You are currently browsing the category archive for the 'Uncategorized' category.
DC comes to us from Countrywide and formerly Homebanc. He has over 20 years experience in the mortgage industry and is a regular speaker on economic issues affecting Atlanta. DC is a councilman for the city of Alpharetta, and the coach of the 2007 state baseball champion high school team. (now why didn’t I write down the teams name?) He also is working with the Governor to help resolve the recent water shortage situation. His accolades go on and on but I’ll stop.
Highligts of his presentation:
We talked a lot about what factors got us to where we are and what changes are coming down the pipelines from Fannie Mae, HUD, and other government agencies. A few years ago we gave loans to people with no money down, no credit scores minimums, no verification of income or assets, and people fresh out of bankruptcy – basically anyone who could “fog a mirror” bought homes. That is all changing in the mortgage industry and it’ll be harder to get a loan. Countrywide has started “pre approving” some of the buyers. (good for them)
NOW is a good time to buy. Interest rates are in the low 6’s to 7%. Rates are expected to creep into the high 5% range by around late spring or early summer 08. Prices have fallen 3-5% in the metro area. Some more, some less. The forecast is for housing figures to pick back up around May of 08.
Atlanta has been “dragged down” the 3-5% in prices, this is not bad considering the Florida, California and Utah markets are down as much as 30% drops in prices. I currently have two buyers from San Francisco, one from Las Vegas, one from NY, and one from Philadelphia who want to transfer to Atlanta, but aren’t willing to sell their homes in those other markets for the price they’ll get. They don’t have to sell, so they’ll all wait till they can and them move.
DC said most buyers are in a mentality of it’s going to be cheaper to buy later so “I’ll wait”.
DC is expecting a turn in our market in Atlanta around May 08.
We’re experiencing 11-12 months of current supply of homes for sale based on absorption rates from current buyers. This echos the figures in my other blogs from August figures.
Large track, new home, builders are “in touble”. They rely on low margin high volume sales to generate profits, and the units aren’t selling fast enough. Custom builders have higher profit margins 25% vs 9% for the large track builders and will survive the market better because they have bigger margins and can better take the “hit” on the fallin prices.
175 major lenders have gone out of business in the last year. Georgia’s largest – Homebanc was one of them. They couldn’t sell their paper in the market even though it was A and B paper.
Section 8 rental payments from the government have been reduced. This is squeazing the margins on rental property owners. Investors had it good for so long, they’re stepping back from purchases.
DC expects the Dow to be around 12,000-12,200 by end of this year. (not sure I agree on this one) He feels the Dow is over valued (I do agree on this statement) I would agree it might fall back into the high 12,000 range. One good “shock” could temporarily send it back down.
We’re in a market being driven by peoples “mentality” and until this mentality has a paradign shift, it’ll linger. The indicators are good, but the press keeps selling the “dirty laundry” to quote the old Don Henley lyric.
Where’s the bottom of the weak market. DC says he does not know, but feels it not far away. I hope he’s right. Homebanc Stock prices kept falling from $6.50 a share ( I got out at $5.50) and I watched it go to $0.22 a share before they “quit” trading it. Some people have advocated we’re heading for a recession. I heard “a recession is when yourneighbor is out of work, and a depression is when you’re out of work”.
DC feels were currently dealing with “a herd mentality.”
He expects the FED to lower the (banks’s) discount rate another .25% at the end of Nov 07. Unfortunately, the discount rate and the mortgage rates do not have a direct correlation of 1 to 1 in up and down movements.
Check back for future updates on our blog.
Scott
