March 21, 2009: Commentary and updates

• Federal Reserve announces a Bond Buying Binge!
• Interest rates decline from FED action
• Mortgage rates at 4% level
• Housing Starts Surge 22%
• Multi-Billion Dollar Mergers a way to get money home
• Tax Credits for home purchase and home construction
• Home & Design: Staging on a Budget

FED ANNOUNCESNEW POLICY:
It is called Quantitative Easing, for the record and for those in finance and economic theory. The pro’s and those in the know thought it would not happen, but Professor Bernanke surprised them all. From all I have read Bernanke had studied this strategy long before anyone had any clue it would ever be used.

Before I explain the process and how it could benefit us all, let me start with a lesser known fact. The FED, Federal Reserve System, is the ONLY department of the U. S. Government that positively contributes to the income of the United States. It should it is a legal insider trading department. Just think it over, the FED creates which way interest rates will go, they can buy or sell in the market bonds, inject cash buy gold and virtually anything the FED deems necessary to manage our economy. If they bought bonds before the announcement the FED already has a profit as those bonds are worth more because interest rates declined!

The bond buying binge will put $300 billion in a purchase program of long-term treasury bonds. The FED will also buy mortgage backed securities. All told the FED will buy $1.15 Trillion into the economy in the next 6 months to jump start the HOUSING INDUSTRY and REAL ESTATE.

When I started my career as a floor trader I was told one CARDINAL RULE: DO NOT FIGHT THE FED! If there is any sign you will see our real estate market pick up this is it!

HOUSING STARTS SURGE

Boosted by an 82% increase in construction of apartment buildings housing starts in the U.S. surged 22%.

MORTGAGE RATE BELOW 5%!

(COMPLIMENTS OF MIKE COLYER OF COUNTRYWIDE)

High Conforming Loan Limit at 80%
REFINANCE - 30 year fxd = 4.625 with 1 point
PURHCASE - 30 year fxd = 4.375 with 1 point

417K and under
REFINANCE/PURCHASE - 30 year fxd = 4.375 with 1 point

JUMBO TO 1.5MM to 80%!!!! 3MM to 70%
REFINANCE/PURHCASE - 30 year fxd = 5.75 with 1 point
REFINANCE/PURHCASE - 5fxd Int Only = 5.25 with 1 point

Mike Colyer
Sales Manager
Countrywide Bank, FSB
650-257-7777 Office
650-288-8170 Cell
866-511-9024 Fax 40 Hawthorne Ave
Mail Stop: BR 737
Los Altos, CA 94022
http://www.TheBayAreaLender.com
Mike_Colyer@countrywide.com
ARE PLATFORM COMPANIES BRINGING THEIR OFFSHORE CASH HORDE HOME?

On February 12, 2009 I wrote you about Platform Companies. To review the company definition, A Platform Company has a fractionalized production process, keeping knowledge intensive activities like design and distribution in-house, while outsourcing low-value added physical production. They develop new product, new markets, and new products for new markets. They aggressively invest in foreign countries, they are growth companies like our Silicon Valley Companies, and they are Drug Companies. The amount of potential repatriated $US is estimated at $545 Billion.
1. Roche is buy Genentech for $6 Billion
2. Merck is paying $41.1 Billion for Schering-Plough
3. Pfizer purchase of Wyeth of $68 Billion.
Why is that important? Tax write offs of R&D and Goodwill and merger expenses will allow the potential re-patriot of billions of $US held over seas without a tax potential. Billion of $US here mean more for the U.S. Economy.

Economic growth comes from money. If any of you are history buffs, like me, you will know the Dark Ages did not disappear until Gold was taken from the Aztecs, Incas of the newly discovered America’s and used by the King of Spain and the Pirates of England to jump start the stagnant European Economy. Locally 2001 DOT.COM fueled our real estate and economy just as the low interest rates after the DOT.COM bust fueled the real estate industry further.

TAX CREDITS & INCENTIVES GALLORE!

• $8000 Federal Income Tax Credit for first-time home buyers with $10,000 State of California tax credit for buying a new home.
• FHA loans in the 4% range for up to $729,750
• Purchase price mortgages up 7.1% in February
• Energy efficiency upgrades for windows, insulation are eligible for a tax credit of 30% of qualifying costs
• Renewable Energy Systems as solar, wind, and geothermal may qualify for 30% tax credit
• Heating stoves that use renewable biomass fuel: such as, wood pellets, plants, now qualify for a tax credit.

HOME & DESIGN

Deciding on listing your home? Here are some budget ideas that can help you on the CHEAP!

Expand the Closet: One of the most overlooked areas of staging is the closet. Declutter stops at “out of sight out of mind”. It should take into effect the closet. If it looks stuffed, remove it. The ideal closet should have two hanger spaces between the next hanger.

B.Y.O.B. (BRING YOUR OWN BED) I love this one; arrange some moving boxes into the shape of a bed. Dress it up with some nice bedding and pillows. It takes about a half hour, great idea right?

PUT A LID ON IT: The best thing you can do to eliminate odors and bugs is to close all your drains, sinks and tubs; close all the lids on toilets close all the closet doors. Now, let all the sun in! You will get immediate results for zero dollars

GO GREEN: If your home has green features like EnergyStar Appliances, generator, double paned windows, bamboo flooring, make certain you list them in your MLS listing and advertising. Continue the theme with strategically placed soy candles, homemade guest soaps, and green cleaning products under the sink. Believe me this will put your home up a notch to current day buyers.

CREATE A FOCAL POINT: Pick out a visible corner and put in a large plant, live or silk will do just fine. Set up a spot light behind so it lights up the leaves and throws a shadow on the wall. It is a space perception, especially for a large room without too much natural lighting.

SET UP A CHAT ROOM: Whether it is a living room, family room, breakfast nook or den; set up an area that furniture does not have to be moved around so a conversation can proceed. Place fresh flowers and bring in a sense of caring and pride of ownership.

ADD BATHROOM ELEGANCE: Get some decorative hand towels, tie a sheer ribbon around them, and place them on towel racks in all the bathrooms. Use dried flowers and candles to complement colors and add a little SPITZ!

NIX THE PERSONAL PHOTOS

BRIGHTEN IT UP: Get the energy efficient light bulbs in with higher watts. Keep those drapes and shades open and up!
FRAME A LOCAL SCENE: Take those family pictures out and replace the family photo with local photos. Use some you have or from local calendars. The web is great for giving you great pictures of the bay and the ocean and the area around us.

REDO THE PET AREA: My wife has a trick of using a bowl or container of coffee beans to take away the odor of the pet area. She also uses them in closets. New food bowls are a must clean litter boxes and beds and put them in an area such as the laundry room or utility room.

ENTICE THEM AT THE ENTRANCE: Tighten the loose doors and cabinets, re-stain and paint or varnish the doors. Paint the trim on the floors and the ceilings. Paint outside trim, nicks on the house especially where the buyer comes in the house.

More next week on staging on the cheap, 6 Landscaping Tricks that WOW Buyers!