Mortgage Market Guide is pleased to present our annual forecast
By Barry Habib
Last year's forecast had anticipated some very odd happenings...but nothing to the extent of how the actual story unfolded, in what became a year of making history.
How did we do on our forecast last year?
Federal Reserve Chairman Ben Bernanke was confident that we were not heading into a recession and a down market . . . and we correctly disagreed.
We saw Stocks heading lower . . . and they did, actually to a much larger extent than we had expected. But our one Stock selection for last year did quite well, more than doubling in a short period of time.
We saw 2008 as being a year of high volatility . . . and that turned out to be an understatement.
We said the Fed would cut . . . but we were wrong as to the extent of those cuts, brought on by the financial crisis, also something we did not foresee.
We saw $4/gallon gasoline over the summer, and while many disagreed, our target price was correct.
We did well with our forecast for the Dollar and Gold prices, as well as how we anticipated the housing market to fare.
Most importantly, and for more than 11 months during 2008, our rate forecast was right on target, with the last few weeks seeing mortgage rates decline further than we had predicted at this time last year.
What next? As we enter 2009, here's what our crystal ball is showing us.
The economy will have a tough go once again during the coming year. But we do see things as being better than during 2008, with more optimism in the air by this time next year.
The Fed and the Treasury have and will continue to add lots of stimulus to our economy. It will just take some time for the "medicine" to work its way through the system. After hogging the spotlight with many different moves, we expect the Fed to be on hold with their interest rate policy throughout the majority of 2009. After all, there's no room to cut further, and we don't see a hike until economic conditions show signs of improvement. When a hike comes, we may all take it as a welcome sign that things are getting better.
The job market will get worse before it gets better, and don't be surprised to see the unemployment rate rise to 8% from its present 6.7% level before things start to improve.
We can safely predict, without much disagreement from anybody, that volatility will continue for Stocks, but we do see hints that there will be a significant first quarter rally. By the end of 2009, we forecast that Stock prices will see some handsome gains. This play on financials has a generous dividend yield, and stands to improve greatly should financials start to recover...and we think they will.
As I write this to you on 12/24, our stock picks for the year include UYG (Ultra Financials ProShares), which was trading around $5. This play on financials has a generous dividend yield, and stands to improve greatly should financials start to recover...and we think they will. We also liked VZ (Verizon), which currently is trading around $32, as strength in cell phone usage and an exploding fiber optics business see them standing to gain. Additionally, there is a juicy 6% dividend yield. One more we like is DIG (ProShares Ultra Oil and Gas), which was priced close to $25. Keep reading on our oil forecast to understand why we like this play.
As of mid-December, with oil around $36/barrel, we saw a great opportunity for the long term. Oil prices will rise over time, and have already started to climb, and patience will be greatly rewarded. The negative side effect from lower oil prices is that it has greatly diminished research and exploration into alternative energy sources, as well as investigating more costly extraction of fuel. For example, the oil-rich yet difficult to mine tar sands in Canada only make financial sense unless oil prices are over $70/barrel. And any other resources that are "boxed in" or require additional transportation costs may come offline at current oil prices. And once they are offline, there is a significant ramp up time to get them back. The irony in lower oil prices is that they may lead to much higher prices down the road.
Look for the Dollar to weaken a bit, but eventually strengthen as the US stabilizes while Europe declines a bit further.
On housing, we see 2009 as a period of price stabilization for most markets. One good gauge that home prices are stabilizing in your area is to figure a monthly payment with 20% down and compare that to rents for the same property. If it would actually be cheaper to purchase the home than to rent it - that's a good sign.
Home prices in some markets may still decline some during 2009, but those who make savvy purchases below market value should fare quite well, especially longer term. There's a lot of inventory on the market, which is viewed negatively, and needs to be sopped up before the housing market really turns. But...the inventory in the housing market does make this a fantastic time to be a buyer. Homebuyers will have a strong negotiating stance from the get-go, and are likely to make favorable deals, maybe even a once-in-lifetime deal. Those who buy a home and live in it for the long term will are likely to be rewarded handsomely. Let's face, people need homes. They are not going to start living in tents just because the economy is bad. We predict that consumers will start buying again in the coming year, particularly with attractive home loan rates and many homes to choose from.
Mortgage Rate Forecast ...How low can they go?
Early 2009 could very well mark the lowest rates that we will see for the rest of our lives. Think about that. More importantly, your customers should be thinking about that too. We expect interest rates to stay in a range of 4.5 - 5.5%, with the potential to see rates moving toward the higher part of the range later in the year.
The forecast for the beginning of the year is important of course, but count on us at Mortgage Market Guide to keep informing and advising you throughout the coming year. With so many of your competitors having dropped away, opportunities abound for those who are willing to stay positive and work hard. The question is not who is going to let you be successful . . . it's who is going to stop you.
Wednesday, January 7, 2009
Tuesday, January 6, 2009
EXTRA EXTRA! CASTING CALL FOR ABC'S THE BACHELORETTE COMES TO DALLAS - JANUARY 7, 2009
ATTENTION LADIES & GENTLEMAN! ARE YOU STILL SEEKING FOR THAT SPECIAL MAN/WOMAN? WELL, THIS MAY JUST BE YOUR TIME!
The search is on for eligible women and men who are ready to find true love on the new season of The Bachelorette on ABC. One lucky lady is given the opportunity to find the man of her dreams – and hopefully her groom-to-be – in the popular primetime romantic reality series. Women who feel they possess the charm, style and personality to become America's next leading lady, or men who hope to be among her 25suitors, are invited to meet with the show’s casting producers on:
WEDNESDAY, JANUARY 7TH, 2009
FROM: 6:00-9:00PM
AT THE JOULE HOTEL - PM NIGHTLIFE LOUNGE
1530 MAIN STREET
DALLAS, TX 75202
PH: 214-748-1300
GOOD LUCK!!
P.S. NO, I WILL NOT BE THERE! :-)
(EXTRA EXTRA NEWS IS NEWS YOU CAN USE THAT IS NON-REAL ESTATE RELATED)
Friday, January 2, 2009
As mortgage rates slide, refinancing applications take off
The holidays can be slow in the mortgage business as consumers take a break to celebrate.
But at Gary Akright's Addison mortgage office, the phone is ringing off the wall.
The lowest loan interest rates in more than a generation have prompted thousands of homeowners to refinance.
But so far, there hasn't been a similar uptick in purchases. "We are seeing a lot of activity," said Akright, president of Dominion Mortgage Corp. "We are offering 30-year fixed rate loans at 4 7/8 percent right now, and that's great."
As home mortgage rates have fallen to their lowest point since the 1960s, the cost of financing a home has fallen more than a full percentage point since this time last year.
The drop results in savings of more than $100 a month on payments for a $150,000 loan.
No wonder applications to refinance homes have jumped more than 500 percent nationwide since October. So far, there has not been a similar jump in lending for home purchases. Loan application volumes for buying a house have risen less than 15 percent since mortgage rates took their dive.
Given the problems in the U.S. economy and worries about falling home values, it doesn't surprise analysts that the lower interest rates haven't kicked-started sales.
"Lower rates are certainly a factor, but they are only part of the solution to the housing issues," said Ted Wilson of Dallas-based Residential Strategies Inc. It's a given that most consumers don't buy houses when they're worried about their jobs or think prices are going down.
"Consumers are hesitant to make big-ticket item purchases when there is so much uncertainty with the economy," Wilson said. "The fact is that, for those who can qualify, there are some exceptional bargains available in the market, and finance costs are at record lows."
The increase in home refinancings will be a boost to the U.S. economy, said veteran housing industry analyst David Berson of PMI Group. "This will allow some people to increase their spending, which is not a bad thing for the economy," Berson said. Bigger wave ahead?
And there is the potential for an even bigger refinancing wave in the weeks ahead, he said.
"It takes people awhile to realize interest rates have changed," Berson said. "If rates stay at this level or move lower, we will see additional pickups in loan applications."
Unlike previous markets, not everyone will be able to take advantage of the mortgage rates – even if they go lower. Lenders are more demanding than they've been in years.
"Applications don't mean people will be qualified," Berson said.
Grapevine mortgage consultant Billy Parker said he's been "overwhelmed with applications the past couple of weeks."But he warns that borrowers "still need good credit for the most part."
Economists are cautious in their expectations of the recent mortgage rate drops.
"The reason I don't think the lower interest rates will work is I don't think interest rates are the issue," said James Gaines, an economist with Texas A&M University's Real Estate Center. "We've already had historically low interest rates. "The thing affecting the ability of people to buy is the tighter loan underwriting standards and – more important – requirements of larger down payments." The need for more money up front has made it tougher for first-time buyers.
And people buying houses priced above $417,000 will find that lenders want to charge them up to three percentage points more in interest. "The jumbo rates are still so high because the lenders can't sell that paper" to investors who got burned in the home loan market, Gaines said.
Neighborhood values for homeowners who decide to refinance, advisers point out that home values have declined in some neighborhoods, which could make it harder to obtain a new loan.
With thousands of layoffs during the last couple of years in the mortgage business, there are a lot fewer workers to handle the increased application volume. "We are starting to get some real backups in the processing," Akright said.
courtesty of steve brown/DMN
But at Gary Akright's Addison mortgage office, the phone is ringing off the wall.
The lowest loan interest rates in more than a generation have prompted thousands of homeowners to refinance.
But so far, there hasn't been a similar uptick in purchases. "We are seeing a lot of activity," said Akright, president of Dominion Mortgage Corp. "We are offering 30-year fixed rate loans at 4 7/8 percent right now, and that's great."
As home mortgage rates have fallen to their lowest point since the 1960s, the cost of financing a home has fallen more than a full percentage point since this time last year.
The drop results in savings of more than $100 a month on payments for a $150,000 loan.
No wonder applications to refinance homes have jumped more than 500 percent nationwide since October. So far, there has not been a similar jump in lending for home purchases. Loan application volumes for buying a house have risen less than 15 percent since mortgage rates took their dive.
Given the problems in the U.S. economy and worries about falling home values, it doesn't surprise analysts that the lower interest rates haven't kicked-started sales.
"Lower rates are certainly a factor, but they are only part of the solution to the housing issues," said Ted Wilson of Dallas-based Residential Strategies Inc. It's a given that most consumers don't buy houses when they're worried about their jobs or think prices are going down.
"Consumers are hesitant to make big-ticket item purchases when there is so much uncertainty with the economy," Wilson said. "The fact is that, for those who can qualify, there are some exceptional bargains available in the market, and finance costs are at record lows."
The increase in home refinancings will be a boost to the U.S. economy, said veteran housing industry analyst David Berson of PMI Group. "This will allow some people to increase their spending, which is not a bad thing for the economy," Berson said. Bigger wave ahead?
And there is the potential for an even bigger refinancing wave in the weeks ahead, he said.
"It takes people awhile to realize interest rates have changed," Berson said. "If rates stay at this level or move lower, we will see additional pickups in loan applications."
Unlike previous markets, not everyone will be able to take advantage of the mortgage rates – even if they go lower. Lenders are more demanding than they've been in years.
"Applications don't mean people will be qualified," Berson said.
Grapevine mortgage consultant Billy Parker said he's been "overwhelmed with applications the past couple of weeks."But he warns that borrowers "still need good credit for the most part."
Economists are cautious in their expectations of the recent mortgage rate drops.
"The reason I don't think the lower interest rates will work is I don't think interest rates are the issue," said James Gaines, an economist with Texas A&M University's Real Estate Center. "We've already had historically low interest rates. "The thing affecting the ability of people to buy is the tighter loan underwriting standards and – more important – requirements of larger down payments." The need for more money up front has made it tougher for first-time buyers.
And people buying houses priced above $417,000 will find that lenders want to charge them up to three percentage points more in interest. "The jumbo rates are still so high because the lenders can't sell that paper" to investors who got burned in the home loan market, Gaines said.
Neighborhood values for homeowners who decide to refinance, advisers point out that home values have declined in some neighborhoods, which could make it harder to obtain a new loan.
With thousands of layoffs during the last couple of years in the mortgage business, there are a lot fewer workers to handle the increased application volume. "We are starting to get some real backups in the processing," Akright said.
courtesty of steve brown/DMN
Thursday, January 1, 2009
FOR SALE: LUXURY PENTHOUSE IN UPTOWN..REDUCED BY $60,000...PRICED UNDER MARKET VALUE!
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