| | |  |   Shamun Mahmud Commercial Capital Limited 10800 Main Street Suite 150 Fairfax, VA 22030 shamun@betterloansNOW.com (703) 879 - 1779 (800) 460 - 1921 |  | We are one of the few National Financial Institutions that specialize in helping businesses find, qualify for, and, finance a dwelling of their own. We fund loans from $500,000 to $50M. Ask us about our fast-track commercial mortgages and mods! |   | August 18, 2009  Someone’s Poison is Another’s Pleasure Yes, we are still talking economics here. Consider this quote from recent CNN/Money article: "Poor sales are the number-one problem afflicting America’s small businesses, and few business owners expect consumers to start spending again anytime soon, according to the National Federation of Independent Business’s latest monthly survey of its membership." Indeed, because of the recession, consumers are not spending as much and are saving more. They are also borrowing less. Consumer credit dropped for the fifth straight time last month, down over $10 billion from the month before. There is no doubt that these spending patterns are prolonging the recession and are likely to cause the recovery to be more tepid than we have seen previously. The question is, will consumers go back to their spending ways when they feel better about the economy? The answer is likely yes and no. They may feel better, but it is not likely they will be able to treat their homes like piggy banks as was commonplace during the past several years. Missing this equity, patterns of more savings and less consumption are likely to persist. These patterns will be better for economic health in the long run. For one thing, consumers borrowing less will mean less competition for dollars at a time in which the government will be borrowing tremendous sums to fund the stimulus deficit. A slow recovery with less consumer borrowing could serve to keep interest rates low which would facilitate a longer-term recovery. So today’s pain may turn into good things in the long run. This is consistent with the Federal Reserve Board’s most recent statement regarding the economy. The Fed sees the end of the recession but expects recovery to be weak in the near term.  The Markets. Rates were mixed in the past week. Freddie Mac announced that for the week ending August 13, 30-year fixed rates averaged 5.29%, up from 5.22% the week before. The average for 15-year rose slightly to 4.68%. Adjustables were mixed with the average for one-year adjustables falling slightly to 4.72% and five-year adjustables increasing modestly to 4.75%. A year ago 30-year fixed rates were at 6.52%. “Long-term fixed-rates rose slightly over the past week while initial rates on adjustables were little changed,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Last week’s release of July’s employment report showed a slight improvement in the declining labor market. The unemployment rate ticked down to 9.4 percent in July, representing the first monthly decline since April 2008. Approximately 247,000 jobs were lost, fewer than the market consensus and the smallest loss since August 2008. Declines in some local housing markets may be nearing an end as well. Median existing home prices rose among 17 percent of major metropolitan areas in the second quarter from the same period last year, up from 12 percent showing gains during the first quarter, according to the National Association of Realtors®. This represents the greatest number of areas experiencing annual growth since the third quarter of 2008.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes. Current Indices For Adjustable Rate Mortgages Updated August 14, 2009 | Daily Value | Monthly Value | | Aug. 13 | July | | 6-month Treasury Security | 0.28% | 0.28% | | 1-year Treasury Security | 0.45% | 0.48% | | 3-year Treasury Security | 1.66% | 1.55% | | 5-year Treasury Security | 2.58% | 2.46% | | 10-year Treasury Security | 3.59% | 3.56% | | 12-month LIBOR | | 1.501% (July | | 12-month MTA | | 0.901% (July) | | 11th District Cost of Funds | | 1.599% (June) | | Prime Rate | | 3.25% (Dec) |  For the first time in almost 15 years, the size of new homes built in the United States is shrinking. New homes are now 7% smaller, or the size of one average-sized room. To be precise, the median square footage of newly built homes fell to 2,065 square feet in the first three months of this year, compared with the same period last year, according to the U.S. Census Bureau. This caps off 2008, when home size fell every quarter, marking first year of declines since 1994. That could indicate that the romance between Americans and morbidly obese McMansions has finally cooled. "A new ethic is arising right now that will become commonplace — as commonplace as is recycling today, when just a few decades ago it was rarely, if ever, done," said Sarah Susanka, author of the book, "The Not So Big House." "As more and more people build or remodel homes that satisfy in quality rather than quantity, there will be a huge shift in what we perceive as desirable." She believes the current shrinking trend mimics one of 100 years ago, when simple bungalows supplanted elaborate Victorian homes as the design choice for many Americans. But, it could also just be the recession. "Home size gains flatten out or decline during recessions, and we’re in the midst of the most serious housing recession in decades," said Kermit Baker, the chief economist for the American Institute of Architects. Source: CNN/Money Today’s home buyers are asking for more green features as a means of lowering costs, becoming more environmentally friendly, and adopting a healthier lifestyle. "Green features are becoming one of the top three priorities, after price and location," says Joseph Himali, Greater Capital Area Association of Realtors Board of Directors president. Green features focus on energy efficiency, water efficiency, resource efficiency, and indoor air quality and include such elements as Energy Star appliances, low-flow shower heads, carpets and paint with low volatile organic compounds, and building materials procured from local suppliers. The average green buyer will shell out $12,400–on average–for green features, according to the National Association of Realtors. National Association of Home Builders green-building standards program manager Kevin Morrow expects the market share of green-certified homes to rise to 20 percent in 2010 from about 10 percent in 2009 and 2 percent in 2006. Tax credits and other financial incentives, coupled with green certifications, makes it easier for buyers, builders, and real estate professionals to go green. Source: Washington Times The recession has more than halved the formation of new households. Between March 2007 and March 2008, the number of new households grew by 772,000, compared with an increase of 1.63 million a year earlier, according to the U.S. Census Bureau. New households results in fewer home sales and rentals, less furniture sold, and less work for electricians, carpenters, painters—and real estate professionals. Harvard University’s Joint Center for Housing Studies estimates that the glut of 1.5 million new homes created during the housing boom would be gone now if households had been forming at historical levels. The downturn also has pushed down immigration levels. Even inflows of illegal immigrants have stopped rising since 2008, according to the Pew Hispanic Center. Source: The Miami Herald |