A Historical Look At Mortgage Rates

January 30th, 2009

A Historical Look At Mortgage Rates

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A Historical Look At Mortgage Rates

January 23rd, 2009

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The Dark Side, by Jeff Thredgold

May 14th, 2008

April 2, 2008
The Dark Side
Written by Jeff Thredgold, CSP, President, Thredgold Economic Associates

As a long-time observer of the U.S. economy and financial markets, my writing and speaking have typically found me to err on the side of optimism…of seeing changes as providing new opportunities, as opposed to our being too fearful of change…of typically seeing the glass as half full rather than half empty…

…I see it as being realistic and optimistic

I am frequently challenged and criticized for my optimism. Various people who receive the Tea Leaf have suggested I am too “Pollyanna” or too optimistic. One reader recently referred to me as a “sunshine pumper”…while others at times have been less kind…

…such is life in the dismal science of economics

Balance
In an effort to provide “balance”…I present to you the long-term view of futurist Harry Dent. Harry is a very successful writer and high-priced speaker whose views are greatly impacted by how movements of large generations through their life cycles (such as the Baby Boomers) have great impact on such critical factors as savings, stock prices, productivity, housing, retirement, inflation, etc.

You may recall two of Harry’s successful books released in the late 1990s, The Great Boom Ahead and The Roaring 2000s. A more recent book, The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2005-2009, was released in 2004.

In fairness, Harry has made some accurate forecasts during the past 20 years. He has also had some major blunders.

The period 2005-2009 has not exactly been the greatest boom in history…far from it. This period to date has been one of moderate economic growth during 2005 to 2007, followed by likely recession in 2008, and who knows what in 2009.

His 2004 book predicted the Dow Jones Industrial Average would rise to 40000 by 2009, with the NASDAQ index at 25000. Note: the Dow as of April 1, 2008 was 12654, while the NASDAQ was at 2363, or forecast misses of only 27346 and 22637 points, respectively. Needless to say, these forecasts would easily rank with some of the worst ever made.

Harry’s Back
…and never really went away

…he suggests his next book, due out in mid-2009, will likely be entitled The Great Crash of 2010

…Harry now forecasts that the Dow Jones Industrial Average will hit 16000 to 20000 during the next year or two, followed by the next Great Depression. He sees some great stock market buying opportunities in late 2010 and late 2014

…moreover, he forecasts that the next Great Depression, beginning in 2010, will last until around 2020-2024, a period of 10 to 14 years

…Harry suggests that rising inflation pressures will lead interest rates higher between late 2008 and 2009, just before the increasing retirement moves of Baby Boomers will quickly lead to the greatest deflationary period since the 1930s

…Harry suggests that housing values will ultimately have to fall 40%-50% to be fairly valued, with the worst of the housing decline occurring between early 2010 and early 2015

…for the period described above, he suggests only two major places to put your money…high quality bonds and cash

It’s more fun being optimistic.

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Land ho! Now’s the time to buy!

January 21st, 2008

Land ho! Now’s the time to buy!

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Relief For Home Buyers

January 17th, 2008

Relief For Home Buyers

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Landwatch article on Flathead County

October 17th, 2007

Here’s the number one reason why the natural beauty of the Flathead County area in Northwestern Montana is so remarkably well-preserved: Close to eighty percent of the land is protected as either national or state forestlands.

But that still leaves plenty of land in Flathead County in private hands and means that select parcels of property are available for purchase by anyone who finds the local version of paradise inviting.

The abundance of state parks in the area, including Whitefish Lake and West Shore, provide visitors ready access to beaches, mature pine forests and stunning views of the valley all in one locale. Only residents, though, can take full advantage of year-round recreational activities that include hiking, camping, rock climbing, biking, hang gliding, horseback riding, rafting, skiing, snowmobiling, hunting and golfing.

Flathead County is the third-largest county in Montana and home to Flathead Lake, the southernmost portion of the Rocky Mountain trench. The high mountain ridges to the east and west protect most of Northwest Montana from extreme weather and the many lakes and rivers in the area keep temperatures moderate in both winter and summer.

At 28 miles long and approximately 15 miles wide, Flathead Lake is the largest natural freshwater lake west of the Mississippi. The lake contains 22 islands, miles of tree-lined shores, clean beaches and crystal clear waters. The abundance of lake trout make this a renowned spot for anglers looking for trophies: fifteen to twenty pound lakers are regularly landed. Sailing, kayaking and canoeing are also popular activities around the lake.

The northernmost tip of the area, known as Flathead Valley, is approximately an hours drive south from the west entrance of Glacier National Park, which contains some of America’s most splendid mountain scenery. With more than one million acres in lakes, breathtaking valleys and majestic glacier-carved mountains, this is a destination for many travelers; if you live here, it’s where you go to hike in any season.

And consider this: Flathead Valley was named one of Golf Digest Top 50 Golf Destinations in the world for its public courses!

Flathead Valley has several growing cities that have successfully maintained their small-town feel. Kalispell, Whitefish, Columbia Falls, Bigfork and Polson are often seen as gateways to the outdoors. They offer an array of recreational activities at local parks and also sustain a thriving arts and cultural scene.

Within Flathead County, Big Mountain and Blacktail Mountain provide acres of good trails for skiers at all levels. There are also hundreds of trails for cross-country skiing and snowshoeing in Glacier National Park, the Flathead National Forest and around the valley. In springtime, cherry orchards cover the surrounding hillsides in beautiful blossoms.

This is Big Sky Country, where the pristine beauty of the mountains and forests is being preserved in perpetuity. The slower pace of life here is an invitation to find some peace and quiet but remain as active as you like. If you’re looking for outdoor adventure, you’ll be happy to hear the good news: thousands of acres of open land in Northwestern Montana are still available and are for sale.

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First Steps for First-Time Home Buyers

June 27th, 2007

By Sally Anderson

Preliminary Footwork

In his 1990 book Washington Homes, author and real estate broker Jim Stacey claims that there are three stages for the first-time home buyer: contemplation, comparison and commitment. He urges prospective buyers to get through the first stage on their own, with the help of friends and family members. The road between contemplation and being ready to commit to buying a house is arduous and emotional, and Stacey has learned that the best use of a broker’s time and skills is to enter the fray after buyers have done some preliminary footwork.
Part of this background work is figuring out whether you’re ready to be a homeowner——financially, psychologically and emotionally. First, make sure your credit record will appeal to a lender. If you have doubts, get a copy of your credit report in advance. (You can do this online for free at ConsumerInfo.com and other Web sites). If your credit history is less than shiny, you’re probably better off renting while you buy down your debts and polish up your record.

Figuring Out What You Want

No matter how well you can picture your dream house and communicate your ideal to a Realtor, the house you finally fall in love with may have little resemblance to the image you started out with. But you have to begin somewhere, and a detailed wish list is a great head start. Let’s say your wish list looks like this, in order of priority:

Two bedrooms, two baths
Safe, quiet neighborhood
Garden
Ability to add on
No major repairs needed
Near close friends or family members
Close to downtown
Craftsman-style detached home
Lots of natural daylight
Parking
Good investment with excellent resale potential
Affordable property taxes
Neighborhood matches family personality, culturally and politically
Enclosed laundry area
Walk-in closet in master bedroom
Storage space for sports equipment
Gas hookup for stove
Back deck or patio
Close to work, schools, church
Finished basement for office or guest room
No threat of commercial encroachment
Hardwood floors
French doors leading to backyard
Close to public transportation

Now, how would the list change if you had to settle for only 10 of your wishes in your price range? If you had to narrow it to five, would your top priorities be different? When you start looking at houses, this information will be invaluable to a Realtor as he or she matches your requirements to available houses.

What Can You Afford?

Every market is different, but the first step to answering this question is finding out what you can pay on a monthly basis after you’ve made your down payment——5, 10 or 20 percent of the asking price of the house.

Visit a loan officer. The best way to learn what you can afford is to get prequalified for a loan. Your Realtor may recommend someone or you can just walk into the office of a local lender. Prequalifying won’t cost you anything, except a probable sales pitch, since the lender would like your business when you’re ready to apply for a loan. You’ll walk away with a good idea of how your income, assets and liabilities translate into what you can afford, and it can also help your chances of beating out the competition in a sellers market (where there are more buyers than houses on the market).

Do the math. You can also do a simple calculation on your own. Broker wisdom says that monthly payments should be 25 to 33 percent of your monthly gross income. To calculate: Take your monthly income before taxes, including all sources, and divide it by four. Subtract from this figure the total amount you pay per month in debts (loans, charge accounts and the like). The result is the lower end of what you can reasonably afford to pay on a monthly basis. After deducting monthly homeowners insurance (say, $50 per month) and property tax payments ($100), you’ll see approximately what you can afford for your monthly loan payment. To calculate the higher end, divide by three instead of four.
To find out how this translates in terms of house pricing, multiply your final total above by 12 (months) and then divide that number by the average interest rate on loans today——say, 7 percent. The result is the approximate market you’ll be focusing on.
Additional costs. Keep in mind that in addition to the purchase price you’ll need extra cash for closing costs (including points and fees), inspection and future expenses. All in all, to get through closing——meaning, once you’ve signed the last remaining paper after agreeing on price and terms with the seller——the cost will typically be 2 to 7 percent more than the agreed-upon selling price. If you calculate that from the middle zone, at 4.5 percent, a $200,000 house will cost $209,000 to purchase. Be sure to consider annual property taxes and repairs (predictable and unexpected).

Take heart in knowing that most first-time buyers are simply getting into the market. Your dream house may be two or three houses into the future, so don’t feel like you have to spend every penny you can afford if it means trading off some cherished freedom.

Starting the House Hunt

Now that you have an idea of what you can afford, you can focus on whether you’re in the market for a condominium, co-op, townhouse, single-family detached home or——hey, it happens——a mansion that will accommodate 20 of your closest friends. Begin interviewing Realtors based on recommendations. A great Realtor can educate you about what to look for and avoid, provide reliable references for other experts you’ll need along the line——such as lenders and inspectors——and represent you in negotiations and at closing. It definitely pays to shop around.
Now you’re ready for the fun stuff: pounding the pavement. Go to as many open houses as you can stand, even at times your broker isn’t available, and then go to another. (Just be sure to sign in under your broker’s name.) In the neighborhoods you’re considering, include some homes you know you can’t afford and some priced below your means. Think of it as leveling out your learning curve.
Talk to friends and family about their buying experiences. People are often surprisingly open about what they’ve learned about financing, construction——and even themselves——in the course of buying their first house.
And finally, if there are times when you just can’t bear to see another overpriced house with kelly-green shag carpet, take a day off——and remind yourself that someday you’ll know it was all worthwhile.

Sally Anderson is a writer and editor based in Seattle.

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Seven Reasons To Own Your Home

June 20th, 2007

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.

2. Gains. Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. And while there’’s no guarantee of appreciation, a 2001 study by the NATIONAL ASSOCIATION OF REALTORS®® found that a typical homeowner has approximately $50,000 of unrealized gain in a home.

3. Equity. Money paid for rent is money that you’’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your mortgage payments don’’t go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.

6. Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

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Ten Reasons To List Your Home During The Winter

June 20th, 2007

1. Fewer Showings- Yes, there are less buyers, but those buyers are usually very serious about making a purchase.

2. Less Competition- Most people wait until spring and summer to list their home, which means during the winter you will have far less competition than at any other time of the year.

3. Homes Show Better During the Holidays- Buyers love homes that can tell a story. The holidays are a great time to show homes because the home is usually dressed up for holiday celebrations!

4. January is the Biggest Transfer Month- Did you know that more corporate moves happen during January than any other time of the year? That is a great reason to list your home during the winter.

5. Timing- By putting the home on the market during the winter you may be able to more easily hit your moving goals!

6. More Time to Get Top Dollar- By starting to market your home early you may be able to secure a higher price.

7. Great Time to Shop- If your home sells quickly you will be able to shop for your next home during the winter, this is a great time for a bargain!

8. More Advertising- Because most agent and offices have less inventory during the winter you home may be advertised more often than during the spring and summer months.

9. More Attention- Most agents will be able to devote more specialized attention to your needs during the winter because the have less clients to manage.

10. The Market- Today’s interest rates are at a forty year lows. This gives buyers more spending power, and will be even more important when you begin shopping for your next home.

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Preparing Your Home For Sale

June 20th, 2007

The Exterior

LAWN
The yard should be neatly mowed, raked and edged.

TREES/SHRUBS
Should be pruned and shaped to complement the property.

FLOWERS
Consider adding seasonal flowers.

SIDEWALKS/DRIVEWAYS
Should be swept and washed to remove debris, dirt and stains. Cracks should be repaired and patched.

PAINTING
Check the home for any necessary maintenance just as a buyer would. Repaint or touch up as necessary. You can’t find a better investment when you are selling your home!

DOORS/WINDOWS
All doors and windows should be in good working order. Clean and paint doors if necessary, wash all windows and replace any broken or cracked window panes. Screens should be free of any tears or holes. Inspect all locks to insure that they are functioning properly.

ROOFS/GUTTERS/DOWNSPOUTS
Check or loose or missing shingles. Clean out gutters and downspouts. Touch up peeling areas on gutters.

THE INTERIOR

ATMOSPHERE
When placing yourself in the potential buyer’s shoes, you will want to consider the overall atmosphere of your home. Keep color, lighting and smell in mind as you go through the home.

SMELL
A clean-smelling house creates a positive image in the buyer’s mind. Be aware of any odors from cooking, cigarettes, pets, etc. that may have adverse effects on potential buyers.

LIGHTING
Take advantage of natural light as much as possible by cleaning windows, opening shades and drapes, etc. Add lamps and lighting where necessary.

WALLS
Check for peeling paint or loose wallpaper. Consider replacing unusual or bold colors with neutral tones.

FLOORS
Clean all carpeting and area rugs. Clean and polish linoleum, tile, and wooden floors.

CLOSETS
Empty closets of off-season clothing. Organize them to demonstrate the most efficient use of space. Leave as few items on the floors and shelves as possible.

FURNITURE
Arrange furniture to give the rooms as spacious a feeling as possible. Consider removing furniture from rooms that are too crowded. Avoid clutter.

WOODWORK
Clean and polish all woodwork if necessary. Pay particular attention to the kitchen and bath cabinets.

BATHROOMS
Cleanliness is the key. Make sure all surfaces are spotless. Replace worn or dirty shower curtains, clean and repair caulking, store all personal care products out of sight. Repair any faucets that leak or do not function properly. Clear off countertops. Clean and organize all cabinets and drawers. Bring out your best soaps and towels.

FIREPLACE
Sweep and clean the fireplace. Place a few logs on the grate to create an attractive appearance.

DINING ROOM
Consider adding fresh or silk flowers, or setting the table with an attractive arrangement.

KITCHEN
Avoid clutter-store small appliances whenever possible to maximize the appearance of work space. Clean and organize all storage space. Clean, bright, and sparkling appliances always make a good impression!

BASEMENT/ATTIC
The basement and attic should be cleaned and organized. Be sure the stairs are cleared, well-lighted and that the handrail is secure. Pack items neatly in boxes.

GARAGE
Sweep and wash the floor to remove dirt and stains. Organize tools, garden equipment, bicycles, etc.

**This is a great time to organize for a move. Remove items that will not make the move with you, and pack items you won’t be needing in the next four months. Then when an offer is made-you are ahead of the packing!

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A Historical Look At Mortgage Rates

A Historical Look At Mortgage Rates

The Dark Side, by Jeff Thredgold

Land ho! Now’s the time to buy!

Relief For Home Buyers

Landwatch article on Flathead County

First Steps for First-Time Home Buyers

Seven Reasons To Own Your Home

Ten Reasons To List Your Home During The Winter

Preparing Your Home For Sale

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