Mortgage Rates Improve

While the headlines were focused on the poor performance of the stock market, mortgage rates improved moderately during a volatile week. Mortgage rates were helped by a couple of factors. Seeking to reduce risk, investors sold stocks and moved the funds into relatively safer Treasury bonds and government guaranteed mortgage backed securities. In addition, slower economic growth and lower energy prices reduced expectations for future inflation. More good news for the housing market came from the September Existing Home Sales report, which rose 5.5% from August to the highest annual rate since August 2007.
Another important development was a decline in Libor rates during the week. Libor rates are viewed as a primary indicator of credit market conditions. They are also an important benchmark for setting the rates on many consumer loans, including adjustable-rate mortgages. Libor rates shot higher during the credit crisis when financial institutions became reluctant to lend money to each other. The broad series of recent government actions brought Libor rates down closer to more normal levels. A series of government officials made statements during the week, including Fed Chief Bernanke, former Fed Chief Greenspan, Treasury Secretary Paulson, and FDIC Chairman Bair. The common theme is that the government is ready to take further actions as needed to support the economy and financial markets. Broad support was seen for a second fiscal stimulus package. The decline in the housing market was a key factor in causing the credit crisis, and many proposals are under consideration to help stabilize the housing market and prevent foreclosures. The bottom line, though, is that it will take some time for economic conditions to improve. For more information or for free mortgage advice please email me at corey@frontstreetmtg.com.

Welcome to Our Office

As part of a new advertising campaign we've been doing some photo shoots to show the location of our "offices". A very important aspect of our business model is to get rid of the costs and headaches that come along with a standard bricks and mortar office. This allows us to more closely focus on marketing and introducing new technologies to our clients that will actually help them to buy and sell waterfront property. We wholeheartedly believe that we can be of better service to our clients by spending more time in the field making ourselves aware of available properties and touring properties with our buyers to make sure they find the perfect match for their needs. We are just coming off the peak of our color change up here in Northern Michigan, but it is still spectacular out there. It got down into the 20's last night, so you may want to have a neighbor turn on the heat at your cabin up here if you haven't found time to get up north soon.

One of the greatest things I realized today as we were driving around and setting up shots was how quiet the lakes and rivers of Northern Michigan are this time of year. We were very surprised to see a fly angler fishing The AuSable in front of our cabin when we arrived this morning. It worked out great for the photos! He was equally as surprised having spent the entire morning with the river to himself. If you can make the time to get up this fall it will be well worth the trip. With less traffic and fewer people, you'll get to see a side of Northern Michigan often missed by the summer crowds. The wildlife tends to be more active and the fishing and hunting can be spectacular if you enjoy those past times. We hope to see you soon.

Investor Confidence Slowly Rises

On Monday, the government announced that it will use up to $250 billion of the $700 billion rescue fund to make equity investments in a wide range of financial institutions. Their purpose is to inject capital into the banking system and encourage lending. Many other countries have taken a similar step. This, along with the other government actions, seems to have increased investor confidence in the banking system, and conditions in the credit markets showed signs of improvement during the week. Equity markets were extremely volatile this week, and the stock market ended with moderate gains. Mortgage rates moved in a very wide range during the week as well, but they finished the week nearly unchanged.
In a speech Wednesday, Fed Chief Bernanke suggested that the key tools to "confront and solve" market problems are now in place. He emphasized, though, that financial markets and the economy may take months to recover. Many investors had expected that the rescue plan and other government actions would have a larger immediate impact. Now the general outlook is for economic growth to remain weaker than normal until at least the middle of 2009. Bernanke added that he expects the inflation rate to decline due to a slowing economy and lower energy prices, which would be good news for future mortgage rates. The inflation data released during the week supported the view that inflation rates are slowing. The September Consumer Price Index (CPI) remained flat from August, and the core rate, which excludes food and energy, rose only 0.1% for the month. The Producer Price Index (PPI) reflected an even greater impact from lower energy prices with a substantial decline. For more information or for free mortgage advice please email me at corey@frontstreetmtg.com.

First Time Home Buyer Tax Credit

This is an excerpt from a recently received newsletter from the National Association of Realtors.

WASHINGTON — First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.
Available for a limited time only, the credit:
Applies to home purchases after April 8, 2008, and before July 1, 2009.
Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405. This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on IRS.gov, the IRS Web site.

What a difference a day makes

With nearly a 1,000 point gain in the Dow Jones Industrial Average on Monday, the largest single day gain in its history, the market showed a real sense of confidence that the moves made by The United States and other governments around the world will have a positive impact on the current economic situation. While it is a good sign, it shouldn't be a surprise to anyone to see a lot of ups and downs for a little while as investors try to take advantage of the erratic swings in the market. There's one thing for certain, property values will not fall 10% in a single day only to recover almost as much a few days later. For the faint of heart who don't enjoy daily swings like these, real estate offers a place to put your money that reliably increases over the long term, is never worth zero, and can right now be had at a bargain in many market segments!

Stocks Fall Further

This week the stock market fell to the lowest level since 2003. Normally mortgage markets improve during a stock market decline, since Fannie Mae, Freddie Mac, and Ginnie Mae mortgage backed securities (the vehicles through which most mortgages made today are sold) are considered a relatively safe haven. This week, however, the prices paid for these securities moved lower as well. One reason is that some investment funds have been forced to reduce their leverage and sell nearly every asset class in their portfolios. Another factor is investor concern that the supply of debt will increase significantly as the government funds its rescue actions. Mortgage rates ended the week moderately higher. Investors viewed the $700 billion rescue plan passed last week as a necessary first step, but not an immediate solution to the credit crisis. Governments around the world took a variety of additional steps during the week to support the banking system. A historic coordinated interest rate cut from many central banks took place on Wednesday. The Federal Reserve lowered the Fed Funds rate by one half point to 1.50%, citing reduced inflationary pressures due to an economic slowdown and falling energy prices. The Fed Funds rate heavily influences short-term interest rates, but its impact on long-term mortgage rates varies based on inflation expectations. In this case, the Fed rate cut most likely helped move mortgage rates a little lower, but the factors described above had more influence. The decline in home prices was a major cause of the credit crisis, and stabilization in the housing market will be important to resolve the problems. Little noticed this week, August Pending Home Sales jumped 7% from July, far above the consensus for a small decline. They were 9% higher than one year ago and were at the highest level since June 2007. Pending Home Sales are a leading indicator for the housing market, meaning that the next Existing and New Home Sales reports may show increases. Investors will be closely watching future housing market data to see if the trend continues. For more information or for free mortgage advice please email me at corey@frontstreetmtg.com.

The Greatest Time of Year

Some may prefer the warmth of summer or the explosion of colors in the spring or the brilliance of a heavy winter snowfall, but for me there is no better time of year than right now. The crispness of the air, the spectacular colors, tremendous hunting and fishing opportunities and so much more. I had the opportunity to head over to our family hunting camp this past weekend with my wife and daughters and really get into the season. Wood needed to be cut for the upcoming deer season and my old blind was finally taken over by mother nature and had to be removed. I'll be hoping for dry weather during this hunting season as I hunt from my portable climbing stand. The girls, at ages 7 and 4, really loved helping to stack the wood and Autumn had her first opportunity to drive the Gator! She stayed on the trail most of the time! Taking a few days away and just getting outdoors is a great way to pull your mind away from the daily grind and recharge those batteries. If you haven't taken the opportunity to spend some quality time with your family recently, get out there while the weather is good and remind yourself why you work so hard in the first place.

The Sky is Falling!!???

The sky is falling!!!! The sky is falling!!!! If I have to read any more of this stuff, I may lose it! Talk of a depression and a global failure are very frightening indeed, but is there really a chance of that occuring? As in any other presidential campaign year, a lot of media attention is driven towards the dire state of the economy which often times erodes investor and consumer confidence making things even worse. There are some very real problems out there right now that will take some time and effort to correct. Most people forget that just one year ago, to the day in fact, the Dow hit an all time high!!! You would think we've been in a downward spiral that began 7 years and 10 months ago the way it's portrayed in the media. I try my best to seek out good information from unbiased sources that will allow me to form my own oppinions. I found this to be a great article on the state of the economy http://news-press.com/apps/pbcs.dll/article?AID=/20080930/BUSINESS/809300379/1001/archives. Sure, we've got our problems and it's going to take a while for people to settle down and get on with their lives. I personally, along with a lot of people we're working with right now, have chosen to continue working hard and work within the market we're given. We aren't given enough months in our lifetime to think doom and gloom for too long a period. It's spectacular out there right now, so get out away from the news and the computer and enjoy this terrific fall season.

Congress Passes Rescue Bill

All eyes were on Congress last week as they debated the financial rescue plan. Fed Chief Bernanke and Treasury Secretary Paulson proposed the $700 billion plan to purchase troubled mortgage assets from financial institutions, providing the institutions with much needed capital. The expectation is that the institutions will use the freed up capital to make credit more readily available. On Monday, the House unexpectedly voted against the plan, and the stock market plunged. A revised plan, which retained the core of the original plan, passed by a wide margin in the Senate on Wednesday and passed in the House on Friday. Despite the historic events this week, mortgage rates ended the week nearly unchanged.
In the shadow of the debate over the rescue plan, the economic data released during the week continued to highlight the weakness in the economy. The monthly Employment report showed that the economy lost -159K jobs in September, worse than the consensus forecast of -105K. The economy has lost jobs for nine straight months, which is the worst performance since the period following 9/11. The Unemployment Rate remained at 6.1%, which was up from 4.7% one year ago. Exports have been a source of strength this year, but economic weakness around the world has hurt in this area as well. It is hoped that the rescue plan will be a strong first step in boosting the economy, and other actions are also expected to help. Falling oil prices and low wage inflation have eased inflationary pressures. This will allow the Fed more flexibility to cut rates and stimulate the economy. Investors have priced in a half-point cut in the Fed Funds rate by the end of the year. For more information or for a free mortgage consultation please email me at corey@frontstreetmtg.com.

All real estate is not created equal

Is premium property on The Ausable River the strongest real estate market in the country? I haven't taken the opportunity to look as close at every national market, but based on the general statistics, I can definitely make the argument. In the history of The AuSable River, there have been 16 sales of $400,000 or more. 7 of those 16 properties have sold since February of 2007! In 2007 and 2008, Homewaters, L.L.C. had the pleasure of representing 6 properties of $400,000 or more and we sold every one of them except for one, which is currently listed for $1,395,000. In fact, we sold every residential property we had listed on The AuSable River's mainstream except for that one property and one that we have an accepted offer on right now.

Perhaps more impressive is the fact that we sold 4 of the 6 most expensive properties on the river to date during 2007 and 2008 including sales of $750,000, $640,000, $624,000 and $600,000. When other markets are tumbling, there is a strong demand for prime riverfront property. For those looking for a stable place to put their investment dollars, The Ausable and other prime Northern Michigan rivers should definitely be at the top of the list for consideration. Get in touch if you'd like more detailed informaition on market statistics for AuSable River Real Estate or any other segment of the market in Northern Michigan.

Homewaters is Growing!

Most people find it hard to believe, but Homewaters, L.L.C. has had a terrific sales year and increased our sales over a very strong 2007 by quite a bit. We've had two years now to dial in our business model and have really gone a long way toward figuring out this new world of real estate created by the internet. By constantly analyzing our website and the exposure our properties receive, we've managed to build a strong brand loyalty through the internet and it's lead to a great year in the face of most other brokerages suffering a large downturn. Thank you very much to all of you who helped make 2008 such a huge year for our company!

Because of our success, we've been receiving calls from property owners all over Northern Michigan who would like us to represent their properties. One of the keys to our success has been the fact that each agent or broker within our company services a specific geographic area. We carefully selected each agent because of their knowledge base in those areas. Thank you to all of those potential buyers who contacted us this year in search of property in areas that we do not currently service. I'm sorry we had to refer you to other firms, but hopefully in 2009 we'll be able to put you in contact with one of our own agents who can provide the level of service that we pride ourselves on.

Many segments of our market have maintained their value even in the face of the current economic conditions. In other areas, prices have come down to make it very attractive for well qualified buyers to be able to get into a waterfront property that just a few years ago was out of reach. There are some terrific opportunities to buy in Northern Michigan Real Estate and we'll do our best to ensure we can service any interested buyer. Thanks again for all the support and kind comments we've received over the past year. We look forward to a strong finish to 2008 and to expand our dominance into other waterfront markets throughout Northern Michigan in 2009.

New Technology for Mason, Oceana, Manistee Counties

The Mason Oceana, Manistee Board of Realtors (MOM Board) announced last week that they will be joining into a data sharing agreement with The Southwestern Michigan Regional Information Center (SWMRIC). This is a group of 7 real estate boards extending from an area North of Grand Rapids all the way along The Lake Michigan shoreline to the Indiana border. This is an important step forward for property owners and potential buyers in Mason Oceana and Manistee Counties. The current system used by the MOM Board is quite outdated and does not provide very broad distribution of information on properties in that area.

Homewaters, L.L.C. is one of only a handful of companies that receives a data feed into our website from The MOM Board which allows our website users to view all the available properties for sale in Mason Oceana and Manistee Counties. The new feed coming from SWMRIC will provide listing information for every property in Southwestern Michigan from participating brokers. This means much more information available on our site and an expansion of our service area! For our sellers, it means every Realtor in any one of the other 7 boards of real estate will now receive the data about their property for sale when conducting searches for potential buyers. This should go a long way to driving more buyers to that area and increasing demand. The change is to take place on or around February 1, 2009, so check in early next year if you've been looking for property near The Lake Michigan shoreline in Central and Southern Michigan.