Recently, I attended a lecture by Anthony Grasst, a very keen MBA that manages MetLife's mortgage department. It was a pleasure to hear the words of wisdom that provide a different view of our economy.
Graast explained that the dot.com boom / bust and the unemployment rate after 9/11 are at least comparable, if not worse than now.
According to e-commerce news, 2001 entered the record book as the most devastating year in that Internet work was lost.
In an article released in 2002, "100,925 positions were cut in the year [2001]. About 250% higher than the 41,515 cuts that the 2000 dot-com shakeout began in earnest."
According to ComputerWorld.com, the numbers span many sectors, and in 2001 more than 2 million people were cut.
Real numbers are often fleeting. Certainly hundreds of thousands, and perhaps millions, have lost their jobs since the dot.com failure. The unemployment rate after 9/11 was also amazing. The current recession passed the total unemployment benchmark in November 2008. Still, we have forgotten two major recessions in recent employment, dot.com bust and 9/11. It has recovered.
There is no doubt that we have experienced a double predicament. When our national economy began to recover from the dot.com bubble burst, 9/11 quickly put us back. Still recovered.
In fact, the monetary losses from these two events were even more serious than the current crisis, and many experienced more losses as the stock market affected far more real assets than today. .
According to Wikipedia: “Some telecommunications companies incurred irreparable debt from expansion projects, sold assets in cash or filed for bankruptcy. These largest WorldComs use illegal accounting practices When these irregularities were revealed, the company's shares crashed, and within the next few days filed for the second largest company bankruptcy in the history of the United States, NorthPoint Communications, Global Crossing, JDS Uniphase, XO Communications, Covad Communications, etc. It didn't happen, so it became a dark fiber, affecting companies such as Nortel, Cisco, Corning, etc. The stock price of these companies was up to $ 113 Plunged to a minimum of $ 1 from the pain of national finance, who can forget Enron?
The monetary losses of September 11, Gustav and Katrina hurricanes, and other disasters during the Bush administration era, and the true cost of the Iraq war, can be compared somewhat to today's tragic situation. While the press properly reported on these disasters, over-evaluation of today's crisis and full consumption reporting make it inferior when compared.
Money is hard for those who want to buy a house. However, according to Glast, the fluidity is changing. The current true fluidity is not as tight as the media makes you believe. “In the past few months, the money supply has increased by 20%, but it takes six to nine months to get to market.”
A message related to Grasst's lecture was that funding was possible. You just have a job and pay your bill, you can't lie. What a concept. Other funding sources became available from companies such as MetLife, which entered the credit and mortgage business in 2007 after all non-performing loans were already made. Another revamped source is the USDA loan that revised its rules, making them a good alternative. According to Jack Dyke, Sandpoint's Mountain West Bank VP and regional sales manager, most local and inland northwest banks did not make suspicious loans that endanger other banks.
Our problem is that we have become a society that expects instant satisfaction. Request results that occur instantaneously. The Great Depression lasted from 1931 to 1937 for at least six years. It can be argued that the stock market is responding to President Obama's policies and actions, but only those born yesterday are making these issues and problems. Our sorrow as an adult and a wise American educated to be immediately satisfied is that in a 60-day tenure, one man took us years to bear fruit I believe I can fix it.
Glasto pointed out that banks and financial institutions were broken, like the Great Depression, according to the media. In the Great Depression, the bank for four years broke down. was. During the great depression, the stock market lost 90% of its value. Currently, our loss is 40-50%. In both cases, the stock was very overvalued. Recall that the stock market first exceeded 7,000 and then 10,000. As a young investor who just graduated from business school, I didn't expect 10,000. After all, the market was between 500 and 1,000 from the late 1950s to the mid-1980s. After that, it was 2,000-3,500 over 10 years. Notable runs up to 14,000 points were made during a few years, just over a decade. [See this historical chart] You can say that the same thing happened to the value of the house. Too fast? This is the opinion of many economists.
Unemployment hurts, but a more important factor is consumer spending. The unemployment rate is 7-8%, but the unemployment rate is 92%, so consumer trust is important.
Glasto said, “The most important thing we can do in my real estate business is to educate buyers. In terms of housing prices, we are approaching the bottom.”
“Recently, about two months ago, I was informed that I was in a recession for more than a year. Was the expert a little behind that information?”
So where is the bottom? Yahoo Education has posted that the US population is growing at an annual rate of .92%, but other sources cite .88% annually, and Wikipedia has approached that number close to 1% . The current population is over 306 million, which increases the population by 3 million every year. As a result, housing demand in the United States greatly exceeds the current level of construction.
On February 11, 2009, Chris Kaucnik, former marketing director of the National Association of REALTORS®, wrote: “The average number of months that inventory has shifted completely over the last 56 years is 35. Optimistically, the bell from the second quarter of 2009, especially when government incentives were added.” Currently, Home Warranty of America, Inc. See this article on RIS Media written by Chris Kaucnik, marketing director of.
Current numbers in North Idaho around Sandpoint support the assumption that inventory is low, or at least at normal levels. According to REALTORS® Selkirk Association, closed sales of residential, condominium and townhomes in 2004 were 1,241 units, 1,190 units in 2005, 920 in 2006, 936 in 2007, 605 in 2008. As the market grows, 1,000 houses will be available annually. Currently, 1,097 houses are sold. Is it oversupply? There is now a one-year housing supply, so statisticians do not occupy God. Last year, we saw a significant decrease in sales despite lower pricing combined with lower interest rates. We all know why. How long will the recession continue in the area advertised as the next Lake Tahoe? The prediction makes sense that we have a better year than 2008. [The REALTORS® Selkirk Association believes that these numbers are reliable, but it is not absolutely certain.]
Unemployment is also a major concern. Spokane has just reached 9.6% [according to a spokesman review on February 24, 2009]. The local numbers that basically match the current domestic level of 7.8% are bright spots. [Figures taken from Idaho Labor Ministry's February newsletter] This is mainly due to manufacturing sites. Many consider Sandpoint as a tourism economy, but tourism-based employment is actually the fourth largest after manufacturing employment [see this Bonner County profile issued by the Idaho Department of Labor]
This diverse employment situation and continued success as a tourist destination has surpassed the nationwide demand for more homes available. To date, units sold over the same period in the same period are the same with 79 units sold. But our market is already $ 3,000,000 ahead of last year's numbers, and the average selling price is almost $ 54,000 per household. The median selling price has also increased by $ 35,000. No matter how you look at it, so far we are ahead of 2008.
This raises another great concern for potential buyers of property in the Bonner County area of North Idaho. This is a concern that if you buy now, it can quickly become upside down. Many buyers come to North Idaho from parts of Arizona and California. A place where a reduction of up to 50% is observed According to OFHEO's house price index, in the US, house prices fell 4.5% in 2008. Washington fell 3.7%, Idaho fell 1.76%, Spokane fell 1.26%, and the nearest community-measured sandpoint, Coeur d & # 39; Alene, fell 4.45%. Taking into account the predictions, many economists predict that this trend will change in the inland northwest by the end of the year. The most consistent economist analyzing North Idaho is CSP and self-proclaimed economic futurist Jeff Thredgold, who publishes quarterly information on Zion & # 39; s Bank. His prediction for Idaho is a turning point until late 2009. [Read his winter forecast]
Still, even though the value of homes in North Idaho has fallen by a few points, many REALTORS® point out that homes are at the highest price level of the year.
Another factor affects it. Interest rates are the lowest ever. [See this CBS news report] Tony Grast said, “Saving 1% of interest will save 10% in value. So, if the Fed withdraws from the mortgage business in June, interest "At present, we are artificially adopting low interest rates. “Google keywords & # 39; artificially low interest rates & # 39; You can also find countless articles on the web. Will the price increase? Probably. So, the buyer has an incredibly low interest rate If you are buying a house at a low price, does this mean that it is the right time to buy? These indicators definitely show a favorable yes, since June Interest rates have historically started to rise slowly, so prices and interest rates are still at historically low levels for the last two quarters of this year. This suggests that 2009 is one of the best years to buy a house in the last 10 years.
Checking today's interest rate, buyers can expect to get interest rates between 4.85% and 5.17%. If you believe in part of next year's forecast, interest rates could be 6.5-7%. To be sure, the Fed has a little room to lower interest rates because the federal discount rate is ½% and the current target rate of the federal fund is 0 to ¼%. Can you say “less than zero”? If the price approaches 7% by 2010, the actual cost of buying a home may be 20-25% higher than today, even if the selling price is the same. Looking ahead, the total payment for a $ 300,000 loan at 4.85% over 30 years would be $ 569,000 and the monthly payment would be $ 1583.00. Change the rate to 6.85%, change the total payment to $ 707,000, and change the monthly payment to $ 1965.00. In practice, the amount paid to the bank is $ 138,000 higher. Can I get my child to go to college for that additional amount? Even in a small but important way, paying an additional $ 382.00 a month can cause many buyers to leave the market.
In conclusion, what is the truth about the economy? The numbers seem distorted due to the best dramas by politicians and national and local media. If you look closely, it sometimes embarrasses some people and devastating others, but the truth is like a more complex bag. Certainly, we have been here before. Locally, it is much better than the rest of the world. What is our commitment to work and community? Personally, I believe that our job is to get through the bad looks and mal laziness, give real numbers, and keep our community working towards what it is.
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