View From the Front Lines

I haven't posted in a while on the nationwide mortgage situation. Truthfully, new information has been flying so fast and furiously that I've been trying to incorporate it all and distill it into something meaningful. We are in a situation that continues to evolve and change - analysis from more informed pundits than myself has been tried (and has failed). So here's my report from the front lines - certainly no answers, just what I see as a real estate agent.

• HOPE NOW is not so hopeful. President Bush originally touted this program as having the ability to help 1.2 million homeowners. At this point 99% of the articles and information I've found say that this is not going to happen. Why? This is a voluntary program and there is no oversight of the involved lenders to hold them to specific benchmarks. Plus, many buyers might rather just walk away from their home - why pay even a fixed interest rate on a home that is losing value by the day? The program got off to a rocky start when the President announced it on national television by giving out THE WRONG PHONE NUMBER.


• The Fed rate cut and the stimulus package won't stimulate housing. It will certainly have a soothing psychological effect, and having an extra few hundred dollars in the till will help a lot of people sleep better for a month or two. But I noticed that when those Fed rate cuts happen, I get an email from my online savings account company. My interest rate has fallen from 5.05% to 3.8% in lock step with the rate cuts. Which makes me want to pay down debt and hunker down in my nice affordable home until this blows over. It certainly doesn't make me want to run out and buy a new house. Or car. Or dress. Mortgage interest rates are down right now - unfortunately, there are lots of other factors in the market affecting people's willingness to buy. It's a shame, really. Nothing boosts your buying power like low interest rates. One caveat to this - our firm is working with lots of buyers. I know other real estate agents that are working with lots of buyers. But I definitely see more buyers that are on the fence or deciding that now isn't the time to buy.


• http://www.youwalkaway.com/. That's right, for around $1100, this company will show you how to abandon your home with a minimum of discomfort. This points up a bigger reality about the housing market in this country. Historically, home was a place to raise your family, create memories, and retire in comfort. Then some retirees realized selling their home could make them instant millionaires. Then a bunch of 20-, 30-, and 40-somethings decided they didn't want to wait for retirement to get their millions, they wanted them right now. And everybody forgot that it was actually possible to own a home for 30 years and be proud of paying it off. Home became a piggybank classified under the false headline "investment". Dangerous because it was an investment where people still laid their heads and raised their families, in short, an EMOTIONAL INVESTMENT. Ask your financial advisor or stock broker what they think of emotional investments (protect your eardrums first).


• We will come through this, and it will be a good thing. I hear from agents all over the country that their markets are still strong. Ditto for the Triangle. There has been a huge run up in property values in many major markets. It stands to reason that the downturn will be as severe as the upside. What goes up must come down - it's no different in this case. But once this is finished, best case scenario is that we may end up with more responsible loan products, more constrained inventory, more affordable housing, and a real estate industry populated by real estate agents and lenders that are true professionals dedicated to serving buyers and sellers instead of seeking a quick buck.

That's my story, and I'm sticking to it - at least, until the next swarm of articles and blog posts comes across my laptop.