Tuesday, January 27, 2009

Looking into a crystal ball? Economists Predict

Economists Predict Recession's End
As posted by Austin Kilgore | 01.23.09

The country's recession is the longest and deepest in 60 years, but it will rebound in 2009, according to two economists at the Comerica Bank Economic Forecast Conference in Santa Clara, California.

Comerica Bank's chief economist Dana Johnson told approximately 600 Silicon Valley business leaders, “We should see at least a 6 percent increase in gross domestic product in the third quarter. I don't think it's at all a stretch to say that once the economy picks up steam, it will be really impressive.”

Another economist at the conference, Stanford University's John B. Shoven, agreed, but said he believes the rebound will happen in the fourth quarter of 2009.

He added as soon as investors realize the economy will strengthen in 2010, “the stock market could start to rally in the second quarter,” several months ahead of the recovery.

They both credited the economic stimulus actions taken by the U.S. Government from preventing disaster.

Johnson said, “We came within an eyelash of a catastrophic failure of our financial system.”

The economists said while President Barack Obama has surrounded himself with a strong team of economic advisors, the government won't be able to do much to prevent the unemployment rate increasing to 9 percent by mid-year.

However, Johnson said, “The federal fiscal stimulus headed our way beginning this spring...will do an enormous amount to get this economy going.”


It is a hard time to complete a purchase with the time it takes to get approved and funded for a loan in this stressed environment. Staffs are less. Funds are less. The rules on reselling the loans are more stringent from Freddy and Fannie. Bankers have to work harder. So must we RE agents. And you too as a buyer. But it can be worth it.

So if you want to buy some affordable property before 2010 we need to get to work.

Keith L.

Monday, January 26, 2009

Looking at the Bigger picture of Loan rates

The Financial situation This Week

Inflation chatter could come around again this week, as the Fed will be holding their regularly scheduled meetings on Tuesday and Wednesday, with their Policy Statement and decision regarding the Fed Funds Rate coming on Wednesday. Remember, the Fed made history last month when they slashed the Fed Funds Rate by .75% to the lowest target range in history of 0% to .25%. The chart below shows an interesting history of the Fed Funds Rate since 1955.

Other potential market movers include Friday's Gross Domestic Product (GDP) Report. GDP is the broadest measure of economic activity, and given the state of our economy, a negative report might not be too much of a surprise. In addition, Thursday's Durable Goods Report (i.e. items that are non-disposable, like cars, furniture, appliances, games, cameras, business equipment, etc) will give us a read on consumer and business consumption and buying behavior. We'll also get a look at the housing market this week with Monday's Existing Home Sales Report and Thursday's New Home Sales Report.
Remember: Inflation is the arch enemy of Bonds and home loan rates, and even the mention of it can have negative ramifications.

I recall the early 1980's and the high interest rates. That was very hard time to be buyer. And a miserable time to be a seller. So why is it hard to be a buyer or a Seller today? Because the lending sector has not gotten back on the horse yet. They have to pick themselves up and dust off and get back in the saddle. The funding of loans is still the crux of the financial turbulence we are struggling to overcome.

The Heat is On for Mortgages.

Homes are on sale, sellers are motivated, and interest rates are at historic lows...but may not stay that way, which means it makes sense to get moving on that home purchase or refinance you've been contemplating. But if you (as one of my clients) are among the smart individuals who are going ahead and taking advantage of the low home loan rates to be had right now, there are a few things to be aware of.

With interest rates at record lows, all lenders in the US have recently seen a sharp increase in loan applications - right at the time that many lenders have cut headcount to save money in a challenging economy. This means that timeframes needed for underwriting, approvals and closing have become longer than normal. Some companies have chosen to actually raise rates just to slow down the volume to a manageable level.
Sound crazy? No crazier than when you go to buy that hot new vehicle...only to find that there is no price negotiation. In fact, you wind up lucky to just pay the sticker price, as the demand usually allows the Dealer to add a markup to the price. And you don't get the car right away; you have to wait on a list for your turn to come up.

Right now, home loans are like that hot new car - but with the timer ticking on interest rates locks, there are a few things you can do to protect yourself.

First, longer lock in time frames than might normally have been considered are a necessity, to ensure that the file has time to be processed, underwritten, approved and closed in time to protect the rate lock in this extremely volatile climate. And that longer, safer lock-in period may be a bit more costly - but it's money well spent. Overall, the mind set here should not be one of greed. Don't try to squeeze every last drop out of rates. If you are within a quarter percent of the lowest rates offered in the history of this country, you did very well. And rates always shoot up higher at a much faster pace than when then dip lower. So if the savings or opportunity make sense - grab it.

Next, responding quickly to requests for information or documentation is important - the faster the file is submitted and approved, the better off we are to keep that great interest rate protected.

Finally, be aware that it may be a smart idea to pay points to gain the best interest rate - and sometimes is even necessary in today's market. Giant mortgage buyers Fannie Mae and Freddie Mac have recently imposed more "risk-based pricing adjustments", meaning that even credit scores and loan to values which in the past would have been considered very low risk, may now be subject to mandated fees by Fannie and Freddie. And based on the way lenders have changed their rate sheets over time, there is now very little "premium pricing", which used to allow options for fees like these, points or other closing costs to be covered in return for a slightly higher interest rate.

Right now is still an excellent time to act, before the great low rates of today get away from us. But let's be smart - get started right away on your Loan Approval process.

Keith Lambert

Thursday, January 22, 2009

Best deal on the Beach

While out looking in Marina Del Rey and Playa Vista for Townhomes we found this really great unit down in Play Del Rey. With the market as it is and the price they now are asking for this unit... I think it is a dream property for the right person.

I shot a small Video of the view from the balcony.

White water views of the beach for under a Million Dollars is a relatively new for this part of Los Angeles.

Keith L.

Tuesday, January 20, 2009

Rental Property Information - High End Apartments

Wow! Good stuff ... Two new places are available for those of you who appreciate the finer things in life.

Beach side apartment - 2 bedrooms.
Ocean Ave. in Santa Monica


Fabulous secluded Guest House - 1 bedroom
North of Montana

Follow the links to see the photos and read more about these two high end rentals. Send the link to any of your friends that may be looking for quality places to live.

Sincerely, Keith L. <"><

Monday, January 19, 2009

This Too Shall Pass. New season will emerge!

The Seasons Change. The President Changes. (Tomorrow!) So this quote is on point:


In the Markets: Last week saw the start of earnings season for the fourth quarter of 2008, and this is likely to be one earnings season everyone hopes passes quickly.

The beleaguered banking sector was in the spotlight throughout the week, as Citigroup reported an $8.29 Billion loss, completing its worst year ever since its inception in 1812. Bank of America also lost $1.79 Billion in the fourth quarter, making 2008 the bank's first yearly loss in 17 years. And the news extended overseas as Deutsche Bank, which is Germany's largest bank, warned of a fourth-quarter loss of $6.3 Billion.

There were a few bright spots to note during the week, however, as JP Morgan Chase surprised the market with an earnings report that beat expectations...it's been awhile since a financial Stock actually surprised to the good side! In addition, Bank of America received a lifeline of $138 Billion from the government's $700 Billion rescue fund to help absorb their purchase of Merrill Lynch.

And in inflation - or lack thereof - headlines, the Consumer Price Index for 2008 was reported the lowest since 1954, indicating that inflation is definitely not a threat at this time.

Lending it the part that needs to be resurrected in time to keep the wheels of commerce and the real estate industry moving ahead. They have changed many of the systems in recent months to enable the resale of loans to happen in new more scrutinized fashion. But that also has other troubles for the not so standard property. If it does not fit the forms and the standard check boxes of the new resellers marketing program, it will not qualify for a loan and therefore further depress the real estate market with unsellable inventory clogging the marketplace.

As I learn more on the lending situation I will post the details.

For now, lenders are requiring serious cash for your down payment on a home or income property. No lender wants to see a property go upside down on a further drop in value. But likewise for the Contrarian among us it may be a good time to pick up a cheap deal.

Glad to be of help.


Monday, January 12, 2009

1 bedroom Condo in Playa Del Rey

1 bedrooms are not great for the highest resale but as a cheaper alternative to living in an apartment it can be a very good deal after you see your tax accountant.

Anyone who owns their own home knows that the game is rigged. You've got to have a First Trust Deed to get ahead in the USA. That is why there was so much pressure to make home ownership more available a few years back... That's another story.

But a nice very livable unit here on the west side just crossed my desk with a nice price reduction. Say you can do a 60k down. Would you be OK with a monthly of $1,485 on your first trust deed. Most of that is interest and would be given back to you on your tax return. That reduces your cost of housing to very low. HOA and utilities and a little principle.

What the heck are you waiting for? For the stock market to go up?

If you want to see the cheaper stuff that makes a good deal Call me.

Keith L.

Good weekend showing property

FYI, Those who still have the cash to be in the buyers seat are still looking.

I was helping a client look at homes this weekend. It is almost a miracle for there to be ocean view options in the market range that just a few years ago was out of range. Sometimes you find a diamond in the rough. I think we did.

Other market changes is that it is much more work for us agents to get the loans and the deal closed but that is OK. We get to earn out living.

Keith L.

Monday, January 05, 2009

Time flies like an arrow. Fruit flies like a banana.

Logic and Illogical stuff make a great pun.

But it makes for a bad lending situation. I received a mailing from a big bank looking to get more customers. So I call this big lending institution. And after reviewing a lot of their details they had 7 ways to pre-qualify the borrower and another 5 qualifications on the property.

Mostly they say that they want to loan. But in reality they only want to loan to the bigger, better and most cash heavy guy that is ready to pick up on the best deals. No small loans. No loan to the guy that is new to buying income properties. Must have X and Y and Z. Or else they will not give the letter of interest to even make an offer to purchase with.

Makes me appreciate the good loan brokers that I work with all the more. Some money is still out there to fund the deals. Just need to get it form the lenders that are finished shitting there pants from the wall street problems and is ready to get back to work. There will be 1/3 fewer loans made. But we all need to keep making the wheel turning. Those who buy when the times are tough make the biggest killing.

If you have enough capital available to get in and play when the lenders on apartment buildings want 35 % or more down, then lets talk.

Keith Lambert
Residential Income Property