We are on the cusp!

Undeniably the stock market has become a Bear market. That means that the Dow industrial average is down more than 20%. Sooner or later, those investors are going to start to move to safer investments. What are safer investments you ask? Well I am going to suggest that Mortgage Backed Securities are safer investments. For the last 12 months, this investment has been out of favor with everyone from institutional investors to foreign investors. As housing prices have fallen drastically on both coasts the middle of the country has done a good job of holding value. The Countrywide Mortgage debacle has turned a corner and is now Bank of America’s problem. The Fed has not had to rescue any more mortgage companies for the last 30 days. Second quarter earnings are being reported this week and by now all the major companies have figured out that they cannot hide the losses from the mortgage mess, so those will be dealt with in these reports.

That leaves us with mortgage backed securities in position to be an attractive investment again; especially the Ginnie Mae government loans. With over 70% of all loan applications that I am taking right now being for FHA or VA loans, I am confident that most other successful originators are doing the same. This will create a huge supply for these investments and the hawkers of these securities will have the product to sell and most of these properties will not be those that are going into foreclosure but being bought out of foreclosure by people who have the means and desire to make their mortgage payments. Sooner or later, Wall Street is going to start moving these securities and then the laws of economics will take over. As demand goes up so does price. On a bond, for those of you that don’t remember, when the price goes up the yield (see interest rate) goes down. Thus, even though there is discussion of the Fed raising short term interest rates, what they really are hoping for is that the lowering of short term rates that they did months ago will finally take hold on the long rates and we will see the 30 year fixed rate get below 6% again.

Now I realize that this is optimistic thinking on my part, but if you listen to the doom and gloom prognosticators out there saying that the economy and the stock market are still in for tougher times, someone has to be willing to bet on the bond market. Today I am that person!!!

What a difference a day makes!

Over the past 11 months the mortgage industry has gone through one of the most tumultuous times in recent history. As mortgage companies went out of business, others were rescued by the Federal Reserve and program guidelines changed like your mother told you to change your underwear; DAILY. Many people, loan officers included were caught not being up to date on the ever changing landscape of guideline changes. I can admit I had challenges with 2 condo loans in particular.

In addition to the ever changing landscape of product and guideline changes we have also seen a rate climate that reminds me of a playground toy, the sliding teeter totter! Rates go up one day, down the next, up again then up and up and then a drastic drop followed by more upward movement. I continue to preach to my clients, that locking in is the best defense in the current market. We can always look to renegotiate if rates go down drastically but, once they go up you are screwed. As my old mentor told me, “pigs get fat, hogs get slaughtered.

Let’s hope that the reforms FHA has instituted effective July 14, 2008 and the merger of Countrywide and Bank of America signal a change to the whirlwind of changes and the rest of the year is filled with calm waters for borrowers to sail in.

For questions or comments on this post, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

Does the Fed really have any control over inflation?

As we sit here and watch a bunch of suits sit around and discuss theory, the rest of the nation is living reality. That reality is the fact that gas prices continue to rise, every other commodity is effected by the rising fuel prices and then to top that off, we have the real estate industry, the engine of the economy of the world continuing to crash or should I say foreclose in around us. To hear Gentle Ben Bernanke and his colleagues discuss the economy, you would think that they are living in a glass castle. Does anyone of them know what it is like to pump or pay for their own gas? When was the last time one of them went to the grocery store to by something to fix themselves?

These discussions about whether to raise or lower interest rates are simply wasted energy. We need to quit focusing on what the Fed is or isn’t going to do because what ever they do at this point is too little too late. They are now talking about raising interest rates to slow the economy. Are you kidding me? This economy is still going backwards. So called Fed experts will tell you that they are managing the economy six months in the future, but if that is they case, they really screwed up six months ago! I have an idea, let’s deal with the here and now. You know, like when they rescued Countrywide from going Bankrupt by getting Bank of America to be the lead bank in the buyout of Countrywide. Or more recently when Bear Sterns was crashing and they got J.P. Morgan Chase to purchase them. Both of these happened overnight and in theory were done to keep things from crashing around us.

Dear Ben, put pressure on the White House to solve the rising energy price challenge. That is your inflation monster. Until you figure out how to do that, everything else you are doing is just giving the talking heads on MSNBC something to talk about so they can keep their jobs.

For questions or comments, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

FHA Lifts 90 Waiting Period

In a move to help get foreclosures off the books of lenders quicker and help avoid deterioration of properties that have been foreclosed upon the Department of Housing and Urban Development has lifted their ban on writing a contract if the title has changed in the past 90 days. See the following article: http://www.cnbc.com/id/25146122

For further clarification you can visit HUD’s website at http://www.hud.gov/news/release.cfm?content=pr08-082.cfm

For questions or comments please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

Summer is almost here!

After spending 5 of the last 7 days on the golf course, I realized (not for the first time) that my future is not in professional golf. Thus I am resigned to continuing to help people achieve the American Dream of home ownership. So what is going on in the real estate world you ask?

Well we finally have the long awaited to changes in FHA mortgage insurance premium coming into play. See the link to the HUD bulletin: http://www.mmbaonline.com/Portals/0/Documents/FHArisk.pdf

Therefore after July 14, 2008 it will be more expensive for borrowers with less than stellar credit to purchase a home. The effect in most cases will be less than $20 per month, but when you are living paycheck to paycheck, $20 a month can be a lot of money!

Foreclosures continue to rise! That is to be expected, but what it has done is that over the past 10 years an appraiser could ignore a comparable sale if it was a foreclosure. Now with the amount of foreclosures, they have to be treated as part of the marketplace. Thus property values are declining in areas of numerous foreclosures. The positive aspect of this is that those property owners who have been complaining about their rising real estate taxes will see a freeze on the rise and in some cases may see there property taxes come down in 2009!

For questions or comments on this post, please contact Chris Scheer at cscheer@cornerstonestl.com or 314.223.9824.

FOR IMMEDIATE RELEASE

Contact: Carol Lundgren

314-726-6111, ext. 203

ST. CHARLES COUNTY HOME PRICES RISE 4.4% OVER APRIL 2007

Average Sale Price Up Over $9,000 in 12 Months

Despite statistics in other parts of the country and across the Metropolitan Area, the median home price actually rose 4.4% over last year in St. Charles County. According to figures just released by the St. Charles County Association of Realtors (SCCAR), the average sale price of a home in St. Charles County was $220,791 in April, up from $211,450 in April 2007.

“That’s exciting news for St. Charles County homeowners and homebuyers,” says Keith McCulloh, SCCAR president. “All real estate is local, and these statistics prove that St. Charles County remains a great place to invest in a home.”

McCulloh adds, “The rise in home prices reinforces the fact that buying a home in St. Charles County remains an excellent long-term investment and means of increasing your family wealth. For example, if you purchased your home in St. Charles County in April of 2003, you paid an average of $168,123. Today, that home’s value would have increased by a full 32 percent. That’s a return that would have been hard to beat in other investments, plus it’s tax free.”

In addition, SCCAR figures show that the average home took 94 days to sell in April, up only 14 days over last year. “Again, while you read and hear dire stories about homes sitting on the market for extremely long periods of time, the St. Charles County story is unique. Three months is definitely not a long time to sell a home, so sellers should not be scared off by what they’ve heard,” McCulloh points out.

For more information, call 636-946-4022, or visit www.RightTimeForRealEstate.com.

WILL MY HOUSE EVER SELL?

As you went out into the yard to pick up this newspaper, there was the “For Sale” sign in your front yard. You look at it and shake your head as you wonder if it will become a permanent part of your landscaping. You resist the temptation to see if the sign has grown roots as you walk back to your front door!

If this describes you, you have probably decided that the “self-proclaimed experts” in the media are right; the real estate market is terrible! After all, no one has bought your house! Yes, the real estate market has slowed, but homes are still selling all over the St. Louis region. Plus, despite what you hear in the media, many homes are selling relatively quickly! In March, the average home in St. Charles County sold in 90 days, which is an increase of only 8 days from the average in March of last year!

So, what separates the house that sells from your home with the sales sign that has grown roots in your front yard? In any market, it is all about the basics. No matter what the market is, location, condition and price determine how fast your home will sell! Now more than ever, it is important that you remember the basics! Now more than ever, it is vital that you have a Realtor beside you to help you market and sell your home!

Different neighborhoods have and will always command different prices depending on market conditions. Occasionally, changes in traffic patterns, development and other issues will change the value in a neighborhood. Your Realtor can help you determine the market price in your neighborhood. Since most of us can’t pick up our home and move it, we will talk more about condition and price.

One of the reasons that now is a great time to buy is that there are a lot of homes for potential buyers to choose from. Now more than ever, it is important to remember our mother’s advice when she told us to put on clean clothes or wash our hands because, “You never get a second chance to make a first impression.” You cannot count on a buyer’s ability to look beyond the clutter or the maintenance that needs to be done and see the “inner beauty” of your home! That won’t happen in any market and, particularly, when that buyer has a lot of homes to choose from.

Your Realtor will help you look at your home objectively through the eyes of a potential buyer. Needed maintenance should be completed before your home goes on the market. Moving is a great time to get rid of “stuff” that has been in your closets or in your kitchen cabinets unused or unworn for ages. To help your home make its best impression, clean house now rather than when it is time to move!

Your Realtor will also help you determine if your home needs more tender loving care before it goes on the market. It is important that your yard is neatly manicured, weeds pulled, dead plantings or branches removed, etc. If you don’t have the time, you may want to hire a teenager in the neighborhood or a service to keep up your yard while your home is on the market. Also, a fresh coat of paint is a great way to make your home shine. This is especially true if your tastes run towards the eccentric or non-traditional. Again, don’t expect potential buyers to share your tastes or realize how easy it would be to paint. It won’t happen!

It is important to remember that the market, not your Realtor or a potential buyer, determines the right sales price for your home. The value of your home is not based on how much you have spent on improvements, how much nicer your home is than the others in the neighborhood, how much you owe the bank, or how much you need to clear to afford your new home. Your Realtor will compare your home to others that have recently sold in your neighborhood to determine the right price.

Your Realtor has the knowledge and information to evaluate your home and arrive at the correct sales price. Unfortunately, in the current market, the right price might be less than you were hoping. Yes, you have the option of pricing your home higher than your Realtor suggests and reducing it later. Quite simply, that does not work! Many studies have shown that homeowners that try this strategy end up settling for less than they would have received if they had listened to their Realtor from the beginning.

The good news is that with few exceptions, most homeowners in this market can sell their home for more than they paid for it! Your home remains the best long-term investment available to your family. Plus, most of us will still need a place to live, so you will probably make up the price difference when you begin to look for your new home!

Remember, having a Realtor beside you is the only safe way to buy or sell a home. For more information on why 2008 is the Right Time for Real Estate, call your Realtor today and visit www.RightTimeForRealEstate.com.