find those little extras are especially important now that your home will be competing against so many others for buyers.”
Seller: “I guess that’s not a bad idea.”
You: “If you’re still interested in selling, I have other suggestions of what I’d include in my marketing plan for your home that I’d like to share with you. Can we setup an appointment for me to stop by to go over them with you?”
4. “I can’t afford to use a real estate salesperson. I need every dollar I can get to pay off my mortgage loan.”
You: “So you’re really concerned about your net proceeds, right? What if I could prove to you that your net would be higher if you used a sales associate?”
FSBO: “How can you do that?”
You: “Research shows that in 2006, sellers who worked with a real estate professional sold their homes for an average of 32 percent more than homes that sold directly by their owners. So even if you pay me a commission, you’ll still come out way ahead. In fact, nearly four out of five people who try to sell on their own end up listing with a real estate professional. Do you have a moment for me to get some information about your home?”
(Ask questions to assess FSBO’s motivation, including “Where are you moving, and when do you need to be there?” If they can’t answer those questions, you’ve learned that they may not be motivated, and you can move onto FSBOs who are more eager to sell.)
FSBO: “You’re just saying that to get me to list with you.”
You: “Those statistics are all true. But I’m not here to list your home. I’m here to help you market your home. I’d like to give you a free brochure that describes some ways you can market your home more effectively. In exchange, I ask that you give me the names of people who look at your house but don’t buy it.”
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Seems sensible to keep away from the US housing disaster, at least for the time being....
BOSTON (Reuters) - For decades, buying a home was a key step on the path to financial security for the American middle class. Home owners could count on a fixed mortgage payment rather than rising rent, take advantage of tax breaks, and build equity as their houses increased in value over time.
But with home prices falling and families losing their homes to foreclosure, some people who under other circumstances would be looking to buy their first home now see greater security in renting. One such person is Lisa Chesnut, who lives in Tucson, Arizona, and works as an information systems coordinator. With a good job and two young sons, 29-year-old Chesnut and her husband, Bryan, look like classic first-time buyers.
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The fed's attempts to save the housing market have come to nothing. Risk has returned with a vengence. Banks have remembered how interest rates should properly reflect default probabilities.
Feb. 29 (Bloomberg) -- Consumers like Valerie Jacobsen aren't getting much of a break on borrowing costs even after five months of interest rate cuts by the Federal Reserve. Jacobsen, 30, wants to refinance her 7.25 percent first and 8.5 percent second mortgages into one loan at a lower cost. To cut the payments enough to recoup her $3,000 in closing costs, she needs a rate well below 6 percent. She wasn't ready when costs dipped in January and now they're back at levels that make her plan too expensive, the Austin, Minnesota, resident says.
``Rates I'm seeing aren't really mimicking what the Federal Reserve is doing,'' said Jacobsen. ``I'm wondering why that is.''
Trying to spur lending and avert a recession, the Fed has chopped 2.25 percentage points off its benchmark rate since September. Wariness among lenders and fears of inflation are keeping mortgage and auto loan rates close to or above levels before the central bank began easing, while credit-card issuers are tightening their standards.
The slippage between the Fed's rate cuts and consumers' ability to borrow or reduce loan costs is weakening the central bank's ability to stimulate the biggest part of the economy, consumer spending. It accounts for more than two-thirds of goods and services output and stalled for the second consecutive month in January after adjusting for inflation, the Commerce Department said today.
Homes everywhere and not a sale in sight. It is bad, real bad...
Feb. 29 (Bloomberg) -- When Quinn Cuthbertson looks around his new neighborhood in El Dorado Hills, California, he sees rows of empty homes and barren hillsides. A promised new school and a clubhouse haven't materialized.
Cuthbertson paid $460,000 for a four-bedroom house in this northern California town named for the mythical golden city. He now suspects his neighbor spent $45,000 less. Nearby, 87 of 98 Toll Brothers Inc. home sites are undeveloped.
Almost 200,000 newly constructed single-family homes are sitting empty in the U.S., the most since Commerce Department statistics began in 1973. Partially completed developments reduce revenue for cities and towns and hurt businesses, said Nicolas Retsinas, the director of Harvard University's Joint Center for Housing Studies. Rising foreclosures and falling property values may cut tax revenue by more than $6.6 billion for 10 states, including New York, California and Florida, the U.S. Conference of Mayors said in a November report.
``Half-filled developments are an advertisement for a failing housing market,'' said Retsinas, a former assistant secretary for housing at the U.S. Department of Housing and Urban Development. ``It also has a spillover effect on the surrounding community.''
He is only stating what we all know already....
OMAHA, Neb. (AP) -- Billionaire Warren Buffett said Monday that the U.S. economy is essentially in a recession even if it hasn't met the technical definition of one yet. Buffett said in an interview with cable network CNBC the reports he gets from the retail businesses his holding company owns show a significant slowdown in purchases.
The chairman and CEO of Omaha-based Berkshire Hathaway Inc. said millions of people have also lost equity in their homes because home prices have dropped.The technical definition of a recession most economists use is two consecutive quarters of negative growth in the nation's gross domestic product. "I would say, by any commonsense definition, we are in a recession," Buffett said on CNBC.
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More bad news, if more were needed.....
As if investors didn't have enough to worry about, Friday's batch of economic numbers shows more signs of recession as well as its evil twin--inflation. First, the government reported that U.S. consumer spending rose more than expected in January, but the gain was eaten up by swiftly rising prices.
Then, a Chicago-based business group said U.S. Midwest business activity contracted sharply in February, showing that even areas of the country least affected by the boom-bust housing cycle are feeling ripples from the crisis. On top of that, U.S. consumer sentiment dropped to a 16-year low in February, hitting levels that usually sound the alarm bells of recession, on worries about declining incomes and rising unemployment, a survey showed.
No surprise, then, that stocks opened sharply lower on Friday--and then proceeded to fall even more. Friday's reports were just the latest in a string of worrisome news about the growing threat of recession and inflation.
"Over the last three to four weeks, there have been a string of economic releases that were dramatically weaker than expected," said John Canavan, a market analyst at Stone and McCarthy Associates. "The implications are quite negative for the economy."
The only bright spot: futures traders are now speculating that the Federal Reserve will cut interest rates by three-quarters of a point at its March 18 meeting instead of the half point that was expected previously.
Nowhere is safe....
NAPA, Calif. - For many residents of this, one of the most storied valleys in the world, life is still a bowl of grapes. But beyond the picturesque vineyards and stonewalled estates, times are shaky, the future unclear.
Tourists sipping their way up the 30-mile valley from the city of Napa to Calistoga may never see this other Napa Valley. But this celebrated wine country is proof that there are few places in the nation left unsmacked by the housing crisis. Beautiful Napa is experiencing foreclosures, plunging housing prices, unheard of drops in home sales and the nervous sense of foreboding that has spread across the country like a flu.
Hey! You've won a ride back to the top
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