We learned yesterday that President Obama announced a plan to help homeowners avoid foreclosure which involves two different initiatives.
1) A refinance program that will help for homeowners who have played by the rules (made their payments on time) but have been unable to refinance because they owe more on their home then it is worth.
2) A loan modification program that is designed to keep troubled homeowners out of foreclosure and to keep “at risk” borrowers from defaulting in the first place.
Although lenders are not required to participate the plan is designed to entice the lenders and mortgage services by offering new incentives.
Since the loan-modification plan does not mandate lenders to take part in either program it will require banks and financial institutions to follow the government’s protocols who have received capital under the government’s $700-billion financial bailout program known as TARP. Other lenders can use their own discretion when offering these types of loans.
To be eligible:
1 -The home must be a borrowers primary residence
2 -The loan must be a conforming loan (at or below $417,000) and guaranteed by Fannie Mae or Freddie Mac.
3 -Borrower does not need to be behind in payments (in fact a mortgage servicer will be paid a higher incentive fee if a modification is done before a borrower falls behind).
What the Plan does not do:
1) The plan will not require participating lenders to reduce the principal on a borrowers mortgage because the home has lost value. The modification will act to lower monthly payments, (by lowering rate or extending the term) but the homeowner’s outstanding debt will probably not change.
2) The plan will not help borrowers with “jumbo” mortgages—any loan above $417,000.
3) The plan does not include second mortgages, such as a home equity line of credit, any modification or refinancing would apply only to the first mortgages.
4) It is not targeted to help non-occupied borrowers who have “investment” properties as it only applies to primary residence.
5) The plan does not mandate lenders to participate.
It has been reported that the number of borrowers who are in “trouble” on their mortgages has risen from 10 million to 15 million, yet the plan may only help 7 to 9 million. As you can imagine there are some good things here yet officials acknowledge that the plan will not help all borrowers or prevent all foreclosures. The policies of the plan are to be released on March 4th 2009.
1) A refinance program that will help for homeowners who have played by the rules (made their payments on time) but have been unable to refinance because they owe more on their home then it is worth.
2) A loan modification program that is designed to keep troubled homeowners out of foreclosure and to keep “at risk” borrowers from defaulting in the first place.
Although lenders are not required to participate the plan is designed to entice the lenders and mortgage services by offering new incentives.
Since the loan-modification plan does not mandate lenders to take part in either program it will require banks and financial institutions to follow the government’s protocols who have received capital under the government’s $700-billion financial bailout program known as TARP. Other lenders can use their own discretion when offering these types of loans.
To be eligible:
1 -The home must be a borrowers primary residence
2 -The loan must be a conforming loan (at or below $417,000) and guaranteed by Fannie Mae or Freddie Mac.
3 -Borrower does not need to be behind in payments (in fact a mortgage servicer will be paid a higher incentive fee if a modification is done before a borrower falls behind).
What the Plan does not do:
1) The plan will not require participating lenders to reduce the principal on a borrowers mortgage because the home has lost value. The modification will act to lower monthly payments, (by lowering rate or extending the term) but the homeowner’s outstanding debt will probably not change.
2) The plan will not help borrowers with “jumbo” mortgages—any loan above $417,000.
3) The plan does not include second mortgages, such as a home equity line of credit, any modification or refinancing would apply only to the first mortgages.
4) It is not targeted to help non-occupied borrowers who have “investment” properties as it only applies to primary residence.
5) The plan does not mandate lenders to participate.
It has been reported that the number of borrowers who are in “trouble” on their mortgages has risen from 10 million to 15 million, yet the plan may only help 7 to 9 million. As you can imagine there are some good things here yet officials acknowledge that the plan will not help all borrowers or prevent all foreclosures. The policies of the plan are to be released on March 4th 2009.
Lessons of the Hot Dog Vendor
During these days of continually being bombarded by doom and gloom about the economy, it might be a good time to re-visit the story of the Hot Dog Vendor...
A Man lived by the side of the road...and sold hot dogs.
He was hard of hearing, so he had no radio. He had trouble with his eyes, so he had no newspaper. But he sold good hot dogs.
He put up a sign on the highway, telling how good they were. He stood by the side of the road and cried, "Buy a hot dog, mister!" And People bought.
He increased his meat and bun order, and he bought a bigger stove to take care of his trade. He got his son home from college to help him. But then something happened. His son said, "Father, haven't you been listening to the radio? There's a big Depression on. The international situation is terrible, and the domestic situation is even worse."
Whereupon the father thought, "Well, my son has gone to college. He listens to the radio and reads the newspaper, so he ought to know." So, the father cut down on the bun order, took down his advertising sign, and no longer bothered to stand on the highway to sell hot dogs.
His hot dog sales fell almost overnight. "You were right, son", the father said to the boy. "We are certainly in the middle of a Great Depression."
Moral of the story ~
Stop reading the newspaper, turn off the news on the radio and television, and serve your clients!
A Man lived by the side of the road...and sold hot dogs.
He was hard of hearing, so he had no radio. He had trouble with his eyes, so he had no newspaper. But he sold good hot dogs.
He put up a sign on the highway, telling how good they were. He stood by the side of the road and cried, "Buy a hot dog, mister!" And People bought.
He increased his meat and bun order, and he bought a bigger stove to take care of his trade. He got his son home from college to help him. But then something happened. His son said, "Father, haven't you been listening to the radio? There's a big Depression on. The international situation is terrible, and the domestic situation is even worse."
Whereupon the father thought, "Well, my son has gone to college. He listens to the radio and reads the newspaper, so he ought to know." So, the father cut down on the bun order, took down his advertising sign, and no longer bothered to stand on the highway to sell hot dogs.
His hot dog sales fell almost overnight. "You were right, son", the father said to the boy. "We are certainly in the middle of a Great Depression."
Moral of the story ~
Stop reading the newspaper, turn off the news on the radio and television, and serve your clients!
How the Stimulus will effect housing
Just signed and sealed...a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. The package signed by President Obama increases the home buyer tax credit to $8,000, drops the repayment feature, reinstates last year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans, and provides $2 billion in additional funding for states and localities to be used to purchase, manage, repair and resell foreclosed and abandoned properties.
Homebuyer Tax Credit. The bill provides for a $8,000 tax credit that would be available to first-time home buyers (those who haven't owned in at least three years) for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment for buyers who hold onto their property for at least three years. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
The three-year minimum holding period is a safeguard against speculators' use of the credit. The legislation also extends the effective date of the credit to December 1 from June 30, and extends eligibility to borrowers who buy their home with the help of state or local financial assistance that comes from the proceeds of tax-exempt mortgage revenue bonds.
The start date for the first time homebuyer credit is January 1, 2009 through and before December 1, 2009.
FHA and conforming loan limits. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.
Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.
Rental assistance. Up to $1.5 billion to provide short-term rental assistance and other aid for families during the economic crisis. Transportation infrastructure. Up to $29 billion for highway construction projects, $8 billion for rail projects.
Rural housing development. Increased funding for the Rural Housing Service direct and guaranteed loan programs.
Low-income housing grants. Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations.
Tax-exempt housing bonds. Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds.
Energy efficient housing. Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, increases in the residential tax credit through 2010 for certain energy efficient upgrades and $5 billion to weatherize low-income homes. Another thing to keep an eye on in the coming weeks is President Obama's plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That's because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
Homebuyer Tax Credit. The bill provides for a $8,000 tax credit that would be available to first-time home buyers (those who haven't owned in at least three years) for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment for buyers who hold onto their property for at least three years. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
The three-year minimum holding period is a safeguard against speculators' use of the credit. The legislation also extends the effective date of the credit to December 1 from June 30, and extends eligibility to borrowers who buy their home with the help of state or local financial assistance that comes from the proceeds of tax-exempt mortgage revenue bonds.
The start date for the first time homebuyer credit is January 1, 2009 through and before December 1, 2009.
FHA and conforming loan limits. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.
Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.
Rental assistance. Up to $1.5 billion to provide short-term rental assistance and other aid for families during the economic crisis. Transportation infrastructure. Up to $29 billion for highway construction projects, $8 billion for rail projects.
Rural housing development. Increased funding for the Rural Housing Service direct and guaranteed loan programs.
Low-income housing grants. Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations.
Tax-exempt housing bonds. Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds.
Energy efficient housing. Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, increases in the residential tax credit through 2010 for certain energy efficient upgrades and $5 billion to weatherize low-income homes. Another thing to keep an eye on in the coming weeks is President Obama's plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That's because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
A Recession is a Terrible Thing to Waste
We are in a recession… there…now, let’s all take a breath and move on.
What we are not in is a depression. I am not intending to be flippant or insensitive to the plight of many in horrendous situations but consider this: history will show that the times we are experiencing most certainly are challenging, albeit devastating for some, but pale in comparison to what we have endured as a nation in the past.
As we move forward in 2009, it is important for all to take stock and gather some perspective. Depending on who you listen to, the experts say we may be half-way through this present recession. Economic historians observe, that after every valley (recession) we always see a recovery climb following
Here are three factors that have or will come into play:
Liquidity: Contrary to many reports, borrowers that are responsible are able to secure financing. In fact, rates are historically low right now.
Employment: This is obviously a major concern for potential borrowers. Most believe that unemployment will reach 8% to 9% in 2009. My home province of Quebec that the unemployment rate reached 14% in the early 1990s. Thankfully, the job market did not remain in that territory for an extended period. Keeping things in prospective – the unemployment rate during the great depression was 25%. Consumer confidence may take some time to return.
Affordability: The peak of 2005’s market pushed affordability out of reach of many. The correction we’ve seen has brought much needed affordability back into the equation.
What you need to know… and why demand IS coming!
What we are not in is a depression. I am not intending to be flippant or insensitive to the plight of many in horrendous situations but consider this: history will show that the times we are experiencing most certainly are challenging, albeit devastating for some, but pale in comparison to what we have endured as a nation in the past.
As we move forward in 2009, it is important for all to take stock and gather some perspective. Depending on who you listen to, the experts say we may be half-way through this present recession. Economic historians observe, that after every valley (recession) we always see a recovery climb following
Here are three factors that have or will come into play:
Liquidity: Contrary to many reports, borrowers that are responsible are able to secure financing. In fact, rates are historically low right now.
Employment: This is obviously a major concern for potential borrowers. Most believe that unemployment will reach 8% to 9% in 2009. My home province of Quebec that the unemployment rate reached 14% in the early 1990s. Thankfully, the job market did not remain in that territory for an extended period. Keeping things in prospective – the unemployment rate during the great depression was 25%. Consumer confidence may take some time to return.
Affordability: The peak of 2005’s market pushed affordability out of reach of many. The correction we’ve seen has brought much needed affordability back into the equation.
What you need to know… and why demand IS coming!
- Due to the recent financial collapse, developers are not able to access the monies required to build multi-home or condo developments. The impact of situation will result in a building shortage within the next three years.
- Even though the mortgage industry has tighten and some people will not qualify for a loan, the overall health of the housing market will be improved due to the stringent regulations.
- People are living longer, for most, that’s a good thing! As Americans live longer lives their housing needs will affect the supply.
- Prior to August 2007 The availability of “free” purchase money and minimum standards for investors to jump in was out of control. The market is in the process of correcting itself and both the unqualified buyer and the amateur investors will be few and far between. Financing is available and for qualified buyers.
As I look at all of these indicators, I believe that within the next three years we will have a housing shortage! For many the current real estate market is a chance for many to take advantage of the possibilities this moment in time affords.
New Music (at least to me)
For Christmas, my sister Isabel gave me a CD that I just can’t get enough of. Even before opening the familiar sized package, I knew I’d be in for a treat; she has such intriguing taste. The Lost Fingers is a Quebec jazz trio named in tribute to Django Reinhardt's 2 lost fingers (who turned a terrible manual injury into a technical advantage on the guitar). Performing jazz swing covers, double bassist Alex Morrisette and guitarists Christian Roberge and Byron Mikaloff have all their fingers, and have them poking about in the 80's hit parade for tunes to twist in a lively, acoustic style. Material ranging from AC/DC and Soft Cell to Paula Abdul and George Michael. The first track is telling—the trio’s cover of Technotronic’s “Pump Up the Jam” may be the most absurd inclusion, but possibly the strongest. The Lost Fingers—Lost in the 80’s is just plain fun! Who would have ever thought that Samantha Fox’s “Touch Me” could be sung in a gypsy swing? What would Stevie Wonder say about his “Part-time Lover” sung with Quebecer's bouncing jazz harmonies...? Maybe it’s because the 80's represent my high school and college years, but I can’t help but smile when I hear a boggie swing of Michael Jackson’s “Billie Jean”. When you listen to “You Shook Me All Night Long”, you might think that Randy Newman was on the disc playing and singing a cameo. The fact that a Jazz trio could take an AC/DC song and put doo-wops and scat in it is nothing short of genius! I was never a Paula Abdul fan, but it is a kick to tap your foot to her “Straight Up” without the aid of drum machines (BTW: no drums at all on the disc) or synthesizers.
Though it may be a little bit of a shtick, The Lost Fingers have a really cool concept here. Idiosyncratic, unusual and entertaining are all words to describe this musical escapade you’ll be sure to enjoy.
Where is Market Value?!
The historical definition of “Market Value”: “What a willing and able buyer is prepared to pay for a property”. Traditionally, sellers have set their prices based on either their competition, recent sales activity or a combination of both. Historically, this information was provided to the Seller by a real estate agent. The internet created a paradigm shift of access to information that has changed the real estate business for everyone. Today, as consumers garner information, they have the resources to flex their shopping muscles and dictate sale prices.
Since the Wall Street collapse, many buyers have been reticent to pull the trigger on purchases. As they watch the downward trends, those that do, enter negotiations armed with data and a confidence that has not been seen in at least a decade. The difference this time is that almost any purchaser can harvest data in minutes. Not only do they dictate “what” the market price is, but “where” it is going.
Many sellers maintain the expectation that their home should sell for more than the most recent sales; while a buyer will insist on a price still 5-10% from the bottom. Due to the pressures sellers are
feeling (ie longer selling time and lack of offers), they tend to back down at a much faster tempo than in the past. An experienced agent can assist a prepared buyer and negotiate terms that were previously unheard of. As a market-savvy agent, I have helped by clients write offers that at face value match the listed price but also include back-end concessions (for closing costs or repairs) that benefit the buyer and still allow the seller/developer to save face.
My concern for sellers today is that if they don’t get ahead of the curve it could become more and more costly for them. There is a difference between pricing a percentage below the last sale and pricing below the competition. The way we predict what a willing, able buyer will pay is to objectively look at these numbers - they will tell us where market value is.
Since the Wall Street collapse, many buyers have been reticent to pull the trigger on purchases. As they watch the downward trends, those that do, enter negotiations armed with data and a confidence that has not been seen in at least a decade. The difference this time is that almost any purchaser can harvest data in minutes. Not only do they dictate “what” the market price is, but “where” it is going.
Many sellers maintain the expectation that their home should sell for more than the most recent sales; while a buyer will insist on a price still 5-10% from the bottom. Due to the pressures sellers are
feeling (ie longer selling time and lack of offers), they tend to back down at a much faster tempo than in the past. An experienced agent can assist a prepared buyer and negotiate terms that were previously unheard of. As a market-savvy agent, I have helped by clients write offers that at face value match the listed price but also include back-end concessions (for closing costs or repairs) that benefit the buyer and still allow the seller/developer to save face.My concern for sellers today is that if they don’t get ahead of the curve it could become more and more costly for them. There is a difference between pricing a percentage below the last sale and pricing below the competition. The way we predict what a willing, able buyer will pay is to objectively look at these numbers - they will tell us where market value is.
Who are the Joneses, and why is everyone trying to keep up with them?
As we celebrate Thanksgiving this month and with the recent crisis that has caused many to rethink what is important, I have been opining on a thought. It is not meant to judge or critique, just observations. My clients are confident that I served them to the best of my ability, taking a long-term approach to home ownership. The complexity of the current crisis has been illustrated by smarter people than I. However, I believe this is a crucial part of the dilemma.
It used to be
that spending money on status symbols for the sake of flaunting your wealth was an activity reserved for celebrities and millionaires. That has all changed. Conspicuous consumption, what was once referred to as "keeping up with the Joneses", has brought the lifestyles of the rich and famous to suburbia.
The demand for status goods, fueled by conspicuous consumption, has diverted many resources away from investment in the manufacture of more material goods and services in order to satisfy consumer preoccupations with their relative social standing and prestige.
The philosophy of "keeping up with the Joneses" has widespread effects on society. According to this philosophy, conspicuous consumption occurs when "households care about their relative standard of living" in relation to their societal peers.
One area in which "living above ones' means" has caused negative social effects is that of credit card usage. In the first quarter of 2002, total credit debt was $660 billion. By 2005, the total credit card debt had increased to $735 billion. Americas' average credit card debt in 2007 was $8400 per household. By the end of 2007, consumer debt in America had risen to $2.5 trillion. According to the Federal Reserve, over 43% of households spend more than they earn.
Another recent example is the 2007 subprime mortgage financial crisis, in which credit was eagerly extended to homebuyers who were unable to afford the homes that they were purchasing. That in and of itself is an issue that has been addressed by many smarter people than me.
The Trappings Of SuccessEveryone is looking for the smallest ph
one, the cable provider with the most channels and the television with the biggest screen. Add in desktop computers and high-speed internet access and you've created a list of America's growing "necessities". According to a 2006 survey entitled "Necessity or Luxury" by the Pew Research Center, 33% of Americans now view cable or satellite TV as a necessity. In 1996 that number was 17%. Also, 51% now can't live without a home computer, up from 26% in '96.
Some items that were seen as fads or didn't exist ten years ago have jumped onto the necessity list:
· Cell Phone: 49%
· High-speed internet: 29%
· Flat-screen TV: 5%
· iPod: 3%
This tableau is at once absurd and sad--but not altogether surprising. We are, after all, a nation of accomplished spenders, slaves to advertising and status symbolism. The conspicuous fruits of our consumption shout out our aspirations and insecurities.
Why are we killing ourselves this way? In large part, we work so that we might spend. Americans are engaged in an intensifying national shopping spree rooted in competitive emulation--keeping up with the Joneses on a manic scale. We are impoverishing ourselves, in pursuit of a consumption goal that is inherently unachievable.
Corrosive consumerism, of course, has existed as long as envy and avarice. Look at the pharaohs' pyramids. Evidence of its current manifestation will seem blatantly familiar to anyone with a TV, a car, or kids. (The coolest brands are often fashion brands or 'badge items' that people wear and relay a message about themselves.)
In the late 20th century, competitive spending has intensified insidiously. In part, that's because the gap between rich and poor has widened, creating a highly visible class of superwealthy who set outrageous spending precedents for everyone else. At the same time, TV ads, not to mention the programs they punctuate, have brought images of Lexuses and Rolexes, directed at the rich, to the gazes of average Joes.
Much of our spending clearly is unnecessary or wasteful, raising troubling moral questions. Moreover, the uphill pursuit of material nirvana is stressing us out. Amid widespread wealth, most Americans aren't content with their lives.
Why We Do It
There are a variety of factors driving consumption:
· The desire to show off our success
· The need to have what other people have
· Prolific advertising and product placements
· Easy credit
· A society that favors instant gratification over hard work
The Joneses Are Broke
Many of the people driving around the suburbs in their giant SUVs while talking on their new cell phones are deeply in debt. If you ask them how they are doing, they will tell you that they are just barely getting by. Why so much debt and such a grim outlook from areas of obvious affluence? It's simply a matter of people spending far more money than they should. If you can "afford" life's luxuries but aren't funding your 401(k) and investing in your retirement savings, you may want to reevaluate your financial situation.
If you believe what you read, we have to have stuff! More and more stuff! Without it we are less important, less beautiful, and less popular and the biggest lie, less happy. Let us CHOOSE to be grateful for what we have and those around us.
It used to be
that spending money on status symbols for the sake of flaunting your wealth was an activity reserved for celebrities and millionaires. That has all changed. Conspicuous consumption, what was once referred to as "keeping up with the Joneses", has brought the lifestyles of the rich and famous to suburbia.The demand for status goods, fueled by conspicuous consumption, has diverted many resources away from investment in the manufacture of more material goods and services in order to satisfy consumer preoccupations with their relative social standing and prestige.
The philosophy of "keeping up with the Joneses" has widespread effects on society. According to this philosophy, conspicuous consumption occurs when "households care about their relative standard of living" in relation to their societal peers.
One area in which "living above ones' means" has caused negative social effects is that of credit card usage. In the first quarter of 2002, total credit debt was $660 billion. By 2005, the total credit card debt had increased to $735 billion. Americas' average credit card debt in 2007 was $8400 per household. By the end of 2007, consumer debt in America had risen to $2.5 trillion. According to the Federal Reserve, over 43% of households spend more than they earn.
Another recent example is the 2007 subprime mortgage financial crisis, in which credit was eagerly extended to homebuyers who were unable to afford the homes that they were purchasing. That in and of itself is an issue that has been addressed by many smarter people than me.
The Trappings Of SuccessEveryone is looking for the smallest ph
one, the cable provider with the most channels and the television with the biggest screen. Add in desktop computers and high-speed internet access and you've created a list of America's growing "necessities". According to a 2006 survey entitled "Necessity or Luxury" by the Pew Research Center, 33% of Americans now view cable or satellite TV as a necessity. In 1996 that number was 17%. Also, 51% now can't live without a home computer, up from 26% in '96.Some items that were seen as fads or didn't exist ten years ago have jumped onto the necessity list:
· Cell Phone: 49%
· High-speed internet: 29%
· Flat-screen TV: 5%
· iPod: 3%
This tableau is at once absurd and sad--but not altogether surprising. We are, after all, a nation of accomplished spenders, slaves to advertising and status symbolism. The conspicuous fruits of our consumption shout out our aspirations and insecurities.
Why are we killing ourselves this way? In large part, we work so that we might spend. Americans are engaged in an intensifying national shopping spree rooted in competitive emulation--keeping up with the Joneses on a manic scale. We are impoverishing ourselves, in pursuit of a consumption goal that is inherently unachievable.
Corrosive consumerism, of course, has existed as long as envy and avarice. Look at the pharaohs' pyramids. Evidence of its current manifestation will seem blatantly familiar to anyone with a TV, a car, or kids. (The coolest brands are often fashion brands or 'badge items' that people wear and relay a message about themselves.)
In the late 20th century, competitive spending has intensified insidiously. In part, that's because the gap between rich and poor has widened, creating a highly visible class of superwealthy who set outrageous spending precedents for everyone else. At the same time, TV ads, not to mention the programs they punctuate, have brought images of Lexuses and Rolexes, directed at the rich, to the gazes of average Joes.
Much of our spending clearly is unnecessary or wasteful, raising troubling moral questions. Moreover, the uphill pursuit of material nirvana is stressing us out. Amid widespread wealth, most Americans aren't content with their lives.
Why We Do It
There are a variety of factors driving consumption:
· The desire to show off our success
· The need to have what other people have
· Prolific advertising and product placements
· Easy credit
· A society that favors instant gratification over hard work
The Joneses Are Broke
Many of the people driving around the suburbs in their giant SUVs while talking on their new cell phones are deeply in debt. If you ask them how they are doing, they will tell you that they are just barely getting by. Why so much debt and such a grim outlook from areas of obvious affluence? It's simply a matter of people spending far more money than they should. If you can "afford" life's luxuries but aren't funding your 401(k) and investing in your retirement savings, you may want to reevaluate your financial situation.
If you believe what you read, we have to have stuff! More and more stuff! Without it we are less important, less beautiful, and less popular and the biggest lie, less happy. Let us CHOOSE to be grateful for what we have and those around us.
The sky is NOT falling
Everyone has an opinion... that's okay, this is AMERICA!!
I'm sad to say that to one degree or another, everyone is guessing. There were those that said early 09 was when it was turning around. That was said in late fall of 07, just after the crisis of August 6th impacted everyone.
The sky is NOT falling, we will adapt and be better than before. I believe this is the time when people willing to take a risk will be industry leaders in the future.
When a business cycle starts to falter, the media start wringing their hands. Then big businesses do, freelancers, entrepreneurs and soon everyone is keening.
People and organizations that have no real financial stress start to pull back, "because it's prudent." It's almost as if everyone is just waiting for an excuse to do less. In fact, they are.Growth is frightening for a lot of people. It brings change and the opportunity for public failure, they find an excuse. We decide to do it later, or not at all.
But uncertain times, frozen liquidity, political change and poor astrological forecasts all lead to less competition, more available talent and a do-or-die attitude that causes real change to happen.
"Houses cost too much for the mass market. Today's average price is out of reach for two-thirds of all buyers." ~Science Digest 1948 (average price at the time: $8,000)
"The era of easy profits in real estate may be drawing to a close." ~Money Magazine 1981
"Most economists agree...a home will become little more than a roof and a tax deduction, certainly not the lucrative investment it once was..." ~Money Magazine 1986
"Financial planners agree that houses will continue to be a poor investment." ~Kiplinger's Personal Financial Magazine 1993
I'm sad to say that to one degree or another, everyone is guessing. There were those that said early 09 was when it was turning around. That was said in late fall of 07, just after the crisis of August 6th impacted everyone.
The sky is NOT falling, we will adapt and be better than before. I believe this is the time when people willing to take a risk will be industry leaders in the future.
When a business cycle starts to falter, the media start wringing their hands. Then big businesses do, freelancers, entrepreneurs and soon everyone is keening.
People and organizations that have no real financial stress start to pull back, "because it's prudent." It's almost as if everyone is just waiting for an excuse to do less. In fact, they are.Growth is frightening for a lot of people. It brings change and the opportunity for public failure, they find an excuse. We decide to do it later, or not at all.
But uncertain times, frozen liquidity, political change and poor astrological forecasts all lead to less competition, more available talent and a do-or-die attitude that causes real change to happen.
"Houses cost too much for the mass market. Today's average price is out of reach for two-thirds of all buyers." ~Science Digest 1948 (average price at the time: $8,000)
"The era of easy profits in real estate may be drawing to a close." ~Money Magazine 1981
"Most economists agree...a home will become little more than a roof and a tax deduction, certainly not the lucrative investment it once was..." ~Money Magazine 1986
"Financial planners agree that houses will continue to be a poor investment." ~Kiplinger's Personal Financial Magazine 1993
The JUMBO Effect
The past few weeks have been fraught with hysteria, calamity, fear and anxiousness. We could all use a little good news couldn’t we? I believe one of the factors that will bring health and balance to our Eastside market is the resizing of the Jumbo Loan… actually the fact is that the conforming loan is getting bigger. Allow me to explain.
Prior to the first stimulus package the maximum loan amount for a confirming rate was $417,000.00. When the Congress and the President signed the first package there was a temporary ceiling (expiring December 31, 2008) on the maximum to $567,500.00. The investors didn’t feel the kind of confidence (due to the climate we were in) required to offer the rates that the lower price loans would receive, so there actually became a third tier—Conforming Jumbo. Now that the second stimulus package has been passed, there is a new permanent loan limit. For King, Pierce and Snohomish Counties it is now $522,100.00.
This is exciting because the median home price in our counties is certainly above the $417,000.00 limit. Those buying a home with conforming loans will receive not just better rates but better terms as well.
The trickle up effect this will have is a fundamental in inventory being absorbed. Considering the fact that there is now over a $100,000.00 increase in the ceiling that will assist those that should be buying in our median price range, this will give them the ability not to overstretch, but find reasonable monies to fulfill their housing objectives.
As we pray to see our young men and women come home from the conflicts in the middle east soon. In the past, those service men and women, using their V.A. (Veteran's Administration) loans were forced to live farther out due to the maximum limits as well. As they return home, they will also have the opportunity to take advantage of the new higher loan limits.
As the more affordable price points see sales increase it will help absorb the upper-end price points. That’s an effect we can use.
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