DO AS I SAY... NOT AS I DO

DO AS I SAY... NOT AS I DO

There are many things about real estate that are great... one of which is that it never gets dull. With the boom everyone was a genius. With the bust everyone is pointing fingers at who's fault it was. Though banks had a big role in feeding the bubble it was Government policy or lack there of that created the ingredients for the bubble to form. Government policy encouraged home ownership to those who couldn't afford it and Wall Street in their creative capacity figured out how to create the financial products that would keep the supply of investment money coming in to fund the loans.

Government is now attempting to throw a lifeline to struggling homeowners and "rescue" them by creating programs and policies encouraging banks to offer loan modifications programs to struggling homeowners.... except for government held mortgages of course. An interesting read from the link to the article below.

http://money.cnn.com/2010/05/14/news/economy/fannie_freddie_principal_reduction/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29

From the desk of Zach Trailer

A Bit of Perspective

This is an interesting article that brings a bit of gravity back to the encouraging housing sales statics that we have seen in 2010. The crux of this article touches on the fact that a high percentage of our national wealth is tied up in the housing market. Of course, over the last 10 years this wealth was leveraged to consume. The appreciating asset of our homes over the last 10 years created an "ATM" that people could then draw from for all sorts of purchases. Though this ATM has dried up for the average person the truth that this article points out is that this has other consequences that ripple through the economy affecting construction, small business, and government employment all which contribute to the jobs engine in the United States. This is a good read that helps bring to life the ripple effect that an overall reduction of value in the real estate market has.


http://finance.yahoo.com/real-estate/article/109507/real-estates-far-reach-to-continue-to-pinch

A Wild Ride on Wall Street

What a wild ride on Wall Street last week. All of 2010 gains were temporarily wiped out and after a roller coaster couple of days the Dow is gaining back what was lost. At one point a 30 year mortgage was in the neighborhood of 4.5% as money fleeing from EU risk came pouring into US Treasuries. An EU bailout has caused the dollar to fall again today 5/10 which is good for the stock market.

The Real Estate market continues to show strength. Below is a great link to see just how strongly the housing market has come back in silicon valley. http://www.burbed.com/2010/04/25/silicon-valley-median-home-price-rises-29-percent/ Median prices have risen by 29%. Likely there are a few contributing factors. The expiration of the first time home buyers tax credit brought a lot of buyers into the market. Historically low interests rates continue to be a big incentive to buyers. The truth of the matter is that compared with a year ago those who are still employed are far less afraid of losing their jobs than they were a year ago, especially in here in Silicon Valley. In Silicon Valley companies are financially healthy and making a lot of money. Many including Apple have announced fabulous earnings which gives confidence to those who are employed. In fact, tech is hiring again which will only continue to build strength in the market.

Have a great Monday!

From the desk of Zach Trailer.