We thought you would appreciate reading some excerpts from an internet report we just received.  If we just had a crystal ball, how great it would be.  As it has been said

        “It takes courage to buy at the bottom of the market!”

Our thanks to Craig Goebbel for this interesting point of view.  See below:

 The Craig Report  (excerpts)
….There are two things of which we can be more than fairly certain:
·         The First Time Homebuyer Tax Credit is $8,000, if you hold for three years there is no payback and you can now use it with state agency down payment assistance.  This is good news.
·         In (Washington State) King, Pierce and Snohomish Counties the new Super Conforming loan limit is increased from $506,000 to $567,500.
….How stimulating will all of this money be for our economy and real estate in particular?  Well, we need to wait a (little while) to find out.
….We all know how the price distortion of homes was created.  All of us, and I do mean all of us took part in the unprecedented run-up in home values fueled by the idiot money of pay option arms, stated income and zero down.
Now, all of us are feeling the pain of the ugly reality of correction.  No market is immune and no sector of the economy has been spared.  The questions are how much more and how much longer? …..
…..  Median income has always driven the median price of housing and residential rental rates.  The affordability index combines median income with prevailing interest rates and median home prices.  I contend the bottom is just around the corner because real median income (not stated median income!) has not dropped nearly as drastically as home prices.  Second, the affordability index is quite favorable for homebuyers because of the price adjustments already in place and very low interest rates.  I believe we are at or very near the bottom, particularly in the Pacific Northwest and most other parts of the country as well….

www.CraigGoebbel.com

Thanks again to Tricia Morris of Premier Mortgage for allowing us to use excerpts from her newsletter. Tricia’s number is 808-874-8800 or email  tricia@mortgagemaui.com

The week ahead looks to be loaded with action yet again, as two key reports bookend the week. On Monday, we will get the details on the Fed’s favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) index, found within the Personal Income report. As mentioned above, the Fed said they believe that “inflation pressures will remain subdued in coming quarters”, so it will be important to see what this report reveals. 

On Friday, the Labor Department releases their Jobs Report for January. Last month, they reported 524,000 jobs lost during the month of December. The employment environment continues to be shaky, with many major companies such as Home Depot, Caterpillar, Sprint, and Texas Instruments announcing job cuts recently. While all those cuts won’t take place at once, Friday’s number probably won’t be a pretty one. 

Remember: When Bonds prices move higher, home loan rates move lower and vice versa. As you can see in the chart below, Bonds and home loan rates lost some ground since the Fed’s meeting last week. As always, I will be watching closely to see what happens this week – and encourage you to call me to learn more or discuss your own financial picture. 

With the economy tightening, now is the perfect time to review your finances and prepare a smart plan for your spending. In this short video, you’ll get five great ideas to help you analyze your spending, locate and plug the leaks, and stay on track with a comfortable budget that helps you achieve your goals. 

Thank you Tricia Morris of Premier Mortgage for allowing us to publish the next few blogs from your newsletter.  If you wish to contact her call 808-874-8800 or email her at tricia@mortgagemaui.com

“ACTION IS THE REAL MEASURE OF INTELLIGENCE.” Napoleon Hill. Last week was definitely action packed, though only time will tell how intelligent each action was – here are the highlights. 

On Wednesday, the Fed announced that it decided to keep the Fed Funds Rate steady at the current 0 – .25% range, the lowest ever. They also indicated that “economic conditions are likely to warrant exceptionally low levels of the Federal Funds Rate for some time” and that “inflation pressures will remain subdued in coming quarters”. 

Also last week, the Federal Deposit Insurance Corp (FDIC) announced that it may set up a “bad bank” as a vehicle to buy toxic or illiquid assets from banks. What does a “bad bank” do? No, it doesn’t talk back to you, give you attitude and treat you with disrespect. Lenders and the entire financial sector are struggling with “mark-to-market” accounting issues, and in the absence of a repair of the mark-to-market system, lenders are forced to sell assets in a market where there are few buyers. Hence the bad bank plan, to create an entity that will purchase the assets that no one else will buy, which is yet another very creative way for the government to breathe life back into the financial sector. This action is not finalized, so we’ll keep watching closely to see how it plays out in the days ahead. 

In other news, the House of Representatives passed President Obama’s $819B stimulus package, by a vote of 244-188, being split fairly cleanly by party lines. Existing Home Sales did surprisingly come in a bit better than expected, but 4th Quarter Gross Domestic Product (GDP) numbers showed the economy contracted in the 4th quarter, as you can see in the chart below. While the numbers were better than estimates, the economy was still at its slowest pace in 26 years

BIG CHANGES IN WAILEA AND MAKENA!

Two of our largest high end developements have changed.  Baccarat, the development replacing The Renaissance Hotel, as planned has been cancelled and Maluaka, the Makena Condo Development has also been cancelled. 

 NEW THINGS ARE COMING.  DON’T MISS SOME GREAT OPPORTUNITIES INCLUDING POPULAR Ho’olei Townhomes that are vacation rentable.  Great resales EVERYWHERE!!!!   

 Call us at 808-280-1650, email us at dad@MauiRealEstate.net or watch our website www.MauiRealEstate.net

 The Hansen Ohana,

Your Maui Family Tradition