September Good Bad n’ Ugly from My Heart

Good Morning,

At the beginning of the year, I put out my best guess as to the direction of rates. I suggested lower this year, than last. At first, the Fed tried to prove my wrong, but the woes of the world proved otherwise. Rates are now lower than last year. Bottom Line: Good news for my clients.

Summer has been busy and my thanks for helping this one to be so great. Amazing, the number of our calls that were your referrals. I especially love the ones that begin: “Mike, I don’t know if you can help…” What better than to turn doubt into success, especially with our rates. Please keep the referrals coming.

Interesting Tidbits of Helpful News

Some helpful numbers of interest and value:

  • Homes in foreclosure – down 75% – now .06% of all homes

  • Inflation subdued with little real GDP growth, keeps rates low

  • Increase in 2020 cost to build and remodel, due to building codes Build Now!!

  • Federal Reserve shows a summer with positive increases in the Leading Economic Indicators.

  • Property values continue to increase – Case Shiller index

  • Loans over 90 days delinquent, drop to only 3 % of the marketplace

Looking ahead, note the new growth jobs in the Robotics | Energy sector. This technology is the latest disruptive class. It also makes the point the days of starting a new business, then letting it operate on auto-pilot, are all but over. Instead, new technology brings about a constant need to re-invest and remain ever aware of your competitors. Truly a different kind of life experience, yet one in which we all gain.

The Good, The Bad ‘n The Ugly

The Good: World-wide weakness in oversea markets should keep interest rates favorable, near term. And until the next ‘Black Swan’ event I don’t see much change, either way.

Another Good is the California Property Tax Postponement Program. On my website is more information and it pertains to our low income seniors, one giving them a better edge of not paying property taxes. The government will let you request on an annual basis and only charge you 7 % interest to do so. If you have interest, please call so we can help you.

The Bad: Local government continual struggling to balance budgets on the back of consumers, business, and builders. The outcome: Good today, yet higher costs down the road. The old game of kicking the pain, oops I mean Can, down the road. It never works, it only gets them re-elected. Let’s wake up.

For example, look at affordable housing initiatives. Is there truly a “building fund”, or is it far more about line-items expenses called staffing, pensions, and more regulations in need of enforcement. The latest one is San Mateo. It’s increasing commercial construction fees for the sake of a “sinking fund”.

History say such monies will eventually be transferred to other underfunded needs. And if this happens, what ever remains in the “fund” will be gone. They may sell the emotion, but do they actually build?

The Ugly: U.S. Market’s over-sensitivity to the Federal Reserve. Last week Ms. Yellen stated “…in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months…”

At the same time, there was a downward revision to 1.1% in U.S. Q2 GDP growth, while gross domestic income grew just 0.2%. It makes one wonder, except politically, how a slowing economy causes increase rates to increase. Ask yourself: Who benefits from this crazy marriage?

Ugly 2: We just had a good look at what was once a 4 page loan application form. As of January 2018 it will be 13+ pages for a married couple. Wow! And what does Fannie Mae offer, “Easier for borrowers to complete…with minimal lender intervention”. What? How Deplorable! Your vote matters.

Closing Thoughts: The Bay area is resilient and hard working, home to amazing technologies and new innovations. Yet it is not isolated from the changing world. This is where I try to be helpful, even insightful, especially as to financial information that may effect you and your home. In this way, you can keep your focus on what you do best. With this, thank you for your calls and many referrals. Your trust in me is what keeps me going. It keeps me motivated to be ever better and more helpful. You matter to me.

Have a fabulous day and we remain ever grateful for you.

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