What the Latest Fed. Meeting Meant to the Market

It's been said there's a pot of gold at the end of every rainbow. Yet, after last week's regularly scheduled meeting of the Federal Open Market Committee, the Fed helped gold seem more "charmed" than ever. What happened, and what does this mean for home loan rates? As expected, last week the Fed decided to keep the Fed Funds Rate (which is the lending rate banks charge each other for the use of overnight funds, and it is used as a base rate that many other lending rates are based on) at 0.25%. The Fed also reiterated that economic conditions warrant keeping the Fed Funds Rate low for an "extended period".
But the Fed's Policy Statement was clearly more downbeat on the economy and showed greater deflationary concerns than the previous Fed Statement. It also gave the feeling that the Fed will jump in with more Quantitative Easing (QE) if necessary. QE means the Fed is prepared to create Dollars through Treasury purchases, which in turn causes the Dollar to weaken. And last week, in response to the Fed's statement, we saw precious metals like Gold and Silver move higher as a hedge against a weaker US Dollar.
But, the Fed's Statement is also significant because another round of QE by the Fed could mean continued good news for Bonds and home loan rates. What's more, last Friday, respected hedge fund manager, David Tepper, noted that the shift in the Fed's statement also puts Stocks in an almost "no lose" position.
Why is this? Should the economy improve, Stocks go up. But should the economy weaken, and the Fed jumps in with more QE, Stocks could also benefit because more QE alongside a weaker economy brings the Dollar index down, making our exports more attractive. This will greatly help large US multi-national corporations, which have a high influence on the major US Stock indices. The Fed clearly has some big decisions to make in the coming weeks and months to help ensure our continued recovery, and I'll be watching closely to see how Bonds and home rates are affected. Last week, for instance, Bonds and home loan rates ended the week about .125 percent better than where they began.
Another thing to note - there was a mix of housing news last week. Housing Starts rose 10.5% in August from July, which was above expectations and was the highest level in 4 months. Building Permits, a sign of future construction, gained 1.8% and were also better than anticipated. In addition, New Home Sales came in near expectations, while Existing Home Sales were slightly above expectations - but still 19% below the sales pace of a year ago. Also, the inventory of unsold homes was reported at an 11.6 month supply for existing homes and an 8.6 month supply for new homes. Remember: The level of improvement in housing is a big indication of the strength of our economic recovery.

Information provided by: Lyn Bankowski

First-Time homebuyers stoke demand for smaller homes

First-time homebuyers are contributing to an increase in demand for smaller and less expensive new homes, according to research from economists at the National Association of Home Builders (NAHB). Delving into data from the most recent biennial American Housing Survey, which was conducted by the Department of Housing and Urban Development and the Census Bureau in 2009, the study, "Characteristics of New and First-Time Home Buyers," finds that 41 percent of the 8.4 million households who bought a home between 2007 and 2009 were first-time buyers.

The market share of first-timers was up from 35 percent in both 2005 and 2007. Although some of the demand was fueled by the initial version of the home buyer tax credit in mid-2008, which was specifically targeted to those buying a home for the first time, the upward trend is expected to continue as children of baby boomers - members of a generation that is larger than their parents' - move into their household formation years in the period ahead.

First-time buyers for the two years of the study had an average age of 34, compared to 46 for those trading up. The average income of first-timers was over $67,000, about 30 percent below the average household income of trade-up buyers of $97,000. About half of the first-time buyers earned less than $60,000.

The household size of both first-time and trade-up buyers has been declining, while single-person households have been on the rise. First-timers bought homes with an average market value of about $184,000, compared to more than $297,000 for trade-up buyers. First-time buyers bought homes averaging 1,874 square feet, significantly below the 2,549-square-foot home purchased on average by those trading up. Forty-six percent of first-timers bought homes smaller than 1,500 square feet.

The full report is available here.

Budgeting Tips to Help you Buy Your Home

TODAY WE WILL DISCUSS BUDGETING AND HOW TO GET STARTED! I AM NOT GOING TO TALK ABOUT THE FULL DEAL HERE. JUST THE BASICS. IT CAN BE OVERWHELMING… I KNOW. SO LET’S BREAK IT DOWN. IF YOU WANT THAT FIRST HOME TO CALL YOUR OWN, AN UPGRADE, A SECOND HOME, INVESTMENT PROPERTY OR JUST TO DO BETTER WITH THE DOLLARS YOU HAVE, THEN THIS IS A STARTING PLACE.

FIRST, START WITH A REALLY GOOD BUDGETING FORMAT. ONE WITH MORE THAN JUST A FEW GENERIC CATAGORIES. THINK ABOUT THE DOLLARS YOU SPEND EACH DAY, WEEK, MONTH AND YEAR. THEY DON’T FALL INTO JUST A COUPLE OF CATAGORIES. A BUDGET SHOULD REMIND YOU OF THOSE NORMAL EXPENSES THAT ARE NORMAL FOR YOU, EVEN IF THEY ARE NOT NORMAL FOR MOST OF THE POPULATION. IF YOU DON’T HAVE ACCESS TO A GREAT BUDGET FORMAT, LET ME KNOW AND I WILL SHARE ONE WITH YOU. IF YOU DON’T SEE A CATEGORY YOU NEED, ADD IT.

SECOND, BE HONEST. WE EACH LIVE IN OUR LIVES AND HOMES DIFFERENTLY. SOME FOLKS ARE HOMESTEADERS. EACH WEEKEND AND HOLIDAY IS PLANNED AROUND HOME IMPROVEMENT PROJECTS, ENTERTAINING AND PUTZING AROUND THE YARD AND HOME. OTHERS, HIT-AND-RUN. HOME IS JUST A PLACE TO DROP OFF THEIR PERSONAL ITEMS, CHANGE CLOTHS AND GO SOME PLACE FROM. EACH WEEKEND AND HOLIDAY IS PLANNED AROUND OUTSIDE INTEREST AND ACTIVITIES. EACH OF THESE FOLKS ARE GOING TO HAVE A BUDGET THAT LOOKS QUITE DIFFERENT. THINK ABOUT WHO YOU ARE AND HOW YOU LIVE AND SPEND THE MONEY YOU HAVE.

THIRD, BE SURE TO USE YOUR NET INCOME WHEN FIGURING OUT WHAT YOU HAVE TO WORK WITH. THIS IS WHAT IS LEFT AFTER TAXES AND REQUIRED DEDUCTIONS. IF YOU HAVE DEDUCTIONS FROM YOUR PAY FOR SAVINGS, INVESTMENTS, INSURANCE, ETC., (PRE-TAX OR AFTER TAX) THOSE NEED TO BE NOTED YOUR BUDGET AS WELL.

FOURTH, THINK OF WHAT YOU MUST SPEND AND WHAT IS OPTIONAL. NEEDS AND WANTS. THE BUDGET SHOULD REFLECT A PLAN FOR THE FUTURE AS WELL AS THE EXPENSES OF TODAY. IF YOU WANT IT AND IT’ S IMPORTANT TO YOU, PLAN FOR IT. MAKE A CATEGORY AND LOOK AT IT EVERY MONTH. EVEN IF YOU DON’T HAVE THE FUNDS TO ACCOMMODATE IT NOW, MAKE CHANGES AND PLAN AHEAD SO THAT YOU WILL. THIS IS WHERE DISCIPLINE AND GOAL SETTING COME IN.

FIFTH, RE-EVALUATE NORMAL EXPENSES AND BILLS. CHECK YOUR BILLS WHEN THEY COME. ARE YOU GETTING FULL BENEFIT FROM ALL THE SERVICES OFFERED? I RECENTLY WENT THROUGH MY OWN COMBINED CABLE, INTERNET AND PHONE BILL. THERE WERE SERVICES INCLUDED THAT MY FAMILY DOES NOT REGULARLY USE. I CALLED THE PROVIDER AND WE MADE A FEW CHANGES THAT SAVED US OVER $ 20.00 PER MONTH. ($ 240.00 per year)

SIXTH, IF YOU HAVE A SPOUSE, SIGNIFICANT OTHER OR ROOMMATE, EACH OF YOU NEEDS TO FILL OUT A BUDGET SEPARATELY AS A STARTING POINT. THEN SIT DOWN AND TALK ABOUT THE DIFFFERECES, EXPECTIONS, AND PRIORITIES. FROM THAT CONVERSATION CREATE ONE MASTER BUDGET THAT EACH OF YOU AGREES TO. WE ALL HAVE DIFFERENT OPINIONS. IF EVERYONE INVOLVED TAKES OWNERSHIP OF THE BUDGET, THEN THE CHANCES FOR SUCCESS ARE MUCH GREATER.

SEVENTH, PLAN FOR SAVINGS AND INVESTING. FOR MANY, THIS IS THE HARDEST. IF YOU ARE NOT DOING IT NOW, TIME TO START. YOU CAN START SMALL, EVEN $ 25.00 PER MONTH IS A START. WE ALL SLEEP BETTER AT NIGHT WITH MONEY IN THE BANK. LIFE IS UNPREDICTABLE. PLAN FOR THE BUMPS IN THE ROAD, THEY ARE PART OF THE JOURNEY.

EIGHTH, A BUDGET IS NOT A MAKE IT AND FORGET IT DEAL. IT’S A CONSTANTLY CHANGING AND EVOLVING PROCESS. MAKE YOUR BUDGET VISABLE, VIABLE AND USEABLE.

NINTH, IF YOU NEED HELP AND THE PROCESS IS OVERWHELMING, GET HELP. FIND TRUSTWORTHY, EXPERIENCED, HELP.

TENTH, TRACK YOUR RECEIPTS FOR PURCHASES, MONTHLY BILLS AND STATEMENTS. THESE ARE THE TRUTH TELLERS OF HOW YOU SPEND YOUR MONEY. EACH MONTH WHEN YOU SIT DOWN WITH YOUR BILLS AND BUDGET, USE THESE TO DETERMINE YOUR STREGTHS AND WEAKNESSES. MODIFY AS NEEDED.

PLEASE, KNOW THAT THIS IS JUST A STARTING POINT. MANY, MANY BOOKS HAVE BEEN WRITTEN ON THIS TOPIC. YOU MAY CONSIDER READING ONE OR TEN OF THEM. PERHAPS TAKE A CLASS OR ATTEND A SEMINAR. THESE TIPS ARE DESIGNED TO GET YOU THINKING AND MOVING TOWARDS A BETTER TOMORROW.

ALL THE BEST! LYN

Contributed by: Lyn Bankowski AlaskaUSA Mortgage

THIS IS INFORMATION IS NOT TO BE CONSIDERED LEGAL OR FINANCIAL ADVICE. PLEASE SEEK THE PROFESSIONALS IN THOSE FIELDS WHEN NEEDED.

Foreclosure & Short Sale Scams are Going Strong

The housing market in the United States may not be thriving, but business is booming for foreclosure rescue and loan modification scammers.

The US Government Accountability Office (GAO) released a report in July 2010 entitled “Home Ownership Preservation”. It states that: “The current foreclosure crisis has provided persons who may perpetrate mortgage foreclosure rescue and loan modification schemes with unprecedented opportunities to profit from homeowners desperate to save their homes.

The GAO report says there are two main types of foreclosure rescue and loan modification scams: advance-fee loan modification schemes and sales-leaseback schemes, with advance-fee schemes being the most common.

The Federal Trade Commission (FTC) reports on a new twist on the advance-fee scam that’s showing up this year, a “forensic mortgage loan audit.” The scammer offers to find regulatory violations in your original mortgage that will help you avoid foreclosure or even cancel your loan. There’s no evidence that anyone has ever succeeded in modifying their loan using this approach.

Here are some “red flags” that at-risk homeowners should watch out for when looking for foreclosure help, courtesy of the FTC. You should avoid any business that:

• guarantees to stop the foreclosure process – no matter what your circumstances
• instructs you not to contact your lender, lawyer, or credit or housing counselor
• collects a fee before providing you with any services
• accepts payment only by cashier’s check or wire transfer
• encourages you to lease your home so you can buy it back over time
• tells you to make your mortgage payments directly to it, rather than your lender
• tells you to transfer your property deed or title to it
• offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
• offers to fill out paperwork for you
• pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

courtesy of MilitaryAvenue.com

Washington Realtor Membership Declines

With the slowdown in home sales nationally comes a decline in the membership of the National Association or Realtors and the Washington Association of Realtors. According to an article in the Inman News, in Washington state, which had the second-highest peak-to-trough drop nationwide, Realtor membership dropped 8.3 percent between August 2009 and August 2010, which the state's association also attributed to delayed impacts from the housing downturn.

"The decline in the housing market hit Washington later than elsewhere. The data indicate that the Puget Sound area peaked about a year after the national peak in home prices, and that recovery in home prices has been slower in Puget Sound than elsewhere," said Steve Francks, Washington Realtors' CEO.

Whidbey Island, Island County, Washington Information

Island County is a unique area, well known for its exceptional quality of life. Island residents and tourists alike marvel at the fantastic views of the snow-covered Cascade and Olympic mountains as they relax in this pastoral setting. The islands comprising Island County are Whidbey Island, Camano, Ben Ure, Smith Deception, Strawberry, Baby, Minor and Kalamut.

The two settled islands, Whidbey Island and Camano Island, are favorite destinations for weekend visitors with easy access via State Route 20 over Deception Pass, State Route 532 to Camano, and the State Ferry System routes accessed off-island at Mukilteo and Port Townsend.

Whidbey Island is the longest island in the contiguous United States - 45 miles long with 148 miles of shoreline. Camano is 16 miles long and has 52 miles of shoreline. Whidbey Island is located 27 miles north of Seattle and 50 miles south of the Canadian border. Island County has a total land area of 208 square miles (Whidbey - 168 sq. mi; Camano -40 sq. mi).

European settlements were first established in the early 1850's in the Penn Cove-Coupeville area. The rich history of this area has been preserved through the establishment of the Ebey's Landing National Historical Reserve. The small communities that were established along these sheltered shorelines in the 1850's are today highly regarded as locations for permanent homes and summer residences as well as small but successful businesses.

Information provided by Island County Economic Development Council