Roland's Blog: February 2009

 

     

It doesn't take much more than a monkey to do the functions of pushing papers around and cavorting in front of a captive audience. It is safe to say that having those skill sets don't make you, the agent, any money. Administrative support is nice, but it is also available anywhere. You need a little more to turn your personal ship around.

You can always find an office that uses this style of management(?). Let me know when you get tired of the old see no evil, hear no evil and speak no evil style. When those hands are not in place they are firmly planted across their rear end.

Before you read any further......I don't walk on water.

If you needed hand-holding.........you would call your mother. If you wanted a problem solver........you could call Dr. Phil. I know that successful agents don't want or need the same support and focus on yesterdays marketing. I will sit down with any agent and learn about the current flow and strategies of their business, and then I will share with them other ways that might be more productive and systemized. I will gladly craft a business plan for an agent based on their strengths and transfer skill sets to them in their greatest areas of weakness.

Think about it.

All any experienced agent needs is a coach!

If you can keep on target, if you can stay on course, if you can just do the things that you know will keep you successful.........you will reach any goal that you set. You know it and I know it. If you were to peel back all the layers that obscure the reason why successful agents suddenly fail, you would discover that all the excuses fall into one category. Agents get busy and habits begin to change and then things come up and then one day you are so far from your original business plan, it seems impossible to get back.

Markets change and what was once a beautiful tree gets lost in the forest. Agents go outside and seek help. Agents go outside and seek coaching and accountability. Agents attempt to re-invent the wheel.

        This is not the way to success. This will fail.

I will not promise you outlandish splits. Long and Foster prefers to remain stable and be here in good times and bad. I will not dazzle you with a promise to put out any fire that shows up. I will not bore you with promises that obscure the truth. I will hold you accountable to a plan that supports your strengths. I will help you succeed in spite of yourself. You know what to do.

Let me make sure that you do it.

John MacArthur

Branch Manager

Long & Foster Real Estate, Inc.

Olney/ Brookville MD

301-924-7620

Remember the old TV commercial that went like this:

This is your brain. This is your brain on drugs.

For those of you too young to remember this anti-drug TV spot, your brain on drugs is supposed to look like a fried egg on the sidewalk (not so subtle message of "you can fry your brains out if you take drugs").

But here's a newer version for you:

This is YOU: Good person. Good credit. Hard worker. Pays the bills. Pays taxes. Contributing member of society. Needs a mortgage.

This is YOU ON PAPER:  Loser. Application declined. Next stop? Paper shredder.

How can you NOT take this personally?

Sometimes we forget this important fact: When the lender looks at your credit application, he only sees the PAPER YOU.

Not the REAL YOU.

It is distressing to me, that increasingly, the 2 "YOU's" are miles apart. Once stated income went away, all those holes in the lending world that stated income supposedly plugged, are gaping open again.

YOU: Are a respected,  self employed business owner for 20 years. You make plenty of money to pay your bills and pay your mortgage. Your credit has been perfect your entire adult life. You are able to write off business expenses and losses against your business.

YOU ON PAPER:  Don't show enough income to qualify.

 

 

 

 

 

 

 

 

 

YOU: Always have plenty of cash on hand to buy your friends a round of drinks. That's because you get much of your income from TIPS, and very little from your wages.  

YOU ON PAPER: Have an income way too low to qualify.

YOU: Are the savior of your family.  You take care of grandpa and in exchange, he makes your house payment and writes you a check for a small salary. You don't work because you take care of Grandpa.

YOU ON PAPER: Are unemployed.

YOU: Are a caring parent who lovingly co-signed to get your kid a car.   Johnny was too embarrassed to tell you he was late on his payments 6 out of 12 months last year.

YOU ON PAPER: Have bad credit.

 

There is zero tolerance for lack of income and poor credit when making an application for a mortgage. As you do your taxes, and make financial decisions, remember this:

This is YOU. But the bank only cares about the YOU ON PAPER.

You don't want to fry your brains out just trying to get a mortgage.

Or in the shredder because you can't.

 

 

Written by Janet Guilbault, Mortgage Lending Specialist Based Out of the San Francisco Bay Area

 

 

The biggest hurdle I see in the real estate marketplace today is the fear for real estate agents to commit to a niche market.  A niche market can provide your business with a brand, a distinguished service offering, and a means to an exit strategy.  The benefits are plentiful yet the perceived risks tend to haunt industry professionals.

A niche marketer picks up traffic from an underserved and needy marketplace-you know the economic fundamentals of supply and demand. Ready, willing, and able customers aren't hiding under rocks they are scouring the net and asking for referrals from their Sphere of Influence.  The question is will you be top of mind?

If you are marketing yourself effectively as a niche you can bet you will be.

Are you still afraid to let go of those old and tired apron strings? You know, the ones that you were tied to when you first came into the business and you were trained to take everything just to make ends meet?  The taste in the mouth of your unsuspecting clients might end up being bittersweet.

This weekend I was contacted online by a home buyer who is having a problem with his new construction real estate contract.  The real estate agent who he is working with does not have the experience he needs with new construction homes yet he is already signed, sealed, and delivered on his offer to purchase and is running into some significant issues that need resolution.  Now he is working through the grapevine of his real estate agent's friends to get the expertise he needs.

If you oversell yourself as a generalist you do yourself and your customer a disservice. 

 

In a less robust economy YOU can and SHOULD turn to a niche market.  Remember you want customers, not the looky-loos.  You can FIND a niche in any size community and let's be honest, normally you will service more than one town.

Keep your general market knowledge in your back pocket but move beyond the undergrad philosophy.  Step into a niche and become the master of your field.  If you are still concerned about lack of business by making this move,

• Take on a minor to increase your opportunity.
• Include your knowledge on general areas of real estate and when prospects come to you make a referral.
• Expand and branch out by growing a team full of niche experts.

If you keep your mind open your advantage will become clear and understood.

Niche markets change.  If the rate of homeowners delinquent on their payments in your area is 1 of 4, then short sales are not a niche but rather a general study that you need.

Don't get left twisting in the wind.  First step out of the industry to get your mind freed up to think more clearly...see how the other half lives,

Freelance writer niche markets- Writing for the golden goose.

Why Niche Marketing is important online- The true anatomy of longtail success.

7 Steps to small business success- Look at Number 1 "Start Smart".

Do yourself a favor today and don't wait 60-90-120 days.  Carpe Diem.  The time is now to think about a niche.  Do you want to stay a generalist to "keep food on the table today"? 

Are you cutting off your niche to spite your marketplace?

Yes, I realize that it is hard to put the words "foreclosure"and "silver lining"  together in the same sentence. However, while the foreclosure is a tragedy on a personal level for someone or a whole family and a national tragedy for all of us, it does create an opportunity for home ownership for someone who had been priced out of the housing market before.

The Washington Post just did an article in its real estate section this weekend talking about the beneficiaries of the housing bust - young couples who couldn't afford to buy a home before.  These buyers are helping all of us by taking those vacant houses off the market and turning them into homes again. They are helping to rebuild the economy by buying new furniture and renovation or constructioin supplies from Loews or Home Depot.

The National Assocation of Realtors said earlier this month that 45 percent of all sales in the fourth quarter of 2008 were distressed sales.  Working with foreclosures is not profiting by someone else's misfortune as one ActiveRainer said recently. There are a lot of potential homeowners out there who can benefit from the supply of foreclosed homes, and finally get a chance at that best of American dreams, home ownership. If the financing is done responsibly this time, it can be a great turn around  and one in which I am proud to be a part.

The dust is settling, the ink has dried and the phones are beginning to ring. Yahoooooooooo! Spring is right around the corner and what a great home buying season 2009 will be. The opportunities for first-time home buyers are huge. As long the home purchase is complete by December 1, 2009 and the new buyer meets the criteria of the plan, they will get the EIGHT GRAND!

In the past week, there have been so many questions regarding the tax credit. As the result, I went on a mission to find the best information on the the most commonly asked questions. The results are below and definitely worth the read -

1. Who is eligible to claim the tax credit?
   First-time home buyers purchasing any kind of single family home-new or resale-are eligible for the tax credit. To qualify for the tax credit, the new buyer must purchase the on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.
   
2. What is the definition of a first-time home buyer?
   The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the home-ownership history of both the home buyer and his/her spouse.
   
   For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
   
3. How is the amount of the tax credit determined?
   The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.
   
4. Are there any income limits for claiming the tax credit?
   The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
   
5. What is "modified adjusted gross income"?
   Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.
   
   To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
   
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
   Possibly. It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose MAGI exceeds the phaseout limits.
   
7. Can you give me an example of how the partial tax credit is determined?
   Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
   
   Here's another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
   
   Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
   
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008?
   The most significant difference is that this tax credit does not have to be repaid. Because it had to be repaid, the previous "credit" was essentially an interest-free loan. This tax incentive is a true tax credit. However, home buyers must use the residence as a principal residence for at least three years or face recapture of the tax credit amount. Certain exceptions apply.
   
9. How do I claim the tax credit? Do I need to complete a form or application?
   Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return. No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests.
   
10. What types of homes will qualify for the tax credit?
    Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.
    
11. I read that the tax credit is "refundable." What does that mean?
    The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.
    
    For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).
    
12. I purchased a home in early 2009 and have already filed to receive the $7,500 tax credit on my 2008 tax returns. How can I claim the new $8,000 tax credit instead?
    Home buyers in this situation may file an amended 2008 tax return with a 1040X form. You should consult with a tax adviser to ensure you file this return properly.
    
13. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
    Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and before December 1, 2009.
    
    In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
    
14. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
    Yes. The tax credit can be combined with the MRB home buyer program. Note that first-time home buyers who purchased a home in 2008 may notclaim the tax credit if they are participating in an MRB program.
    
15. I live in the District of Columbia. Can I claim both the Washington, D.C. first-time home buyer credit and this new credit?
    No. You can claim only one.
    
16. I am not a U.S. citizen. Can I claim the tax credit?
    Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
17. Is a tax credit the same as a tax deduction?
    No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.
    
    A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer's tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.
    
18. I bought a home in 2008. Do I qualify for this credit?
    No, but if you purchased your first home between April 9, 2008 and January 1, 2009, you may qualify for a different tax credit.
    
19. Is there any way for a home buyer to access the money allocatable to the credit sooner than waiting to file their 2009 tax return?
    Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down-payment.
    
    Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.
    
    Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a down-payment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.
    
20. If I'm qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
    Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
    
    Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.
    
21. For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
    Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

information source - NHBA - Bank Rate - IRS

Gwenn Tanvas is a Certified Mortgage Planning Specialists who specializes in Government Programs such as FHA, State and Federal VA and USDA Rural Housing Loans. Visit her website for more information, on-line calculators and a secure on-line application. She is able to assist with transaction throughout the state of Wisconsin. Her offices are located in Appleton, Oshkosh and Green Bay and offers the convenience of one-stop shopping. http://www.WisconsinLoanTips.com or http://www.MortgageProsOfWisconsin.com she can also be reached for comment or to answer questions via email at gwennt@centurytel.net

 

Inspired by Donna Rattee"ARE THE BANKS REALLY WORKING WITH YOU" it suddenly occured to me that the answer is a resounding . . . . . .

NO!   NO!   NO!

WHO CAN EXPLAIN THE INEXPLICABLE? 

• Banks reject offers for foreclosures and then sell the property months later for much less money.
• Banks ignore communications about short sales until the buyer just finds another home to buy.
• Banks interfere with broker sales commissions and drive agents out of the short sale market.
• Banks interfere with the buyer's right to select their own mortgage company.
• Banks have no standards for short sales forcing many more home owners into foreclosure.
• Banks obfuscate the facts when testifying before Congress.
• Banks force home owners into foreclosure rather than mofify loans. 
• It goes on and on and nothing appears to improve. 

QUESTION:  WHAT IS CONSISTENT THROUGHOUT THE ABOVE? 

ANSWER:  The end result is a reduced or non-existent commission for a real estate transaction. 

The banks know that 95% of us work on a contingent basis. NO SALE - NO FEE.

WILL WE SEE THE BANKS BEGIN TO USE TAX MONEY (TARP) TO BEGIN BUYING UP REAL ESTATE COMPANIES? 

SUPPOSE A BANK PROPOSED THAT, since they own $Billions and $Billions of "Toxic Assets", defaulted mortgage instruments representing millions and millions of properties throughout the United States, they could easily make the case that the banks could save the government a lot of money if they were permitted to operate national real estate brokerages for the purpose of disposing of the homes in their inventory and those that will soon be foreclosed.  Of course, I realize that the "toxic assets" the banks hold are not actual real estate, although there is a lot of that, I believe that they could convince Congress that such a plan would work.

MANY LARGE BROKERAGES AND REAL ESTATE COMPANIES ARE IN FINANCIAL TROUBLE and could be purchased at a fraction of their former value.  HOW WOULD THE REGULATORY BODIES THAT REJECTED THE BANKS EFFORTS TO "GET IN REAL ESTATE" in the past view the matter now? 

WHICH BRINGS US BACK TO THE ORIGINAL QUESTION?

Are the banks, rather than relying on "permission" to get into real estate, simply decided to "STARVE OUT ALL OF THE REAL ESTATE AGENTS".

FOOD FOR THOUGHT!

The past year will be remembered as one of the most eventful years in economic history our country has seen in many decades. Scandals and financial crises dominated the headlines. Not a month passed without news about something "crashing", corporate or government "back-room deals", and emergency bailouts to fix problems that many consumers had been unaware of.

Did this affect real estate? You bet it did. Did it create challenges for real estate agents? Yes. Did it confuse buyers and sellers? Absolutely!

Let's take a closer look at what happened in 2008:

JANUARY - Stock market volatility

January was a very volatile month in terms of the world's stock markets. Non-U.S. market prices saw a sharp decrease on Monday, January 21, 2008 and, for some markets, this continued on January 22nd. January 21st came to be called "Black Monday," and the activities of that day were referred to a "global shares crash".

Our American stock markets were closed on January 21st in celebration of Martin Luther King Jr. Day. In response to the fall in non-U.S. markets, the U.S. Federal Reserve announced a surprise rate cut of 0.75% at 8 a.m. Tuesday the 21st in an effort to prevent large declines in the American stock markets.

FEBRUARY - NAR announces 2007 numbers

The National Association of Realtors (NAR) announced that in 2007, existing homes sales experienced their largest drop in 25 years. "It's the first price decline in many, many years and possibly going back to the Great Depression," said the group's chief economist, Lawrence Yun. This news further fueled the growing concern felt by home buyers and sellers.

MARCH - Real estate fraud

In a move that stunned many in the industry, 406 people across the United States were arrested for mortgage fraud as part of a comprehensive sting carried out by the FBI. Those arrested included buyers, sellers and mortgage lenders.

 

APRIL - Foreclosures / builders in trouble / inventory up / buyers disappear

The troubles continued in April, with media coverage of high foreclosure rates. Builders began reporting difficulties in selling their existing new home inventory. Standing housing inventory (both for new and pre-owned homes) increased across the country. As a result of all of these factors, as well as the events that occurred earlier in the year, consumer confidence continues to erode, and fewer buyers make offers on homes.

MAY - Department of Justice settles with NAR

On May 27th, the Department of Justice and NAR reached a long-awaited settlement regarding NAR's multiple listing policy and how it pertained to the display of listings from the MLS on brokers' virtual office Web sites (or VOWs). The settlement brought a measure of calm back into the real estate markets.

 

JUNE - Government and corporate scandals

Senate Banking Committee Chairman Christopher Dodd proposed a housing bailout to assist troubled subprime mortgage lenders, including Countrywide Mortgage. Dodd admitted that he received special treatment and campaign donations from Countrywide in the form of a $75,000 reduction in mortgage payments".

The Chairman of the Senate Finance Committee and the head of Fannie Mae also received mortgages on favorable terms due to their association with Countrywide CEO Angelo R. Mozilo.

Former Bear-Stearns fund managers were arrested by the FBI for their allegedly fraudulent role in the subprime mortgage collapse. The managers purportedly misrepresented the fiscal health of their funds to investors publicly -- while privately withdrawing their own money.

JULY - Banks in trouble

Indymac Bank, a subsidiary of Indymac (the Independent National Mortgage Corporation, is placed into the receivership of the FDIC. Indymac's failure was the fourth largest bank failure in US history. IndyMac Bank was the largest savings and loan association in the Los Angeles area, and the seventh largest mortgage originator in the US.

AUGUST- Real Estate Recovery

In August, a measure of consumer confidence was beginning to return to the market, as buyers and sellers felt we had weathered the storm. Pending numbers began to increase, as inventory was absorbed.

SEPTEMBER - Financial crises

The improvements that began in August came to an abrupt halt as a number of dire financial crises struck the economic markets. Among these:

Federal takeover of Fannie Mae and Freddie Mac. These two organizations owned or guaranteed about half of the $12 trillion mortgage market.

Merrill Lynch is sold to Bank of America amidst fears of a liquidity crisis.

Lehman Brothers files for bankruptcy protection.

The US Federal Reserve loans $85 billion to American International Group (AIG) to help AIG avoid bankruptcy.

Secretary of the Treasury Henry Paulson's financial rescue plan is unveiled after a volatile week in stock and debt markets.

It becomes known that the Federal Bureau of Investigation is looking into the possibility of fraud by mortgage financing companies Fannie Mae and Freddie Mac, Lehman Brothers, and insurer AIG, bringing the number to 26 of corporate lenders under investigation.

Washington Mutual is seized by the Federal Deposit Insurance Corporation amidst fears of a run on the bank. Its banking assets were sold to JP Morgan Chase for $1.9 billion.

The Emergency Economic Stabilization Act is defeated by a vote of 228 to 205 in the United States House of Representatives.

OCTOBER - Government "bail out"

In an effort to bring stability and normalcy to the economy, action was taken on several fronts:

The U.S. Senate passes their version of the $700 billion bailout bill.

The Emergency Economic Stabilization Act of 2008 is proposed, commonly referred to as a bailout of the U.S. financial system. The Act authorizes the US Secretary of the Treasury to allocate up to $700 billion to purchase distressed assets (especially mortgage backed securities), and to make capital infusions into banks.

President George W. Bush signs into law the Emergency Economic Stabilization Act.

Unfortunately, in spite of the approved bailout - or, some think, because of it - the stock market experiences its worst week of performance in 75 years.

 

NOVEMBER - World economies meet / NAR makes recommendations to Congress

A group of twenty of the world's largest economies meets in Washington DC, and releases a summary of the meeting. Although no detailed plans were agreed upon, the group listed immediate and medium term action plans for each of the following five principles:

Strengthening transparency and accountability

Improving regulation

Promoting market integrity

Reinforcing cooperation, and

Reforming international institutions

At long last, the government turns to the National Association of Realtors for their input on the housing / economic crises. NAR's urges Congress to include the following provisions in any future legislation relative to housing:

Make the $7,500 tax credit available to all purchasers, and eliminate the repayment requirement. The credit's limited availability and required repayment terms have severely limited its appeal to potential homebuyers. As a result, the credit has not been effective at stimulating home sales.

Make the increased 2008 FHA, Fannie Mae, and Freddie Mac loan limits permanent. The rules for 2009 will significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.

Get the emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures. Don't just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.

Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply properly manage their current lines of business. Do we really want them to manage the home buying process? Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.

DECEMBER - Mortgage applications are up / interest rates are down

By the second week of December mortgage applications were way up, as a result of the decrease in interest rates. Applications from borrowers using conventional loans were up 37% from the same time a year earlier as well as the percentage for borrowers using FHA financing was up by 39%.

Mortgage rates were at their lowest rates in over four years! The 30-year fixed rates were at 5.47% in December, versus 5.40% in March of 2004. And 15-year rate fixed loans were as low as 5.13%. As a point of comparison, in December of 2007, the interest rate was at 6.11%.

As we wrap up 2008, there is no doubt that we've been tumbled and tossed around by events and drama. But like I've always said, real estate will survive -- and thrive! Real estate isn't going anywhere. Property ownership is the cornerstone of a free country. People need a place to live -- and always will.

Prices go up. Prices come down. But demand, on some level, will always be there.

Moving forward into 2009 it is clear that 2009 will need to be a year of restoration and stability. While we will see adjustments in 2009, it's sure to be a much better year than 2008. Today's Local Market Conditions Report