Homestead mailing list

[Don Bowen <don.bowen AT earthlink.net>]

At 11/8/2006, you wrote:
> I wonder what is in store for the
> economy and for anyone connected with the housing industry in general.  Just
> thinking outloud.

There is a rising number of cancellations among new home builders.



Don Bowen              Awl Knotted Up                       KI6DIU
http://www.braingarage.com
My travel journal
http://www.braingarage.com/Dons/Travels/journal/Journal.html

I am omnivagant.  
> From don.bowen AT earthlink.net  Wed Nov  8 11:34:11 2006
Return-Path: <don.bowen AT earthlink.net>
X-Original-To: homestead AT lists.ibiblio.org
Delivered-To: homestead AT lists.ibiblio.org
Received: from elasmtp-mealy.atl.sa.earthlink.net
        (elasmtp-mealy.atl.sa.earthlink.net [209.86.89.69])
        by lists.ibiblio.org (Postfix) with ESMTP id 5D99D4C00D
        for <homestead AT lists.ibiblio.org>; Wed,  8 Nov 2006 11:34:11 -0500 
(EST)
Received: from [71.110.161.10] (helo=DonsLaptop.earthlink.net)
        by elasmtp-mealy.atl.sa.earthlink.net with asmtp
        (TLSv1:DES-CBC3-SHA:168) (Exim 4.34) id 1GhqNO-0001wY-6V
        for homestead AT lists.ibiblio.org; Wed, 08 Nov 2006 11:34:11 -0500
Message-Id: <6.1.2.0.2.20061108082352.01ce38c8 AT earthlink.net>
X-Sender: don.bowen AT earthlink.net@earthlink.net
X-Mailer: QUALCOMM Windows Eudora Version 6.1.2.0
Date: Wed, 08 Nov 2006 08:30:51 -0800
To: homestead AT lists.ibiblio.org
From: Don Bowen <don.bowen AT earthlink.net>
In-Reply-To: <7.0.1.0.2.20061108080122.02caf3f0 AT ruralize.com>
References: <6.1.2.0.2.20061106101353.01c86cc8 AT earthlink.net>
        <7.0.1.0.2.20061106162012.02c17fd0 AT ruralize.com>
        <6.1.2.0.2.20061106160435.01e18d50 AT earthlink.net>
        <7.0.1.0.2.20061107083821.02ca77f8 AT ruralize.com>
        <18c9df6e0611070719w360e56a5k401243f6dd7559ca AT mail.gmail.com>
        <011901c702a4$5b93bf50$95088ed1@Cosmo>
        <7.0.1.0.2.20061107134958.02c98760 AT ruralize.com>
        <017e01c702b1$cf220a50$95088ed1@Cosmo>
        <7.0.1.0.2.20061107192459.02c9e890 AT ruralize.com>
        <a37e31f0611080422l616453f0i9ad38ebbb67810bc AT mail.gmail.com>
        <7.0.1.0.2.20061108080122.02caf3f0 AT ruralize.com>
Mime-Version: 1.0
X-ELNK-Trace: 
fae472dab72753a485338a7d01cb3b6a7e972de0d01da9406de2a36a5586b6e002ecca3dcda134b8350badd9bab72f9c350badd9bab72f9c350badd9bab72f9c
X-Originating-IP: 71.110.161.10
Content-Type: text/plain; charset="us-ascii"; format=flowed
X-Content-Filtered-By: Mailman/MimeDel 2.1.8
Subject: Re: [Homestead] Housing bubble or froth
X-BeenThere: homestead AT lists.ibiblio.org
X-Mailman-Version: 2.1.8
Precedence: list
Reply-To: homestead AT lists.ibiblio.org
List-Id: <homestead.lists.ibiblio.org>
List-Unsubscribe: <http://lists.ibiblio.org/mailman/listinfo/homestead>,
        <mailto:homestead-request AT lists.ibiblio.org?subject=unsubscribe>
List-Archive: <https://lists.ibiblio.org/sympa/arc/homestead>
List-Post: <mailto:homestead AT lists.ibiblio.org>
List-Help: <mailto:sympa AT lists.ibiblio.org?subject=HELP>
List-Subscribe: <http://lists.ibiblio.org/mailman/listinfo/homestead>,
        <mailto:homestead-request AT lists.ibiblio.org?subject=subscribe>
X-List-Received-Date: Wed, 08 Nov 2006 16:34:11 -0000

At 11/8/2006, you wrote:
> If the Fed finds that the economy is in
> danger due to real estate market conditions it will lower their
> already low interest rate to stimulate the economy. This will allow
> yet another wave of refinancing.

Home finance rates have been somewhat independent of the Fed over night 
rate.  One reason was the Chinese money in the market.  All those Chinese 
goods in Walmart helped keep mortgage rates down so people could refinance 
and buy more Chinese goods in Walmart.  Several factors have changed that 
and one small symptom is Walmart not hitting its revenue targets and going 
to even steeper discounts in Chinese goods.  The Chinese people themselves 
want some of the goodies, refrigerator, TV, and automotive sales have 
climbed in China.  This has resulted in heavy purchases of oil by China and 
the run up in prices.  The slowdown in Walmart sales and other markets is 
reflected in slowing oil sales to China and a recent easing of 
prices.  Just one little loop in a very complex global market.



Don Bowen              Awl Knotted Up                       KI6DIU
http://www.braingarage.com
My travel journal
http://www.braingarage.com/Dons/Travels/journal/Journal.html

I am omnivagant.  
> From genegerue AT ruralize.com  Wed Nov  8 12:43:34 2006
Return-Path: <genegerue AT ruralize.com>
X-Original-To: homestead AT lists.ibiblio.org
Delivered-To: homestead AT lists.ibiblio.org
Received: from n054.sc0.cp.net (smtpout1070.sc0.he.tucows.com [64.97.144.70])
        by lists.ibiblio.org (Postfix) with ESMTP id 1BC784C00D
        for <homestead AT lists.ibiblio.org>; Wed,  8 Nov 2006 12:43:30 -0500 
(EST)
Received: from SLIM.hughes.net (72.168.70.61) by n054.sc0.cp.net (7.2.069.1)
        (authenticated as genegerue AT hughes.net)
        id 45520BE9000044BE for homestead AT lists.ibiblio.org;
        Wed, 8 Nov 2006 17:43:20 +0000
Message-Id: <7.0.1.0.2.20061108111848.02cba198 AT ruralize.com>
X-Mailer: QUALCOMM Windows Eudora Version 7.0.1.0
Date: Wed, 08 Nov 2006 11:41:40 -0600
To: homestead AT lists.ibiblio.org
From: Gene GeRue <genegerue AT ruralize.com>
In-Reply-To: <6.1.2.0.2.20061108082352.01ce38c8 AT earthlink.net>
References: <6.1.2.0.2.20061106101353.01c86cc8 AT earthlink.net>
        <7.0.1.0.2.20061106162012.02c17fd0 AT ruralize.com>
        <6.1.2.0.2.20061106160435.01e18d50 AT earthlink.net>
        <7.0.1.0.2.20061107083821.02ca77f8 AT ruralize.com>
        <18c9df6e0611070719w360e56a5k401243f6dd7559ca AT mail.gmail.com>
        <011901c702a4$5b93bf50$95088ed1@Cosmo>
        <7.0.1.0.2.20061107134958.02c98760 AT ruralize.com>
        <017e01c702b1$cf220a50$95088ed1@Cosmo>
        <7.0.1.0.2.20061107192459.02c9e890 AT ruralize.com>
        <a37e31f0611080422l616453f0i9ad38ebbb67810bc AT mail.gmail.com>
        <7.0.1.0.2.20061108080122.02caf3f0 AT ruralize.com>
        <6.1.2.0.2.20061108082352.01ce38c8 AT earthlink.net>
Mime-Version: 1.0
Content-Type: text/plain; charset="us-ascii"; format=flowed
Subject: [Homestead] Real Estate 101, was Re:  Housing bubble or froth
X-BeenThere: homestead AT lists.ibiblio.org
X-Mailman-Version: 2.1.8
Precedence: list
Reply-To: homestead AT lists.ibiblio.org
List-Id: <homestead.lists.ibiblio.org>
List-Unsubscribe: <http://lists.ibiblio.org/mailman/listinfo/homestead>,
        <mailto:homestead-request AT lists.ibiblio.org?subject=unsubscribe>
List-Archive: <https://lists.ibiblio.org/sympa/arc/homestead>
List-Post: <mailto:homestead AT lists.ibiblio.org>
List-Help: <mailto:sympa AT lists.ibiblio.org?subject=HELP>
List-Subscribe: <http://lists.ibiblio.org/mailman/listinfo/homestead>,
        <mailto:homestead-request AT lists.ibiblio.org?subject=subscribe>
X-List-Received-Date: Wed, 08 Nov 2006 17:43:34 -0000


> Home finance rates have been somewhat independent of the Fed over night rate.

In my effort to keep it short, I over-simplified. In fact, the Fed 
rate is less connected to mortgage rates than bond prices because 
real estate loans are in competition with bonds for investor money. 
But the Fed rate drives many business decisions and does affect the 
housing industry. Wall Street and consumer psychology are always 
factors. Both are buoyed by good news from the Fed.

Lenders are free to set their own rates but must make them 
sufficiently high to sell the paper on the secondary market so they 
can make more loans. Rate setting is a balance between loan demand 
and money supply. Lenders will be willing to shave their profit 
margin to keep making loans. One tactic increase profit is to lower 
rates but raise fees.

Seldom understood by home buyers is that primary lenders do not get 
the interest. They make their profits by making and servicing loans 
or selling the servicing rights.

Before looking at houses, buyers are well advised to find a good 
lender first and determine all factors of their loan and knowing in 
advance how much loan they qualify for and what it will cost them. 
Finding the ideal home before finding the ideal loan is foolish. When 
a loan negative pops up at closing time it is usually accepted 
because emotions are high, in their minds the buyers have already 
placed their furniture. So very few buyers stop the deal.

One big negative is a prepayment penalty. I have rarely accepted and 
I almost always advised my clients to not accept a prepayment 
penalty. There are valid time exception but in general a prepayment 
penalty makes refinancing much more expensive and unless a buyer is 
certain of their income and certain that they will stay in the home 
beyond the prepay period, they are vulnerable. There is damned little 
certainty of either today.