Market Adjustments

Hi Folks, 

        Well the stock market seems to be going into the pot. Up and down every time Greenspan clears his throat we feel ripples in the market. Everything from stocks, real estate, Mortgage industry. There is a mass excites in the lower regions of the loan market. I had a lender call the other day and told me there were 12 mortgage companies that went out of business that week. Some of this is market corrections and others are self fulfilling prophesies. Market corrections are a part of a healthy economy. Corrections in any market brings a cense of reality to the market place. What will a person pay for a product at any given time. Those speculative buyers (and we all are to some degree) are reeled in by market adjustments. Some loans have all but vanished and many are on the way out. The 100%, the 80%-20% may be harder to come by as well as Stated income loans. The 80%-20% and the 100% loans are instruments where the buyer brings nothing to the table. Even the closing cost many time are rapped into the purchase.  Greenspan brought up this problem last year. In our hopes to bring more people into the housing market we deleted one of the prerequisites, invested capitol. We thought if a buyer was paying a certain amount in rent it would be ok to sell them a home with those payments. The walk away rate in these lower end mortgages is at an alarming rate.

        I took a trip to Boston a couple of weeks ago. That economy is in transition. With the Big Dig over there are thousands of construction workers looking for work. The days on market in the housing industry is rising and home prices are adjusting. The west coast has been slowing for quite some time. We in the Midwest have had our problems also. In the Michigan and other northern state plant closing lost 30,000 jobs. The trickle down on those numbers touches everybody. Much of Wisconsin's economy is in servicing secondary products to major industries like the auto makers and they are slowing. If the big boys in the economy don't pull in their horns the adjustments will take their course and we will be onward and upward. But if folks grab their wallets with both hands and squeeze till George bleeds we could be in for a ride.

          When we moved to the Ozarks 6 years ago I use to sit on the porch of my then neighbor Moon Cook. Moon wasn't his real name but he liked to chew the cork if you know what I mean. So folks just seem to call him Moon. He talked about the old days in the Ozarks when everyone was looking for anything to keep their families fed. A couple one time found that in the White River there were fresh water clams and the shells made beautiful button for high end cloths. By the way they tasted pretty go to. It wasn't long before every body that was any body was making buttons. Before long the clams were gone and the folks in the Ozarks had to move on to the next bigger and better thing. Which happened to be tomatoes. Everyone planted tomatoes till the market was so overwhelmed you couldn't give them away. I tell you that because there is nothing new under the sun. Weather it's buttons or tomatoes your product is at the mercy of a ever changing economy. What will your button bring tomorrow depends on the consumers ability to buy at a given perception of value. That value has also been put on a larger stage than our forefathers. In the Ozarks today we are a bit sheltered in that we have something just about everyone wants. Low taxes, affordable housing, government under control, good fishing, great entertainment, delightful neighbors.  I'm just sorry that Moon passed away, he was a delight to talk to and brought common sense reality to complex world.  

In Your Servce, Russ Prothero