Thursday, November 27, 2008

An early sign that the mortgage crisis is ending?

Thanks to McClatchy for directing me to this site.
Homebuyers jump at falling mortgage rates
By Dale Kasler
Published: Thursday, Nov. 27, 2008 | Page 8B

Stuart Stenhouse has been watching the housing market for some time. On Wednesday, lured by a plunge in mortgage rates, the 40-year-old Sacramentan jumped in.

"That's why I'm starting," Stenhouse said as he traipsed around Beazer Homes' Natomas Field development in a cold midday drizzle. He doubted he would buy immediately, but the lower rates prompted him to start looking at town homes in the low-$200,000 range.

Sacramento's troubled housing market, which has been gaining momentum for several months, got a new jolt this week. An $800 billion stimulus plan for the credit markets, unveiled Tuesday by the Federal Reserve and U.S. Treasury Department, sent fixed-rate mortgages tumbling as much as 1 percentage point.

Almost immediately, homebuyers with deals pending raced to lock in rates. Potential homebuyers called their agents and said they were ready to look in earnest. Homeowners took a fresh look at the refinance market.

It's unlikely this will cure all that ails the real estate market. It won't spell relief for homeowners who've fallen behind on their payments or can't refinance out of an expensive variable-rate mortgage because they owe more than their houses are worth.

Still, the move was seen as helpful. Alan Wagner, president of the Sacramento Association of Realtors, said the lower rates might help firm up the region's housing prices – which have continued to plummet even as the volume of sales has improved. At the very least, the rates will probably bring more buyers out of the woodwork, and soon.

"Where Friday is going to be Black Friday for retail people, it'll be a day for people to start looking for houses," said Wagner, an agent with Re/Max Gold in Elk Grove.

Jeff Tarbell of Comstock Mortgage, with offices in Sacramento and Roseville, said 30-year fixed-rate mortgages fell to around 5.375 percent. They had been something over 6 percent before the stimulus plan was announced.

This week's average mortgage rate of 5.97 percent was the lowest since the week of Oct. 9, when rates fell to 5.94 percent. Average rates have been below 6 percent 16 weeks this year, according to mortgage giant Freddie Mac. The year's low was 5.48 percent the week of Jan. 24; the high was 6.63 percent the week of July 24.

Tuesday's news overwhelmed computers at Comstock, and the banks where it places loans, as purchasers moved to take advantage.

"There was so much volume in such a short window of time, I would say probably our own system, and four or five of the big banks that we register loans with, went down or went into some sort of a tizzy," Tarbell said. It quieted Wednesday but was still busy.

One of Tarbell's clients, who's moving from the Bay Area, was about to lock in a $400,000 mortgage at 6 percent. He ended up borrowing at 5.625 percent. Savings: $161 a month.

The government plan includes $500 billion in new cash to buy up mortgage-backed securities, plus another $100 billion to buy debt securities issued by government-affiliated mortgage firms such as Freddie Mac.

Separately, $200 billion will be loaned to institutions that invest in securities backed by auto, credit-card and small-business loans.

By purchasing those securities, the government drives up their price. That drives down the securities' yield, which drives down the interest rates consumers pay.

The plan comes as the Sacramento housing market, one of the first in the country to collapse, is still struggling to find its footing. October marked the seventh straight month with higher sales, but prices are still falling off a cliff.

MDA DataQuick said Sacramento County median prices fell to $195,000 in October, a 35 percent drop from a year ago. Placer County's median of $320,000 was 21 percent below last year and 39 percent below the 2005 peak.

Moreover, the new-home market remains weak. Housing starts in greater Sacramento are down 34 percent this year, says the Construction Industry Research Board.

That means, at least for now, downward pressure on prices. "The buyers are out there looking for really good deals, and they're getting really good deals," said Patti Smith of Patti Smith Timberline Realty in Georgetown.

Lower rates will help, though. "We will see an increase in sales," said Kathryn Boyce with the Sacramento office of researcher Hanley Wood Market Intelligence. "People who were on the edge, who stopped looking because interest rates went up, will now want to jump back in quickly."

Steve Galster, co-owner of the Galster Group real estate firm in Fair Oaks, has a client who began looking at properties in September but then stopped, frightened that home values hadn't hit bottom. Despite nudging from Galster the past two months, the client wouldn't resume searching.

But when the interest rates fell, the client called Galster. "He's been watching things, and all of a sudden he says, 'Why not now?'" according to Galster.

The two are going house-hunting Saturday morning.

Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at
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Jack520 wrote on 11/27/2008 06:29:29 AM:

Home prices do what home prices do. I have always said this and it is so true. When they go up, people rush in cause they dont want to be priced out. When they go down, they are afraid to buy. This keeps the trend going. You all saw what kept them going up, I do not need to refresh you on this trend. Why do they start to go up? Well, first, if you can buy a home for roughly the same price as renting, why rent? You have to take into consideration the tax savings, with the state taxes at 9 % and federal roughly 26% combined, that makes around 34 % ( they do not add). If you are paying 1200 a month for rent, then you can pay 1800 for your house payment ( do you taxes yourself and find out, dont trust my number ). Then determine what you can buy for that amount....When the market gets close to making it more cost effective to buy versus rent, is when the market begins to turn up. Are we do the math. As more people buy, so do their friends. I am glad young families can buy.
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Tuesday, November 18, 2008

Saudi Aid and Fatwas to Calm Pakistani Militants? has a note, referenced to Asia Times Online [but I can’t find it] stating that

“General Petraeus has given Saudi Arabia control over aid to Pakistan. ++ It is hoped that a series of religious decrees against terrorism and a continued debate on inter-religious dialogue with Saudi support will reach troubled areas in Pakistan. ++ Saudi involvement risks pulling them into a quagmire of politics and military action. ++ However, the US, Saudis and Pakistanis engaging militants individually can have results.”

I cannot internalize how a general so reputedly intelligent could do something so transparently unwise. Yes, Pakistan has, as the article says, “failed” to produce the kind of results we want on “the war on terror”, but to make use of Saudi Arabia to remedy the situation is folly beyond measure. If the Pakistanis are conflicted about how they want to make use of Islamic ideals to motivate their citizenry, Saudi Arabia has to be at least as conflicted. Indeed, they admit to carrying on a low-grace civil war against their own “jehadists.” Can Petraeus be unaware of the many times in Saudi history that various extreme Islamist groups have become major problems for government control? How can Saudi theologians, wahhabi theologians at that, develop the kinds of theological decrees that would rein in extremists in “troubled areas” of Pakistan?

I am dumbfounded and horrified. Dear Lord, save us.

[click on the title for a link to the source]

Monday, November 03, 2008

Preparing for the outcome

It is now the night before the election and, even though the pundits claim to know how it will come out, many of us are anxious. Now is the time to prepare to accept the result, whatever it is.

Our country is dangerously polarized. When this election is over we must all be prepared to join in making the best of the result, even if we disagree with it. What makes democracy work is the universal commitment to consent to the will of the majority and to protect the right of the minority to retain their own voice, even in defeat.

Abraham Lincoln’s Second Inaugural Speech, brief as it was, delivered in the rain, captured the spirit that must prevail among us after a bitter contest.

The Almighty has His own purposes. “Woe unto the world because of offenses; for it must needs be that offenses come, but woe to that man by whom the offense cometh.” … Fondly do we hope, fervently do we pray, that this mighty scourge of war may speedily pass away. Yet, if God wills that it continue … still it must be said "the judgments of the Lord are true and righteous altogether.”
With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation's wounds, … to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.