Weak Data Moves Mortgage Rates Lower

After several weeks of focus on Fed actions and events in foreign markets, domestic economic data was the primary influence on mortgage markets this week. Weaker than expected results from the data helped mortgage rates, which ended the week lower.
While it is rarely a big market mover, this week's Consumer Confidence report shocked investors. The index declined to 46.0, far below the consensus forecast of 55.0, and the lowest level in nine months. Consumers are clearly worried about the labor market, and an increase in Jobless Claims in recent weeks has amplified the issue. The decline in confidence has potentially negative consequences for the economy. Consumer spending accounts for about 70% of economic activity, and this data raises concerns about the level of future spending. Also, home sales suffer during periods of low consumer confidence, and the housing data released this week reflected consumer insecurity. Of course, slower economic growth is favorable for mortgage rates, which fell after the report came out.
In contrast to the weakness seen in many of the consumer-driven economic reports, the manufacturing sector has been demonstrating strong performance in recent months. Fourth quarter Gross Domestic Product (GDP), the broadest measure of economic activity, rose at a brisk 5.9% annual rate, largely due to a pickup in manufacturing. The added boost from manufacturing may be temporary, however. During the financial crisis, companies drew down inventories as much as possible to conserve capital. As the economy has shown improvement, companies have been increasing inventories closer to pre-crisis levels. When the inventory rebuilding is complete, manufacturing is expected to return to more normal levels. For more information and free mortgage advice, please e-mail, keith@frontstreetmtg.com.

Tight Lines,

Keith

Are short sales and foreclosures the way to go?

"From Short Sale offer to foreclosure to REO...and we still don't have an answer. We made an offer of the short sale asking price in July 09. I found that it went through a sheriff auction on Jan. 7th. Bank Bought it. But.... apparently there is a 12 month redemption on this house. I'm so confused. The Realtors involved seem to be clueless or are not telling us everything. It still has the realtor sign in front. The owners have left. What is really going on here?"

This is a question that was posted on Trulia.com yesterday. It's a terrific example of the pitfalls that can come along with foreclosed and short sale transactions. Many buyers ask us to set up a search for "foreclosed" properties because they think that's where they're going to get the best deal. While that may be the case sometimes, it's not always true and there often times those are the most damaged properties and the most frustrating to work through to a closing. Picture the home owner who is struggling or unable to make their mortgage payment. Do you think they are still doing all the necessary upkeep on the home and repairs that are often needed if they can't even afford the payment? If it's bank owned, many homes were damaged as the disgruntled owners left with no real concern for the "feelings" of the bank.

The other downside is having to work with lending institutions who are overrun with files to handle. There are often long delays and they'll routinely ask buyers to pay for costs that are customarily those that a seller would pay. Short sales are even worse from a time frame and frustration standpoint. Buyers and sellers can wait for months to hear from the bank on whether or not they're going to accept a short sale offer and often times there is no person to contact for an update. It's just wait and see and they'll get to it when they have time. More often than not, the buyer loses patience and walks away from the transaction.

I'm not saying that you shouldn't pursue a bank owned property or one that's being marketed as a short sale, I'm just saying don't count out the private homeowner who may be willing to be just as competitive on price! It will probably take a lot less time and aggravation to get into that home and you'll be helping an individual achieve their property goals at the same instant you'll achieve yours!

Outside Magazine Article on Buying Recreational Propery

Everyone knows one of those guys whose grandparents bought a vacation home for
peanuts when property was cheap. Once a year, you get invited—to the lake house,
the slopeside cabin—and say the same thing to yourself on the drive back: I wish
my family had a place like that. Well, now's your chance. Low prices and
record-low mortgage rates make this the best time in generations to buy your
dream escape. Not so you can flip it—those games are thankfully over—but to use
it, then, someday, hand it down. We asked Larry Olmsted, who writes the Life on
Vacation second-home real-estate column for USA Today, to report on ten spots
where you can get the best value for your money. Your job is to pick one. Your
grandkids will thank you.

This article by Larry Olmsted caught my eye while I was reading one of my favorite magazines, Outside. It really sums up why today's real estate market is prime for buying a second home, cabin or vacant land in Northern Michigan. I believe that Northern Michigan was overlooked in the article, but hey, more for the people who have already discovered this wonderful area. With interest rates low, the property values steady, it is a great time to invest in your family's future. The areas that Home Waters covers offer some of the best prices on recreational property in the country and with all the rivers, lakes, creeks and streams there are literally boundless opportunites for waterfront living on virtually any budget. Northern Michigan is a four season playground for the active lifestyle and opportunities are everywhere in all seasons to enjoy nature's settings.

If you would like more information on finding the property "that will make you grandkids thank you" please don't hesitate to contact me(brian@homewaters.net) or any of the agents at Homewaters to help get you started in taking advantage of this great market.

The Great Lakes To Get "Greater"

For those of us who know and love the great lakes, yesterday was a date to remember. Lisa Jackson, EPA Administrator met with govenors of states that touch the great lakes to lay out a plan to clean up these Great Lakes. Congress has approved $475 million already for such efforts and President Obama has proposed an additional $300 million for the 2011 budget.

The Great Lakes hold 20% of the world's fresh water and provide drinking water for more than 30 million people. They also provide for endless hours of entertainment for boaters, swimmers, and fishermen. Yet, the Great Lakes have been ravaged by toxins, invasive species and overharvesting of native fish. The plan proposes to decrease the amounts of phosphorus run off, protection of wetland areas, and save species like the lake sturgeon. Environmental rules will be enforced and new ones will be created to ensure that generations to come will have better water quality than we do today.

Close to $60 million will be spent this year on stopping Asian Carp from entering the Great Lakes. This extremely invasive species could endanger the $7 billion sport fishing industry and alter the ecosystem of the lakes.

New Agent and Service Territory

Homewaters, L.L.C. is very proud to announce the addition of our newest agent, Associate Broker, Sonya Loose. This will allow us to service an entirely new area in Clare / Gladwin Counties. What I love most about Sonya in terms of her approach to the business is that she understands it takes truly hard work to be a solid Realtor. There are a tremendous number of very high quality lakes and rivers in her service area and their proximity to metropolitan areas to the South make them very good options for those searching for waterfront property up North. Check back to the Homewaters site in the coming weeks as we build in the map searching and pull in all the data from the new mls system. In the meantime, you can check out Sonya's site at http://www.thegladwinrealestate.com/ to get in touch with her and start your search in Clare or Gladwin Counties. Welcome aboard Sonya!

Mark Bear, January's Top Agent

Each month we'll be featuring one of our agents or brokers who provided exceptional service to their clients. With multiple closings and a number of new listings, Sales Associate, Mark Bear, earned the honor for January. Mark has been with Homewaters, L.L.C. since our founding in 2007 with a focus on the lakes and rivers of Crawford, Otsego, and Montmorency Counties. Mark lives in Lovells along the banks of The AuSable River's North Branch. He's a passionate fly angler andtruly enjoys helping other anglers find their own slice of "Home Water". His base of knowledge of The AuSable System as seen through the polarized lenses of a fly angler is a tremendous asset to anyone that wants to ensure they end up on a truly prime section of water.

Already in 2010, he's closed transactions on The Manistee River and North Branch of The AuSable River and has a terrific inventory of properties that he'll be representing in. Also in 2010, Mark is transitioning into a larger role in territory traditionally covered by Broker / Owner, Chad Brown, including The AuSable "Holy Water" (the Flies Only, No Kill regulated section of river from Burton's Landing to Wakeley Bridge) and Lower South Branch. If you are interested in buying or selling property on The AuSable River, North Branch, South Branch, Otsego Lake, East and West Twin Lakes or any other body of water in Crawford, Otsego or Montmorency Counties, contact Mark at your convenience. I'm absolutely confident you'll find him knowledgeable, professional and willing to do whatever it takes to ensure you achieve your property goals.

bear@homewaters.net

(989) 889-5037 mobile

Fed Comments Push Mortgage Rates Higher

While investors began the week watching for fresh information about Greece and China, the Fed stole the spotlight on Wednesday with news that was unfavorable for mortgage markets, and mortgage rates ended the week moderately higher.
The Fed currently has significant influence on mortgage rates. Over the last year, the Fed pushed mortgage rates lower by purchasing over $1 trillion in mortgage-backed securities (MBS). Wednesday, the Fed's Plosser suggested that the Fed should begin selling those MBS "sooner rather than later." Later that day, the Fed released the detailed minutes from the January 27 Fed meeting. The minutes revealed that "several" Fed officials favored starting the sale of the Fed's MBS portfolio "in the near future." Investors were not expecting that Fed MBS sales would begin any time soon. Quite simply, adding to the supply of MBS being sold means that yields would need to move higher to attract buyers. Since mortgage rates are largely determined by MBS yields, mortgage rates rose after the news.
Thursday, the Fed announced an increase in the discount rate, the emergency rate at which banks borrow money from the Fed. The Fed made clear that this in no way reflected a change in broader monetary policy or its economic outlook. This was simply a return to more normal levels for one Fed tool now that the financial crisis has eased. As a result, there was very little impact on mortgage rates. According to Fed officials, a move to begin to tighten overall monetary policy, which almost certainly would cause a significant reaction, is still expected to be at least several months away. The inflation data released this week continued to show low levels of current inflation, providing little pressure for the Fed to rush to take action. For more information and free mortgage advice, please e-mail: keith@frontstreetmtg.com.

Tight Lines,

Keith

Is Now A Good Time To Buy?

Investing, whether in real estate, stocks, bonds etc. is always a gamble. Sometimes we win and sometimes we lose. Unfortunately, there have been more portfolio "losers" as of late, but we got off the sideline and played the game; despite knowing the possible consequences. And interestingly enough, despite being kicked around and bruised, we're still in the game! We've remained hopeful by keeping whatever money remains in the "market".

The media has done a tremendous job of instilling fear among consumers; especially in the real estate market. Traverse City has not been except from foreclosures, however, we have not experienced it to the same degree that has been found in larger metropolitan areas. From a local perspective housing activity seems to be improving. Agents are busy. New listings and "SOLDS" hit the market daily. And as of this morning , there are 183 pending sales. So, "yes", things are moving! Overall, it is my belief that prices on a local level have stabilized.

The home buyer tax credit has worked. 51% of the sales last fall were first time home buyers. And now with the program extended and now including repeat home buyers, activity remains strong. With this program coming to an end (April) and interest rates forecasted to increase, now is an opportune time to buy. Prices and interest rates will not remain this low forever.

However, even if all the stars align to indicate now is a good time to buy, in the end, it's a personal decision. A decision that you have to be comfortable with. And when you decide the time is right, the talented, knowledgable and dedicated agents of Homewaters will be here - ready, willing and able to help.

Getting Your Home Ready for Sale

If you have your home on the market or are thinking about putting it up for sale, here are some tips which will help the process go smoother when you have a buyer. Also, it is strongly recommended today that the Seller hire a professional Home Inspector who can identify those areas of concern that you may not have knowledge of and will show up when the buyer has a Home Inspection done.

Change your furnace filters monthly. “It’s so easy to do but so critical. Clogged filters decrease furnace efficiency and can cause breakdowns.

Drain your water heater at least once a year. Sediment will drain out along with the water from the water tank. Removing sediment can prolong the heater’s useful life.

Clean the coils. If you have baseboard heating units that use hot water, clear dust from the coils inside the units to maximize heating efficiency. Clean dust whenever you see it accumulating. If you have a hot water boiler/furnace, you should also oil the pump inside the furnace twice a year, says Lesh. Look for the three spots on the pump designated for oiling.

Check your circuits. Test the performance of the circuit breakers in your electrical circuit box twice a year by flipping them off and back on. If you have a circuit that keeps shutting off with normal daily electrical use, call an electrician. A faulty circuit breaker could indicate a short in the wiring inside your walls.

Watch out for drips. Check under sinks periodically to look for leaks or water stains that might indicate leaks. Catching a small problem early can prevent water damage. Use a plunger to clean out sinks and tubs whenever water doesn’t drain normally.

Be aware of life spans. Water heaters, furnaces, roofs, and other key components of your home should be replaced before they fail, based on their average useful lives. Here’s a general ballpark of the life span for key components:
Exterior house paint: 5-10 years
Furnace: 15-50 years
Roof: 13-15 years
Water heater: 7-15 years
Wood deck staining: 4-7 years

Keep the wet out. Water is a major enemy of your house. Check each season for signs of water damage to your home. Flashing, the metal pieces used to seal the areas between roofs and chimneys and around doors and windows, are especially vulnerable to damage by wind or age. Loose flashing can let water seep under a roof or inside walls, which in turn can cause mold.

Get to the bottom of things. Check your home’s foundation for cracks or gaps that could let in water or varmints. Also look at the ground around your house. As homes age, they often sink slightly below the surrounding ground. This settling lets water puddle against the foundation and possibly damage it, notes Manfredini. Doing major landscaping work also can cause changes to the ground’s pitch that let water flow toward the house.

Look up. Chimneys take a great deal of weather abuse. Visually inspect them each year for signs of loose mortar or loose or missing bricks. Have the insides of chimneys cleaned every two to three years. Also check your roof for loose shingles or dangling gutters.

Mortgage Rates Hold Steady

Global events in China and Greece had a significant impact on US mortgage markets this week, but in opposite directions. In addition, demand was much weaker than average for the 10-year and 30-year Treasury auctions, which pushed up yields. The net result was a slight increase in mortgage rates from last week.
A surprise announcement Thursday night that China raised bank reserve requirements helped mortgage markets and hurt the stock market. The increase is a form of monetary tightening which is intended to slow economic growth in China. This likely means that China will buy fewer exports from other countries, slowing economic growth globally. Slower expected economic growth reduces inflationary pressures, which is positive for mortgage yields.
In recent weeks, large fiscal deficits in Greece have caused speculation that the country will default on its government debt, which resulted in an investor flight to the relative safety of US bonds. This week, the news that Greece will receive economic aid from other European Union nations prompted investors to reverse this flight to safety by selling US bonds, moving yields higher.
While it caused little immediate reaction, on Wednesday Fed Chief Bernanke revealed monetary policy strategies which may have important long-term implications for mortgage markets. Bernanke released the text of a speech which provided more details about the Fed's planned methods to tighten monetary policy when the economy has gained enough strength. One of the things the Fed intends to do is sell its portfolio of mortgage-backed securities (MBS). Due to concerns about disrupting mortgage markets, however, Bernanke suggested that this will be one of the last measures taken to tighten policy, and it will be done very gradually. For more information or free mortgage advice, please e-mail me at: keith@frontstreetmtg.com.

Tight Lines,

Keith

New Listing on Kaleva Creek

New listing on Kaleva Creek! 200' of private creek front with 3 acres of high and dry land for building. Wildlife galore an close to area trails, Manistee River, Casino, and Bear Creek. This area of Kaleva Creek is excellent Steelhead and Salmon spawning areas for the wild steelhead and salmon that populate Lake Michigan.

This is an excellent value for someone looking for high quality, cold water stream at an affordable price. There is electric service a the private gravel drive and the site is perfect for building a weekend getaway or your retirement home. Let me know if you have any questions on this property, I will be glad to help you find your perfect spot "up north".

Latest information on Asian Carp Threat-Chicago Sun Times

Federal Officials Unveil Aggressive Strategy to Reduce Threat of Asian Carp in the Great Lakes

WASHINGTON - Federal officials from the U.S. Army Corps of Engineers, the Environmental Protection Agency, the Department of the Interior, and the U.S. Coast Guard today unveiled a strategy that outlines over 25 short and long-term actions and $78.5 million in investments to combat the spread of Asian carp. The draft Asian Carp Control Strategy Framework (Framework) is an unparalleled effort to control the invasive species, unifying Federal, state, and local action, and introducing a multi-tiered defense of the Great Lakes to prevent Asian carp from developing self-sustaining populations while longer term biological controls are being developed.

"As with many great eco-systems across the country, invasive species have harmed the Great Lakes, and an invasion of Asian carp threatens to be particularly ecologically and economically damaging," said Nancy Sutley, Chair of the White House Council on Environmental Quality. "Today, we have an opportunity to work together to prevent environmental and economic damage before it happens. This Framework utilizes the best available science and its multi-tiered strategy will ensure coordination and the most effective response."

Asian Carp protest in Traverse City

Broker Chad Brown and Sales Associate Brian Pitser attended a gathering of concerned citizens, business owners and legislators along the banks of The Boardman River Saturday morning to mobilize an effort to prevent the spread of Asian Carp into The Great Lakes via shipping canals in Chicago that connect to The Mississippi where the carp have overtaken. Here's a more complete summary of the effort. Asian Carp Meeting

Court victory for land owners in Charlevoix

For the second time in the past few months, courts have ruled in favor of individuals suing to prevent their taxes from popping up when an owner passes. Go here for the complete story.

Cabin Fever!

It usually hits me about the same time every winter - that dreaded "Cabin Fever". I really enjoy being outside and am always looking for opportunities to be outside but winter offers challenges. However, if I am ever feeling punchy inside I just take a short road trip to Seven Bridges on Valley Road between Kalkaska and Rapid City.

Seven Bridges is a 285 acre property owned by the Grand Traverse Regional Land Conservancy and managed by the State of Michigan. It has the most unique hiking trail I have ever seen in our area in that it crosses the Rapid River 7 times over bridges built to enhance the trail system. The Rapid River this past week-end was living up to its name and was an awesome sight plus the only sound you hear is the flowing of the water - Wow. As I hiked and watched the river I was reminded why the heavy snow falls and rain in Northern Michigan are so important to the whole eco system. The Rapid River and its clean water are flowing directly into the Chain of Lakes system which ultimately flow to Lake Michgan. We are so blessed with clean clear water in Northern Michigan.

I hiked both Saturday and Sunday in the sun and saw a couple of deer - great family activity if you are ever in this area.

Mortgage Rates Improve on Global Concerns

The biggest influence on mortgage rates this week came from outside the US. Concerns about the possible default of sovereign debt in smaller nations caused investors to seek the relative safety of US fixed income securities. This week's economic data was roughly balanced in terms of positive and negative surprises. The added demand for safer investments helped mortgage rates move lower during the week.
The recession has impacted countries in different ways. Some of the hardest hit have been smaller European nations, such as Greece and Spain. As members of the European Union, they must adhere to certain restrictions which limit their flexibility to adjust domestic economic policy. As a result, some countries may be at risk of defaulting on government debt. Investors responded by buying relatively safer assets such as US bonds, including agency mortgage-backed securities (MBS). Investors also withdrew money from global stock markets during the week. In the US, the Dow fell about 200 points.
Friday's important Employment report contained mixed news. Against a consensus forecast for a gain of 15K jobs, the economy lost -20K jobs in January. The big story, though, was an unexpected drop in the Unemployment Rate to 9.7% from 10.0% in December. Two separate sources of data are used to compute the change in jobs and the change in the unemployment rate, and during volatile periods the two methods can show widely divergent results. The decline in the unemployment rate in January was viewed as very good news by many economists, pointing to an improving labor market. On a more negative note, revisions to older data showed that the economy has lost 8.4 million jobs since the start of the recession in December 2007, from the previous reported level of 7.2 million. For more information on mortgage rates, please e-mail: keith@frontstreetmtg.com.

Tight Lines,

Keith

Just Do It

This time of year, it's often easier to just stay indoors where it's nice and warm and enjoy your favorite t.v. show. Unfortunately I find myself in this same position quite often, but occasionally get out and see something I haven't before in the winter months. Associate Broker Lance Weyeneth and I had an opportunity to walk a beautiful acreage parcel on Lake Huron not long ago and the landscape was something I had never seen. For the first hundred feet or so on the lake, it looked like softball sized stones covered the ice in broad sweeping carpet. When I walked out on the surface we realized they were 1,000's upon 1,000's of perfectly formed ice balls. It really made for an amazing scene. At the edge of the open water, where the force of the wind and waves pushes against this solid mass were huge upheavals of the ice and snow that looked more like a lunar landscape than the lakeshore. The sound of the slush, ice, and waves surging against the hard shelf was indescribable as well. In all the years I've spent enjoying the outdoors, it was unlike anything I had seen. Just another example of what you just might find if you put on the gear and take an afternoon to explore!

Fed To End MBS Purchase Program

There was major economic news on many fronts this week, with mixed results for mortgage markets. The Fed statement essentially followed the expected script, demand was strong for the Treasury auctions, and much of the economic data released during the week was stronger than expected. The net effect was a small increase in mortgage rates during the week.
As expected, the Fed made no change in the fed funds rate on Wednesday. The biggest surprise was that the Fed's Hoenig dissented from the decision, as he believes that economic conditions have improved enough that the Fed should begin to tighten policy. The Fed's outlook for the economy was slightly more positive than in the prior statement. The statement repeated that the mortgage-backed security (MBS) purchase program will be concluded by the end of March. Some investors were disappointed that the Fed didn't show more support for a possible expansion of the MBS purchase program, and mortgage rates rose after the news.
There is a wide range of expectations in the investment community about the impact of the end of the MBS purchase program on mortgage rates. The Fed has been purchasing roughly 75% of new MBS issuance, and a decline in demand from one source normally leads to higher yields to attract other buyers. One argument, however, is that the end of the program has been expected for quite a while, so mortgage rates already reflect the news, and there could be little reaction over coming months. Other analysts predict an increase in mortgage rates of as much as one percent. The Fed itself expects a small increase in mortgage rates as a result of the end of the program. For more information on your mortgage needs, please e-mail me at keith@frontstreetmtg.com.

Tight Lines,

Keith