Skip to main content

Optimism is Contagious (Posted February 8, 2016)

In a recent interview for “Housing News Report”, Jonathan Smoke – Chief Economist at Realtor.com – says that, “2016 will be our best year since 2006, but also our most normal year since 2000. We’ve lived through 15 years of abnormal trends, and after working off the negative effects of the housing bust, we’re finally seeing signs of more normal conditions.”  What?  Is this man psychic?  How does he know this?  While I’m confident Old Smokey (I’m pretty sure that was his nickname back in college) is a pretty smart guy and he didn’t get his job as Chief Economist on his looks alone, let’s look at some of the factors he most likely reviewed to make his feel-good statement.

According to Freddie Mac, fixed-rate 30-year prime mortgages were priced at 3.87% at the end of 2014 and 3.96% for the week of Dec. 24, 2015.  At the end of 2014, there were MANY people predicting that rates would be at 5% or higher by the end of 2015.  If only there were some way to bet on things like this.  Hmmm. 

What were some of the things that kept the interest rates in check and should continue to keep them in check, you might ask.  Here are just a few:

•  Uncle Sam’s Drunken Cousins: Last year, there was a lot of negative interest in the European and Asian markets – this meant there were boatloads of capital available to underwrite U.S. mortgages. 
•  Suntans & Treehugging:  With warmer weather and more people driving more fuel-efficient cars, oil demand has been significantly reduced – and with more sustainable, renewable energy options becoming available, demand for oil should continue to stay below levels we’re used to seeing.  While this is a huge problem for energy producers, it’s a major boon for U.S. consumers.  This means more disposable income for you and me. 

And for the BIGGEST reason Mr. Smoke and others are optimistic:

•  The White House Lease is Up:  Yes, it’s an election year.  While we all have to put up with listening to people who have never held a regular job tell us how they’re going to improve our lives better than the two cats standing on either side of them in a debate, there’s a silver lining to all of that – everyone and their dog who has ANYTHING to do with the economy moves heaven and earth to NOT rock the boat while the country chooses who’s going to be the Next American Idle. 


This should be a VERY GOOD year to sell real estate: stable interest rates (fingers crossed), more disposable income, and rent prices rising faster than house prices – too bad yesterday’s Super Bowl 50 loser didn’t have a scouting report this good!

Comments

Post a Comment

Popular posts from this blog

Posted August 31, 2015

Fast . . . So They’re Not Furious InSellerate , a lead-generation company, conducted a study that yielded some very interesting insights: •    32% of consumers expect a company to respond to an online inquiry within 30 minutes •    42% of consumers expect contact within one hour •    M ore than half of the companies studied (56.34%) did not respond to the online or email inquiry at all Of those companies that did respond, the average response time exceeded 24 hours, and the primary response vehicle was email, which is a passive, relatively non-effective method of contact .   The take-away thought from all of this is “no kidding”, of course, but it underscores the wisdom that a lead is only as good as the work you put into it. Safety Over Sales According to a USA Today article, realtors in Iowa are taking steps to ensure the safety of all agents. The initiative includes an optional seller contract that prohibits any agent from ...
Post a Comment
Read more

An Indelible Lesson

This is a reprint from about nine months ago, but I thought the timing is right to revisit this subject.   Recently, I saw this gentleman at the gym whose upper body was almost entirely covered in tattoos.   I struck up a conversation with him and learned that it took well over 100 hours, and it cost $85/hour.   As we continued to chat, I was doing the math in my head: $85 X 100 hours = $8,500 !   Being the mortgage geek that I am, my next thought was, “I’m staring at a walking, talking down payment on a house!”   There’s a huge misconception floating out there that 20% is required as a down payment.   There are those products that do require such an amount, but there are so many others that don’t.   A very popular loan option only requires 3.5%.   In the case of my new gym acquaintance, $8,500 represents a 3.5% down payment on a $242,000 mortgage – that’s not a palace, but that amount of money could buy a modest home in a nice neighborho...
Post a Comment
Read more

Perspective Produces Progress

Each week I try to write something that will either make you think about a rather humdrum mortgage/real estate topic in a new way or at least clear the cerebral cobwebs.   Admittedly, some weeks I’m better at accomplishing that than others – my apologies for those “off” weeks.   As I’ve been trying to come up with a topic for this week’s missive, it’s not so much that I’ve been hitting a brick wall that’s been keeping me from inspiration, it’s that I’ve felt sort of “dragged down” by so many things that have been happening here in our own backyard over the past few weeks that have been . . . less than inspiring.   It seems that wherever you turn – TV, radio, Facebook, Instagram , newspapers (they still exist) – one party isn’t happy unless the opposing party is proven wrong and/or devastated.   I’m not advocating the philosophy that “everyone’s a winner and should get a trophy just for showing up” – I’m an advocate of just the opposite when it comes to c...
Post a Comment
Read more