Monday, January 25, 2010

Home sales report a mix of good and bad

Sales of preexisting homes dropped 17% in December which is more than anticipated. A large part of this was due to the threat of expiration of the first time home buyer tax credit that was eventually extended to cover deals signed by April 30, 2010. On another note existing home sales actually rose 4.9% for the overall 2009 year which is the first increase in four years. Another positive number is the 1.5% increase in median home sale prices which is the first increase since August of 2007. Here's a more complete article on the report from Business Week.

While I tend not to take national numbers too seriously because all markets are locally affected and often vary greatly from other areas or segment, this is real good news. It also stands out because we're seeing real world, immediate signs that things are really breaking loose. We've already closed a number of very nice waterfront properties this year and have no less than 10 sales pending and heading toward closing. That's just about unheard of for our very seasonal vacation home market. Many of those sales were buyers who had pretty much identified the property they wanted to purchase during 2009 but were hesitant to move forward. Whether it's the recent change in the political landscape or just people tired of waiting and ready to move forward, sales are off to a terrific start in 2010!

Friday, January 22, 2010

Mortgage Rates Improve, Stocks Fall

While the economic data released this week had little impact, mortgage rates were heavily influenced by two big stories. One was an announcement that China will take steps to slow its economic growth and the other was President Obama's proposed new restrictions on the activities of financial institutions. Both measures are expected to lead to slower economic growth in the US, which hurt the stock market but helped fixed income markets. As a result, mortgage rates ended a little lower.
During the week, China released a report showing that its Gross Domestic Product (GDP) grew at an 8.7% pace in 2009. Rapid growth generally leads to higher inflation. In an effort to slow its economy and prevent inflation, China announced that it is going to curb bank lending. China currently has the third largest economy and is responsible for a significant percentage of global economic growth, so the effects of a slowdown in China will be felt around the world. In the US, President Obama proposed to limit the size and activities of large banks to reduce the risks to the financial system as a whole. If passed by Congress, this too would lead to slower growth for many large US financial services firms. The potential for slower economic growth and the resulting reduction in inflationary pressures was favorable for mortgage rates.
To build capital and reduce risk, the FHA announced that it will raise insurance rates and tighten credit score requirements. The major changes include increasing upfront premiums from 1.75% to 2.25%, reducing the maximum seller contribution from 6% to 3%, and increasing the level of FICO scores from 500 to 580 below which a down payment of 10% is required. At this point, the expected timing of the upfront premium increase will be in the spring, and the other changes will take place over the summer.

Tight Lines,

Keith Gillow

For more information and free mortgage advice please email Keith Gillow @

Thursday, January 21, 2010

The New "Normal"

I had an opportunity to attend a sales class on Tuesday where the speaker was from Stockton, CA which in 2007 held the dubious distinction of having the highest foreclosure rate in the nation. Their market and other markets around the country have experienced now for 2 years, declining values just as we have in our Northern Michigan real estate. These lost values are not something that will come back quickly. We presently have a 31.5 month supply of direct waterfront homes in the Traverse City area - all things being equal it will take 2-1/2 years to sell your home on the water. As recently as last Fall, the direct waterfront home supply was at over 80 month supply. There has been some great activity in the waterfront market but only the most aggressively priced homes are selling and will continue to sell. We have a Buyers Market today and the shift has created a complete reversal of the type of market we experienced during most of the 2000's.

Every Seller has his own unique situation and as professional Realtors it is our job to help you navigate the road bumps and to be honest with you about the Fair Market Value of your property. If you have reasons to sell and move on with your life, please consider the carrying costs of not selling if yours were to be one of the homes on the market for 31.5 or more months. The market Shift is permanent and price, condition and flexibility are what is required of the Sellers of Waterfront Homes in 2010, in my opinion. We are selling homes and we have comparables that will support current Market Value.

FHA Tightens Requirements

U.S. Department of Housing and Urban Development announces new regulations in order to qualify for an FHA loan. Changes include establishing new minimum credit scores, a ratio for credit score to down payment and an increase in Mortgage Insurance Premium among other items. Here is a link to the more detailed breakdown from the HUD website.

Friday, January 15, 2010

Low Inflation and Strong Auctions

While mortgage rates climbed in December, they have decreased during the first two weeks of January. A combination of factors was favorable for mortgage markets this week. Low inflation, weaker than expected economic growth data, and strong demand for the Treasury auctions all helped mortgage rates move a little lower.
One primary long-term concern for mortgage investors is that the enormous level of stimulus intended to boost the economy will lead to higher inflation. Inflation erodes the value of fixed income investments, so future inflation expectations are a major determinant of bond values, including mortgage-backed securities (MBS). Inflation has not been a factor in the short-term, however, as virtually all of the data in recent months has shown it to be low. This week, the Consumer Price Index (CPI), the most widely watched inflation indicator, showed that core inflation rose only 1.8% from one year ago. The Fed's comfort zone is for core inflation to rise at a 1.0% to 2.0% annual rate, and Fed forecasts are for low core inflation this year. Mortgage investors will be watching these levels closely, and any surprises down the road could push mortgage rates higher. A second major long-term issue for mortgage investors is that the vast increase in the supply of government debt will exceed the demand. So far, both foreign and domestic demand has remained strong. This week's Treasury auctions saw very solid demand, particularly for the longer-term 10-yr and 30-yr securities, which are the most comparable to MBS. The cause for concern is that some important buyers, including China, have been hinting that they will reduce their Treasury purchases if the US doesn't display more fiscal discipline. If demand were to fall, then yields would need to rise to attract investors, which would not be good for mortgage rates. For more information or for a free mortgage rate quote contact Keith Gillow @

Thursday, January 14, 2010

A great start to 2010

Only half way through January and things are really breaking loose in the waterfront market up north. We have 13 pending sales right now and at least three offers in play. Web traffic is up 21% from the same period last year (thanks to all the loyal internet clients!!) and it seems like we're in for a great year. A lot of the transactions are buyers who've been watching the market through 2009 and have decided now is the time to buy. Normally our segment of the market is quite seasonal with most of our sales coming in the spring and late summer, but this is great to see. Hopefully it's a sign of things to come in 2010. If you've already identified a property that suits the needs of your family, now may be the best time to make that offer and see if you can get the deal you want! Please let us know if we can be of any help!!!

Friday, January 8, 2010

Jobs Data Falls Short

Over the last few weeks, many economists have been raising their forecasts for economic growth in 2010. The economic data released this week generally did not support this outlook, however, producing some daily volatility. As a result of the weaker than expected data, mortgage rates ended the week a little lower.
In December, the economy lost -85K jobs, which was lower than the consensus forecast of -5K, and the Unemployment Rate remained at 10.0%. A small revision to the November data created a gain of 4K jobs, the first monthly increase since December 2007. The report indicated that 661K people dropped out of the labor force in December. The details suggest that small businesses may be creating jobs more slowly than larger companies. The manufacturing and constructions sectors continued to perform poorly. Average hourly earnings, an indicator of wage growth, showed a small increase. Overall, the data was weaker than expected, and mortgage rates moved lower after the news. In the housing sector, November Pending Home Sales fell 16% from October, but the decline followed nine straight months of increases and November Pending Home Sales were 15% higher than one year ago. Pending home sales are a leading indicator of future housing market activity. Recent data has been heavily influenced by the timing of the homebuyer tax credit, which was originally set to expire at the end of November. A surge of buyers attempting to purchase before the original deadline pulled demand forward. When the homebuyer tax credit was expanded and extended through the first half of 2010, the time pressure was removed. According to the National Association of Realtors (NAR), we should see another "notable" gain in sales activity in coming months. For more free mortgage advice please email

Wednesday, January 6, 2010

Michigan balks at Obama's stance in Asian carp fight

Michigan balks at Obama's stance in Asian carp fight

Posted using ShareThis

Asian Carp Threaten the Great Lakes-Please sign the Petition

Wednesday, January 6, 2010
Asian Carp Threaten the Great Lakes Waterways

We need a grassroots effort to maintain vigilance on this issue to protect Lake Michigan and the connecting waterways.

Attorney General Cox wanted to make you aware of significant
developments which took place over the holidays in Michigan's efforts to
stop Asian carp from entering the Great Lakes. Five states and a
province are now standing with Michigan before the United States Supreme
Court in our battle to protect the Great Lakes and the billions in
economic activity they create for our economy.

As you know, Michigan Attorney General Mike Cox filed suit at the U.S.
Supreme Court on December 21st asking for an immediate injunction to
close locks controlling the flow of water from carp-infested Chicago
waterways to Lake Michigan. The suit also asked the Supreme Court to
reopen the long running "Chicago Diversion" case to force action on a
plan to separate the Great Lakes from the Mississippi River basin.

A.G. Cox is pleased to note today that four other Great Lakes states
have now joined Michigan's fight to protect our greatest natural
resource from Asian carp: Minnesota, New York, Ohio and Wisconsin.

These states have filed documents with the U.S. Supreme Court in support
of our request to immediately close the locks at Chicago.

The State of Indiana's attorney general has announced that his office
will also move soon to support Michigan's efforts to protect the Great

And, the Canadian Province of Ontario filed an amicus brief at the
Supreme Court supporting Attorney General Cox's position.

This new support for Michigan's position in the U.S. Supreme Court is
great news.

Opponents of Michigan's efforts are expected to file their response this
week. Our hope is that the Supreme Court responds quickly in order to
put these protective measures in place before Asian carp make it into
Lake Michigan and beyond.

By way of reminder, you can still download a copy of Attorney General
Cox's filing, press and background materials at,1607,7-164-34391-228350--,00.html)

As Attorney General Cox has said, "Stopping Asian carp is an economic
and environmental necessity for Michigan. Thousands of jobs are at
stake and we will not get a second chance to protect the unique ecology
of the Great Lakes once the carp enter Lake Michigan. That's why the
locks must be shut down until we are assured that Michigan will be

Please click on this link and sign the petition to help prevent this spread of Asian carp:

Thanks for your support

Tuesday, January 5, 2010

True Waterfront Specialty

I was running through the sales totals for 2009 and realized that we went over $24,000,000 in sales since our founding in 2007. Not bad for a "small" firm! More importantly, over 88% of those sales took place in the waterfront segment. While many companies say they "specialize" in waterfront properties, none has made the commitment that Homewaters, L.L.C. has. Each and every agent or broker with our firm is passionate about the lakes and rivers in their service area which leads them to want to learn their markets inside and out. By focusing so hard on the waterfront market, we are able to get an in depth understanding of market conditions on each body of water and help both buyers and sellers determine the right strategy to reach their goals. The average agent simply cannot focus their attention to one segment and simply can't gain the depth of knowledge that can mean the difference between simply buying a property and making a sound decision for you and your family.

Another advantage we offer is our regional coverage. Often times our clients don't know exactly the body of water or area they'd like to settle in. We often put two or more of our agents to work in each of their respective territories to ensure that client is aware of opportunities in any part of Northern Michigan they have an interest. Rather than working with three different agents from three different companies, our agents truly work together as a team bringing their own regional knowledge to the table to make sure the client finds the property that best suits their needs.

If you've been watching the market and are realizing now may be the time to take the next step, we'd truly appreciate the opportunity to answer any questions you may have and to discuss how working with Homewaters, L.L.C. can offer some real life advantages in your search for your piece of Home Water!