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Market Update Video #3
Recovery and Refinancing are the topics for this week’s video. Important Freddie Mac & Fannie Mae information as well. Do you have a Freddie or Fannie loan? Do you have lost equity in your home making it difficult to refinance to the lowest interest rate like almost everyone else? Don’t miss out on this week’s Market Update Video. CLICK HERE to view.
Market Update Video #2
Unemployment, threats of tax increases, and foreclosures are keeping our inventory around 12 months in the books in the Mid-Willamette Valley. People need to go back to work now! CLICK HERE to view our market update video for the week.
Market Update Video #1
Click Here to view our Market Update Video. Subscribe and forward to the people you think may enjoy this.
Video Tour for 5275 Chicago St. SE Turner, Oregon
We just listed this nice home in the heart of Turner, Oregon. This home has been fixed up with new carpet, tile, trim, doors and paint to make it shine! Many windows allow for natural light, large rooms and formal dining. This property would also work excellent for an office or home based business with ample parking, functional for many offices and next to a park! Check out the video tour Here
5275 Chicago St. SE Turner, Oregon
Just listed this wonderful property that is designed for owner occupied or an office building in the heart of Turner Oregon! Check out our Video Tour!
Tax Credit Hangover
Is there seriously more talk of another tax credit? Please… the last ones only prolonged the inevitable and ultimately dug our hole deeper. The previous tax credits cost the American Tax Payers, which are mostly middle income earners, $23.5 Billion! Out of the 1.8 Million home buyers that took advantage of the first program, 950,000 bought back in 2009 when the $6500 tax credit was in play. If you bought during that time, and was considered a “first time home buyer”, then remember that you have to pay that money back. The IRS designated that $500 per year to be paid back over a 13 year term. It was basically a free loan.
Now that the tax credits are over, we have a $23.5 Billion bill and the headache gets worse. Existing home sales are down considerably and we are heading into our typical slow period of long Winter months. Job growth is nothing where it should be and consumers are not confident with the track that we are on. As states continue to threaten to cut the budget; that specifically hurts markets like ours where many of our residents are state workers. So, take your ibuprofen and drink lots of water because the headache continues.
The Next Depression?
The experts say most recessions last an average of 18 months. We are getting closer and closer to doubling that with this current recession. At what point do they call it a depression? The Great Depression of the 1930s was very deep; cutting to the core of what America prided itself on. It sure seems like we are quite aways away from something like that, however; the Great Depression had an instant effect after the stock market crash in 1929. Some economies started to recover in the mid 30’s, but most of the world came out of it in the late 30s to early 40s. Some say World War II was the factor in getting us out of the Depression.
I am just wondering who decides when it is a depression. According to Wikipedia, there is no real consensus on what a Depression is. It explains, ‘There is no widely agreed definition for a depression, though some have been proposed. In the United States the National Bureau of Economic Research determines contractions and expansions in the business cycle, but does not declare depressions. Generally, periods labeled depressions are marked by a substantial and sustained shortfall of the ability to purchase goods relative to the amount that could be produced using current resources and technology (potential output). Another proposed definition of depression includes two general rules: 1) a decline in real GDP exceeding 10%, or 2) a recession lasting 2 or more years.
Well, I hate to bring it up, but we are way past 2 years. Obviously most people are still being able to buy groceries and live a fairly normal life. Even though many people are not able to make their house payments, the GDP increased the first quarter by 2.4% and 3.7% the second quarter of this year. That’s a sliver of good news! So, why are we not getting out of this recession? July’s unemployment rate still remains over 10% for Oregon and 9.5% for the U.S. Only 71,000 private jobs were created. That is terrible since private jobs are the driving force to our healthy economy!
Well, I say blame it on the government. Although I believe their intentions are good, they only seem to swing the pendulum way too far the other way. Strict oversight and over regulation will only paralyze our economy further. The good news is that entities like FHA are starting to come around. There is talk that they need to lighten up the oversight. Keeping interest rates down can only do so much, but if a potential buyer can’t get financed, then it doesn’t matter how low the rates are. We do need a balance of oversight and low interest rates. The people who are taking advantage of this market are the investors. Good for them. They will be the ones who will be reaping the rewards in about 20 years. The problem is that there are not enough of them to help us reduce enough inventory to get us out of this mess. The government needs to loosen its grip on the financial systems and stop thinking they need to protect us from every danger out there. The free market will not sustain with Big Brother looking over the shoulder every second. The other alternative? We can be like Europe. Lets keep in mind what made this country the greatest country in history.
More Tax Credit Fraud!
We are entering into the middle of Summer even though we haven’t had much of a Summer thus far in the Pacific Northwest. We finally are receiving some nice weather and people are taking advantage of that. Sales are slumping a little since the tax credit has been ceased. Although, we are getting reports of increased fraud. You would think that the IRS would require a purchase contract to be submitted, along with the HUD 1, since they instituted the April 30th deadline to be under contract with a seller. Well, they apparently don’t have any policies in place to verify that and buyers are going into contract after the April 30th deadline and still receiving the tax credit. As a tax payer, how does that make you feel? Hopefully they can get that under control soon and start thinking a few steps ahead.
April Jobs Report tied to Strategic Defaults?
Jobs continued to gain in the month of April according to the Bureau of Labor & Statistics. 290,000 non farm jobs were created with 66,000 of them for the government as temporary jobs for the census continue to gain momentum. Have you had your friendly census worker visit you yet?
Over the last 2.5 years this Great Recession has contributed to approximately 8 Million jobs lost. Last months jobs report is encouraging, but I am not expecting numbers like that to follow month after month. And even if it did it would take about 3 years to get all of those jobs back that we lost. I hate to be a pessimist here. I want this our economy to thrive again and thrive now! I hope I am wrong, but I just don’t see how we can continue to spend the money that we don’t have and sustain any kind of momentum that we are seeing. The bailout of Greece is a prime example of that. The U. S. holds 17% responsibility in the International Monetary Fund and they just decided to bail out Greece for a whopping 1 Trillion Dollars! Greece is a perfect example of entitlement programs coming to a head. The working class can not afford to pay for all of these programs! More taxes means higher costs for good and services or less jobs. Period.
A lot of this “growth” that we are seeing is believed to be due to the seasonal time of year and the notion that many people are out spending more money instead of paying for their mortgage every month. Many of these are people who have jobs and have the money to pay for their bills, but they are strategically missing payments in order to have a little more fun this year. People are frustrated that their equity is gone so they are not seeing the value in making their mortgage payments. This is known as Strategic Defaulting. They miss a couple of months, which can mount out to a chunk of change, every month or so until the bank comes knocking. The borrower then makes a payment to appease their lender and the cycle continues over and over again. This obviously brings up a moral dilemma. What would you do? Studies show that once the value of a person’s home decreases to 75% of their balance owed, that person considers a strategic default. The more popular this idea becomes the more people will consider it. This won’t help out the recovery of our economy, but it is the sign of the times.
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Principal Brokers Licensed in the State of Oregon