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The Sky Is Falling! No It Isn’t! Yes It Is!

By
Services for Real Estate Pros with Ron Taylor and Sons Real Estate and Auctioneers

Let's face it. We are living in a new economy whether we like it or not. The real question is how are we going to adjust to it or better, what are we going to do about it?

The Obama administration is spending money like no other before it since the founding of this great nation. All of this is done under the guise of saving our economy but the path is socialism.

I remember someone asking former President Bill Clinton the question, "When has any nation ever spent itself into prosperity?" Of course the answer is, never. Just ask Greece.

Listen to what Matt Spalding of the Heritage Foundation said: "This past year has been a historic one when it comes to the sheer size of legislation forced through Congress. But the health care bill is just a symptom of a larger epidemic: the shift toward an "administrative state" - an unelected, unaccountable, bureaucratic government operating without the consent of the governed. The United States has been moving down this path in fits and starts for some time, from the Progressive Era reforms through the New Deal's interventions in the economy."

But what has all this to do with real estate you might ask? A lot! Remember last week's volatile stock market movement when at one point the market was down almost a thousand points. Investors fled to the 10 year Treasury, driving the yield way down and pulling down the rate on the 30-year fixed mortgage right along with it. The yield came up a bit, but at one point you could get a 30-year fixed rate mortgage for 4.5 percent with no points. That's not bad but at what cost?

What if the market never recovered that day or what if the same thing happened the following day? How would that affect consumer confidence? As everyone knows, consumer confidence is a very important part of the real estate market.

I can go to several websites that will tell me the real estate market has bottomed out and things are on the rise again. On the other hand I can go to some websites that will tell me the worst is not over. Many will tell me the commercial real estate market is the next to fall.

The National Association of Realtors, of which I am a member, has to put a positive spin on things or they will lose more members. Even Clear Capital says a 3.9% decrease in home value was better than the previous 5% between February and March of this year. The slowing of the decline in housing value is seen as a positive trend, even though the overall numbers are still negative.

If our government keeps spending at the current rate, the best thing you can do is get out of debt as there will be a day of reckoning. And that starts with paying off your current mortgage as quickly as possible as more and more banks are projected to default.

Many European nations are making an adjustment away from socialism but we as a nation seem to be on the path that they want to get off of. Greece is broke through over-spending and many are comparing California to Greece. What comes out of California seems to move eastward.

What can we do about it? Get rid of these socialites in November.

For more information about our company, go to www.cansellnow.com

Jennifer Arbach
EXIT Realty Front and Center - Binghamton, NY
Office Administrator

Agreed! Judgement Day looms large come November 2nd. We want our America back!

May 10, 2010 06:35 AM
Chris Wechner
CW Health Inc - Waterford, MI

I think your call to action (pay off your debts now while the mortgage rates are artificially being held low before they jump super sky high to repay our fed's debt) is a very wise one, Ron.

May 10, 2010 06:38 AM
Paul Walker
Equity Fifty Five Realty, LLC - Scott AFB, IL
Scott AFB IL Area Realtor

Nice Post! We all need to tighten our belts. I just had a deal go south this morning after my buyer decided she couldn't purchase the home do to the real estate taxes being so high. When real estate taxes are $4000 per year on a $145,000 home, it makes you wonder how people can afford a home. We need politicians to realize we are being taxed to death, and these taxes are taking money out of the private sector, slowing down the growth of our GDP. Many of our foreclosures in our area are due to the growth in real estate taxes being paid over the last few years. Property owners could afford to stay in their homes if their taxes dont kill them first.

May 10, 2010 06:56 AM
Doug Rogers
RE/MAX Coastal Properties - Destin, FL
Your Real Estate Resource!

Wise words indeed. Although the Republican party (which I am a member), has been on a shopping spree as well. IF the money ain't in the account, don't buy it!!

May 10, 2010 08:55 AM
Chris Wechner
CW Health Inc - Waterford, MI

Hi, Paul.  $4K doesn't sound cheap, but it lacks the shock value of some of the other property tax prices that I've heard and read.

THAT is the truly scary part, because I have the same belief about what you wrote.

I'm only OK about giving other people (and governments) my money when they can do more for me with it than I can myself.  Governments aren't very well known for their financial efficiency, are they?

May 12, 2010 03:09 AM
Ron Taylor
Ron Taylor and Sons Real Estate and Auctioneers - Louisburg, NC

I found this tidbit of information interesting:

The Mortgage Bankers Association (MBA) in its Weekly Mortgage Applications Survey for the week ending May 7, 2010, said that the Market Composite Index, a measure of mortgage loan application volume, increased 3.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 3.4 percent compared with the previous week. The Refinance Index increased 14.8 percent from the previous week and the seasonally adjusted Purchase Index decreased 9.5 percent from one week earlier.  "The recent plunge in rates on US Treasury securities, due to a flight to quality as investors worldwide sought shelter from the Greek debt crisis, benefited US mortgage borrowers last week. Rates on 30-year mortgages dropped to their lowest level since mid-March.  As a result, refinance applications for conventional loans jumped, hitting their highest level in six weeks," said Michael Fratantoni, MBA's Vice President of Research and Economics.  "In contras  t, purchase applications fell almost 10 percent in the first week following the expiration of the homebuyer tax credit, as the tax credit likely pulled some sales into April that would otherwise have occurred in May or later."  The four week moving average for the seasonally adjusted Market Index is up 4.4 percent.  The refinance share of mortgage activity increased to 57.7 percent of total applications from 51.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 6.3 percent of total applications from the previous week.

May 12, 2010 03:42 AM
Chris Wechner
CW Health Inc - Waterford, MI

The direction is what you'd expect (each the increase in refinance apps and decrease in purchasing apps), but the numbers make it hit home how MUCH different things are, especially the amount of descrease in purchase apps.

Thanks for posting that one, Ron.

May 13, 2010 03:53 AM