Set in a charming winter wonderland, this adorable 1 room cottage offers all the character and rustic flavor your sweet tooth desires. Snuggle up tight with your sweetie by the genuine gingerbread hearth, while visions of sugarplums dance in your heads. What’s that on the rooftop? Motivated seller says this one must go- before the spring melt! So, bring all offers, (and hot cocoa). Complete with a footbridge spanning the small stream, carport, outbuildings, and professionally landscaped, you will be thrilled to call this cozy bungalow home- for a day, a weekend, or just for an afternoon snack!
Remember when interest rates were bouncing around the 6-7% mark, and homes were flying off the shelves? And remember how buyers in that wild market would forgo inspections, write offers on the hoods of their cars, and painstakingly draft impassioned letters of introduction to sellers, pleading for clemency in the life-sentence of homelessness the market was imposing on them? We’ve all watched the steady deflation of the confidence that accompanied those times, to be replaced by the looming grey cloud of indecision and angst.
However, the reality is that rates have fluctuated less than 3 points in the past 8 years (2000-2007)- all the way back as far as 2000, when we reached a high that year of 8.52%, right around the time the DotBombs were imploding, and the country was talking recession. The lowest we’ve seen since then was June of 2003, when rates briefly bottomed at 5.23%. Throughout the next 4 years, the lowest point was a short stop at 5.45% in March of 2004. The remainder of that timespan was spent hovering between the high 5′s, to the high 6′s.
On the surface of it, there are a few obvious reasons for the mental shift; the subprime collapse, Wall Street’s subsequent malaise, an interminable election, to accompany an equally interminable war, and the list goes on. However, as I look at the chart of interest rates over the past 30 years, I can’t help but think that maybe the Fed’s got it all wrong. Maybe instead of a stimulus carrot, in the form of lowered interest rates, Bernanke needs to provide a stimulus stick- in the form of a rate hike.
If you look at it, the market’s appear stuck; buyer’s aren’t buying, businesses are slowing, and banks are still losing money, which we, the taxpayers, get to shoulder as part of our tax burden thanks to the generous ‘handout’ they were provided earlier this year. Part of the revenue stream those banks need comes from interest rates- the wider the spread, the better. If you look at it, we’re in a descending spiral on most fronts: shrinking employment numbers, declining prices on homes, fuel, and consumer goods, and further rumors of lower interest rates. It all sounds like a serious lack of confidence.
Maybe, and this may sound counterintuitive, but humor me for a minute. What if the Fed announced they were going to begin hiking interest rates? I’m guessing there would suddenly be a significant number of homebuyers finding a new motivation to buy, as they witnessed the erosion of their buying power in very real terms. Rather than waiting like school girls in a game of double dutch, anxiously timing the next swing of the market, they’d have a clear signal that the rope was on the upswing, and it’s time to play, or miss out.
Wouldn’t a rate hike also indicate a bump in confidence from those in the know? If inflation, rather than deflation, were a concern, wouldn’t that indicate economic growth? And, taking this little confidence game to its logical end, wouldn’t we all feel just a little better knowing that steps were being taken to prevent things from getting out of hand in the growth department?
Assuming we all bought the story, which thus far we’re all assuming we’ve got the inside scoop on the status quo, wouldn’t we start acting just that little bit more confident in our future earning ability? And how do you think that would affect the bottom line? I, for one, think it’s worth a try. I mean, put in perspective, I like my confidence game a whole lot more than the one Bernard Madoff pulled!
Author’s Note: I prepared this as a draft the day before the Fed annouced they were dropping the rate to the ‘New Historic Low’. I guess we’re not on the same wavelength. However, in my defense, as the previous link indicates, response to this news has been mixed, and with a couple of days to think about it, investors are already looking for new ways to outsmart themselves.
As 2008 winds to a close, I feel compelled to do a little reflection and projection. From a Real Estate perspective, it has been a challenging year. Historically, we’ve not seen such froth in the economy as a whole as we’ve witnessed in the past 12 months, since the Great Depression. This hyperbole has become a staple for 6 o’clock news reports; in fact, if there has been any consistent theme to sum up the year, I’d think a heading along the lines of “Great Depression: the Sequel”, would encapsulate the general media mood, and the extent of most reporting on the subject.
However, there are a few key points that have gotten lost in the rush to spill red ink on the headlines. Just this past week, I finally saw a new piece in the PI that touched on the opportunities this market presents for first-time buyers. Another point that’s frequently forgotten in all the talk of recession is the amazing fact that we’ve never seen the unique set of factors currently in place: low interest rates paired with a buyer’s market. Recession typically is accompanied by high interest rates- the last big one in the eighties saw rates over 18%! We’re looking at a realistic possibility of 4.5% in the New Year.
It’s easy to let the nightly fear-fest of network news argue for the conventional wisdom of hunker-and-hold economics. And I’m not here to recommend that prudence die on the altar of consumption. However, there is a solid argument to be made for recognizing opportunity. In fact, as everyone’s favorite capitalist, Warren Buffet, is fond of saying, “Buy low, sell high”. If you’re an investor or first-time buyer, 2008 has served up an extra helping of opportunity.
With rates at historic lows, home prices rolled back almost 3 years, and a steady supply of inventory to choose from, this is truly phenomenal timing for those in a position to capitalize.
Before I leave the subject of rates, consider that a homebuyer in the $400k range (the King and Snohomish median price) can now afford $30k more house with the same payment than they could just a week ago. And, with the ability to negotiate strongly, the price of that $400k home may also be brought further into the ‘comfortable’ range.
All this talk of recession inevitably leads to asking “when will it end?”. In a recent online poll by Keller Williams and Baylor University, 840 leading economists were asked that question, and roughly 75% of them said 3rd quarter 2009. Now, I’m not going to argue for someone else’s crystal ball, but I have to hope these folks have some idea what they’re talking about. And, if crowd-sourcing is to be believed, this is as good a source as you’re going to find. Granted there are detractors from this view – obviously, 25% of those polled weren’t so bullish. However, that’s the case with just about everything, so I’m going to make a leap and say that, barring unforeseen negativity on the market front, we’re going to see a happier end to 2009.
It’s the unforeseen part that has most folks sitting the fence in the face of all this opportunity. I probably shouldn’t rehash the cascade of banks failures, Wall Street bailouts, unemployment numbers, etc. However, I believe it’s important to put this all in perspective, and realize that there is no such thing as opportunity without risk; the two always travel together. Risk & Reward; opposite sides of the same coin.
I am currently working with a buyer who is very aware of this fact, and as we’re negotiating his short sale purchase, he’s anxiously watching rates. The auto-notification from his bank kicked out an email last week, letting him know that rates had hit his target range; at 4.75% on a 15 year fixed, down .25% from previous lows. Now that’s something to get excited about!
Dec 10th, 2008 by Dennis S. Pearce
It’s with great pleasure that I announce that two members of the Pickett Street team have been selected by Seattle Magazine as 5-Star Real Estate Agents, Best in Client Satisfaction for 2008. My business partner, Jesse D. Moore, and our fellow associate, Lisa Bender, have both been selected among this year’s honorees.
What exactly does this mean? Seattle Magazine says it best:
Experts say that at least 90 percent of homebuyers rely on real estate agents for advice and guidance. But with more than 14,000 Seattle residents holding real estate licenses, how do you find someone who knows the market, represents your interests and operates with an emphasis on integrity and service? Seattle magazine can help. For the fifth year, the magazine has formed a partnership with Crescendo Business Services, an independent research firm, to find out which real estate agents have most consistently wowed their clients. This past May, Crescendo surveyed by mail and phone, 29,000 Seattle area residents who had recently purchased homes. An additional 250 surveys were sent to mortgage and title companies, who are often best able to judge a real estate agent’s technical skills and knowledge.
On the surveys, recipients were asked to nominate only real estate agents whom they knew through personal experience. They were asked to evaluate them based upon nine criteria: customer service, communication, finding the right home, integrity, negotiation, marketing the home, market knowledge, closing preparation and overall satisfaction.
By June, stacks of surveys had arrived, and Crescendo began carefully scoring and screening each nominee with the Washington State Real Estate Commission’s database to make certain that licenses were up to date and that no disciplinary actions were pending.
Then, before finalizing the list, nominated real estate agents were reviewed by a blueribbon panel of local industry experts. The panel consisted of realty company executives, professional and trade association officers and others directly involved in housing-related businesses. The resulting list of FIVE STAR Real Estate Agents is an elite group, representing less than 6 percent of licensed agents in the Seattle area. Only 758 of the top-scoring real estate agents made this year’s list.
Congratulations Jesse and Lisa!