North Conway “Mortgage Matters” | July 19 2010

Keeping you updated on the market! For the week of July 19, 2010 MARKET RECAP Foreclosures were the leading story this past week – leading because they were alarming. RealtyTrac (which is quickly morphing into the “Debbie Downer” of housing data aggregation) reported that banks seized nearly 270,000 properties in the second quarter of 2010, a 5 percent increase from the previous quarter and a 38 percent increase from the same year-ago quarter. RealtyTrac expects that repossessions will top 1 million this year, thanks, in no small part, to an inventory of 5 million seriously delinquent loans.Of course it’s bad form, not to mention irrational, to shoot the messenger, and we don’t mean to do that: RealtyTrac is simply reporting the facts as it collects them. But it’s worth noting that the extent of the foreclosure and shadow inventory problem isn’t flying below anyone’s radar. In other words, it’s already built into expectations. As we’ve stated before, it’s the unknown that roils markets, not the known.Housing prices were also singled out for attention and exposition last week. CoreLogic reported that national home prices increased in May, posting a fourth-consecutive year-over-year increase and another monthly increase. To us, this suggests a stabilized pricing environment, which also suggests an opportune buying market. Nevertheless, CoreLogic expects prices to “moderate and possibly decline” because of the expiration of tax credits (the failsafe explanation) and languid job growth. We remain upbeat, nevertheless, because we have faith in the private market to make lemonade when handed lemons. To wit, Housingwire.com reported that San Diego-based Brookfield Homes launched a new initiative to provide referred home buyers a $10,000 credit toward closing costs, options, or upgrades, while giving $5,000 for the referral. Whether Brookfield’s initiative will work remains to be seen, but we appreciate the tenacity and ingenuity to solve a difficult problem. Anything Brookfield Homes, or any other home seller, sells can still be financed at rock-bottom mortgages rates, though they’ve been a little less rock bottom than they had been over the previous month, with rates inching up slightly across the board. We’ve stated our reasons for why we think rising mortgage rates would be good for the market, spurring activity being not the least of them. The fact is rates will likely remain subdued through summer. We base our prognostication on the Federal Reserve’s latest economic outlook, which expects continued sluggishness due to elevated uncertainty. Economic Indicator Release Date and Time Consensus Estimate Analysis Housing Market Index (July) Mon, July 19, 10:00 am, et 17 Index Important. More homebuilders are anticipating a post-tax-credit rebound. Housing Starts (June) Tues, July 20, 8:30 am, et 570,000 (Annualized) Important. Starts are expected to bottom before improving slightly in coming months. Mortgage Applications Wed, July 21, 7:00 am, et None Important. Refinances appear to have plateaued, while purchases continue to sag. Existing Home Sales (June) Thurs, July 22, 10:00 am, et 5.3 Million (Annualized) Important. Given the recent trend in purchase applications, the drop in the sales rate is no surprise. FIFA House Price Index (May) Thurs, July 22, 10:00 am, et None Important. A slight drop in prices should be expected, though recent data suggest a stabilized price trend. Leading Indicators (June) Thurs, July 22, 10:00 am, et 0.2% (Decrease) Moderately Important. Renewed economic concerns are already priced into the market. We Need More Risky Lending, Not LessThe Wall Street Journalrecently published a cautionary tale on the putative rise of risky lending (“Signs of Risky Lending Emerge”). We only hope the tale is true, because a rise in risky lending reflects a rise in risk taking, and more risk-taking is what this economy needs to pull itself out of its doldrums.Many people will reflexively respond “Wasn’t it risky lending that got us into this predicament in the first place?” Actually, it wasn’t. It was the mispricing of risky lending that got us into this predicament. If a loan is correctly priced – through interest rates, fees, or collateral – then, theoretically, all loans would be expected to generate the same return to investors. The problem wasn’t the risky loan, per se; it was the pricing of the loan, which failed to fully account for risk.Once the mispricing problem was realized, lenders tended to go the other way, shutting out borrowers with lower FICO scores and only lending to those with the highest scores. It was a case of throwing out the baby with the bath water. Obviously, we all want the borrower with the 800 FICO score, the 20 percent down payment, and the steady job, but we also want the less pristine borrower as well. If the Journal is right, and more lenders are warming up to more risky borrowers (we find that’s the case), that bodes well for the economy, because it means more risk taking, more housing-market activity, and more money to lend. If you wish to unsubscribe, click on the link below and send the email. If this message was forwarded to you, please reply to the sender. Click Here To Unsubscribe EQUAL HOUSING LENDER This Newsletter is for informational purposes only. The information contained herein may not be applicable to every situation or jurisdiction and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.

Mortgage Matters – July 12, 2010

	Keeping you updated on the market! For the week of July 12, 2010 MARKET RECAP We may have been early, but we still think we are right. We’re speaking of the impending recovery in the housing market. It’s a contrarian opinion, given all the recent chatter and teeth-gnashing over delinquencies, foreclosures, shadow inventory, vacancies, and what not. But the number of data gatherers jumping aboard the better-times-ahead bandwagon is growing. John Burns Real Estate Consulting, for one, sees better times, according to Housingwire, which reports that the company sees the housing market approaching its next up cycle. Burns & Co. lays out a persuasive argument for a return to housing prosperity: improving job growth, record-low new construction, record-low mortgage rates, and the best affordability conditions in 30 years. To quote CEO John Burns: “We want to point out that the downside of investing in housing right now is about as low as you will ever see.” We agree, even though price stability remains a concern. We could very well discover that the federal tax credits artificially raised housing prices during their tenure. Using Massachusetts as a proxy, Trulia.com reports that the average price reduction for a single-family home or condominium in June rose to 8 percent, or $38,883 off the original asking price. That said, we stick by our hypothesis that a temporary dip in sales and prices should be expected, as buyers and sellers recalibrate to the reduced-subsidy environment. Going forward, we still see housing prices stabilizing and moving higher (albeit at a tortoise-like pace) and sales volume increasing. Of course, our hypothesis is predicated on a continued job recovery, which both loosens purse strings and raises confidence. When people are working, they become less obsessed with predicting the future and with holding out for the rock-bottom price. Yes, 4.5 percent fixed-rate mortgages are better than the 6 percent variety, but only when they are accompanied by lower employment. As we’ve noted many times in the past, we’d prefer to see rising mortgage rates accompanied by rising employment (the two tend to move in tandem). The prospect of higher mortgage rates and better employment would get the current fence-sitters to refinance and buy. And as we’ve also noted in the past (and which John Burns Real Estate Consulting appears to concur), we think the potential for housing appreciation far exceeds the potential for depreciation for anyone looking five years down the road. Economic Indicator Release Date and Time Consensus Estimate Analysis International Trade (May) Tues, July 13, 8:30 am, et $40 Billion (Deficit) Moderately Important. The deficit is expanding on a strengthening dollar. Mortgage Applications Wed, July 14, 7:00 am, et None Important. The recent spurt in refinances will likely level off as rates stabilize. Retail Sales (June) Wed, July 14, 8:30 am, et No Change Important. Slowing sales is reflective of rising consumer pessimism. Import Prices (June) Wed, July 14, 8:30 am, et 0.1% (Decrease) Moderately Important. The stronger dollar is keeping import inflation in check. Producer Price Index (June) Thurs, July 15, 8:30 am, et All Goods: 0.1% (Increase) Core: 0.1% (Decrease) Important. Producer-induced inflation remains non-existent. Industrial Production (June) Thurs, July 15, 9:15 am, et 0.2% (Increase) Important. Increasing capacity utilization rates reflect growing demand. Consumer Price Index (June) Fri, July 16, 8:30 am, et All Goods: No Change Core: 0.1% (Increase) Important. Consumers and credit markets continue to benefit from low inflation. When a House is Not a Home Last Sunday the Washington Post ran a story titled “Finding Gold in Them Thar Foreclosures” that focused on the rewards and risks of buying residential real estate in one of the country’s hardest hit burgs – the metropolitan Phoenix area. A couple days later, a writer on CalculatedRiskBlog.com followed up with an anecdote of an individual investor who had bought nearly 100 homes (focusing on single-family homes) over the past 18 months in the same area. The writer noted that the average purchase price was under $35,000, with one of the properties being bought for $20,000 after selling for $180,000 in 2006. Most of the homes were of the three-bedroom/two-bath vintage, and most were rented, with some even renting by the room. There are at least two worthwhile takeaways from this anecdote: One, investors need to seize opportunities. Jittery markets are great for finding bargains if you are a long-term investor. Second, money is available for real estate investing. Though the writer fails to mention it, we doubt the investor paid cash for all those properties. To be sure, rental properties aren’t for everyone – they come larded with work and headaches, but they can prove highly remunerative when gotten at the right price. In today’s market, there are definitely more right prices than wrong ones, especially for someone with a good credit history who is working with a creative mortgage professional with a strong knowledgeable of financing options. If you wish to unsubscribe, click on the link below and send the email. If this message was forwarded to you, please reply to the sender. Click Here To Unsubscribe EQUAL HOUSING LENDER This Newsletter is for informational purposes only. The information contained herein may not be applicable to every situation or jurisdiction and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.

North Conway Hot Air Balloon Festival

North Conway Balloon Festival… Lifting Spirits 2010!

June 11-13th

Mount Washington Valley Balloon Festival 2010

Bring the family, stay the weekend in one of our local charming Hotels, Motels, Inns or B&B’s, enjoy the North Conway Village’s small town atmosphere, explore our many unique little stores, take a ride on the Conway Scenic Railroad, sample pastries and coffee at unique little coffee shops, enjoy an old-fashion ice cream treats and great food from a variety of local dining establishments.

But the thrill of the weekend is the Hot Air Balloons piloted and crewed by regional balloon enthusiasts. Balloon flights over the Mount Washington Valley are available to the general public with tethered flights for the more cautious. Can you envision anything more thrilling or romantic than sharing you wedding vows high in the sky as you kiss and become husband and wife or renewing your vows in an unforgettable ceremony in the sky… a once in a life time romantic event!