I Ate a Rhinoceros Last Night

I Ate a Rhinoceros Last Night

After being lost in the jungle for 18 days and 18 nights, I resolved to see my family again and was determined not to die a slow, painful death, all alone. So on my 19th day, I crafted weapons out of bark and went out on my hunt when it became dark. That night I feasted on charred rhinoceros and berries. When I woke up in the morning and realized what a crazy dream this was...

I've noticed a lot of this in the news over the past few years. This is just an illustration of how a shocking headline can get people excited and talking, yet it is completely misleading.

My point is this- readers need to be aware that some headlines, and even some of the full reports, should not be taken at face value, and understand that the facts can be very skewed, in an effort to gain readership. While some news reports should be of concern, and we need to be informed of a major economic crisis, some reports have consumers stocking up canned goods and digging bomb shelters in their backyards.

For example- I've read numerous articles citing the fact that nearly 50% (in some counties, more than 50%) of all properties listed for sale are bank owned foreclosures.

Those are shocking and horrifying figures for a consumer to read. I would imagine that they'd think that the world is coming to an end and some may misinterpret the information and think that 50% of all properties are in foreclosure!

The truth is that, while there are a lot of foreclosures taking place in the country at this time, most traditional sellers are choosing NOT to sell right now, and are waiting for prices to rise, or at least stabilize.

When I use the term "traditional seller", I'm referring to the owners that do not need to sell right now, but they may want to sell, to move up to a larger home, downsize to a smaller home, to another area, etc...

If, for instance, many traditional sellers were to place their homes on the market, the percentage of foreclosure listings, and possibly even foreclosure sales posted, would decrease. That doesn't mean that the number of foreclosures would go down, it just means that the percentages would change.

Let's face it, the only people that are selling right now are those that HAVE to sell, and those that REALLY want to.

Consider this in the numbers as well; what are buyers going to purchase first? Will they go for a home that's listed at a rock bottom price, by a lender that just wants to unload it and get it off the books, or would they choose a home that's priced appropriately for the market, with a seller that's not desperate to negotiate? Of course foreclosure sales are highest! Everyone likes to get a good bargain!

These are just some things to factor in, when trying to make sense of all the hype in the media, and all the figures that are carelessly thrown about.

Another example would be the reports about jumbo loans decreasing in usage. It was recently reported that 17.3% of all purchase money loans issued last month, were for jumbo loans (larger loans made above the conforming loan limits, which varies per county). The report went on to say that before the mortgage meltdown, jumbo loans accounted for 40% of all purchase loans issued.

Again, a consumer could look at this and think "wow, people are just not buying the more expensive homes right now, and taking on large mortgages". The truth is that there are not many lenders that offer jumbo loans right now, and those that do are asking for everything but a DNA sample in order to approve the borrowers. Another factor, which was deterring borrowers from jumbo loans, was the high interest rates being offered. This has recently improved, however, so we may see a slight surge in this type of loan, in months to come.

While it's true that some people are playing it safe, and are choosing to stay put, others are chomping at the bit to get a larger home while the prices are so great, and so many more would love to refinance while the rates are so incredibly low. Unfortunately, many of these people cannot qualify for a loan at this time, because of the restrictions and requirements that I mentioned above.

So, when you see a shocking headline, talk to a real estate or mortgage prIofessional that you trust to get the full story, and remember not to panic, because you thought I Ate a Rhinoceros Last Night, and I didn't!