I attended the National Association of Realtors annual convention and do so most every year to participate and take note of the trends effecting the economy and the housing market so that we can be on the cutting edge of our industry. I have had the pleasure serving the NAR on its Resort and Second Home Committee for the past several years and will be serving as the Vice Chair and Chair (god willing) during the next two years.

Here's the latest from the economists and prognosticators:

Transition and the Economy-

The news to report is mixed, much was relayed on the transition of government, everyone agreed we needed change and we got change.

There was a great deal of discussion on the economy naturally and on the GSEs (Gov't sponsored enterprises) now transitioning to GOEs (Gov't owned Enterprise) as the Bail out, stimulus bill are being rolled out.

Help is on the way in the credit sector, whether you like it or not (the plan), there will be relief from debt, consolidations, modifications, buy downs and general affordable credit made available to the those who need it the most, our home owners that are under water!

Regulations will be put in place to monitor the bail out process and the financial institutions that will be receiving the funds to distribute to"qualified" home owners.

Defaults, delinquent loans and Foreclosures are still on the increase as a result of the sub prime and variable interest rates loan that have become unaffordable for many, often times equaling more than the homes are worth said Chairman Lockhart of the FHFA Agency.

The interesting dynamic at play however, is that in many areas in the country, the buyers including first home buyers and investors, are coming into the market place in substantial numbers, as a result of the attractive declining prices that foreclosures, short sales and distressed sale have brought to the real estate market.

We have a future-Slightly hazy...

Dr Yun, NARs Chief Economist, forecasts that the "recessionary like" economy will see some relief by the 3rd and 4th qtrs of 2009 fueled by the influx of funds from the monetary markets not only to the housing sector but also the manufacturing, energy and green job development.

On the longer term forecast he was optimistic that the housing market would see increased demand based on the growing population and immigrations and the shortage of new development, supply and demand. Other factors he noted included the international and overall demand for our "recent attractively priced" housing and the opportunity for a secure and decent "roi", pressure to diversify ones portfolio (that which left of it) including commercial and industrial property.

Opportunity knocks and the Local Market-

70 million baby boomers, first time homebuyers, internationals and investors are still poised to buy an affordable home, lifestyle and investment property but have been cautiously waiting on the opportunity and the market.

Real Estate in comparison to other investment platforms such as the stock market, has fared far better, historically has continued to draw good appreciation and most of all...can be enjoyed!

Our resort realestate market has survived the turbulent ride better than much of California and many other markets that overbuilt propelled by the insatiable demand of the investment market.

The Lake Tahoe basin has some built in supply factors, inherent with the slow growth environmental policies which helped insulate the area to some extent.

That said however the market has seen a decline in median home price of approx 20% over the past 2.5 years driven by the foreclosures, short sales and motivated sellers.

The good news is that inventory is down (as compared to the past year) 10% approx and pending a sales are up by over 20%.

As long as the interest rates and the flow of money holds, I'm forecasting a continued increase in pending sales and closed escrows, even in this beleaguered economy.

Real Estate represents a sound investment at this time.

I'll send you Dr Yun's report as soon as it is out, however I've attached the International home buyer's profile for your review as it is a dynamic at play in our market.

Happy Thanksgiving to you and yours.

Best Wishes,

Deb Howard
Deb Howard & Company
Lake Tahoe's Real Estate Resource
866-542-2912 toll free
530-542-8657 fax
deb@realtordeb.com
www.realtordeb.com
3599 Lake Tahoe Blvd. Ste A
South Lake Tahoe, CA 96150

More excellent information from Norm Hansen at AmWest Mortgage:

From: Norm Hansen
      Thursday, September 18, 2008 10:04 AM

Deb,

In these times of financial stress the question as to availability of financing for consumer homes looms large.

In short…it is there, it is plentiful, and the rates are excellent.

30 year fixed = 6.125% no points (was 5.875% last week).

FHA primary to 97%

FHA “Buy and Fix” = 102%

Jumbos…(forget the new hybrid Jumbo…Norm’s advice).

We have a Jumbo product that is a 5/1 @ 5.375%.

When the conventional Jumbo market comes back within 5 years then switch to a 30 year.

Here’s the bottom line:

Most all conforming loans go through Fannie and Freddie. Which by the way were once government agencies that became private Government Sponsored Enterprises (GSEs). The government is assuring their liquidity. Here’s how it works: Fannie buys the loans from the lenders/banks/wholesalers that made them to consumers...they then create mortgage bonds based on the flow of these loans and sell those bonds to investors to create more cash to fund new loans…eventually the bonds come due and the buyer of those bonds needs to be paid…those funds comes from selling new bonds…a circle.

The government is guaranteeing the payment of those maturing bonds and/or interest payments on them because selling new bonds has been a little slow (investor confidence).

It worked well because the markets got the ‘warm fuzzies’ started buying mortgage bonds…that reduced the rates…and is keeping cash flowing…for now.

The future requires investor confidence to continue buying mortgage bonds. Investors (each of us) are finicky…we can be fooled once…but normally not the second time.

That said…the banks/lenders/wholesalers are selling/originating only good quality loans…to use your words…real people with real income and good credit scores (traditionally the best saleable mortgage). This will keep a good flow of cash.

With stronger underwriting guidelines and Wall Street not offering CDOs and their hybrid MBS (collateral debt offerings and mortgage backed securities…where all the risk was and created the crises) it means the best buy (highest yields)…even better than some treasuries are Mortgage Bonds.

Regards,

Norm

Norm Hansen
Managing Partner
AmWest Mortgage
                                                                      
norm@amwesthomeloans.com 
212 Elks Point Road, Suite 448 /PO Box 12300                                                                      
Zephyr Cove, NV 89448                        
775-586-1130 Tel.
775-586-1140 Fax.

I wanted to share this with all of our readers.  It's an email I received yesterday from a friend at AmWest Home Loans.

From: Norm Hansen - amwesthomeloans.com
 
      Thursday, September 18, 2008 2:30 PM

Deb,

This is a good read…it comes from our advisors back east…

In a bid to ease the credit crunch and restore a sense of calm in the financial markets, the Federal Reserve authorized a $180 billion expansion of its swap lines with other world central banks.  The funds, which will be provided by the Federal Reserve, can be injected into money markets through overnight and term loans.  Stocks are liking this news so far and this is pressuring Bonds.

Something to think about - The Fed is attempting to be savvy and creative in its ways to help the financial system get back on track.  However, there is simply no one who can draw upon past experience to find answers here.  This situation is historic...and we are living through it.  It is almost comical to hear the utter stupidity that comes out of the mouths of some of the politicians who are paraded in front of the cameras...I can't help but think that we actually elected these people.   

There is a lot of panic out there.  People are very worried about their life savings.  Is money in the bank safe?  How about if it is in a life insurance policy?  How about in bonds?  Unfortunately the answer is no, no, no.  Yesterday, the panic reached a level that caused such a demand on Treasuries, that the total return of some short-term paper went negative.  That's right...the premium paid was higher than the return provided by the yield.  So keeping your cash under the mattress is better than an investment in some Treasuries, and apparently safer than the financial market. Suddenly, guess what may become the most attractive way to protect your money?  Think about it...you can touch it, get a tax break, live in it too.  Yes, Real Estate is starting to look pretty good, especially since it has become more reasonable priced.