I'm Not Going to Let Go

The latest from The Wall Street Journal (Tuesday July 29th) in the Opinion section under Review and Outlook addresses lobbying conducted by Fannie Mae and Freddie Mac.

Just note that the financial escape bill signed July 30th doesn't prevent political lobbying and donations from either of these organizations. Now that's tantamount to the fox guarding the hen house! Are we just stupid or what?

Here's the link to this article.

Weekly Kitsap Market Statistics for July 27, 2008

The absorption rate for both Silverdale (142 weeks) and Kitsap County (155.2 weeks) remained just about the same.

For Silverdale, this means we haven't had any active listings "clear" a general building inspection and move to a pending sale status in four weeks.

Don't forget you can view a wide range of Kitsap's market statistics by clicking here.

Financial Happenings...Round Three

I'm really getting tired of these "fixes" (you can interpret this term however you like). If you'll recall in last week's post I addressed that Fannie Mae and Freddie Mac need an apolitical regulator.

Here's an article from today's The Wall Street Journal written by James R. Hagerty and Damian Paletta. You can click here to read it. About a third of the way through, you'll read we're going to have a new level of political bureaucracy called the "Federal Housing Finance Agency." This replaces the current agency called the Office of Federal Housing Enterprise Oversight, OFHEO for short. The director will be named by, you guessed it, the President and subject to...Senate confirmation.

I guess we haven't learned our lesson yet. My question is this: "When are we going to learn?"

More Info on Financial Happenings

I posted my comments a week ago about the "mess" we're now in with Fannie Mae and Freddie Mac. I hinted that politics keeps getting in the way.

This past Wednesday (July 23rd), The Wall Street Journal had a terrific opinion article written by Paul A. Gigot (the Journal's editorial page editor). This is a concise, 10 minute "must read" that provides an indepth assessment of the situation. Check it out for yourself by clicking here.

Real Estate Market Happenings

Now that the media sensationalism concerning Fannie Mae and Freddie Mac finally hit the front page, how is this going to affect buyers and sellers?

First off, the Federal Reserve (Ben Bernanke) and Treasury Department (Henry Paulson) will never let Fannie Mae and Freddie Mac "go under." That's not going to happen...period! The real story is what's going to be done and how much is it going to cost (us, the taxpayers)?

In my humble opinion, $5 trillion of mortgages held is way too much for these two organizations to handle. That's too much risk and it's what got us into this mess anyhow. Second, these two companies need an indepent overseer and not something "dreamed up" by Congress (conflict of interest). Third, mortgage qualifying and lending standards need to be "tightened" much more than they have been in past three years. Yes, it's nice to be able to own your own home and not rent, but life's not fair and not everyone gets this privledge. Sorry! Fourth, mortgage lenders and mortgage brokers who didn't provide full disclosure on the loans they were "selling" to buyers should face criminal prosecution and be sent to prison if found guilty. Fifth, mortgage lenders and brokers who have been found guilty should not be able to open a mortgage company or work in the mortgage lending industry again.

Impact on buyers: Many lenders now require buyers to put 20% down on their purchase. If buyers don't have the money, they can hope to find a seller willing to finance (up to 15%) so buyers can put 5% down. Buyers need to have good credit history and scores also.

Impact on sellers: Hope you have buyers with good credit scores and enough money for 20% down and able to qualify for an 80% mortgage. The backup position is to be willing to provide financing (which has its own risks).

Don't expect this mess to go away anytime soon. It's taken us 20 years or so to get here and it'll take at least two or three years before "things" settle down and maybe start to improve.

Kitsap County Market Statistics for June 30, 2008

Over the past two weeks the absorption rate for Silverdale increased from 25 weeks of inventory to 42 weeks and then back to 25 weeks.

Kitsap County overall the rate increased from 42 weeks up to 74 weeks and then down to 70 weeks.

The market is still very volatile so we'll continue to see this throughout 2008 and then maybe "things" will begin to even out this time next year.