TED SHOOP - N.E. Atlanta metro real estate's Blog

Fed Chairman Ben Bernanke and his colleagues at the central bank issued a unanimous decision during Tuesday's meeting (Sep 16th) to leave its key rate at 2.0 percent for the third straight meeting. Before Monday's market meltdown, economists had widely expected the central bank to hold the Fed funds rate steady. But many analysts began to predict a rate cut of at least a quarter-percentage point after Wall Street suffered its worst day in seven years on Monday. After the Chapter 11 filing by Lehman Brothers, some analysts had been predicting a drop in the Fed rate. That didn't happen today but the door is still cracked open to the idea of a rate drop should economic indicators give the decision makers greater concerns of inflation. The fate of WAMU and AIG will most likely also play a part in future rate decisions as well.  Treasury bonds, which play a large part in influencing the direction of mortgage rates, ended down as was the yield initially (even though these two factors typically move in opposite directions) but lower bonds eventually sent the benchmark yield upward, rising from its lowest level since 2003.  Source: http://www.money.cnn.com

Well, friends, it finally happened. If you haven't heard by now, Uncle Sam has stepped in and adopted Fannie Mae and Freddie Mac. What does all of this mean to us as consumers? Home buyers? Home sellers? Tax payers?  Let me dust off my crystal ball and give you the low down...

Consumers: Initially on Monday, there appeared to be overwhelming approval and applause as evidenced by how the US & global stock markets rallyed. Since then, though, markets were down today due to dropping oil prices, Fed worries of a global economic slowdown, and intensifying concerns about Lehman Bros. Holdings Inc.'s ability to raise capital. Does anybody know why the prices at the pump seem to be creeping back up despite the drop in oil futures? Surely, it cannot be fear of hurricane Ike in the Gulf.

Home Buyers: More change is a comin' when seeking mortgage financing... Unless someone throws a "Hail Mary" pass and saves DPA (down-payment assistance) programs before the current Oct 1st, 2008, deadline, the doorway to home ownership for tens of thousands of homeowners will be slammed shut. Oh by the way, the minimum required down payment is also being increased from 3.0% to 3.5%. With this change, there goes a few more thousand potential home buyers whose bank accounts will come up short and will not qualify for financing (or must at least delay their home buying plans to raise the extra money for the down payment).

Home Sellers: Strap in and hang on - the ride is still a bumpy one. The bailout out of Freddie & Fannie will likely have long-term benefits; however, it will do little to help us out of the current troubles. The glut of soon-to-foreclose (short sale) homes and bank or Real-Estate-Owned (REO) homes presently on the market continues to adversely affect home values around the country and will likely continue to do so until the majority of the housing inventory is significantly reduced. Although I am an optimist by nature, most analysts and "experts" forecast that the earliest this could happen is late 2009 but more like mid-2010. For everyone's sake, I hope the market proves us all wrong - a turn-around by Christmas this year would be sweller than snow...

Tax Payers: Let me see, what was that magical formula? I think it's something like this:
Government involvement +  Inefficiency = Higher Operating Costs + Tax Increases. All I can say is get ready to pay - there is no free ride. Somebody's loss will not be the tax payer's gain.  ;-(

A friend recently referred me to a website where you can order prescription eyeglasses on line at a fraction of the cost that many stores in optician's offices charge.  I was skeptical but was in dire need of some new eye glasses so I thought I'd try them out. The website is: http://zennioptical.com/

I just received my order yesterday in less than 2 weeks. Wow! I am thoroughly impressed. For nominally $44.00, I now have two pair of stylish prescription eye glasses that each have their own hardshell case, clip-on polarized sunglass clip and cleaning cloth. The store at my optician's office wanted to charge me $300+ for each pair of comparable single vision glasses!  Some of Zenni Optical's eye glasses including frames & single vision lenses start as low as $8.00!!! They also offer other types of lenses, special coatings, tintings, etc. Be sure to read the fine print on their warranty and return policies.

Simply go to your eye doctor or eye care center, pay for an eye exam and request a copy of your full prescription. Don't let them bully you into purchasing frames & lenses from their store or provider (by law, they are required to give you your prescription). I recommend that you first visit the website and look at the required values necessary to fill your prescription and choose one or more frame styles that may suit your taste. I had my wife measure my Pupillary Distance (or PD) since my optician didn't take this measurement or include it on my script but it was easy.

I am not a paid spokesperson for Zenni Optical but I am a conscious consumer who despises paying too much for anything and I enjoy saving money (just as I am confident many of you do too). By ordering my prescription eyeglasses from Zenni Optical, I saved well over $500.00!

To your health & financial well being - Ted

Well, if you haven't heard yet, Fed Chairman Ben Bernanke and all but one of his central bank colleagues agreed during Tuesday's meeting (Aug 5th) to leave its key rate alone at 2 percent for the second straight meeting. Many analysts are predicting that they will likely begin an upward climb (although probably not until after the presidential election or at the first of the year). As a result, the prime lending rate for consumers and businesses remained at 5 percent (the prime rate applies to most credit cards, home equity lines of credit and other credit lines).

The stock market liked this news along with lower oil prices (at one point, below $118/barrel) ending up 331+ points for the day.  With respect to Fannie Mae & Freddie Mac as well as many well-known banks & lenders, we're not out of the woods yet. I've seen some "watch lists" circulating among those in industry. Some pretty big and well known names may go away, be merged or change their market focus (i.e. away from mortgage lending).

Here's a quote taken from an AP article posted on MSNBC: "Bernanke’s predecessor, Alan Greenspan called the current credit crisis a “once or twice a century event.” Given the severity of the financial problems, the surprise is not that economic growth is slowing but that there is any growth at all, Greenspan wrote in an opinion piece in the Financial Times."

What does all of this mean for home buyers & sellers, you ask?  Let me dust off my crystal ball...  My recommendation: If you are a buyer and want a home of your own - buy now (down-payment gift programs are going away, credit is not going to get cheaper and the qualification requirements certainly aren't getting easier).  If you are a seller - carefully consider & weigh your motives for selling. If you must sell, list & price it right with the advice of yor Realtor, fix any needed repairs, declutter & stage the home to look its best.  And, if you're just testing the waters and not motivated, perhaps taking the home off the market is the best for everyone.

Finally, if you are one of the thousands of homeowners across this country who may be facing foreclosure, educate yourself about short sale transactions and explore your options with a real estate professional in your area who specializes in them.  Want to learn more from the comfort of your home? Check out the following link about a newly released book written for homeowners and consumers: http://www.mygeorgiahomes.com/content/article.html/2160479
 

Arm yourself with knowledge!

What can you do?