Posted by Charles_CA on 10/4/05 10:08pm
Msg #68894

Its gong to be a long cold winter...

The Fed has suggested that the interest rates have a number of increases yet to go. Make sure you ahve good store fo firewood cause its going to be a long cold winter as things really slow down. How many remember the 17% and 18% interst rates of years ago? those were bad times for everybody, hopefully it won't get that bad but energy costs are fueling inflation.

Reply by Lydia_Fl on 10/4/05 10:21pm
Msg #68895

I was already in the business..........

and remember those days . Hope they don't come back and at the same time I don't think it is going to be the same way, but I have been waiting for drastic changes and it is my opinion that they are very near... Hope I am wrong

Reply by NY_TaxLady on 10/4/05 10:47pm
Msg #68897

Re: I was already in the business..........

I am with you lYdia. I am waiting for the shoe to drop. At least you will be warm for the winter. I think I will be using my firplace more this winter.

Reply by TCMN on 10/5/05 12:54am
Msg #68905

I don't remember the 17-18% days because I was too young then, but I hear about it often from the RE agents I work with. I do remember the 10-12% though.

But, I must differ in saying that even though I think it would be hard right now with the disasters that have happened of late, I think that it would be better served in the long run if they went back to the average of 8 1/2 % for awhile. I honestly feel that people have been spoiled by the under 6% rate that has been around for awhile (since 911 time I think) and now everyone thinks that if they can't get under 5 % then they won't buy anything.

I remember when 8 1/2% was the average for a long time and when it went to 7 or 7 1/2% people were still ..."I don't know if I should buy right now." People couldn't understand that the difference of 1 1/2 % is about $27,000 of buying power to have the same monthly payment.

NOW, they don't realize that anything really below 7% is a very great rate.

So, I think shoot it up to at least 8% for a good year and then when it goes to 7% as a norm they will be grateful to do business with that and kicking themselves for letting opportunity pass them by at the rates things are at today. It's just sad at how the expectations change and I don't see it getting better...seems a lot of people think they deserve something for nothing now a days. I just spent time with my grandparents for their 74th wedding anniversary and the generations have changed so much that it's somewhat sad. Grandpa still never has used a credit card. "If you don't have cash to buy it, you don't need it" Yes, I know, things have changed. BUT, think of it this way....we wouldn't have half the problems with money as a culture if we could still think that way.
I tell my sons this about the money they get..."If you get $20, $10 goes in the bank for college, $5 goes in your bank at home for saving for the big thing you want in the future and $5 you can spend today or whenever you want." They are 8 and 11 and they think about those things everytime they get money or gift cards even. At Christmas last year, they raked in the gift cards...about $80-100 I think each. The little one says to me..."if I give you the gift card would you give me the money for it?" I said of course. He says..."because I want to put some in the bank for college, and some extra in for my car that I'm going to have to buy first to get me to my job when I'm 16 to pay for stuff when I go to college." Talk about a Chistmas gift...could get a better one than hearing that.

That's just my honest opinion.

(don't beat me up too badly for wanting interest rates to go up a little) I just think the markets are slow now when rates are really good...and it can't get much slower for some people, but if it goes up for a time, then it will generate movement when it comes down. Obviously the constant below 6% isn't doing it.

Reply by newlysmomva on 10/5/05 7:57am
Msg #68914

Problem is...most are morgaged to the hilt and when refi time rolls around, will they be able to afford the higher payments? or will they be out of a place to live? I believe we are in for a huge downturn, because the upturn was sooo big and sooo long. Simple economics. I hope I'm wrong but I don't think so. Gas will be the trigger, I beleive. Like you, I think it will be a long winter and that wood stove is looking better and better. I've paid off all of the bills I possibly can in preparation and am not buying anything I don't absolutely have to have.

Reply by LawrenceOK on 10/5/05 8:22am
Msg #68923

This is what I was thinking. Greenspan say's their will be more increases over several months. and that will put a squeeze on many a borrower who has refinanced in the last 2 years. I dont care what kind of loan they are looking for, it will cost them more then what they are paying right now. I expect the lending industry will see a dramatic slow down next year. But look at the bright side, All those SA's that got hoodwinked into this business by the NNA with the promise of BIG BUCKS wont be around much longer because they wont be able to afford taking those $45 & $50 buck signings.

Reply by Charles_CA on 10/5/05 10:27am
Msg #68936

All of you are very insightful, in my opioion...

I believe that Lydia is correct and that it will be different, and I guess we'll find out in what way and I think TCMN has certainly nailed it. I believe that we will all be better off with at stable interest rate and that around 8 to 10 percent is probably where it should be. 10% was considered the "ethical" rate for many long years. A lor of peopl who got into ARMs, reverse mortgages and 0% intersest mortgages will regret their actions. I have a friend of mine who specializes in REOs who has been crying poverty for the lst few years and he is beginning to smile again so I know things are changing. good luck to all of you.

Beswt regards,
Charles

Reply by MB_AZ on 10/5/05 10:41am
Msg #68941

History does repeat itself. I remember the 15%+ interest rates. I was selling Real Estate in Colorado...and struggling to make ends meet. That time, in '78-'79 was just after the gas crisis. Do we see a pattern here?

Reply by Lydia_Fl on 10/5/05 12:58pm
Msg #68973

A good head on your shoulders

Keep your expenses LOW or at a mininum and Just wait !!

Reply by TCMN on 10/5/05 3:14pm
Msg #69032

I'll give you a story about where things seem to be going..


I have a friend and co-worker that, being in real estate, wanted to look for a niche that he could work and make a living at. He decided to go after the foreclosure side. I know people think they can make BIG $$$ in it and maybe in some cases you can, but it's nt like the old days. Back when the banks used to "dumb" the home to just get paid off are done and gone. They have since got smart and actually figure out their fair market and go for the equity to.

Well, he decided to try to work with lenders going that route. When he got "in" with one (I'll finish and see if any of you can figure out who that lender is) they had him listing such homes. Well, he soon found out that when the banks tell him they will have something the process before he gets it to list is really where the money is. (and you all think we realtors "steal your money like car salesmen(no disrespect)" -so not true, we do work hard for you)
Anyway, the thing he realized is that when the lender gets through the sheriff sale, they need to have the place cleaned up and preped for sale. So they were asking him to get that all put together for them and whatever. Well, he soon realized that THERE si where the $$$ came into the loop. He was retaining companies to do this and see what they got paid and decided HE woudl start a business and do it himself. SO, he and his wife decided to start it out first and see what became of it. HARD, HARD WORK! The thing in, anything left in the homes the lenders need removed. They dump it. Well, he can have anything in them. He has gotten some nice things I'm told that might just need cleaning, etc.
Well, to make this shorter....he now has (in less than a year) 22 guys running around the state ( I think he also does parts of another state also to) cleaning out, repairing/remodeling when needed and picking up anything of value (keeping some, selling others). Not every homes needs major fixes but might rather just need a good clean. He is guaranteed the listing so he makes money getting it ready and then selling them. He has to wait 6 months for the rescission deadline to pass before he gets to list it, but do work now and make an income, then gradually you keep your listings at a constant and your income keeps coming there to.

Wanna know how many he has done in a year?


800 was the count the last time he told me...that was 2 months ago.


Can you guess the lender?

________________________________________________

In regard to the comment on the values falling or something? That's how I took it anyway (hope I'm not wrong)

They have already. Prices of homes have started to deflate. Not so much here as other places in the country, but they have and I have had a listing that did just that. They were appraised a year ago for X dollar amount and we listed it not too much higher and I told them where I thought it would sell at. Unfortunately that was lower than their appriasal they had for the heloc they were getting. (I have had borrowers say at a signing that they would've had a higher loan amount but they're appraisal came in $60, 000 less than the last one, or they can't believe their home came back with an appraisal so high) And it will be a blow to a lot of homeowners who are mortgaged to the hilt. They put themselves in a bad position. The ones who refi'd for the lower rates but didn't cash out will be okay. They will have room to move if they need to and might not do anything but break even. And that's even if rates do go up and to borrow costs more.
But I don't know about anyone else doing signings, but I didn't see too many of those docs. I see a lot of refi, consolidate and cash out something to.

I'm not sure about any other realtors out there doing signings either, but its hard for me sometimes sitting there. I've done mortgages to in the past and to see the borrowers deal (and can pretty much gauage their credit without seeing it), see the appraisal (and the house and do a quick market in my head based on visual alone and knowing areas here), but I bet if I could remember them all...I could be close to a real good precentage as to who will be upside down when the market turns.

I have to tell you something that my husband said to me (the banker)...if you watch the mortgage rates and gas prices, they tend to move together. The owner of their bank said that and tought him that when he first started and he still looks at it. (Owner is now 94 and still comes in to work, not often but does)

Just talking here...my opinions...not necessarily right...but my husband will no longer bet me if I'm willing to make a bet. (I don't like to bet if I don't know I will win.) Sometimes for fun at the casino but not generally do I bet.

Another story...this on betting...
Went to the Traverse Race in Saratoga Springs this year....that race was #11 of the 12 for the day. I picked all three in order for Win, Place AND Show...played the EXACTA....(didn't realize they had a TRI-FECTA ) won BIG time....wish I had played more and knew what it was I was doing....would've been buying for everyone the entire stay and on the plane home to if I had. Paid $6X.xx for a $2 bet. I had more than 2 zero places going....was shaking though the way it was and lost my voice. That was not something I would've done had I not had a few drinks and my goal was RELAX some with clients since I hadn't been anywhere but working since Feb. Couldn't walk in and do that ever again probably. Don't like betting.

But I bet there will be more foreclosures than ever before unless the government steps in somehow. Just have a feeling.

Reply by BrendaTX on 10/5/05 2:50pm
Msg #69023

The winter tale brings OT memories to share...

This is human interest, so don't read if you don't like to waste time on these things!

My life was actually made a great deal better by those high interest rate years. It was purely because of my step-father's industrious ways. My step-father was so poor as a child that the only pictures I have of him when he was under fifteen have him with no shoes.

During the high interest years my step-dad developed a small subdivision in the Texas Hill Country after a tornado siege leveled four of his rental houses in Burnet County, Texas. He and Mother worked like dogs to get things cleaned up and back together again.

The 160 acre parcel of land the rental units stood on was land he purchased for $1800 during the depression years when he was seventeen years old...right before going into the armed forces. He paid off that $1800 working for the Corps of Engineers. My step-dad was also one of those fine men that fought in WWII.

Harvey, was his name. He and a carpenter rebuilt the houses while I was a sour little brat and hated handing nails over to him and the helper the summer that followed. Mother and I lived on concrete floors of rental property houses that summer. I painted trim and pouted.

Once they were finished they had been so careful with their money that they had not used up the amount that the insurance had paid. So, Harvey took that and started paving streets, having surveys done and began to sell lots. He charged 14%-16% interest which was less than the banks were charging and he carried the notes on the lots. Then he sold the rental houses. And, as he profited then he built Mother a beautiful house on a hill that overlooked the subdivision.

His four rentals were four 3/1 brick houses and he had built them in the late 50's after being fired from the IRS. (Not sure why he was fired.) But, as evidenced by his activities, Harvey did not let that get him down. What a guy he was. With interest rates up in the 70's he sold them, and he carried the notes on them as well...at that high interest rate, but still just a little lower than the lenders would.

By the way, the same summer he was fired from the IRS he had taken his paltry retirement from the job and purchased an old house on West Avenue in Austin, Texas. He cut it up into five apartments and then he filled it up with student renters. Next, he began to build eight apartments behind the house of five apartments. He lived in two tiny rooms, gave his aging mother a nice apartment, then he began to build the eight efficiency apartments behind the house.

Harvey never married until he met Mother when I was around nine. He had been burned very badly in the war at 19. I guess he was shy as a result. He had spent a year in the hospital and was discharged with a partial disability. I never noticed him having any scars where he had been burned, but the burns had been very extensive. I always recognized the strength and character in my mom's husband, and even though he sort of came suddenly into our lives, I really liked him. He was a nice man to a little girl not to have had children of his own. Mother and he never had any children either.

This interest rate talk brings all this back because Mother (and I) came into his life shortly before the spike in the interest rates. It was from his very careful way with money that made him able to capitalize on the years I would have been waiting in soup lines as a result of. Amazing. (Ummm, yes, you could read "careful" to mean very, very "tight." But tight's not such a bad thing!)

Harvey died in 1994 and I still miss him, but all this talk about the interest rates reminded me of him. I have to hand it to my mom...she sure knew how to pick a good guy.

I never heard Harvey say one curse word...never heard him raise his voice to my mother...and he just kind of glowed as I look back at the way he was around me and Mother. Now I know it's because he had realized his dreams and he had a little family in the end. He was 18 years old than Mother...54 when they married. I just wish I'd have realized how much I meant to him before I was in my mid-thirties right before he died. My boys and I always loved him...but just not nearly enough.

If you don't think this man was a saint, let me tell you one more thing about him. When he first married Mother, his mother had been dead for about two years. He still went every Sunday after church to visit one of his mother's friends in the nursing home. I went with him a couple of times when I was visiting he and Mother.

He was no sissy man. He was a true man of character. Wow, what a wonderful example of a man for a step-father, huh?

Burned in the war, fired from a job, the only one of three kids who would see to a very self-involved needy mother until the end, and yet he was successful. Hard act to follow...I remind my son often of Harvey's successes that he made happen...in spite of it all.

Reply by Charles_CA on 10/5/05 3:07pm
Msg #69027

That's a beautiful story and one that can be a lesson today

Unfortuantley there are too many people who lieve for the moment and refuse to compromise their pleasure an iota. Those are the people sho have very little to show as a result of their life's work. I was very touched buy that story Brenda.

Reply by JanetK_CA on 10/6/05 9:26pm
Msg #69240

Re: That's a beautiful story and one that can be a lesson today

So true! Most of the exceptions I see today are immigrants who aren't afraid of working hard today for future rewards. Many of them appreciate the opportunities available here more than the native born -- too many of whom want everything right now. I believe the latter kind of thinking is why we have so much credit card debt in this country.

Reply by Charm_AL on 10/5/05 3:12pm
Msg #69030

thanks for that Brenda....n/m

Reply by TCMN on 10/5/05 3:55pm
Msg #69037

:) very wonderful, warm memories, you're

blessed to have those. Glad you shared.

Reply by BrendaTX on 10/5/05 4:00pm
Msg #69039

Thank you...a good step-dad is a blessing! n/m

Reply by Cris_AR on 10/5/05 4:07pm
Msg #69040

Re: Thank you...a good step-dad is a blessing! n/m

I had one of those, always thought he was 1/2 nuts, he married Mama with FOUR children!
Just lost him and miss him terribly, he was my rock.

Reply by BrendaTX on 10/5/05 3:57pm
Msg #69038

Re: The winter tale brings OT memories to share...

One little correction...where I said **I would have been waiting in soup lines as a result of. **

What I meant was not that I was not well cared for other than my step-dad, but that I don't have the way with my money that my step-dad did. I have learned a lot from his example.

Reply by Lydia_Fl on 10/5/05 9:38pm
Msg #69099

Re: Thanks for sharing!!!!!!!!!!!!!