Perrysburg Blog

Details?

Can’t give them to you.

But in a recent meeting with a Perrysburg homeowner, I realized that they were in denial.

Which can be a serious emotional state that is impervious to reason, evidence, and logic.

These potential clients want their 2005 price.

They “NEED” it as an old mentor, Howard Brinton, used to say.

But it is 2010.

Chrysler is BK.   Toledo, City of, is BK.   Ohio, State of, is broke.   GM has filed for BK.  The entire giant mortgage brokerage that loaned them their money . . . BK and gone.

2005 is long gone.   What you or I paid is immaterial.  What you or I “NEED” is not important.

We should be moving beyond denial to truth.

In fact, we actually have more practice and experience at distressed markets than anyone else in America.

Seriously.

We (Northwest Ohio) went into this market first – along with Cleveland and Detroit.    (“Why?”, o student of history, you ask.  I will tell you:  we shipped our manufacturing jobs over to China first.  Before we shipped our tech jobs and info jobs and pharma jobs.  We – first!, but I digress.)

So – no excuses.   We are experienced in these matters.   Or we should be.

Nationally, 30% of the ENTIRE U.S. market is distressed.

Perhaps 50% of the total market activity in Toledo is now “distressed”.   That means short sales, REO, foreclosures, deed in lieu, and upside down, underwater sellers who have to bring cash to the table just to close.

Half.

One out of two.

We have to move beyond denial now.

There are some very good Realtors that I know that have not closed a single deal yet this year.

They are in denial.

There are some very good homes that will not sell for their owners.

Denial.

“But . . . the tax credit!”

“But . . . ”

Denial.

It hurts.

But you have to move on.

If you want closure.

Not because anyone wants them to.

Not because it is good for us.

Not because they should.

But they will.

Because, as I have been warning and predicting, interest rates are moving up.

Fast.

Read about it here.

WASHINGTON (AP) – The era of record-low mortgage rates is over.The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in just the past week. As mortgages get more expensive, more would-be homeowners are priced out of the market—a threat to the fragile recovery in the housing market.

AP says it is because the “economy is improving”.  Right.

It’s because the market for mortgages is busted, broken, and destroyed.

Get ready for much higher rates.

Soon.

Here, there, and everywhere there is an inverse correlation with mortgage interest rates and property values.

One thing that I dislike about my guild – the National Association of REALTORS – is that they always say “It’s a good time to buy a home!”

In a hurricane?  It’s a good time to buy a home!

In a depression?  It’s a good time to buy a home!

If there ever was a nuclear war – you can count on the NAR to say one thing . . . “It’s a good time to buy a home . . . before the fallout hits!”

By ALWAYS saying this one thing, at all times, and in all circumstances, they have pretty much shot the credibility of any Realtor who says . . . oh, you might want to buy a home now.

So I will not say that.

But I will point out that the predicted rise in interest rates that I have forecast for 2010 has begun.

Read about it here . . . at the Mortgage Bankers site.

Highlights:

The Market Composite Index, a measure of mortgage loan application volume, was 658.7, a decrease of 16.2 percent on a seasonally adjusted basis from 786.0 one week earlier.
…
The Refinance Index decreased 24.1 percent to 2953.6 from 3890.4 the previous week and the seasonally adjusted Purchase Index increased 4.3 percent to 267.7 from 256.6 one week earlier.
…
The average contract interest rate for 30-year fixed-rate mortgages increased to 5.25 percent from 4.81 percent …

You can figure the rest out for yourself . . . rates are going up.  So you should, for once, listen to the National Association of REALTORS.

There is no inflation.

Now.

There is the threat of DEFLATION.

And the powers that be want to “goose” the economy as any person awake knows.

So what?

Just a thought – interest rates are very, very low right now.  In fact the 30 year fixed rate a week ago was the lowest ever recorded according to the MBA.

I send out a “Buyer Intelligence” newsletter every Friday (just email me if you want to get on the list . . . jon@modene.com)

And I quote the current interest rates in a variety of programs each week.

I have NEVER seen them this low.  Never.

National averages here:

Here are Northwest Ohio’s LOCAL INTEREST RATES:

Conventional:  4.875% with 0 points.
FHA:  5.5% with 1/2 point.
VA: 5/5% with 1/2 point.
OFA (State of Ohio $$): 6% with 0 points (grant cost paid by seller).

How long will these rates last?

Will they go lower?

Will inflation decimate them next year?

I have no idea.  As someone said – “That’s above my paygrade”.

But I do know this – they are a great bargain for anyone borrowing to buy real property today.