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

An Age-Old Concept Reaping Future Rewards

W hy are social media like Facebook and Instagram so darn popular among real estate and mortgage folks?   Hint: the top reason might be an endless supply of memes, cat videos, and the chance to be snarky, but the other reason runs a VERY CLOSE second.   Give up?   Answer:   They’re free – and they really help even the playing field by enabling a one-person shop look and market like an organization who employs an army of wordsmiths and graphic artists. This new century is glorious, right?   With that in mind, let me re-introduce you to a centuries-old concept that is equally glorious – and can help IMPROVE the playing field for you, regardless of the size of your team: karma.   On the subject of “free”, I’m not suggesting that you work for free, but when you freely give of yourself and your knowledge, you’ll see a greater payoff, I promise! Recently, an agent came to us with a question: she has a client who is looking to sell his condo.   It...
Post a Comment
Read more

The Power of Doubt

We find ourselves in that weird week between Christmas and New Year’s – that week that feels a bit like the Twilight Zone where no one’s sure what’s real and what isn’t.   Because of that, most people tend to focus on one of two things: eating as much as possible or setting goals for the upcoming year.   The former is squarely focused on the present – how much can I stuff into my gaping maw at this very moment before I pass out and/or puke – while the latter is focused on the future.    Last week, before the Twilight Zone kicked into full gear, I read a short article that resonated with me, and I think it’ll prick up your metaphorical ears, too.   The author of the article is a gentleman who professionally trains Olympic athletes, and he highlights the talents of a particular athlete from the Philippines who is training to be a marathon runner.   He points out that this runner is not a professional athlete, nor does she receive any type of financ...
Post a Comment
Read more

Get to the Point (Posted February 29, 2016)

As you may have already noticed, there’s some amateur art included in this week’s newsletter.   While it’s certainly better than a crayon drawing that might grace a refrigerator that’s supposed to be “mommy” but looks more like a B-movie creature, we all acknowledge there’s a reason the guy in our office who drew this . . . i s still working in our office rather than making a living elsewhere.   Be that as it may, there’s a point to the picture: is this how you’re allowing your client to choose their mortgage company?   In many cases, it’s probably not too far off.   Agreed, it’s wise to stay on the right side of the law and be sure you’re never accused of “steering”.   With that in mind, many agents tell their clients that it’s completely their decision as to what mortgage company they use (and it is, of course) and effectively step back from the entire conversation – using the illustration to the left, they’re putting the blindfold ...
Post a Comment
Read more