I may not be a real estate expert, but I believe what is currently happening in real estate markets across the country is what people have long known would happen, but didn’t want to admit. Up until recently real estate was a business in a field full of “part-time” licensed Realtors…it was a lucritive business relatively easy to be successful in even for an “average agent”.

Nobody really cared to question mortgage lending practices. Nobody cared to ask the question of how a home could appreciate so much while minimum wage and salaried positions saw little increase. We knew the answers, but didn’t ask the questions.  Instead, people enjoyed the benefits of a “good” real estate market. A market in which people benefited from appreciation and took home equity loans and purchased vacations, cars, college education, etc. without thinking twice of the long-term impact.

The widely covered national news about real estate is just that…national news. My predictions focus on the local real estate market and I see quite a contrast when comparing the national real estate market to the local Atlanta real estate market.

First off, I am glad there was a housing slump in ‘07. I think ‘07 was a reality check for consumers and Realtors alike. Real Estate is a serious business, it was never meant to be a part-time job and ‘07 has uncovered this. The housing slump has forced many Realtors out of the business and those that remain are the individuals that have treated real estate as a business, not a hobby, and definitely not a way to make some “spending money”, no sir, those that remain are the ones that rely on real estate as their sole source of income and that is why they remain.

Secondly, the slump has forced consumers to see real estate from another angle. Pricing a home correctly is a science…it invovles running reports on sold listings, expired listings, currently listed properties…there are many factors that come into effect when developing a competitive market analysis. Numbers never lie and this is the driving force behind the real estate market. Consumers are best served when they select a real estate agent that is not just a sales or marketing person, but also someone with a strong understanding of statisical analysis. The slump has forced consumers to detach themselves from any feelings about their home and instead to look at the numbers and see what they say in regards to pricing a home.

Now the good news…my predictions for Atlanta real estate in 2008 with a brief explanation supporting my claim.

If 2007 was the year of awakening for Atlanta real estate, I view 2008 as the year of the rebound. Don’t think because I say rebound that things will go back to how they were, no sir, instead things will go back to the way they should have been. Here’s the funny thing about statistics (politicians are the best), no matter what the statistics are, they can always be spun to support a claim. I could do this, but I’m not going to here. I will simply state some basic facts and why these will help the Atlanta real estate market.

I don’t know if houses will continue to depreciate or appreciate. I do know this, the Atlanta market will rebound and I feel like it is already beginning to happen. Be realistic about the value of your home, don’t think, interpret…listen to a Realtor interpret the market to you and price your home accordingly. Business 101 teaches the concept of pricing a good or service at what the market can bare…same goes for real estate. We can all play a role in changing the market if everyone follows this simple rule. Don’t be greedy. Are you really losing $50K on your house or are you gaining $25K on your new house…remember, the market is affecting everyone (some more so than others).

The Atlanta market will rebound, unlike markets nationally Atlanta is the fastest growing metropolitan area in the United States as well as a leader in job growth.  As businesses relocate to Atlanta so do employees.  The more people moving to Atlanta the greater the demand is for housing. Simple supply and demand. As the Atlanta area grows the demand for houses will push prices of homes back up and help “stabalize and cultivate” the market.

Contrary to popular belief this is a great time to buy real estate for personal or investment reasons. If you are smart about your real estate transactions, the “hit” you feel on the sale of your current home is soon forgotten when you “buy-up” into a home you couldn’t have afforded a year ago. Interest rates are at an all-time low.  I recently bought my first home in Roswell, GA it was a foreclosure and the appraisal came back $20K above my purchase price! Deals are out there…go find them!

Source: 
Carl H. Martens
Internet Marketing and Operations Manager
Richterkessing, Inc.

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In an emergency move, the Federal Reserve cut rates by .75% this morning in an attempt to keep the economy from sliding into recession.  This is the first emergency rate move by the FED since September 2001 just after the 911 event. 

Stock markets around the world took a beating yesterday on fears that the US economy and its pending recession will drag down other economy’s with it. 

The DOW open down over 450 points during the first 5 minutes of trading but has recovered some of its losses to only be down just over 300 points at the time of this report.  Continued weakness in the housing sector, slumping retail sales, and rising unemployment are continuing to point to a recession in our economy. 

It also appears that Wall Street is not to impressed with our President’s stimulus package that would put a $650 check in the hands of many Americans.  $650?  Nice gesture but considering that Americans have now lost in excess of 15% of their net worth over the past several months with the fall in housing prices, and declines in their stock portfolios and retirement funds this meager amount will do most likely nothing to stimulate the economy…maybe it will be able to buy a couple of months of gast at the pumps…but that is about all it will do.

Don’t look for mortgages to drop too quickly…while the FED did cut rates today by .75%, don’t look for mortgage rates to move sharply lower in the next couple of days.  The rise of foreclosures is placing a damper on pushing mortgage rates sharply lower. 

Mortgage rates should move lower but not notably lower over the next several weeks.  If continued weakness persist through February, look for 30 year fixed rate mortgages (conforming) to inch below the 5% mark for the first time in many years.

Maybe this will get the housing market to at least stabilize itself and eventually pick up some steam.  I still believe that this is an excellent time to buy as housing prices continue to fal along with falling rates.  Both sellers and buyers need to be more realistic in their views.  Until this happens, housing will continue to suffer.

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The maximum value of a single-family mortgage eligible to be purchased by Fannie Mae or Freddie Mac will remain at $417,000 for the third straight year, according to the Office of Federal Housing Enterprise Oversight, known as OFHEO.

“While the house price survey data used in determining the conforming loan limit show a decline over the past year, as previously announced and consistent with the proposed new conforming loan-limit guidance, the level will remain at $ 417,000 for the third straight year,” said James Lockhart, OFHEO’s director.

The conforming loan limit is based on the average October-to-October change in home prices, which fell $10,685, or 3.49% to $295,573 in the latest Federal Housing Finance Board survey.

The news isn’t too surprising, as the OFHEO said under no circumstance would the conforming limit drop, and since home prices were sliding, many expected no increase.

The California Association of Mortgage Brokers has been lobbying to raise the conforming loan limit from $417,000 to $625,000, which they estimate will allow tens of thousands of homeowners to obtain more favorable financing.

Currently, the median home price in California is roughly $588,970, making it difficult for many potential homeowners to get a mortgage without putting a sizable sum of money down at closing.

Fannie Mae and Freddie Mac, as well as certain Senators have also been pushing for a temporary lift of the conforming limit to ease the credit crunch, though the Bush Administration and Fed Chief Bernanke have been strongly opposed.

Shares of both government-sponsored entities, who buy many of the loans mortgage lenders originate and then repackage them as securities, rose slightly after being battered Monday following a downgrade.

Full article

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There are not many in the real estate or mortgage sector that would say 2007 was a good year…or even an average year. Many, myself included, could not see this year end any sooner. 2007 brought a complete collapse of the mortgage industry with over 200 major lenders nationwide “tapping out” for good. Guidelines have reverted back to the early 1990 levels and 100% financing is almost a fading memory even with full documentation. 2007 was a culmination of an industry, the mortgage market, that simply lost all rationality and is now paying the price for their mistakes.  The thoughts that real estate prices would continue to rise for eternity was simply ignorant and irresponsible. Providing mortgages to borrowers with marginal to simply bad credit with no money down and no verification of income or assets was again…irresponsible. Then you add on that you provide these loans to marginal or bad credit borrowers with no verification of income or assets and no money down on instruments that were simply “smoke and mirrors”.  Sure they can make a payment at 1.9%…but making a payment at 7% just a little more than 2 years from when they got it….that is a different story. Throw in that their mortgage balance has risen over those 24+ months and their property value has declined during the same period of time and you now have the perfect storm we are meandering through today.

This “storm” will continue through at least Q1 of 2008 and most likely will continue for the most of 2008 as more and more homes are dumped on the market due to increasing foreclosures creating the perfect buying opportunity for buyers.  When the turnaround is going to happen is anyone’s guess at this time but it will come…it always does. The silver lining to this storm is that interest rates should decline in 2008 and prices will also fall setting us up for a perfect buyers market…it could not happen soon enough.

Maybe the mortgage industry will learn from 2007 and will not repeat the same mistakes which have gotten us to this point. Home ownership is a privilege…not a “right”…the mortgage industry has seemed to have forgotten this over the past several years…Placing borrowers in homes they cannot afford serves no one any good…2007 is an example of this…

Here is to a GREAT, WONDERFUL and SAFE 2008…Happy New Year!!!

Have a great day!!!
DC AIKEN, VP

Economic releases stated in this report do not necessarily depict all economic releases for the week.  Market Watch is for informational purposes and its accuracy is not warranted.  The opinions expressed in Market Watch are not necessarily those of Countrywide Home Loans.

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Chairman Bernanke and his FED friends concluded their last “scheduled” meeting of the year at around 2:15 today and announced a .25% cut in rates. The FED stated today, “recent developments, including the deterioration in the financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation” and that this change “should promote moderate growth over time”.

While their last comment was some what reassuring that the economy will get back on track soon, Wall Street did not think so hammering the DOW down over 230 points.

Many Wall Street analyst believe that this cut was not enough to keep the economy from plunging into recession. The housing and financial markets continue to show weakness with the possibilities of a quick turnaround being very remote if even possible.

This small cut is being viewed as a token attempt to pull the nose up on a plane that is falling faster and faster by the day. While stocks are being hammered today, interest rates are recovering from last week’s move to higher levels.

The 10 year treasury as well as mortgages are showing healthy gains today and we have almost retraced the upward movement we saw last week with the 10 year treasury now trading under 4% for the first time since early last week. But the FED still has not figured out the real problem in the housing and financial sector and it is something that I have been preaching for months about….the lack of liquidity in the markets. If you have a loan amount that meets FNMA/FHLMC or FHA guidelines, there is plenty of liquidity.

However, loan mounts “north” of $417,000 or HUD limits, there is virtually no market to sell those loans into. The problem with this scenario is there are plenty of markets where the housing prices exceed these limits which has greatly curtailed lending at this price point as well as loans that fall into the ALT A world (stated income loans). Until the liquidity issue is resolved, housing and the financial markets will continue to suffer which will ultimately slow down the remainder of the economy which is what we are seeing now…..

Have a great day!!!
DC AIKEN, VP

Economic releases stated in this report do not necessarily depict all economic releases for the week.  Market Watch is for informational purposes and its accuracy is not warranted.  The opinions expressed in Market Watch are not necessarily those of Countrywide Home Loans.

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WASHINGTON (AP) — The Federal Reserve cut a key interest rate by one-quarter of a percentage point Tuesday, trying to keep the country out of recession.

The reduction in the federal funds rate to 4.25 percent marked the third rate cut in the past three months. Fed officials signaled that further cuts were possible if a severe downturn in housing and a crisis in mortgage lending get worse.

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There is actually a glimmer of good news to report this month. There were 4,185 closings for all single family in October. This was another large year-to-year decrease, 31.0%, but after lags are reported October may exceed September’s result.

Historically, Octobers’ closings have always been less than September. It will be close, but still a good chance it will happen, as only a few hundred lags will be needed to surpass September.

Another good sign to report is that 4,970 single-family homes went under contract in October versus 4,399 in September. If the ratios hold out there should also be more closings in November than in October.

Why is our market starting to turn around? First, the FED dropped interest rates a half a point in September and now a quarter of a point the end of October. Second, our prices are dropping and in some areas are dropping a lot.

The average price for condos and townhomes was $183,735 in October or a decline of 4.2% from October 2006. It is also the lowest reported average price for condos and townhomes since July 2005.

The average price for single family detached was $248,333 in October or a decline of 0.3% from the same year ago period. This was also the lowest average price reported since February 2006.

There were 1,134 expired listings for condos and townhomes in October. This is the third highest monthly total of all time and when you add September’s record number to it you would exceed the total for all of the year 2000.

There were 6,436 expired listings for single family detached in October. This was just short of being a record, as it was only 120 less than September’s all time record. I believe we will still see more records broken for expired listings before 2007 is over.

There were 3,369 withdrawn listings for all single family and ranks only behind August as the highest reported for a month.

The days-on-market for all single family was 90.8 in October. This is the highest reported DOM since February 1998.

Plus, the average year to date DOM for 2007 is 87.0 and if this does not go down by year-end it will be the highest yearly average since 1994!

The inventory levels are not dropping in the Fall as in the past, as the record number of foreclosures keeps being added to the inventory. This is a large part of our lower prices, but at the same time are helping fuel our minor comeback, because they are being absorbed at a greater rate than the rest of the market. I believe there is a whole lot more foreclosures to still hit our housing market.

There are a couple encouraging signs in October and I would normally be optimistic that we would be starting our turnaround. However, the equity markets have weakened again, gasoline is soaring, and the credit markets are unstable. We will need a few more months of positive numbers before a definitive positive outlook can be projected.

If we can stay out of recession, I believe 2008 will definitely improve.

Thank you,

Steve Palm
Smart Numbers
© 2007 Smart Numbers

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September ended what may be the worst year-to-year quarterly (July-September) percentage change in single family units closed that will ever be reported. At least I hope so.

There were 4,017 units closed for all single family in September. This is a 39.6% decline from September 2006. Plus, last September was our first year-to-year percentage decline reported during our housing recession. Even after lags are reported the percentage decline will be 24-27%, easily our greatest percentage decline to be reported since the early 90’s.

Single family detached closed 3,406 units or a decline of 39.6% and condos & townhomes closed 611 units or a decline of 39.7%. However, we are also comparing against a very strong housing market from 2004-2006. Even without the 4th quarter the year-to-date closings in 2007 are more than we had for all of 2002 and we could have more closings at year-end than we had in 2004.

The average price for all single family was $255,011 in September and $257,692 for year-to-date 2007. Both of the averages are up 2.6% and 2.9% from 2006.

The median price for year-to-date 2007 is $195,000, compared to 2006’s median price of $192,500 or an increase of 1.3%. The reason the increase for “average” is higher than the increase for “median” is that the high-end market has not declined like the rest of the market. The following chart is for 1MM+ closings for the past three years through September. One of the bright spots for housing in 2007 is that the high-end is ahead of last year.

yr/mth 1 2 3 4 5 6 7 8 9 Total

2005 20 50 51 63 50 84 80 73 64 535

2006 38 53 73 67 95 115 99 77 62 679

2007 41 61 94 73 108 122 82 90 54 725

The record for expired listings for all single family was broken in September. There were 7,808 expired listings, easily surpassing the previous record of 7,168 from last December. This record will most likely be broken again before 2008.

There were 3,028 withdrawn listings for all single family in September. This fell short of the record broken in August, but was still the 3rd highest on record.

Days on market for all single family was 91.5 in September. This is the highest recorded DOM for all single family since February 1998.

Months-supply has slowed its increase, but the three year comparison greatly reflects our housing slowdown.

Months Supply 09/30/2005 09/30/2006 09/30/2007 % Change 06′

New - Single Family Detached 7.4 10.5 14.0 33.3%

New - Condos & Townhomes 7.3 8.8 14.2 61.4%

Resale - Single Family Detached 6.3 7.3 10.8 47.9%

Resale - Condos & Townhomes 10.0 9.1 11.3 24.2%

The good news, it is a great time to buy, the FED cut interest rates, consumer confidence increased for the first time in seven months, and the equity markets have improved. What we need is another rate cut, increased consumer confidence, and the equity markets continuing to improve. If this happens, housing will start to come back. October, November, and December will be key reporting periods to see if this will happen.

Thank you,

Steve Palm
Smart Numbers
© 2007 Smart Numbers

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We got our rate cut this week! We HAD to have this reduction, but will it be enough to turn our housing market around? I believe there will be one or two more interest rate reductions before the end of the year. They will be needed after looking at August 2007 results.

There were 5,129 closings for all single family in August. This is a decline of 34.6% from the same year ago period. After lagged closings are reported, the percentage decline will most likely be more than 20% and the largest percentage decline on record (since 1996).

Single family detached closed 4,343 units in August or a decline of 34.6% from the same year ago period. This was the 6th consecutive percentage decline and 12 out of the last 13 periods have produced a negative year-to-year percentage change.Condos and Townhomes closed 785 units or a decline of 33.7% from August 2006. This was the 6th consecutivepercentage decline and the 9th percentage decline over the past 12 monthly periods.

The average sale price for single family detached closings in August was $278,871 versus $264,510 for the same year ago period. Condos and townhomes had an average price of $193,009 versus $186,557 for August 2006.

There were 7,181 expired listings in August. This was 19 more than Last December’s all-time record and 2,100 more than August 2006.

There are 36,894 expired listings for single family detached for year-to-date August 2007. There are 10,000+ more expired listings than were reported for the first eight months of 2006 and more expired listings than were reported for all of 2002.

Single family detached and condos & townhomes broke the record in August for most withdrawn listings for a given period. Single family detached had 3,196 withdrawn listings in August and easily surpassed the previous record of 2,920 withdrawn listings in June 2007. Condos and townhomes had 546 withdrawn listings in August and also easily surpassed the previous record of 495 withdrawn listings in June 2007.

Days on market and months supply continue to increase. Days on market for all single family is averaging 86.2 through year-to-date 2007. This is the highest average for the past 13 years and it is expected to go only higher.

Days on market for year-to-date 2007 for condos and townhomes is 95.0 and is the highest yearly average since records have been kept. The previous high was last year’s 91.0.

Months supply is at an all-time high and below is a three year August trend:

Months Supply 08/31/2005 08/31/2006 08/31/2007 % Change 06′

New - Single Family Detached 7.5 10 13.8 38.0%

New - Condos & Townhomes 7.5 8.4 13.7 63.1%

Resale - Single Family Detached 6.6 7.4 10.8 45.9%

Resale - Condos & Townhomes 10.5 9.5 11.4 20.0%

The rate cut was indeed very good for our housing market. However, more is needed and consumer sentiment needs to improve and soon. I believe 3rd quarter will be our bottom and then our slow turn for improvement willbegin in the 4th quarter.

Thank you,

Steve Palm
Smart Numbers
© 2007 Smart Numbers

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