Housing prices are rising! Did we miss the bottom?

Are you still waiting for a housing bottom? You may have already missed it. According to statistics recently released by Altos Research, housing prices have been on the rise in 21 of the 26 largest metropolitan areas for the last 3 months, while 22 of those areas showed increases last month. Yes, the Portland metro area did show an increase in median income prices for each of the last 3 months ending in June 2009. Our prices rose 0.5% last month, and 0.6% for the last 3 months.


Here are some highlights of the article:

1. The largest price increases were in California, most notably in Los Angeles and San Diego.

2. Housing prices continue to fall in Las Vegas

3. Listed property inventory increased in 16 of the 26 markets, while it dropped in 10 of those markets. However, the rate of increase is slowing.

4. In all areas, except Boston and San Francisco, the median period of time on the market was 100 days or more. In Portland, that number has increased to 110 days. Thank goodness we’re not in Miami where the median time it took for a house to sell was 262 days during the month of May 2009!

5. The median price of homes listed in the Portland metro area as of the end of June was $342,133!

6. The number of homes on the market in Portland, increased 1.8% for the month of June (these are houses listed by realtors, and does not account for homes for sale by owner). Total inventory as of the end of June was 14,336.

7. Housing sales continue to increase, though most of the activity is in the lower end of the market (houses priced $250,000 and below.)

The article does mention that it is possible that median housing price increases peaked in June, and could even potentially drop again in the coming months.

All eyes remain on recovery from this economic crisis and the halt to increasing unemployment numbers. While most potential home buyers said they were waiting for the bottom before they buy, the truth is that many home buyers are still very nervous about losing their jobs, AND, many buyers either cannot qualify for financing, or think they cannot qualify. Because the media talks so much about how hard it is to obtain financing, many potential home buyers are not aware of the options that exist that might help them.

Please let me know if you have thought about getting into the housing market, but found you could not qualify for financing. I can't promise to find a loan, but I will try.

Best regards,

Shelby
http://www.shelbytncmortgage.com

Home buyers beware!

I'm sure you all remember the "house flipping" phenomenom that contributed to the housing boom just a couple years ago. Guess what - it's back, but with a different twist. Investors are out there taking advantage of the glut of foreclosed properties on the market, and flipping these properties quickly, often without spending a cent on home repairs or upgrades. Of course, the investor is making a profit on this sale, so, would you, as a home buyer, be getting a bargain? Possibly - that's really outside the scope of this "buyer beware." I do expect that most of you will do your own research to determine if these properties is a good value.

Here's the risk to you as a consumer. While there is probably no fraud involved in these transactions, as was the case during the housing boom, and while you may be getting a very good price for a very nice house, you may not be able to find good financing for your purchase. Before you realize that financing options are scarce, you could jeopardize your earnest money deposit. FHA has had a 90 day "prior owner" rule for years, to discourage property flipping. They recently lifted that rule, but only for bank owned properties (foreclosures), and not even all bank owned properties will qualify for FHA financing. Fannie and Freddie do not have a 90 day flip rule, but they do look at "chain of title" to determine if the property you want to finance appears to be a flip. Most lenders will not finance properties that have not been owned 90 days by the seller.

So, how do you protect yourself? There are a few things you can and should do before you make an offer.
• Chain of title - a record of who has owned the property and for what length of time, is a matter of public record, and is available to you through the county records.
• If you are working with a realtor, your realtor can research the MLS for records of prior sales (assuming the house has been listed for sale).
• Ask the seller. If the seller lies, he/she is commiting fraud and can be fined heavily, as well as be sentenced to jail time, so it is unlikely this information will be withheld.
• Make the 90 day rule a condition of your purchase offer, AND detail the type of financing you want, or require, as an additional condition of your purchase. (I strongly suggest you have a realtor or attorney write up your purchase offer, to protect yourself, if you suspect house flipping is part of the transaction you are entertaining.)
• Talk to your lender, to determine IF financing is available, and what the terms of the financing will be.

When you limit your financing options, you may be forced to settle for higher rates, higher closing costs, and perhaps less attractive loan terms, in order to close your loan.

If any of you has experienced a problem with financing due to a 90 day rule, please comment on this post, to share your experience and to help others.

Make it a great day today. And, try to stay cool. We are in for a very hot week.

Best regards,

Shelby Bateson

www.shelbytncmortgage.com

Mortgage rates stay low as Ben Bernanke is on the hot seat today

There's a whole lot of moving and shaking going on today on Capitol Hill. Fed Chairman Ben Bernanke continues his testimony before Congress, and is under a lot of pressure, as many of the Senators are questioning some of his past action, and future plans. Many of the Senators, Democrats and Republicans alike are questioning his prior handling of this financial crisis, his failure to act in a timely manner to avert this crisis, his balking at independent audits of his actions, and his apparent belief that the Feds should have even more power than they have now. Wow!

The upshot of all this turmoil, along with some less than stellar earnings reports, is that Wall Street is more than a little anxious today. For the first day in the last eight days, the DOW is taking a break, down 45 points from the high reached yesterday. The NASDAQ is still up though, on the back of some great earnings from companies like Apple. Technology companies, in general seem to be weathering this economic downturn better than financial institutions. They are not subject to foreclosures, charge offs on credit cards, etc. However, their sales are also down due to less consumer spending.

When Wall Street gets nervous, mortgage rates tend to benefit, and that is the case today. As investors sell off stocks and buy bonds, mortgage rates do well. There is very little change from the close of business, as regards mortgage rates today, but no news is good news. We saw rates drop substantially yesterday, close to the lows we saw earlier this year.

For a snapshot of where the Portland market is now, please take a look at Trulia.com. This is a great website to watch market trends in the Portland metro area, or any other major city in the country. I think you'll be surprised to see that the average listing price in the Portland metro area is $429,051 (which is UP 0.1%), while the median sales price is $264,000 (down 9.6% from this time last year). The most popular areas are those closest in to downtown Portland. There is lots more great information, so check out the link above. The information on this site is updated daily.



Best regards
Shelby Bateson

www.shelbytncmortgage.com
http://www.examiner.com/x-17460-Portland-Real-Estate-Examiner

Mortgage rates are falling. What's going on?

Mortgage rates are falling today! Almost all lenders now have "best" rates on the 30year fixed rate mortgage a bit below 5% this afternoon. Rates on other types of loans are falling in tandem. Jumbo loans are making a comeback. Please call for more information on rates and terms available. Jumbo loans (since they are not regulated by Fannie and Freddie) tend to differ a lot from lender to lender, so we need quite a bit of information to determine which lender fits you best.

While the stock market closed up for the 7th straight day, based on better than expected earnings reports, there was also news that has put "fear" back into the hearts of some of the larger institutional investors, driving those funds back into bonds. The 10 year Treasury bond closed below 3.5% today for the first time in over a week.

News that is driving fear into investors surrounds CIT group, one of the major lenders for small and mid sized businesses. The government has decided that CIT is "not too big to fail" and has left this financial giant to flounder, seeking private capital, and perhaps heading for a Chapter 11 bankruptcy. CIT did receive TARP funds in the original round of bailouts, so if they file for bankruptcy, those TARP funds will not be repaid to taxpayers. The reason for the investor fear though is if CIT collapses, it could deal a "crippling blow to an economy still bleeding hundreds of thousands of jobs a month..." Apparently CIT is a very big player in the clothing and merchandise industries.

In the meantime, we are hearing more and more that the recession is winding down and we should start looking for recovery mode in the next 1 to 2 quarters (by the end of 2009!). Your mantra today is "please let this be true." It would be so great to see our economy stabilizing, people back to work, housing prices stable and even rising? Is that too much to ask?

Fed Chairman Ben Bernanke was testifying before Congress today, giving his state of the economy speech, and trying to assure Congress that the Feds do have a handle on this runaway government spending, and can take on a "supercop role" if need be, in policing and monitoring the big financial institutions.

It's amazing and disconcerting to me that one body (the Feds) should have the power to control monetary policy, police the financial institutions, and is now getting involved in the policing of the mortgage industry as well. Fed Chief, Bernanke, is urging Congress to keep proposals to audit the Fed away from monetary policy duties. Excuse me, but does this man think he should have absolute power over the monetary policy of this country, without being subject to audit? OK - stepping off my soapbox, because I've wandered away from the subject of mortgages...

Say YAY today. With all this turmoil up on Capitol Hill, the investment community is nervous enough to be moving funds back into Treasury bonds and driving mortgage rates down. That's the crux of the news today, in a nutshell.

Make it a great afternoon.

Warm regards,

Shelby Bateson
503-819-6545 phone
http://www.shelbytncmortgage.com

**Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.

Stock Market is UP - Mortgage rates are Falling!

The stock market is up again, for the 6th straight session. So far, the DOW is up approximately 7% since last Monday. Usually when we see the stock market up, we see investors running from bonds, so mortgage rates rise too. But, here's what we're hearing today. So far, 69 of the companies on the S & P 500 have reported earnings. 59 of those companies have beat estimates on earnings, so the investors on Wall Street are happy folks and buying. BUT, this is a huge earnings week with many of the major S & P players yet to report. Oil is up to almost $65/barrel, and most metal commodities, like gold, silver, etc, are way up as well.

Companies like Apple and Caterpillar are "biggies" that sometimes put a damper on earnings week, and have yet to report. While they may report good earnings, they tend to also add comments that earnings going forward are iffy. So, some investors are still buying bonds. Also, we have to keep in perspective that some of these great earnings are from banks and investment companies, that are cashing in on higher fees and stock issuance to cover their TARP loans. Others are retailers that are reporting better than expected earnings, but have slashed their workforces and inventories to bare minimums to survive. So, yes, investors are still nervous, especially as Fed Chairman Ben Bernanke will be testifying before Congress this week again about the state of the economy and an exit strategy from all this stimulus and federal spending, to keep future inflation at bay.

In addition to a proposed exit strategy, it is anticipated that Bernanke wants to keep interest rates low as long as possible to help our employment numbers. But, in order to be allowed that leeway, he will have to convince Congress that he also has a plan to keep inflation in check. (I wouldn't want to be Ben Bernanke right now, would you?)

So far, most economists are saying that "leading indicators signal the U.S. economy is nearing the end of this recession." However, the caveat is that unemployment is still way too high and housing prices, over much of the nation, have yet to stabilize. However, more and more economists are predicting that this recession could end by the end of this year! Of special significance are three factors:
1. The fantastic earnings reports by lenders indicates that credit is loosening up a bit - which is good news for both businesses and consumers.
2. Building permits for new home construction were up 8.9% in June. This will put many people back to work.
3. The Federal Reserve is sitting on $877.1 billion dollars in bank excess reserves. This is money that is "available for lending," but is being held by the Federal Reserve instead to keep banks from pumping those funds into the economy too quickly (which would result in inflation.) The Feds are paying interest on those reserves (with taxpayer dollars, of course), to incent the banks to not lend too much too quickly.

The end result is that mortgage rates are fantastic. Best rates on 30 year fixed rate loans are hovering around the 5% range again. 5/1 ARMs are way down in mid 4% range. However, we probably should not expect rates to stay this low for the long term. One of the leading indicators of a healthy economy is higher yields on long term treasury bonds, so savvy investors are watching for yields to rise as soon as possible. With economic recovery potentially around the corner, bond yields, and mortgage rates will begin to rise.

Have a fabulous week.

Best regards,

Shelby Bateson
http://www.shelbytncmortgage.com

* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.

The Recession is OVER! Really?

Merrill Lynch analysts announced yesterday afternoon that the recession is OVER!! While that is certainly a feel good sentiment, perhaps Merrill is overlooking all those people still out of work, or still in fear of losing their jobs? What about the forecast, just this week, that unemployment could rise as high as 13%? A survey done by Realty.com just released this week, shows that more than 50% of potential first time homebuyers are reluctant to make that purchase for fear of losing their jobs.

Nevertheless, mortgage rates are on the rise today as business earnings continue to come in at or above estimates. Retailers, in general are reporting better numbers than expected (which is what prompted Merrill's remarks). The yield on the 10 year Treasury bond rose to 3.45% yesterday, a huge jump over the close Monday at 3.34%. Today the yield jumped to 3.61%, so yes, mortgage rates are definitely on the rise again! We have had several rate increases already today.

Last night, Intel reported much better than expected earnings, which has led to a huge stock market rally today. Intel earnings are considered very significant because they portend the trend in technology buying, which, of course, is very good news for the economy. In addition, there was some positive news about on orders and shipments in the manufacturing index, the first positive news we've seen in this sector is quite some time. The DOW closed up 256 points, while the NASDAQ closed up 63 points. The S & P crossed a critical point of resistance at 925 to close at 933.

At the same time, global confidence continues to drop to new lows as unemployment is surging worldwide. (Are you listening Merrill?) Government stimulus efforts are doing little to reduce unemployment as most of the stimulus dollars have yet to move into those "shovel ready" jobs out there. But, here's a green shoot for you...combined sales of both existing and new construction homes increased in May for the 4th straight month. Perhaps the housing market really is bottoming out finally at least nationally, even if we're not feeling it as much here in Portland.

So, are we in for another round of gains on the stock market, leading to ever higher mortgage rates? Mortgage applications were up the last two weeks, but then rates had dropped again. Currently, 30 year fixed rate mortgages are above 5%** again, though some lenders do still have ARM loans below 5%**. That still remains to be seen, as many of the "bellwethers" of the market have yet to report earnings. Any really bad earnings reports in the next week or so, could send the stock market tumbling again, with bond yields and mortgage rates dropping in tandem. As always, I'll keep you posted as news unwinds. In the meantime, mortgage rates in the 5% range are still very good rates, historically speaking. We all want to see those rates in the 4% range, but is that realistic long term? I'd love to hear your comments.

Warm regards,

Shelby Bateson

Town & Country Mortgage

503-819-6545 phone

Lic # ML-3604

http://www.shelbytncmortgage.com


* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.

Rates are up Slightly, House Valuations, and More News

Good afternoon. I hope you all had a fabulous weekend. I know I did. My son was here visiting from England, but alas, all good things must come to an end. He is returning to his home across the pond today. So, I'm back, and ready to go to work for all of you again.

The stock markets opened higher today, based on positive comments about bank stocks. The banks are actually doing pretty well financially, all things considered, because of increased fees and hugely increased margins on real estate transactions. The DOW is currently up 175 points, the NASDAQ up 35 points.

The 10 year T bond traded as low as 3.25% yield overnight, but is now up around 3.34%. This has caused most mortgage rates to rise a bit from the close on Friday. I am still seeing best rates on 30 year fixed rate loans below 5% for those of you in owner occupied homes with at least 20% equity. Here's my seque into HVCC (Home Valuation Code of Conduct appraisals) again!

I just received an appraisal today - what a disaster! This appraisal was on a home in the Wilshire Beaumont area, an area that has largely held its values. This appraisal almost completely discounted a beautifully finished basement (670 square feet), and overly emphasized comparable sales of homes 500 square feet smaller, with unfinished basements. Other comps that were slightly larger homes (approximately 100 square feet), with unfinished basements, that sold at higher prices were given little weight in in the valuation.

For those of you who think HVCC doesn't affect you, because you're not buying or selling right now, please think again. If home sales are failing, or prices are falling based on these very low appraised values, this definitely affects the value of your home when and if you decide to sell, or if you want or need to refinance your current mortgage. It has been estimated that HVCC, since inception on May 1, 2009, has been responsible for over $1 trillion dollars loss in home values nationwide. I don't have any statistics on how many home sales have fallen through because of this law, but will continue to research this topic and will report when I have more data.

More news headlines:

1. Oil prices closed below $60/barrel again today.

2. The ECB has instructed European banks to start lending and stop hoarding cash. Many European banks simply paid back the federal funding they had received to encourage lending, rather than lend, due to "playing it safe mentality."

3. Commercial construction lending is down 16+% here in the U.S. because of the same "play it safe mentality" in our banks.

4. We have a 2 week hiatus on sales of T-bonds beginning this week. While this may help bond prices and yields stabilize, the opposite could also occur because we are now well into earnings reports from all businesses publicly traded.

5. It is estimated that unemployment nationwide will hit 13% or higher before this recession comes to an end. Unemployment numbers for Oregon are due out later this week, and are estimated to be over 12% already!

FYI - we just received Wells Fargo's most current rating on property valuation risk ratings. All 3 counties in the Tri County area of Oregon (Multnomah, Clackamas, and Washington County are all considered high risk counties.) Clark County, in Washington, is also in the highest risk category.

For those of you contemplating a purchase, whether for investment or for your own home, check out the Investor Loft. This site will give you information on homes that are priced below value, with an estimate of the equity you will be buying at the current sales price.

Another great site which will give you insight on neighborhoods is Cyberhomes. For a nominal fee of $9.95 per month, this site will give you data on recent home sales, and will show you trends for the neighborhoods, so you will know if you are buying into an increasing or decreasing valuation neighborhood.

Both of the above sites cover all the major cities in the country.

Have a fabulous day today.

Please remember to either email or call with questions, comments, concerns.

Best regards,

Shelby Bateson

Town & Country Mortgage

Portland, OR 97219

503-819-6545 phone

http://www.shelbytncmortgage.com

* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.