Notes on Real Estate 
Notes on Real Estate
This issue:
"Chauvinism is extreme and unreasoning partisanship on behalf of a group to which one belongs, especially when the partisanship includes malice and hatred towards a rival group. The term is derived from Nicolas Chauvin, a soldier under Napoleon Bonaparte, due to his fanatical zeal for his Emperor. Nicolas Chauvin was wounded 17 times in the Napoleonic Wars but nevertheless he continued to fight for France.
The origin and early usage indicate that it was coined to describe excessive nationalism or patriotism, and th the original French word (chauvinisme) still retains this meaning today."
Read on, read these news releases, and look deeply beneath the surface.
Long-term Mortgage Rates Highest Since September 2003
McLEAN, VA - Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market
SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.37 percent, with an
average 0.6 point, for the week ending March 9, 2006, up from last week's average of 6.24 percent. Last
year at this time, the 30-year FRM averaged 5.85 percent. The 30-year FRM has not been higher since
September 5, 2003, when it was 6.43 percent.
The Minneapolis Star/Tribune made it an above-the-fold headline, Home Choices, Rates go Upward. The implication of the entire article was that this was a problem. They were wise enough to seek out the counsel of our Minneapolis Lakes Coldwell Banker Burnet's Branch Vice President, Matt Baker, who said, "We were doing cartwheels when rates dropped from 12 to 13 percent. (in the early1980s), and I was predicting that rates would never come below 10 percent."
Partially spurring the increase was the announcement that wages had risen 3.3% in 2005. Also, in the same article quoted above . . .
"Stronger than expected gains in the manufacturing and service industries - coupled with higher labor costs - ignited inflation concerns, which led to the rise in mortgage rates this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Financial markets are beginning to think that the Fed will hike rates three more times this year, instead of two, putting upward pressure on mortgage rates."
So, the "Bad News Chauvinists" rear up and say I told you so. It's a "big deal." The Star/Trib did have the common sense to realize that the state hockey tournament is a bigger deal, and therefore had the major 90% of the above the fold dedicated to Hooked on Hockey and a huge color picture of face-painted teenage fans.
"Positive Real Estate Chauvinists", such as myself, are saying, "Get a grip. This may be news, but it isn't newsworthy." At least, it isn’t alarm worthy.
Think of it like this. If "rates are their highest level since September of 2001," then we REALTORS® ought to be dancing in the streets. Happy are the REALTORS® who were in the business from 2001 until now.
What you are seeing is that correction in the market (as predicted by humble yours truly). It also means that when things get better, financially, the big money people want more for their money. After all, they encouraged growth by making it easier to purchase and spend, and now they want their money back from the prosperity they created. To keep things from looking greedy, they will claim it is a hedge against inflation. Does this mean that there will be a massive slump in the real estate market?
This week's Minnesota Area Association of Realtors gave this report.
"Expanding homebuyer and seller activity carries on in the Twin Cities residential real estate market. New listings reported for the week ending March 4 surpassed last year by 21 percent. As of March 13, total active single-family listings in the 13-county metro area set a new all-time record, surpassing last year’s number by 32 percent."
So, that doesn't sound as if there is much reason for a gloomy forecast. Remember, though, that it is one thing to list a home and quite another to sell it. Many of these homes will see price reductions before they are purchased, and some may simply come back off the market to be offered another time. How else do you suppose an extremely zealous "sellers' market" is going to correct itself without the infamous bubble burst? This is the ebb and flow of a healthy home market, in my possibly somewhat chauvinistic opinion.
(Also, for your fun and edification, I wanted to take the opportunity to point out that Chauvinism initially had nothing to do with men behaving badly, just with people behaving myopically toward anything.)
Every seven seconds, somebody turns 50. You'll be hearing about that, and about the fact that the baby boomers and those of us a few years older would rather go sky-diving than sit on the front porch and whittle a whistle.
Almost all of the housing plans made up to satisfy the baby boomers and the pre-boomers are having to take a second look, and some are loosing their shirts. They presumed we would be just like our mommies and daddies. Retire, collect the pension and downsize until the inevitability of the old folks home.
Health permitting, and sometimes even in spite of health concerns, we are either staying in our homes till the bitter sweet end, selling the big house and getting a big one below the Mason-Dixon line and buying a condo up north to use to visit the grandchildren. Downsizing is not the norm.
I took an entire series of courses to get myself an accreditation as a Certified Senior Real Estate Advisor. (That's what they said it would be called, but I never did see the certificate.) I figured I ought to be capable of talking to my peers. They did give us a couple of valuable insights. People over 50 do not like being called seniors. A far greater number of them than expected do not intend to retire, not so much because they have to keep working for the money, as they just don't see any value in an idle life, and they don't have enough hobbies or that great an interest in golf to stop being financially productive.
There are a great many nifty things you can do as you move into the autumn of your years (You just have to love it… "nifty" and "autumn of…"). There are many options you or your parents can consider. Having a plan is a good idea.
Because one day, however… Well, you just don't want to be taken by surprise. Meanwhile, get out your in-line skates and Shelley and I will meet you at the Lake Harriet Band Shell concession stand for an ice cream cone. (It's on me, if they give senior discounts.)
That’s it for now. Except this:
1. If you have interests or questions, please e-mail me or give me a call.
2. Check out my website HERE
The opinions expressed in this newsletter are solely those of Tom Crone and others being quoted and do not necessarily reflect the opinions of Coldwell Banker Burnet or its affiliates.
