Monday, January 11, 2010

Real Estate Update 1/11/2010

Market Update:
Unemployment Static at 10%Today's Employment Report indicated that the economy lost -85K jobs in December (significantly more than the -5K forecasted) and that the Unemployment Rate remained at 10.0%. A small revision to the November data showed a gain of 4K jobs, the first monthly increase since December 2007. The details of the report suggest that small businesses may be creating jobs more slowly than larger companies and that the manufacturing and constructions sectors continued to perform poorly.

Housing Update:
In the housing sector, November Pending Home Sales fell 16% from October, but the decline followed nine straight months of increases and November Pending Home Sales were 15% higher than one year ago. Pending home sales are a leading indicator of future housing market activity. Recent data has been heavily influenced by the timing of the home buyer tax credit, which was originally set to expire at the end of November. A surge of buyers attempting to purchase before the original deadline pulled demand forward. When the home buyer tax credit was expanded and extended to April 30, 2010, the time pressure was removed. Hopefully, we will have a surge in purchase business between now and the end of April which will generate some momentum that will carry us through the end of the year!

Mortgage Rate Update:
Mortgage Rates on the RiseIn case you checked out for the holidays and are just now checking back in, the final few weeks of December were not kind at all to mortgage rates. Heading into December, mortgage rates were close to record low levels, but a combination of the following factors has caused rates to push about .5% higher from early Dec to the present:
An improving economic outlook: aside from today's Employment and Pending Home Sales reports, most of the recent economic news has been good. Although this is good news for the economy, stronger than expected economic data and a stock market rally are negative for mortgage markets because it generally leads to higher inflation.
Government spending: the government already will need to issue an enormous amount of debt to pay for its spending, and it now looks more than likely that additional expenditures are on the way for job creation and health care bills. Higher yields are required to attract investors to purchase the extra debt, pushing up yields for competing investments such as mortgage-backed securities (MBS).

Fed uncertainty: the Fed is winding down its $1.25 trillion MBS purchase program which is causing great uncertainty as to the future demand for mortgage investments.
Rates spent much of 2009 below 5%. My crystal ball indicates that it is more realistic that rates will stay in the 5-6% range throughout most of 2010.

Identify Your Key Result Areas:
A key result area is something that is under your control that you must achieve to succeed at your job. It is a healthy exercise to identify your key result areas. Prospecting, closing a sale, and effective transaction management are good examples. Your weakest key result area sets the height at which you can use all your other skills and abilities. You can be exceptional in 6 of 7 key result areas, but your poor performance in the 7th area will hold you back and determine how much you achieve with all your other skills. This weakness will act as a drag on your effectiveness and be a constant source of friction and frustration.
It is common to avoid jobs and activities in the areas where you have performed poorly in the past. Instead of setting a goal and making a plan to improve in a particular area, most simply avoid that area altogether, which just makes the situation worse. Likewise, the better you become in a particular area, the more motivated you will be to perform that function, the less you will procrastinate, and the more determined you will be to get the job finished.
We all have weaknesses. The key is to identify what yours are, and then set a goal and make a plan to improve in your weak areas. It is reassuring to know that all business skills are learnable. As you get started in 2010, resolve to master all of your key result areas and then, truly, nothing can hold you back!

Excerpts from "Eat That Frog!" by Brian Tracy
New Technology that Tells You How to Increase Your Credit Score
So, your latest and greatest client, Joe Buyer, has just had his credit report pulled and his credit score is a 605 and 15 points below the 620 minimum score needed. In the past, it would have been complete guesswork to determine what Joe would need to do to bump up his score by 15+ points. However, a tool now exists that analyzes Joe's credit report and lets him know how much his credit score will increase if specific actions are taken. The process is as simple as the Loan Officer running Joe's credit report through some special software. Then, amazingly, the report indicates specific actions that can be taken to improve his score such as:
• a 15 point increase for moving a credit card balance from one credit card to another• a 20 point increase for simply paying a credit card balance down by $2000• a 25 point increase for paying off and closing a particular account

The coolest part of this technology is the "What-If Simulator" which allows the Loan Officer to run countless "what-if" scenarios through the software to see how much the score will change if specific actions are taken. Talk about invaluable information that can help you get a buyer to closing! It is important that you are aware of this technology and that you can recommend it when needed. It is also important that you work with a Loan Officer who understands this technology and knows how to use it. At Fairfield Mortgage, we understand and use this technology regularly. Let us know when we can help your client figure out what they need to do to increase their credit score and qualify for a mortgage.

Rate Update
Rates have been flat over the last few weeks but are up .5% over the last month.

Thank you to James Williamson with Fairfield Mortgage for providing these updates each month!

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