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Halfway Through The Year…Some Random Thoughts

June 30th is a good time to take a pause an assessment of where we are…call it a reflection:

The Tax Credit is gone.

Although we are likely to see an extension of the closing portion of the credit, there looks to be no new beneficiaries of this program.  Years from now, we will look back and see if it truly had its intended impact.  But, for now, as I see the last of our June 30th closings convene, I can’t help but believe the incentive DID help.  It may not have “created transactions” or it may have merely “shifted the normal flow of transactions to happen sooner than they might otherwise have occurred”,  but I believe the $6500-$8000 that most people received will have a big impact on the economy.  Our new homeowners are likely to spend the money on furniture, plasma televisions, home improvements, etc……and that impact alone makes the program worthwhile.  (Without the tax credit in place the government would not likely have spent the money so effectively in helping the economy.)

The fall of home prices has slowed.

I personally believe that this pause in declining home prices has given too many a false sense of security that the worst is over.  I can easily see another 10% drop in prices for two reasons….higher interest rates and increased supply (that Shadow Inventory wave is still coming and there are more Short Sales being approved everyday).

Rates are still low….historically low.

The fall of the Greek and European economies has kept foreign investors in the US bond buying mood.  It will be interesting to see what happens in 60-90 days when all these loans we just closed (pre-June 30th) come to the market.  I am not sure how big the appetite will be for all those 30 year loans under 5%.  If the demand isn’t there for all of it at once, bond traders are likely to offer higher yields in the future (that means higher rates on loans closing at the end of the summer and fall).  Meanwhile, loan officers can rejoice in another mini-refi boom and agents can show buyers why it still is a great time to buy a home.

Investment Property purchases are poised to increase.

As prices have come down and rates have co-operated, there is opportunity for those who believe in real estate as a long term investment strategy because you can cash flow many properties now (that’s where the rental income at least will cover the mortgage payment).  I look forward to seeing the savvy real estate agent and loan officer building the educational tools and property management support systems to make it happen.

A continued thinning of the herd.

The number of agents and LOs has fallen by some estimates from 40-75% over the past few years.  Yet, the number of transactions has not declined nearly as much.  The market is likely to be left with more educated, more technologically comfortable professionals.  Great news for our consumer and better news for us!

An evolving marketing plan.

The Yellow Pages is dead.  Most print media is dead.  TV and Radio are too expensive.  Online workshops are replacing hotel seminars.  Look for more and more homes to be sold on Craigslist.  Look for more agents and LOs to utilize Facebook as a marketing platform (even more than Google).  Video montages will replace still photos.  Buyers are on the internet first.  Our marketing plans need to seek them out, not wait for them to find us.

A better informed consumer.

I see a switch from consumers who gather a lot of conflicting, random information off the web to a consumer who is being counseled by their agent and/or loan officer.  Real estate and mortgage professionals have become coaches and teachers.  It’s been a long time coming, but, thankfully, we are on the dawn of a new era in our industries.

Start fresh in the second half.

June 30th as a day, is historically has the second highest number of Expired Listings (behind December 31st).  With that, comes an opportunity for a fresh start with many home sellers.  Properly pricing your home (while rates are still low) with the right agent is the key to achieving your goals.  Just Do It!

I remain cautiously optimistic about the housing market, the lending environment and the economy on the whole…..as long as we can start creating some decent jobs.  Now is not the time to rest.  Stay focused on your objectives, as a buyer, as a seller, and as a professional.  Happy New Half Year!  2010 ½!

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