Sam's TEAM Blog

In a word, the answer is YES.

The "R" word, once just whispered, is now spoken aloud.  Though yet to be academically confirmed, the predicator signs are all around.  Friday's unemployment number blew through the expected number and upward revisions January and February numbers are now forecast.

Defined as two consecutive quarters, or six successive months, of declining GNP (gross national product), we may well be headed for recession, made all the more probable by the media's pounding home of gloomy news.

Surprised??

Reports of rising foreclosures, increasing tardiness of debt payments, declining housing prices and tightening credit markets on most fronts would make any prudent person play close to the vest.

The impact of continued gloomy news undoubtedly has more than a few huddled in fear of a falling sky.  But rather shivering in the fear of the unknown, prudent buyers and investors are doing their homework and are prepared to snap up undervalued assets at bargain prices.

Imagine an amusement park's roller coaster.  It goes up, then down, then around, to repeat the cycle again and again with some minor variation for the thrill of the ride.  Well, so do economies, product cycles and virtually all things in life.

No one, with truly rare exceptions, has experienced consistent upward mobility without a pause or bump.  It is the dips or drops or pauses which make the run ups possible.  Companies, economies, product and asset categories all pause during the race - these are marthons, not sprints.

The challenge is determining how this current dramatic confluence of circumstances will work out.  When will this current malaise end and how will the turn around look are the unanswered questions.

For buyers, credit scores and behaviors remain the central and most important ingredient to rate and program options.  100% financing is virtually nonexistent, though there are ways of achieving the same effect.

Credit scores aren't the only factor.  Employment history, debt-to-income, earning history and housing history will all be factors weighing heavily on investors decisions.

Of ever increasing import are collateral values, that is the value of subject properties and to an extent, comparables.  These are the back drop on the stage of loan approval.  This is why foreclosure and distressed sales adversely impact not only purchases, but the refinance market as well.

For these reasons it is even more important to be associated with seasoned professionals and shunning the part-timer mortgage broker or the real estate agent whose experience is more of convenience than of a focused, serious professional. 

In the Northwest home values seem to be holding steady for the most part.

The Case-Schiller valuation model, which uses a proprietary comparison formula, indicates that Portland home values declined a paltry 2% year over year.  While any decline in home valuation is troublesome, Portland's home values are virtual stalwarts compared to Miami, Las Vegas, Phoenix and other areas where the declines were greater than 20%.

The Seattle statistic is a 2.7% decline year over year.

What is it about emerging from Winter's doldrums which sparks enthusiasm or at the least optimism in the human spirit??

My blog writings have focused almost exclusively on matters of finance and home finance specifically.

Against a backdrop of dark and gloomy media bashings about credit markets, mortgage foreclosures and most recently the quarterly earnings of General Electric falling short of expectations, today's sunny weather has put bounce in my step and a happy note to my internal music.

What is it indeed?

Birds are chirping.  Blossoms seem brighter than they were just yesterday.  While temperatures this morning were in the mid-30's, it did seem warmer, if only because the sky was blue instead of the foreboding shades of gray we've endured for months now.

As I left for the office this morning, outside my home, a massive flowering cherry tree in the front yard sports brilliant pink blossoms - a giant 20 foot pink pompom -  providing a powerful contrast to the clear blue sky.

Nature seemingly avoids getting caught up in the machinations of the business world.  The ups and downs of the Dow Jones Industrial Average or the mortgage bond markets evidently provide nature nothing of which to worry.

Can it get any better than this??

Yes.

I'll simply avoid listening or watching newscasts the rest of the day and that should do it.

Hope does spring eternal, even in the face of a strong headwind such as we face on many fronts today.

The weather has taken a decidedly warmer turn over the past few days, though night time temperatures have consistently dropped into the 30's.

It is much the same for housing.  Spring brings optimism and hope.  So do what appears to be a bottoming of the markets, both in terms of deterioration of local housing - despite a reported decline in decline in sales prices - and stabilization of the credit markets.

Yet second looks in both arenas gives pause.

Local housing prices are a reflection of some of the urgency with which some sellers approach the market, perhaps of necessity and the near overwhelming inventory levels.

Meanwhile the lending arena is becoming more stable despite media reports to the contrary.  Lender guidelines have tightened considerably, yet many programs remain available for buyer's to utilize.  This is especially so if borrowers have prepared ahead of time.  By that I mean, consulted with a true mortgage professional who learns of their needs, goals, income and most critically surveys a client's credit score.  The latter is perhaps most critical.

If you're serious about purchasing a home or refinancing to reduce debt, shift equity advantageously or lower interest rate, working ahead of need is strongly advised and the smart thing to do.