First of all, Happy New Year! Now that the holidays are over, I am happy to resume writing again, and I was just waiting for the right inspiration to find something to blog about.
I just read one of the best, most informative, well written articles about the housing bust that has led to the subsequent credit market meltdown of 2008. As we must acknowledge in a new year-- out with the old, and in with the new. Still, I believe there's quite a bit to learn from the mistakes that were made that caused the housing and financial markets to crumble. The article from the Wall Street Journal, entitled, "Small House, Big Loan, Spells Owner Trouble" by Michael M. Phillips brilliantly details the multiplying domino effect of the "house of cards" that was created when easy credit allowed strapped homeowners (and home buyers for that matter) to overextend themselves to their breaking points. The story happens to take place (of all places) on the Hopi Reservation in Avondale, Arizona.
Here's a well know recipe for failure:
-Take one woman's financial struggle, and necessity to fuel spending by using her home as a piggy bank
-add a greedy mortgage originator who makes money only by generating new loans,
-throw in a bank that funds the loan then packages it and sells it off to foreign investors as "high quality secure" mortgage backed securities,
-mix in a ratings agency that uses SEC guidelines to rate the securities as AAA so investors are willing to take a higher risk for what they perceive to be a quality investment vehicle
-above all, bake in an oven with little to no government regulation and a ticking time bomb adjustable rate mortgage that will surely throw the "unsuspecting" homeowner completely off the financial Richter scale once baked
-remove in 6-9 months, and watch the homeowner become homeless and the investors' money evaporate!
You'll have to read the article to know how it played out, but I do feel that this article shows how greed and corruption caused the demise of our deregulated financial system to literally fall like a house of cards. Blame whomever you want (one editorial actually had the audacity to blame television itself, namely HGTV for the housing bust). But the result is the same- we have only ourselves to blame. Accountability, now that's a novel word for a new year! Hopefully we will learn from our mistakes and 2009 will be a recovery year for the real estate market.
Happy New Year to you. Please call me directly if you have any questions about the Tucson real estate market, Tucson home sales, or Tucson real estate in general.
Written by Sarah Ley,
BSBA, ABR, CRS, CHNSA
Realtor with Long Realty Company
www.sarahley.longrealty.com
sley@longrealty.com
(520) 404-0544
Saturday, January 3, 2009
Sunday, December 14, 2008
Mortgage Market Update
While the mortgage market continues to generate a lot of talk, both in the Tucson media and in Washington, interest rates for owner occupied financing are currently near all-time lows. If you are looking to take advantage of these low interest rates, and lower home prices, now is a great time to buy a home or refinance your current mortgage. If you do not have a home to sell first, you are in a great position to buy, as there is a large inventory of quality homes for sale in the Tucson market. Many sellers are willing to make concessions, and depending on terms, you could even have some or all of your closing costs paid by the seller. If you are a first time home buyer, or someone who doesn't have a lot of money for a down payment, FHA financing is an excellent alternative. On January 1, 2009, the down payment will go up from 3% to 3.5% (which you do have to have all of this money and it cannot be borrowed). However, you can still get the seller to pay your closing costs, and can get into a new home with an interest rate in the low 5% for very little down. I recently had a client get into a two year old "bank- owned" home in like new condition for only $4,000 with an FHA mortgage.
Lately there has been talk in Washington about an incentive to home buyers of a 4.5% 30-year fixed rate mortgage. But will it become a reality? Right now, no one really knows, as it is just currently "the talk" of Washington politicians. Homeowners who could benefit from a lower interest rate need to know that even if 4.5% becomes a reality from Washington's actions, it would only be available to home buyers, not homeowners seeking to refinance at a better rate. So if you are considering refinancing your mortgage, now may be a great time to do that, as it is not clear if rates will stay low or trend upwards in the new year.
You also may have heard about a program called "Hope for Homeowners." This program has been approved by legislators to help distressed homeowners, so that they can hopefully avoid foreclosure, and also offer a tax credit of $7,500 to first time home buyers and those who have not owned a home in the past three years. Regardless of its best intentions, the program has not been embraced by investors, and it is not available to many people it could potentially help. The bottom line of "Hope for Homeowners" is that the Fed announced recently that they are going to buy up to $600 billion in mortgage-backed securities. This announcement has already helped to drive rates to historical lows. In January, the SEC is meeting. Information may be released that could have a significant bearing on rates- potentially for the worse. Currently, interest rates are extremely volatile. Fluctuations that used to take months are now occurring in just days or hours. If you don't have a loan application in process, you could lose out on lower rates.
Home loan rates are currently in the mid- to low-5% range. Home values are currently at 2003-2004 levels, and have come down significantly from their peak prices in 2005 and 2006. Therefore, it's a great time to either buy a home or refinance your current mortgage. If you have any questions about buying a home in Tucson, or would like information about refinancing your mortgage, please do not hesitate to contact me directly.
Written by Sarah Ley,
BSBA, ABR, CRS, CNHSA
Realtor with Long Realty Company
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Lately there has been talk in Washington about an incentive to home buyers of a 4.5% 30-year fixed rate mortgage. But will it become a reality? Right now, no one really knows, as it is just currently "the talk" of Washington politicians. Homeowners who could benefit from a lower interest rate need to know that even if 4.5% becomes a reality from Washington's actions, it would only be available to home buyers, not homeowners seeking to refinance at a better rate. So if you are considering refinancing your mortgage, now may be a great time to do that, as it is not clear if rates will stay low or trend upwards in the new year.
You also may have heard about a program called "Hope for Homeowners." This program has been approved by legislators to help distressed homeowners, so that they can hopefully avoid foreclosure, and also offer a tax credit of $7,500 to first time home buyers and those who have not owned a home in the past three years. Regardless of its best intentions, the program has not been embraced by investors, and it is not available to many people it could potentially help. The bottom line of "Hope for Homeowners" is that the Fed announced recently that they are going to buy up to $600 billion in mortgage-backed securities. This announcement has already helped to drive rates to historical lows. In January, the SEC is meeting. Information may be released that could have a significant bearing on rates- potentially for the worse. Currently, interest rates are extremely volatile. Fluctuations that used to take months are now occurring in just days or hours. If you don't have a loan application in process, you could lose out on lower rates.
Home loan rates are currently in the mid- to low-5% range. Home values are currently at 2003-2004 levels, and have come down significantly from their peak prices in 2005 and 2006. Therefore, it's a great time to either buy a home or refinance your current mortgage. If you have any questions about buying a home in Tucson, or would like information about refinancing your mortgage, please do not hesitate to contact me directly.
Written by Sarah Ley,
BSBA, ABR, CRS, CNHSA
Realtor with Long Realty Company
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Wednesday, November 26, 2008
Tucson Real Estate- Open House in the Catalina Foothills
I haven't written in quite some time- not since before the election! I will be hosting an open house this Thanksgiving weekend in the lovely community of Fairfield in the Catalina Foothills, from 1-4 PM this Sunday November 30th, 2008. You can click on the link of the address: 5369 N. Sempreverde for detailed information about this property.
Wishing you and your family a wonderful Thanksgiving holiday. Please do not hesitate to contact me if you, a friend, or a family member has a real estate question or concern.
Here is My Thanksgiving wish for you:
May you know peace, happiness, and presence of the moment.
May you appreciate and feel gratitude for the many blessings bestowed to you.
May you laugh, sing, dance, rejoice, and experience the many joys life has to offer.
May your troubles be few, and may you move through them without becoming bitter.
May your your family and your home be a place of warmth, love, and protection.
May you lead a fulfilling life, full of purpose, and always love with an open and full heart...
Happy Thanksgiving! I hope to see you at the open house this Sunday.
Written by Sarah Ley,
BSBA, ABR, CRS, CHNSA
Realtor with Long Realty
Direct: (520) 404-0544
www.sarahley.longrealty.com
sley@longrealty.com
Wishing you and your family a wonderful Thanksgiving holiday. Please do not hesitate to contact me if you, a friend, or a family member has a real estate question or concern.
Here is My Thanksgiving wish for you:
May you know peace, happiness, and presence of the moment.
May you appreciate and feel gratitude for the many blessings bestowed to you.
May you laugh, sing, dance, rejoice, and experience the many joys life has to offer.
May your troubles be few, and may you move through them without becoming bitter.
May your your family and your home be a place of warmth, love, and protection.
May you lead a fulfilling life, full of purpose, and always love with an open and full heart...
Happy Thanksgiving! I hope to see you at the open house this Sunday.
Written by Sarah Ley,
BSBA, ABR, CRS, CHNSA
Realtor with Long Realty
Direct: (520) 404-0544
www.sarahley.longrealty.com
sley@longrealty.com
Friday, October 31, 2008
Is the Economy a Trick-or-a-Treat? You decide...
There have been several occasions this past month that I've sat down to write a new blog article, only to be confronted by the scary and sobering reality that "Nothing I can say at this moment will change what is happening or give anyone relief from the financial hardships they are experiencing." There's simply no place to hide from the fallout of the massive global economic crisis we are currently confronting head on. Unfortunately for us all, it seems to have a seismic range that no one could have anticipated. I've been comparing the economic crisis in my mind to an earthquake. We have had the initial quake, and now we are feeling daily aftershocks with the continuing decline in both the stock market and the real estate market, as well as the apparent implosion of the banking system (as we knew it before the crisis).
So instead of writing yet another article that contends to understand and/or explain the basis of how we got to this point in the first place, and doggone it- how are we going to get out of here, I turned my attention to reading philosophy and fiction as a form of shelter (and necessary diversion) from the constant media storm. Being that today is Halloween, I thought it would be an appropriate day to come back to blogging, with some possible new insights I have garnered from my temporary hiatus. I have come up with a few insights. They don't necessarily have to do with real estate, and they may not relate to anything that you've been experiencing. They are general insights of a philosophical nature. Although I suppose there is the possibility they could apply to any crisis faced during a lifetime (be it a personal or a financial crisis). Here are a few "treats" I would like to share with you that I have gained by pulling away from the mainstream media for a stint, and pausing for some necessary reflection about the current state of our economy in America.
1) This evolved into a crisis because Americans are used to spending not saving their money. I recently read an article about the Baby Boomer generation, who are known to be the generation holding the purse strings of our economy. The Boomers have (up until now) fueled their incessant spending habits with cheap oil and cheap credit. Since there is no more of either, the Boomers will have to revert to basic 'Granny' savings techniques. This is a very foreign concept to many Boomers who have acclimated to spending as a way of life. (My Grandmother used to recycle tin foil for heaven's sake). The lesson here is that there is no easy recipe for financial or personal success. Any success achieved in life is a direct result of diligence and good old fashion hard work. All of us will need to make adjustments to not being able to live a life 'on credit.' It's not really the housing crisis that created the financial crisis of 2008, it was a shift of consumer spending habits that occurred since the early 1990's, where it became normal to finance ones lifestyle on credit.
2) The government is not going to save you or me! The bailout plan was geared to coming to the aid of major commercial banks, which (in theory) should serve to keep the economy lubricated, and keep the wheels of commerce turning. Unfortunately, banks are not helping the problem all that much, as they seem to be hoarding the injection that the government gave them instead of lending to other banks and more consumers. People would be wise to stop thinking that the government is going to bail them out of whatever personal financial firestorm they are facing. Unless you think socialism is an acceptable form of government, we need to figure our own ways out of the messes we have created. Who was it who said, "Oh, such tangled webs we weave." It's time we take responsibility for our own actions. My Grandmother used to say, "Never dig a hole for yourself deeper than you can dig your way out of. Incidentally, this was the same Grandmother who actually took joy in recycling tin foil!
3) Don't base your happiness on the state of the economy. If you do, you are in for a very unhappy and uncertain future. I have been reflecting on the statement, "The best things in life are free." Try that one on for size again. Even if you lost faith in the validity of it. You may find it does ring true, and there are countless ways where getting creative in this domain can actually energize your spirit and renew your belief system that simple things can create great happiness in your life. Yesterday I went on a hike (free)! I found some beautiful rose quartz rocks (free)! I came home and hugged my kids, my husband, and my dog (free)! I witnessed a breathtaking Tucson sunset (free)! And then I sat under a canopy of brilliant stars (free)! At any rate, there is simply no end to how creative you can get with this free stuff, and it is a beautiful thing to appreciate the simple things. Maybe if you adjust your priorities, you'll begin to appreciate everything more, not just the simple things. If you practice adjusting your thinking, you may come to find that Happiness comes from what's inside of us, not what's outside of us. Create for yourself a happiness that is not based on external forces. Ralph Waldo Emerson said it so succinctly, "A happy person is not someone with a certain set of circumstances, but someone with a certain set of attitudes."
4) One of the best quotes of all time is, "Change is the only constant." If only I could remember who said that! No matter. We all may have to relearn the basics in order to survive this economy, and learn to do without all the extras that got us in financial trouble to begin with. In the grand scheme of things, simplifying may not be such a bad thing. My favorite philosopher, Ralph Waldo Emerson, said in his essay, Compensation, "Every excess causes a defect; every defect an excess...For everything you have missed, you have gained something else; and for everything you gain, you lose something." I don't want this posting to turn into a philosophy lesson, but perhaps if we see this time where we must pull back our purse strings as an opportunity for reflection, and a time to learn something new about ourselves regarding the obvious excesses of the past several years, we will gain something from our losses. Accept that things are not always going to go your way, and that change is a normal part of life. It's how you react to change that is going to make or break you. In other words, everything we experience is shaped by our own perceptions.
Just a little food for thought on this Halloween day. Hope that wasn't too tricky! Enjoy yourself tonight, and be safe.
Written by Sarah Ley,
BSBA, ABR, CRS, CNHSA
REALTOR with Long Realty
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
So instead of writing yet another article that contends to understand and/or explain the basis of how we got to this point in the first place, and doggone it- how are we going to get out of here, I turned my attention to reading philosophy and fiction as a form of shelter (and necessary diversion) from the constant media storm. Being that today is Halloween, I thought it would be an appropriate day to come back to blogging, with some possible new insights I have garnered from my temporary hiatus. I have come up with a few insights. They don't necessarily have to do with real estate, and they may not relate to anything that you've been experiencing. They are general insights of a philosophical nature. Although I suppose there is the possibility they could apply to any crisis faced during a lifetime (be it a personal or a financial crisis). Here are a few "treats" I would like to share with you that I have gained by pulling away from the mainstream media for a stint, and pausing for some necessary reflection about the current state of our economy in America.
1) This evolved into a crisis because Americans are used to spending not saving their money. I recently read an article about the Baby Boomer generation, who are known to be the generation holding the purse strings of our economy. The Boomers have (up until now) fueled their incessant spending habits with cheap oil and cheap credit. Since there is no more of either, the Boomers will have to revert to basic 'Granny' savings techniques. This is a very foreign concept to many Boomers who have acclimated to spending as a way of life. (My Grandmother used to recycle tin foil for heaven's sake). The lesson here is that there is no easy recipe for financial or personal success. Any success achieved in life is a direct result of diligence and good old fashion hard work. All of us will need to make adjustments to not being able to live a life 'on credit.' It's not really the housing crisis that created the financial crisis of 2008, it was a shift of consumer spending habits that occurred since the early 1990's, where it became normal to finance ones lifestyle on credit.
2) The government is not going to save you or me! The bailout plan was geared to coming to the aid of major commercial banks, which (in theory) should serve to keep the economy lubricated, and keep the wheels of commerce turning. Unfortunately, banks are not helping the problem all that much, as they seem to be hoarding the injection that the government gave them instead of lending to other banks and more consumers. People would be wise to stop thinking that the government is going to bail them out of whatever personal financial firestorm they are facing. Unless you think socialism is an acceptable form of government, we need to figure our own ways out of the messes we have created. Who was it who said, "Oh, such tangled webs we weave." It's time we take responsibility for our own actions. My Grandmother used to say, "Never dig a hole for yourself deeper than you can dig your way out of. Incidentally, this was the same Grandmother who actually took joy in recycling tin foil!
3) Don't base your happiness on the state of the economy. If you do, you are in for a very unhappy and uncertain future. I have been reflecting on the statement, "The best things in life are free." Try that one on for size again. Even if you lost faith in the validity of it. You may find it does ring true, and there are countless ways where getting creative in this domain can actually energize your spirit and renew your belief system that simple things can create great happiness in your life. Yesterday I went on a hike (free)! I found some beautiful rose quartz rocks (free)! I came home and hugged my kids, my husband, and my dog (free)! I witnessed a breathtaking Tucson sunset (free)! And then I sat under a canopy of brilliant stars (free)! At any rate, there is simply no end to how creative you can get with this free stuff, and it is a beautiful thing to appreciate the simple things. Maybe if you adjust your priorities, you'll begin to appreciate everything more, not just the simple things. If you practice adjusting your thinking, you may come to find that Happiness comes from what's inside of us, not what's outside of us. Create for yourself a happiness that is not based on external forces. Ralph Waldo Emerson said it so succinctly, "A happy person is not someone with a certain set of circumstances, but someone with a certain set of attitudes."
4) One of the best quotes of all time is, "Change is the only constant." If only I could remember who said that! No matter. We all may have to relearn the basics in order to survive this economy, and learn to do without all the extras that got us in financial trouble to begin with. In the grand scheme of things, simplifying may not be such a bad thing. My favorite philosopher, Ralph Waldo Emerson, said in his essay, Compensation, "Every excess causes a defect; every defect an excess...For everything you have missed, you have gained something else; and for everything you gain, you lose something." I don't want this posting to turn into a philosophy lesson, but perhaps if we see this time where we must pull back our purse strings as an opportunity for reflection, and a time to learn something new about ourselves regarding the obvious excesses of the past several years, we will gain something from our losses. Accept that things are not always going to go your way, and that change is a normal part of life. It's how you react to change that is going to make or break you. In other words, everything we experience is shaped by our own perceptions.
Just a little food for thought on this Halloween day. Hope that wasn't too tricky! Enjoy yourself tonight, and be safe.
Written by Sarah Ley,
BSBA, ABR, CRS, CNHSA
REALTOR with Long Realty
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Monday, September 22, 2008
Feeling Fed Up?
Wow, this past week has been such a bombshell that I feel like I've been holding my breath to wait for the dust to settle a bit before even attempting to write about it! What a mess our nation's financial system is in. No ifs, ands, or buts about it-- it's all thanks to the greed that swallowed every ounce of common sense financial institutions used to be known for. I'm just warning you ahead of time-- I'm not sure this post has much to do with real estate. At least not directly. It's more just my own venting off steam. It might even strike you as comical! By now, you've probably read enough of the headlines, enough of the gloom and doom to be able to recite lines like this, "Lawmakers are scrambling to put their mark on the Bush administration's $700 billion plan to save financial market- a fast moving test of wills that could reshape one of the biggest bailouts in U.S. history." (WSJ 9/22/08). Being beyond bewildered with these sort of statements, I feel compelled to trace this financial crisis poster child to its very core! You'll see, it's already in Wikipedia as the "Financial Crisis of 2007 & 2008!" You may have already decided to stop reading right now. Totally understandable. I wouldn't blame you in the least. It would be right in line with the current American mentality about banks, "Get out while you still can!"
Kidding aside, I'm really not that old (age is a relative concept, right!?). I was a child of the 1970's. I remember 1976 in particular. Okay, I was 7 then. It was the bi-centennial year, and it was also the name of a certain well known gas station, '76. I was naive enough to think that they would have to change their name to '77 when 1977 arrived-- and how many signs would they have to change every year!? As I remember from a limited perspective of youth, it was also the era of gas lines due to the gasoline shortage. People making runs on gas stations thinking that they were going to run out of gas. Growing up in Phoenix, Arizona- it wasn't exactly what you'd call fun to be stuck in one of these 'gas lines' in the middle of summer! But what choice did people have if they wanted to fill their tanks? My mom had just about the ugliest Ford Pinto Station wagon you have ever seen. It was one of the ones with the fake wood paneling on the sides. My goodness, you couldn't have picked an uglier car with your eyes closed! Thank goodness I was only 7, or I probably wouldn't have been caught dead in that beast. The story goes that on one mild 115 degree summer afternoon, we actually did run out of gas. It was near Fountain Hills (in the middle of no where). I now intuitively understand the reason Apache Tears are called Apache Tears! Mind you, this was before GPS systems, before blackberries, before cell phones! We hoofed it for miles with limited water and a gas can, finally setting our bulging eyes on a swimming pool that wasn't a mirage- it was real. (My mom was always accidentally finding adventures). Luckily the nice owner of that home not only gave us water, but he took us to the nearest gas station to fill the gas can & then back to the car. This may be partly to do with why I am in real estate today. It's possible that nice homeowner saved my life when I could have become a statistic.
Flash forward a few years. To the mid-eighties. I was a teen. It was a totally (to use the "Valley Girl" lingo) cool time to be a teenager in the 80's! Granted my youth was completely void of comprehending dire economic times. My family was middle class, and I never saw us struggle to make ends meet. My dad would tell me stories (that I doubted were even true) about being a child of the post WWII era, and what the meaning of rationing was. It was like learning about life on another planet! You might think it exists, but you have no yardstick to relate to it. Yes, growing up in the 1980's was all about excess. Excess hair, excessive houses and cars, excess government spending! Remember Ronald Regan and his famous Reaganomics? If you ask me, our favorite Hollywood President was truly the start of this financial crisis. Supply side economics. What a concept! And to think that we all had this little nagging fear in the back of our minds that the communists were going to blow us all sky high with their nuclear weapons. We had to have a massive nuclear arsenal to defend our country. This was how Reagan got us out of the economic crisis of the 1980's. I remember doing a research project on Chernobyl that really opened my eyes to the dangers of nuclear power being mismanaged. I still wonder where all those war heads are today.
While I was reflecting on the cause of our current economic crisis, it sort of dawned on me that every generation has its economic crisis. This one just seems to be the mother of them all! Thinking back to after I graduated from college. It was 1992. I started a fledgling coffee business that was located in the courtyard of a failed savings and loan. I knew that the savings and loan disaster caused our government to form the RTC (Resolution Trust Corporation). But I didn't really know what caused the S&L's to fail. There was Charles Keating, whose name we most remember with the S&L failure. Remember him? My father & I were on a flight to LA (to connect to a flight to Maui) when we saw him. This was in November of 1991. I remember everyone was booing him, taunting him with lines like, "What happened to the private jet, Charles?" Poor guy. In fact checking for this posting, I see that our very own Arizona Senator John McCain was one of the "Keating five." Back to the early 1990's, when I owned a coffee business that occupied this vast space that used to be a fallen S&L. We had that location for 6 years, using the basement of the prior S&L as our commissary where we washed the dishes every day. I had enterprising fantasies of converting the bank to a night club, that could be called "The Vault." I pictured bartenders behind the teller windows and the actual vault being the center of the party. Okay, so I've always had a vivid imagination!
Today, the vacant bank building that housed the dreams of my first business venture looms in my mind as a symbol of our nation's current crisis. I never understood what caused the S&L's demise up until now, but I spent the first 6 years of my adult working life occupying the vast dark spaces of a ruined financial institution. Six years working hard to create a viable business out of the vapors of another larger businesses' failure. Bottom line is that's the very essence of the American dream-- making something out of nothing! Creating a new vision out of some one's failure. Out of the dust of ruins. It's been done before in this nation. It's why our fellow countrymen have been known to be called "Mavericks." I'm hopeful that this current crisis is no exception to past crises. And while it may seem virtually impossible to be optimistic at this juncture, take a look at some of the points in the Time article from 1990 (link to Charles Keating above). The overall verdict is that things are about as dire as we decide they are, and of course they seem a whole lot worse when you're up to your eyeballs in alligators! What choice do we have now, but to move forward from here. Hopefully we all learned something valuable in the process that will cost all of us time, money, and lost opportunities.
I used to think of banks as venerable institutions. Visions of massive marble Corinthian columned buildings where old men with horned rimmed glasses curl their moustaches with the tips of their pencils while they crunch numbers and weigh the pros and cons of each and every loan. That's how I thought of banks before this financial disaster. Their decisions stopped making sense to me about 4 years ago, and I would hope now in hindsight their decisions didn't even make sense to them. I guess (as a point of reference) I'll be telling my kids the story of the gas lines in 1976 now. I'm sure they will be as deer in the headlights as I was listening to my own father's economic crisis stories of post WWII America.
Perhaps some of those number crunching old men will be greeting you at the front door of your neighborhood bank soon? After all, I've been told countless times that "history repeats itself." My kids will have some great stories to tell their kids in about 20 years. I'm just guessing, but perhaps their kids will think they are from another planet!
Written by Sarah Ley
BSBA, ABR, CRS, CNHSA,
Tucson Realtor with Long Realty
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Kidding aside, I'm really not that old (age is a relative concept, right!?). I was a child of the 1970's. I remember 1976 in particular. Okay, I was 7 then. It was the bi-centennial year, and it was also the name of a certain well known gas station, '76. I was naive enough to think that they would have to change their name to '77 when 1977 arrived-- and how many signs would they have to change every year!? As I remember from a limited perspective of youth, it was also the era of gas lines due to the gasoline shortage. People making runs on gas stations thinking that they were going to run out of gas. Growing up in Phoenix, Arizona- it wasn't exactly what you'd call fun to be stuck in one of these 'gas lines' in the middle of summer! But what choice did people have if they wanted to fill their tanks? My mom had just about the ugliest Ford Pinto Station wagon you have ever seen. It was one of the ones with the fake wood paneling on the sides. My goodness, you couldn't have picked an uglier car with your eyes closed! Thank goodness I was only 7, or I probably wouldn't have been caught dead in that beast. The story goes that on one mild 115 degree summer afternoon, we actually did run out of gas. It was near Fountain Hills (in the middle of no where). I now intuitively understand the reason Apache Tears are called Apache Tears! Mind you, this was before GPS systems, before blackberries, before cell phones! We hoofed it for miles with limited water and a gas can, finally setting our bulging eyes on a swimming pool that wasn't a mirage- it was real. (My mom was always accidentally finding adventures). Luckily the nice owner of that home not only gave us water, but he took us to the nearest gas station to fill the gas can & then back to the car. This may be partly to do with why I am in real estate today. It's possible that nice homeowner saved my life when I could have become a statistic.
Flash forward a few years. To the mid-eighties. I was a teen. It was a totally (to use the "Valley Girl" lingo) cool time to be a teenager in the 80's! Granted my youth was completely void of comprehending dire economic times. My family was middle class, and I never saw us struggle to make ends meet. My dad would tell me stories (that I doubted were even true) about being a child of the post WWII era, and what the meaning of rationing was. It was like learning about life on another planet! You might think it exists, but you have no yardstick to relate to it. Yes, growing up in the 1980's was all about excess. Excess hair, excessive houses and cars, excess government spending! Remember Ronald Regan and his famous Reaganomics? If you ask me, our favorite Hollywood President was truly the start of this financial crisis. Supply side economics. What a concept! And to think that we all had this little nagging fear in the back of our minds that the communists were going to blow us all sky high with their nuclear weapons. We had to have a massive nuclear arsenal to defend our country. This was how Reagan got us out of the economic crisis of the 1980's. I remember doing a research project on Chernobyl that really opened my eyes to the dangers of nuclear power being mismanaged. I still wonder where all those war heads are today.
While I was reflecting on the cause of our current economic crisis, it sort of dawned on me that every generation has its economic crisis. This one just seems to be the mother of them all! Thinking back to after I graduated from college. It was 1992. I started a fledgling coffee business that was located in the courtyard of a failed savings and loan. I knew that the savings and loan disaster caused our government to form the RTC (Resolution Trust Corporation). But I didn't really know what caused the S&L's to fail. There was Charles Keating, whose name we most remember with the S&L failure. Remember him? My father & I were on a flight to LA (to connect to a flight to Maui) when we saw him. This was in November of 1991. I remember everyone was booing him, taunting him with lines like, "What happened to the private jet, Charles?" Poor guy. In fact checking for this posting, I see that our very own Arizona Senator John McCain was one of the "Keating five." Back to the early 1990's, when I owned a coffee business that occupied this vast space that used to be a fallen S&L. We had that location for 6 years, using the basement of the prior S&L as our commissary where we washed the dishes every day. I had enterprising fantasies of converting the bank to a night club, that could be called "The Vault." I pictured bartenders behind the teller windows and the actual vault being the center of the party. Okay, so I've always had a vivid imagination!
Today, the vacant bank building that housed the dreams of my first business venture looms in my mind as a symbol of our nation's current crisis. I never understood what caused the S&L's demise up until now, but I spent the first 6 years of my adult working life occupying the vast dark spaces of a ruined financial institution. Six years working hard to create a viable business out of the vapors of another larger businesses' failure. Bottom line is that's the very essence of the American dream-- making something out of nothing! Creating a new vision out of some one's failure. Out of the dust of ruins. It's been done before in this nation. It's why our fellow countrymen have been known to be called "Mavericks." I'm hopeful that this current crisis is no exception to past crises. And while it may seem virtually impossible to be optimistic at this juncture, take a look at some of the points in the Time article from 1990 (link to Charles Keating above). The overall verdict is that things are about as dire as we decide they are, and of course they seem a whole lot worse when you're up to your eyeballs in alligators! What choice do we have now, but to move forward from here. Hopefully we all learned something valuable in the process that will cost all of us time, money, and lost opportunities.
I used to think of banks as venerable institutions. Visions of massive marble Corinthian columned buildings where old men with horned rimmed glasses curl their moustaches with the tips of their pencils while they crunch numbers and weigh the pros and cons of each and every loan. That's how I thought of banks before this financial disaster. Their decisions stopped making sense to me about 4 years ago, and I would hope now in hindsight their decisions didn't even make sense to them. I guess (as a point of reference) I'll be telling my kids the story of the gas lines in 1976 now. I'm sure they will be as deer in the headlights as I was listening to my own father's economic crisis stories of post WWII America.
Perhaps some of those number crunching old men will be greeting you at the front door of your neighborhood bank soon? After all, I've been told countless times that "history repeats itself." My kids will have some great stories to tell their kids in about 20 years. I'm just guessing, but perhaps their kids will think they are from another planet!
Written by Sarah Ley
BSBA, ABR, CRS, CNHSA,
Tucson Realtor with Long Realty
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Saturday, September 13, 2008
Tucson Real Estate- Open House in the Catalina Foothills
With the heat breaking a bit, many folks may want to peruse open houses this weekend. It's sure to be a great weather weekend for looking at Tucson properties! If you are out & about looking for Catalina Foothills real estate or a real estate agent who lives in & specializes in the Catalina Foothills, look no further! I'll be hosting an open house on Sunday September 14th from 1-4 PM in my neighborhood, Skyline Bel Air Estates in the Catalina Foothills, north of Tucson. The property is located at 6010 N. Camino Esplendora . This is a beautiful burnt adobe estate on an acre lot with city and mountain views. Stop in and see it tomorrow!
Skyline Bel Air Estates is a desert commuity located just north and east of the intersection of Swan & Sunrise. It has a 25 yard community lap pool, two tennis courts, and community facilities available for its residents to host parties. The neighborhood has a swim team in the summer months. Most of its 454 homes are older- built from the mid-1960's through the late 1970's. The majority of homes in this hillside community are on half-acre plus lots which offer beautiful views of the city and the mountains-- in my opinion, some of the best views in the city. The award winning Sunrise Drive Elementary school is within walking distance to many of the homes. The community is close to area shops and restaurants. If you're wanting to explore this community, or Catalina foothills real estate in greater detail, I've been a Skyline Bel Air resident for over five years now, and I love this neighborhood! Please call me if you have any questions about this property or Tucson real estate in general. Have a great weekend! I hope to see you at the open house tomorrow.
Written by Sarah Ley
BSBA, ABR, CRS, CNHSA,
Tucson Realtor with Long Realty
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Skyline Bel Air Estates is a desert commuity located just north and east of the intersection of Swan & Sunrise. It has a 25 yard community lap pool, two tennis courts, and community facilities available for its residents to host parties. The neighborhood has a swim team in the summer months. Most of its 454 homes are older- built from the mid-1960's through the late 1970's. The majority of homes in this hillside community are on half-acre plus lots which offer beautiful views of the city and the mountains-- in my opinion, some of the best views in the city. The award winning Sunrise Drive Elementary school is within walking distance to many of the homes. The community is close to area shops and restaurants. If you're wanting to explore this community, or Catalina foothills real estate in greater detail, I've been a Skyline Bel Air resident for over five years now, and I love this neighborhood! Please call me if you have any questions about this property or Tucson real estate in general. Have a great weekend! I hope to see you at the open house tomorrow.
Written by Sarah Ley
BSBA, ABR, CRS, CNHSA,
Tucson Realtor with Long Realty
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Tuesday, September 9, 2008
Fannie Mae & Freddie Mac Bailout- What it means to You- Tucson Home Buyer or Seller
With news of the government takeover of Fannie Mae & Freddie Mac spreading faster than a desert wildfire, consumers are now filled with relief, but they are also looking for answers. People want to (& have a right to) know how the government will change Fannie & Freddie, who will foot the bill, and how this impacts them, both financially (as far as taxes go), but also when they want to buy or sell a home in Tucson. It doesn't take much guess work to figure out that taxpayers are going to be the ones taking the hit head on by the bailout. This post will address what the takeover means for the real estate market, interest rates, and the American economy as a whole.
If I had to guess what the Fannie & Freddie takeover means for mortgage rates, I would have to say (at least in the short run), I would expect interest rates to drop. They already have since yesterday! The government understands the dynamics of our blighted real estate market. The Fed has been attempting to lower mortgage rates for the last year to try to right a shaky real estate market. This has been a battle between fears of hyper or stagflation, and what needs to happen to mortgage interest rates if buyer demand is going to improve. The Fed has lowered the prime rate several times in an attempt to lower mortgage interest rates, which would have (if it had worked) helped the housing market. However, over the last several months mortgage interest rates have for the most part gone up, instead of down. This could possibly be due to banks tightening up on controls over funding new loans, and newer more strict underwriting guidelines, as well as banks trying to protect their bottom lines. But now that the government has full control of Fannie & Freddie- whose primary responsibility has been to bundle mortgages (securitization) in order to provide sufficient funding for these mortgages- our treasury will have more extensive control over the mortgage market, and therefore (it is theorized) better control over mortgage rates. As long as the government's objective remains the same as the Fed's (to keep the real estate market active by lowering the prime rate), it is probably safe to say that- at least in the short term, mortgage interest rates will decline.
What does the Fannie/Freddie takeover reveal about the real estate market? You don't have to look too far, or even across town to see the signs of a depressed market & realize that both the Tucson real estate market and the national real estate market face serious issues. Foreclosures are at record high levels. Consumer confidence is at a record low level. Both local & national real estate markets are stagnating under the pressure. The Fannie/Freddie takeover is big time! It has been stated as being the biggest financial bailout of our nation's history. The bailout happened because the government realized that markets were no longer capable of righting themselves. The foreclosure crisis is one of epic proportions. In addition to consumers losing confidence in the real estate market, foreign investors were losing confidence in the two mortgage giants, causing more and more retreating by both parties. In essence, the theory was that if nothing were done (by the government) that our nation was headed for an economic disaster of catastrophic proportions. Possibly a second Great Depression. I do agree that something had to be done, and this does seem to me (a Tucson real estate professional for nine years) to be the right choice, maybe the only choice?
How is the Fannie/Freddie bailout going to effect the real estate market, both locally and nationally? The bailout presents an obviously ominous sign about weakness in both local and national real estate markets. However, it is believed by many experts that the bailout will (in due time) have a positive effect on the the local Tucson and the national real estate markets. If mortgage interest rates decline, as many experts believe will happen as an outcome of the bailout, this should act as a great 'leg up' for an ailing real estate market. Buyers can get more house for their money, and more buyers can qualify when mortgage interest rates are lower (part of the reason we got in this crisis to begin with, and theoretically what caused home prices to rise at unprecedented levels). Just yesterday, rates on 30 year fixed rate mortgages fell to 5.875% from 6.125% at the outset of the day. Any reduction in interest rates should have the effect of increasing buyer demand. Additionally, lower mortgage interest rates could help to shore up declining real estate values, as buyers' buying power increases, helping to spur additional demand. Hopefully the effect will also be to restore consumer confidence in the real estate market, and give buyers who have been on the fence (anticipating further falls in home prices) to buy. If this happens (and buying activity increases), it will be an injection into both the local and national economies, and our government is well aware of that fact. The economy as a whole will benefit if local and national real estate pictures brighten.
It is additionally hopeful that the bailout of Fannie & Freddie will ease up some of the recent mortgage restrictions the two giants created. These restrictions were created in an attempt to gain tighter control over lending practices and prevent further foreclosures, which translate to big time losses for lenders (and the entities that insure them). While none of us wants the mortgage market to return to the kind of cavalier cowboy lending that led to this crisis to begin with, many of the recently enacted underwriting rules and lender's guidelines seem to be overly restrictive. For example, I had a closing about a month ago, in which a lender (not to be named) would not allow a credit to the buyer's closing costs for repairs. Instead, all of the repairs had to be completed prior to closing, with receipts provided for their completion. This is obviously to prevent buyers from pocketing the repair credit & allowing the house to fall into disrepair. But it makes it challenging when contractors cannot get repairs done prior to closing dates. (There is usually only a window of about two to three weeks prior to the closing date once repairs are negotiated between buyer & seller). At any rate, some of these rules have been enacted in an obvious attempt to protect lenders from further erosion of profit margins. However, current lending restrictions have become more restrictive than any we have seen since the savings & loan debacle. Hopefully this will mean that a federally controlled Fannie & Freddie will enable us to return to more normalized and less restrictive lending criteria because lenders will have the government to back them up.
Obviously, the biggest concern of the bailout is that it has the potential to make taxpayers foot the bill for billions of dollars in mortgage loan losses. In the short term, it will be necessary for the government to infuse money into Fannie & Freddie to keep them solvent. Due to big risks taken during the housing boom, both companies (especially Freddie) have been losing money and foreign investment shareholders for a few years. It is estimated that the government will will have to provide a cash infusion into Fannie & Freddie to enable them to restore to financial solvency. Said Andy Laperriere, managing director of ISI group, "...It's a pretty high likelihood since it (the government) devised a plan to take the companies over." (WSJ 9/9/08). At any rate, the government bailout is sure to be at a very high cost for both the government and for taxpayers. All of this coming at a time of both economic and political uncertainty. I suppose the alternative was allowing Fannie & Freddie to fail completely, which could have led the entire mortgage & real estate industries- potentially even the entire US economy- into a complete tailspin. Overall, the government found itself in a tough situation and decided that they were in the best position to come to Fannie & Freddie's rescue, with the auspicious goal of aiding the entire US economy (at a cost not yet mentioned to taxpayers).
The bailout has already helped the stock market have a rally yesterday (both here in the US & also world stock markets). In general, a lot of what happens in markets (both real estate & stocks) is psychological. If consumers believe that it will have a positive affect, then sometimes that can provide enough of a boost to kick start the markets. Remember the movie, "Field of Dreams?" Kevin Costner's famous line (one that I use all the time) was, "If you build it, they will come." Hopefully this will be the case & we can get the real estate market and the US economy back on track. In addition to unknown costs to taxpayers, The Fannie & Freddie bailout will surely be a big thorn in the side of whoever becomes the next president of our nation. Said Eugene Ludwig, former US Comptroller of the Currency, "It's appropriate for the government to help in these extraordinary circumstances because market psychology has overruled economic reality, placing our nation's well being at risk." (WSJ 9/9/08).
Written by Sarah Ley,
BSBA, ABR, CRS, CHNSA
Tucson Realtor with Long Realty
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
If I had to guess what the Fannie & Freddie takeover means for mortgage rates, I would have to say (at least in the short run), I would expect interest rates to drop. They already have since yesterday! The government understands the dynamics of our blighted real estate market. The Fed has been attempting to lower mortgage rates for the last year to try to right a shaky real estate market. This has been a battle between fears of hyper or stagflation, and what needs to happen to mortgage interest rates if buyer demand is going to improve. The Fed has lowered the prime rate several times in an attempt to lower mortgage interest rates, which would have (if it had worked) helped the housing market. However, over the last several months mortgage interest rates have for the most part gone up, instead of down. This could possibly be due to banks tightening up on controls over funding new loans, and newer more strict underwriting guidelines, as well as banks trying to protect their bottom lines. But now that the government has full control of Fannie & Freddie- whose primary responsibility has been to bundle mortgages (securitization) in order to provide sufficient funding for these mortgages- our treasury will have more extensive control over the mortgage market, and therefore (it is theorized) better control over mortgage rates. As long as the government's objective remains the same as the Fed's (to keep the real estate market active by lowering the prime rate), it is probably safe to say that- at least in the short term, mortgage interest rates will decline.
What does the Fannie/Freddie takeover reveal about the real estate market? You don't have to look too far, or even across town to see the signs of a depressed market & realize that both the Tucson real estate market and the national real estate market face serious issues. Foreclosures are at record high levels. Consumer confidence is at a record low level. Both local & national real estate markets are stagnating under the pressure. The Fannie/Freddie takeover is big time! It has been stated as being the biggest financial bailout of our nation's history. The bailout happened because the government realized that markets were no longer capable of righting themselves. The foreclosure crisis is one of epic proportions. In addition to consumers losing confidence in the real estate market, foreign investors were losing confidence in the two mortgage giants, causing more and more retreating by both parties. In essence, the theory was that if nothing were done (by the government) that our nation was headed for an economic disaster of catastrophic proportions. Possibly a second Great Depression. I do agree that something had to be done, and this does seem to me (a Tucson real estate professional for nine years) to be the right choice, maybe the only choice?
How is the Fannie/Freddie bailout going to effect the real estate market, both locally and nationally? The bailout presents an obviously ominous sign about weakness in both local and national real estate markets. However, it is believed by many experts that the bailout will (in due time) have a positive effect on the the local Tucson and the national real estate markets. If mortgage interest rates decline, as many experts believe will happen as an outcome of the bailout, this should act as a great 'leg up' for an ailing real estate market. Buyers can get more house for their money, and more buyers can qualify when mortgage interest rates are lower (part of the reason we got in this crisis to begin with, and theoretically what caused home prices to rise at unprecedented levels). Just yesterday, rates on 30 year fixed rate mortgages fell to 5.875% from 6.125% at the outset of the day. Any reduction in interest rates should have the effect of increasing buyer demand. Additionally, lower mortgage interest rates could help to shore up declining real estate values, as buyers' buying power increases, helping to spur additional demand. Hopefully the effect will also be to restore consumer confidence in the real estate market, and give buyers who have been on the fence (anticipating further falls in home prices) to buy. If this happens (and buying activity increases), it will be an injection into both the local and national economies, and our government is well aware of that fact. The economy as a whole will benefit if local and national real estate pictures brighten.
It is additionally hopeful that the bailout of Fannie & Freddie will ease up some of the recent mortgage restrictions the two giants created. These restrictions were created in an attempt to gain tighter control over lending practices and prevent further foreclosures, which translate to big time losses for lenders (and the entities that insure them). While none of us wants the mortgage market to return to the kind of cavalier cowboy lending that led to this crisis to begin with, many of the recently enacted underwriting rules and lender's guidelines seem to be overly restrictive. For example, I had a closing about a month ago, in which a lender (not to be named) would not allow a credit to the buyer's closing costs for repairs. Instead, all of the repairs had to be completed prior to closing, with receipts provided for their completion. This is obviously to prevent buyers from pocketing the repair credit & allowing the house to fall into disrepair. But it makes it challenging when contractors cannot get repairs done prior to closing dates. (There is usually only a window of about two to three weeks prior to the closing date once repairs are negotiated between buyer & seller). At any rate, some of these rules have been enacted in an obvious attempt to protect lenders from further erosion of profit margins. However, current lending restrictions have become more restrictive than any we have seen since the savings & loan debacle. Hopefully this will mean that a federally controlled Fannie & Freddie will enable us to return to more normalized and less restrictive lending criteria because lenders will have the government to back them up.
Obviously, the biggest concern of the bailout is that it has the potential to make taxpayers foot the bill for billions of dollars in mortgage loan losses. In the short term, it will be necessary for the government to infuse money into Fannie & Freddie to keep them solvent. Due to big risks taken during the housing boom, both companies (especially Freddie) have been losing money and foreign investment shareholders for a few years. It is estimated that the government will will have to provide a cash infusion into Fannie & Freddie to enable them to restore to financial solvency. Said Andy Laperriere, managing director of ISI group, "...It's a pretty high likelihood since it (the government) devised a plan to take the companies over." (WSJ 9/9/08). At any rate, the government bailout is sure to be at a very high cost for both the government and for taxpayers. All of this coming at a time of both economic and political uncertainty. I suppose the alternative was allowing Fannie & Freddie to fail completely, which could have led the entire mortgage & real estate industries- potentially even the entire US economy- into a complete tailspin. Overall, the government found itself in a tough situation and decided that they were in the best position to come to Fannie & Freddie's rescue, with the auspicious goal of aiding the entire US economy (at a cost not yet mentioned to taxpayers).
The bailout has already helped the stock market have a rally yesterday (both here in the US & also world stock markets). In general, a lot of what happens in markets (both real estate & stocks) is psychological. If consumers believe that it will have a positive affect, then sometimes that can provide enough of a boost to kick start the markets. Remember the movie, "Field of Dreams?" Kevin Costner's famous line (one that I use all the time) was, "If you build it, they will come." Hopefully this will be the case & we can get the real estate market and the US economy back on track. In addition to unknown costs to taxpayers, The Fannie & Freddie bailout will surely be a big thorn in the side of whoever becomes the next president of our nation. Said Eugene Ludwig, former US Comptroller of the Currency, "It's appropriate for the government to help in these extraordinary circumstances because market psychology has overruled economic reality, placing our nation's well being at risk." (WSJ 9/9/08).
Written by Sarah Ley,
BSBA, ABR, CRS, CHNSA
Tucson Realtor with Long Realty
Direct: (520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
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