Housing and Recovery Act 2008

Various client's have discussed the housing bill signed into law two weeks ago. Below is a great summary. A few items will have a slight impact on housing. The biggest benefit is for borrowers that are in danger of foreclosing and first time home buyers. The FHA created a program which is a loan write down and shared equity participation with Uncle Sam for 50% of the future appreciation. My first economics teacher Dr.Lamb burned into our brains, that there is no such thing as a free lunch. Various elements of this bill bear that out. The bill is not sexy so I had to throw in a picture of Heidi Klum to liven things up. Enjoy your weekend.-Mr.Mortgage

Key provisions of the Act include:

New agency created to regulate Fannie Mae, Freddie Mac, and the Federal Home Loan Banks: The Act creates a new regulatory agency, called the Federal Housing Finance Agency, to oversee and regulate Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. The agency is charged with the responsibility of monitoring the portfolio holdings of the entities it oversees and ensuring they maintain sufficient capital to operate healthy national housing finance markets.

FHA Program updated: Effective January 1, 2009, the FHA loan limit for conforming loans increases to as much as $625,500 in the most expensive U.S. markets. This affects both home equity conversion mortgages (reverse mortgages) and jumbo loans. Down payment requirements on FHA loans increase from 3 percent to 3.5 percent.

The Hope for Homeowners Program: The Act creates a new Federal Housing Authority (FHA) program designed to help borrowers in danger of losing their homes to foreclosure. Eligible homeowners may be able to pay off their original (foreclosing) lenders with a fixed-rate, 30-year-term mortgage for up to 90 percent of the appraised value of the property. Eligible homeowners are those who originated their loans before January 1, 2008, spend more than 31 percent of their monthly income on their mortgage, and are currently in danger of foreclosure. Borrowers would have to share future equity with the FHA. The program is completely voluntary; banks may elect not to participate. The program begins on October 1, 2008 and ends in September of 2011.

Temporary mortgage foreclosure protection for servicemembers: The Act provides mortgage foreclosure protection for members of the U.S. Armed Services by temporarily increasing (through December 31, 2008) the maximum loan guarantee for VA loans. The period a lender must wait before initiating foreclosure proceedings after a service member returns from service is extended from 90 days to 9 months. Increases in mortgage interest rates above 6 percent are suspended during the period of service and for one year after a service member ends service. This provision will sunset on January 1, 2011.

Temporary tax "credit" for first-time homebuyers: First-time homebuyers of a principal residence purchased after April 8, 2008 and before July 1, 2009 may take a refundable tax credit of 10 percent (up to a maximum of $7,500; $3,750 for married persons filing separate returns) of the purchase price of the property. The credit is phased out for individual taxpayers with adjusted gross incomes (AGIs) ranging from $75,000 to $95,000 ($150,000 to $170,000 if married filing jointly). However, taxpayers must repay the credit taken over 15 years in equal installments as a surcharge on their annual income tax return.

Temporary standard property tax deduction for non-itemizers: For 2008 only, taxpayers who do not itemize their deductions will be allowed to take a real property tax standard deduction (in addition to the standard deduction) of up to $1,000 if married filing jointly ($500 for all other filers).

Reduced homesale exclusion for nonqualified use: For sales and exchanges of a principal residence after December 31, 2008, the $250,000 ($500,000 if married filing jointly) homesale exclusion won't apply to the extent the gain is allocated to periods (not including any period before January 1, 2009) during which the property is not used as the principal residence of the taxpayer or the taxpayer's spouse.

Temporary increase in low-income housing credit: For 2008 and 2009 only, the Act provides a 20 cent increase in the low-income housing credit per-resident cap, and increases the small state minimum by 10 percent. The technical rules relating to the credit have also been simplified.

Expansion of the rehabilitation tax credit: The Act taxpayers to qualify for the full amount of the rehabilitation credit so long as less than 50 percent (up from 35 percent) of the rehabilitated building is leased to state and local governments or other tax-exempt entities.

Repeal of AMT limitations: on tax-exempt housing bonds, low-income housing credit, and rehabilitation tax credit. Generally effective after December 31, 2007, interest on tax-exempt housing bonds are not subject to the alternative minimum tax (AMT), and the low-income housing credit and rehabilitation tax credit can be used to offset AMT liability.

REIT modernization: The Act liberalizes the rules for real estate investment trusts (REITs) by clarifying that they can earn foreign currency income associated with real estate activities, increasing the permissible size of REIT investments in taxable REIT subsidiaries, modifying the REIT safe harbor for dealer sales, and extending the special rules for lodging facilities to health care facilities.

Election to accelerate recognition of historic AMT/R&D credits: The Act allows taxpayers to elect to accelerate the recognition of a portion of their historic AMT or research and development (R&D) credits in lieu of the bonus depreciation tax benefit allowed under the Economic Stimulus Act of 2008. The amount taxpayers can receive is calculated based on the amount invested in property that would otherwise qualify for said bonus depreciation. This amount is capped at the lesser of 6 percent of historic AMT and R&D credits or $30 million.

Huge Impact on 2nd homes and Investment Properties

Conforming mortgage guidelines are the Home Loan Rule Book, delineating between applicants that approved for a mortgage and those that do not.

Effective today, the rule book just got a little bit tougher.

According to Fannie Mae, homeowners converting their primary residence into a second home or investment property will be subject to additional underwriting scrutiny. Fannie Mae is leery of lending to people that may be over-extended.

The complete underwriting update is available at the Fannie Mae Web site but some of the more important points are summarized below, divided into Second Home and Investment Property.

Second Home Guideline Changes

• Without 30 percent equity in the second home, mortgage applicants must have 6 months worth of PITI reserves for both properties in their bank accounts.


• With 30 percent equity, the PITI reserve can be reduced to 2 months.

Previously, there was no minimum reserve requirement.

Investment Property Guideline Changes

• With 30 percent equity in an investment property, 75% of the monthly rental income can be applied toward the applicant's monthly household income.


• Without 30 percent equity, rental income may not be applied to the applicant's monthly household income and 6 months PITI is required for both properties.

Previously, 75% of the rental income was allowable regardless of equity, and minimum reserve requirements were 2 months.

Even though just a small percentage of Americans own second homes or investment properties, the conforming mortgage guideline changes impacts homeowners everywhere.

This is because more restrictive guidlines lead to two separate, but concurrent, outcomes:

1. The demand for homes reduces because fewer buyers qualify for mortgages


2. The supply of homes increases because fewer sellers can refinance into more affordable home loan

Less demand and more supply places downward pressure on home prices.

Now, remember that mortgage guidelines continuously evolve and what's accurate as August 1, 2008, may not be accurate six months down the road. In other words, confirm what you're reading about mortgages online with your loan officer before making any real estate-related decisions.

Looking Back and Looking Ahead

On the wave of a two-day rally, mortgage rates improved last week overall. This despite a Friday reversal that had caused rates to tick higher just before weekend house-hunting began.
And, like so many other weeks this year, last week's mortgage market activity was defined by its quick-moving interest rates. At least one major mortgage lender issued 11 separate rates sheets between -- an average of more than 2 per day. Now, as an active mortgage rate shopper, you can't predict mortgage rate volatility but you can be prepared for it.
Start by knowing which mortgage product is the best fit for your long- and short-term financial goals and then be ready to pounce on a "good rate" because the rates expire as soon as that next rate sheet gets issued.

Another effective way to prepare for shopping is to watch for data that can influence the market's opinion of the U.S. economy. This week, there's a lot of it --starting with Tuesday's Consumer Confidence report. When confidence levels are high, economists expect Americans to spend more, propelling the economy forward towards inflation. Inflation makes mortgage rates rise.

Then, on Thursday, the Employment Cost Index data is released. This will be a closely-watched figure this month because it should show if American workers are pressuring employers for raises in light of higher gas and food prices. If wages are up, it will be considered inflationary because businesses eventually pass that cost back to consumers.

Again, bad for mortgage rates. And lastly, on Friday, the jobs report will be released. American businesses have shed jobs in each of the last 6 months, and June is expected to show the same. The jobs report's influence on mortgage rates is enormous so expect big rate swings Friday, either up or down.

Overall this week, considering the weight of the data, it may be prudent to finish-up rate shopping as soon as possible and get locked in with your lender. As the week progresses and the data's import grows, the markets should get less and less stable.

Jumbo Mortgage rates for July 29, 2008. Loan amounts up to $2,000,000:
3/1 ARM 5.875%
5/1 ARM 6.25%
7/1 ARM 6.50%
10/1 ARM 7.75%
30 Yr Fixed 7.875%

All rates offered to the borrower with 1 point cost. Rate quotes assume an owner occupied purchase transaction with a 25% down payment, 720 credit score, full income qualification and 12 months of verified reserves. Rates are subject to fluctuation. Custom jumbo loan rate quotes and rate lock advice are available by visiting www.thegreatloan.com

MORTGAGE RATE TREND:
Next 7 days: Slightly Lower
Next 30 days: Flat
Next 3 months: Higher

Fannie and Freddie Baked in the Cake

Jumbo Mortgage markets have turned their attention back to the U.S. economy this morning, causing yesterday's rate improvements to unwind a bit.
Rates had fallen Monday after the Federal Reserve and U.S. Treasury's joint announcement in support of Fannie Mae and Freddie Mac. Today, it's the data that is taking center stage.
Most notably, the U.S. Dollar is trading at an all-time low versus the Euro and other currencies.
This is a negative for active home buyers because American homeowners repay their mortgage interest in U.S. dollars. When the dollar loses value, so does the value of those interest payments so mortgage rates end up increasing in order to attract new investors.
Another reason why mortgage rates are higher this morning is that June's Producer Price Index registered much higher than was expected, posting its largest one-month gain since November 2007.
PPI is a lot like the Cost of Living index, except that it measures operating costs for businesses instead. When business costs are increasing, they are often passed onto consumers and this is why rising PPI is thought to be inflationary and inflation -- like a weakening dollar -- pressures mortgage rates to rise.
So, while Monday's rate improvements haven't completely erased, today's action reminds us that mortgage markets wait for no one and yesterday's mortgage rates rarely carry forward.
Especially when inflation is in the mix. Did you buy bread or gas this week? I did. Inflation is alive and killing our purchasing power.

When the Power Goes Out and Other Lessons.

In part of Los Angeles and Orange County we had a power outage that lasted about two hours this afternoon. This isn't Iraq where 40% of the time they have power failures. This is a rare event but it reminded me of the world and people we depend on to go about our daily lives.

Today's home owner or home buyer is experiencing the same level of surprise when they try to get a mortgage loan. Make no mistake about it THIS IS NOT A PROBLEM FOR OTHER PEOPLE. If you are thinking about selling, your buyer has to put 10-20% down now or take a high rate on an FHA loan with a big monthly mortgage insurance payment. It was 0% down two years ago with so-so credit. If you are thinking about refinancing now or some point when you can find the time. Do it now! If you don't have the equity or are 1 point shy on the FICO you are out of luck and stuck with your current loan.

I kid you not, it all matters. The rampant inflation has caused rates to move into the low 6% range on 5 and 7Y ARMs for the most qualified clients with plenty of equity. This is a shock to people that borrowed during the 02-05 period when rates were the lowest level in 50 years. Most of these client's are coming out of 5% rates on adjustables. These adjust against the LIBOR which is now 3.20%. Almost every Prime perfect credit ARM is 2.50% plus the LIBOR index. If you were adjusting today your rate would be 5.70%, not bad but look at this chart and do the math:

Rates move back to the 2006 or 2007 levels and you are at 7-8%+. In order to stop inflation central banks(i.e. the FED) raise rates. Don't be shocked to see HELOCs at 8% in two years and LIBOR at 6%. Why should a person put money in a CD at 3% when inflation is really 5-7%. Do you buy gas or food? Enough said. Rates will go higher to compensate.

Welcome to the new reality of a weak dollar, high inflation, and falling home values. No area in the country is immune to these forces. These winds have a dramatic impact on the loans available even to the most stellar money good borrowers. The new standard for jumbo loans is to have 20% equity minimum. This is for loans that are above the new Fannie Mae "conforming jumbo" limits which differ by area. In most high cost markets it is 729k. Do you have the equity to refinance? Are you close to not having 20% equity in your home? If not you can't refinance unless you bring a check to the table if you are in the jumbo loan market. Otherwise you can have 5-10% equity but now you have to carry mortgage insurance which can run a few hundred hard earned dollars a month.

If you want to check your home value go to realtor.com or redfin.com. Search for a home just like yours. Find similar homes and then find the lowest priced comparable. That is the market. Banks are looking at the lowest comparable home now because it is a falling market. This is called deflation. Home values are deflating like a balloon with a hole in it.

We have seen dozens of client's this month that can't refinance because they don't have the required equity. Their next move is usually to put their home on the market or sit tight and pray to the interest rate gods that their mortgage payment doesn't adjust too high. Don't gamble with your most valuable financial asset and largest liability. Pay attention to your risks and work to get the best possible loan for your situation. If you don't work with our firm, please work with someone competent. Take care and have a great weekend. The American Dream isn't dead we are just having a nightmare scenario. It will pass.

Not out of the Woods.

UCLA’s Anderson school of business reported that they see the first flicker light at the end of the housing collapse in California, citing year-over-year transaction increases in areas like Riverside (one of the hardest hit by the bubble). To me this just smacks of analysts wanting to be the first to call bottom without consideration to the underlying fundamentals of the California market.
The two most important of which are the fact that a majority of the loans in the more expensive markets were made with a combination of stated (a/k/a fake) income and exotic loan products like option arms and interest only loans that have yet to recast or adjust. How can anyone call for a bottom and say that foreclosures will ease in 2009 with a clear wave of resets looming on the horizon for 2009-2012 that are actually more severe in nature than ARM resets? That’s irresponsible.
An option ARM reset can increase the monthly payment requirement of a borrower 4-5 fold. With no equity to refinance these homes are going to go cascading in to foreclosure further hurting the market. Any one that does not take this eventuality as a serious threat to the market is just plain ignorant. It’s going to be messy.
See the graph and you tell me if we’re out of the woods yet. As an anecdotal story I had a specuvestor call my office seeking a 5% down NEGAM for a 1.4 million dollar home in Westwood that he thought was a bargain because it was reduced from 1.7 million.

It won't be done until 2012. All the 10's of billions of pick-a-pay time bomb loans haven't reset to fully amortizing yet. As a sign that it was a poisonous product WAMU(the 2nd biggest lender in this area) announced yesterday that they will no longer offer this product. Maybe the smart money crowd knows something the specuvestors don't about real estate and the $34B worth of NEGAMs WAMU has on the books. I will let these charts speak for themselves:

Buy vs Rent:Long Time Renter Takes The Plunge

From a recent client discussion:

"The case for renting has been simple enough. House prices rose so high in the first half of this decade that you could often get more for your money by renting. You could also avoid having a large part of your net worth tied up in a speculative bubble. All this time, I have been a renter myself, ... [but] the housing market has, obviously, changed quite a bit since our last move, in 2005....This month, we found a house that we really liked, and we made an offer. It was accepted.I’m still not sure how good our timing was. Based on the backlog of houses on the market, I fully expect that our new house will be worth less in six months than it is today. ...In fact, if you’re now renting - almost anywhere - and do not need to move, I’d probably recommend that you wait to buy. The market is still coming your way. But it’s O.K. with me if our timing wasn’t perfect.
Leonhardt isn't buying for appreciation, and he realizes the price will probably still decline further. He is buying because prices have fallen enough that the intangibles of homeownership (as he and his wife value them) outweigh the extra costs of owning a home compared to renting."

Chaos in Luxury Finance. The Other Shoe Has Dropped.

This week we witnessed a dramatic change within the jumbo mortgage and luxury financing space that has broad implications for housing markets across the country. It appears to have started with Wells Fargo on Monday and spread within a day to all investors whether bank, insurance, pension or hedge fund money sources. Remember we had earnings from all banks and insurance companies in the last two weeks. This allowed all market participants to peek under the hood and see that the credit engine is leaking oil.

The market above 1m had become restrictive in the last few months moving to a fully documented income, 720 minimum FICO playing field for most loan scenarios. Lending to the wealthy seemed stable. Then this weeks major crack in the 2m+ market which we specialize in, we knew another shoe had dropped in the credit meltdown. Granted 1-20m property finance is a niche within the 10 trillion dollar mortgage industry. But, the changes forecast major declines in luxury markets as this further decreases the available pool of buyers and will pressure prices.

Program loan to value limits were cut between 5-10% at most investors. We received dozens of calls from brokers, realtors, and loan officers across the country desperatly searching for 20-25% down financing for their purchases that now require 30-35% down or millions in reserves which most clients don't have. Programs are available to put 20% down on property up to 6m but they require 1-3m plus in liquid assets beyond the down payment. It will take a few weeks for this meltdown to be seen in asking prices as housing markets move VERY slowly. Not like your gas station that changes prices every afternoon right before you pull up to fill the tank on the weekend.
As proof of the credit market distress I would like you to consider the 1Y USD LIBOR chart below. This is May 1st 2007 to May 1st 2008. With hundreds of billions that the European Central Bank and FED Central Bank action in March we had a great move down in LIBOR as they flooded the market with cash in exchange for illiquid securities from banks. Now we have spiked up again and the market is saying that their is huge demand for money and supply is constrained. Lenders are afraid to lend so they are increasing the price. So econ 101 dictates prices must rise hence we have moved up about .75% in the last 30 days. Every borrowing cost is rising yet the FED just cut rates on Wednesday and the market is not responding. Remember the FED rate cuts only matters to banks who can borrow at the window or for your HELOC which is based on prime. The majority of corporate borrowing and 80-90% of adjustable rate mortgages are based on LIBOR. The LIBOR movement has a direct impact on what rate someone gets today and if someone is adjusting now they will move up or down based on LIBOR every 6 months per their jumbo loan contract.

Well another happy piece of news for folks on the sidelines waiting to buy. Enjoy your weekend and someday this meltdown will be over. Just not for several years. It took time to create the largest asset bubble in history and it will take time to deflate back to the fundamentals.


Extra reading for you credit crunch junkies:

The Fed is apparently still worried about the LIBOR, from the WSJ: Central Banks Ponder Dollar-Debt Rate
Central banks on both sides of the Atlantic are debating causes of the surge in interest rates on commercial banks' dollar-borrowing in money markets and considering what they can do about it.A major source of stress has been the London interbank offered rate, or Libor, a benchmark for the rates banks pay on dollar loans in the offshore market. It remains unusually high compared with expected Federal Reserve interest rates...

Why is your jumbo mortgage more expensive now?

If you wonder why jumbo mortgage rates for all borrowers have increased in recent months at major banks it's because we are in a real deal Holyfield CREDIT CRUNCH. No fooling around, every major financial institution around the world has had to go cap in hand to shareholders or international wealth funds for money. All the money that went into bad loans needs to be replenished and the cost of capital is going up for everyone. Classic supply and demand. As a mortgage banker we saw this meltdown coming years ago and created relationships with insurance companies, pension funds and small banks in order to provide jumbo mortgage financing outside the Wall St blood bath. After you call your bank give us a call you will be impressed if you have solid credit, income and have equity in your property.
from Marketwatch
Citi originally said Tuesday that it would raise $3 billion in a stock offering, but increased that amount by $1.5 billion after demand for the new shares exceeded its original offer. The banking giant said the offering priced at $25.27 per share, with the transaction totaling more than 178 million shares.
Citi shares fell 3.5% in pre-market trading Wednesday.
Citi said that the offering of new common stock, combined with the $6 billion it raised earlier this year selling preferred shares, would have left the company with a Tier 1 capital ratio of 8.6% at the end of March.
"We were pleased to increase the offering size to $4.5 billion in response to strong demand from a broad base of investors," Citi Chief Financial Officer Gary Crittenden said in a statement. "This optimizes our capital structure and further strengthens our balance sheet."

Citi has lost billions of dollars as the global credit crunch hammered the value of risky mortgage-related securities and leveraged loans held by the company. It tapped former hedge-fund manager Vikram Pandit to replace Charles Prince as chief executive last year and is selling some assets and businesses to cut leverage.
Citi also got a $7.5 billion investment from Abu Dhabi in November and said in January that it was raising $14.5 billion more from Singapore, Kuwait and other governments.
Analysts reacted coolly to the newest push to raise capital, saying Wednesday before the announcement of the increased offering, that they remain concerned that Citigroup did not go far enough with its $3 billion target.
"The fact that the company raised such a small amount of capital at this time confounds us," Oppenheimer analyst Meredith Whitney wrote in a research note Wednesday. "By our estimates, we believe Citi needs to raise an additional $10-$15 billion or sell several hundreds of billions worth of assets in order to truly shore up its capital position."
She cited "seriously constrained" earnings power and pressure on four of Citi's 10 core businesses as continuing problems for the bank.
Analysts said Citi may have come under the watchful eye of ratings agencies that are worried it does not have sufficient capital to weather future market disruptions. This means the banking giant will need to increase its reserves significantly over the next few months.
"It is our belief that one or more of the rating agencies did not feel comfortable with the firm's current capital mix and that is why the company offered the $3 billion in common stock," said William Tanona, an analyst for Goldman Sachs, in a note to investors.
"If our assumption is correct, it suggests that additional capital raises will likely also be in the form of common equity, which is most dilutive to shareholders [and] conversely, we view this as a positive for debt holders," Tanona said.
Concern remains on Wall Street that the company may still have large exposure to mortgage-related securities and other vulnerable assets.
Citi reported a $5.1 billion net loss earlier in April as it wrote down the value of soured mortgage investments and other credit-related positions by roughly $12 billion.

Real Estate Supply and Demand in 8 mins.

This is an outstanding video in that it provides a basic overview of what is going on from a consumer demand perspective, it is 8 minutes long, and worth a viewing.
http://www.youtube.com/watch?v=Cus4opgTJb0

Mortgage Rates are Low But Millions Won't Qualify

The topic is a little stale and monotonous. But if you have any interest in mortgage rates or your ability to get a great mortgage loan in this credit crunch keep reading. Otherwise return to your regularly scheduled net surfing. You keep hearing (and watching) me say that mortgage rates are down, but that not everyone is eligible for the lower rates. This chart should help clarify:

To read it, just find the intersection of your credit score and loan-to-value. The number in the box is the mandatory mortgage fee that mortgage financier Fannie Mae tacks on to your closing costs.
The fee is calculated as:
(Mandatory Fee) = (Loan Size) * (Mortgage Pricing Adjustment) / 100
These added costs are making conforming remortgages cost-prohibitive for a lot of Americans.
The risk-based fees are officially called "Loan-Level Pricing Adjustments" although the abbreviated form of "LLPA" is used just as often. I tend to call them "risk-based fees" because it's easier to understand.
The fees shown above, by the way, are in addition to the universal fee of 0.25 on all home loans, regardless of credit score or LTV. That particular charge is called the "Adverse Market Delivery Charge" and went into effect in December 2007.
But the costs don't stop there. There are other more risk-based price changes for homeowners to know about. For example:
All 2-unit properties carry 0.500 in mandatory fees
All 3-4 unit properties carry 1.000 in mandatory fees
"Cash out" remortgages at all LTVs can add up to 0.500 in fees
The good news is the mandatory mortgage fees don't have to be paid at closing. Most mortgage lenders will trade 1.000 in fees for a quarter-percent increase in mortgage rate. This means that if your mortgage rate is 6.000% and your costs are 1.000, you can accept a 6.250% rate and skip the loan-level pricing adjustment in its entirety.
Wrapping the fees into the mortgage rate makes the monthly mortgage payment higher, but preserves a homeowner's liquidity and cash position.
Expect more risk-based fees throughout this year, especially for LTVs above 80 percent, and for specific property-types such as condos and multi-families. If you watch this show, you'll see the bigger picture and how we got to this place.
The piling-on of risk-based fees makes now a good time to consider buying or remortgaging a home. Changes to pricing are made without advance notice and we all get taken by surprise. Always to our detriment.
Mortgage rates may fall with the economy this year, but it won't matter if the cost of financing keeps increasing. If you're going to want a new conforming or jumbo loan later this year, talk to a mortgage banker today and get a plan started.

One's misfortune is your gain.

This magazine arrived in the mailbox today and sums up my view of the various opportunities within markets that the upheaval and perfect storm present. Make no mistake about it this is the greatest financial crisis since the Great Depression. The wave of bank failures has just started. The FDIC just added about 150 new staff members that are experienced in dealing with insolvent banks. Terrible news is everywhere, but the best deals are always to be had when everyone is running around losing their mind.

Deals abound:

Goldman Sachs Sold $500m worth of Chrysler Debt at 0.63 on the dollar. Remember the US government bailed out Chrysler in the 80's and made billions on the loan. Maybe this hedge fund will do the same on this loan. Time will tell.

A home builder sold improved land for 15 cents on the dollar (of builder's total costs).

Client's are buying foreclosed homes at 60% of what they sold for in 06 and in some markets 05.

These deals are done quickly. Just like the good old half-yearly at Nordstrom or the blue light special at K-Mart. You have to know the sky isn't falling, have the cash or financing in place and pull the trigger. These deals won't last.

I hear news from realtors across the country of multiple offers on homes in great areas that are priced right. Remember their is no such thing as a national market for housing. In Santa Monica, CA for example you can have a 2m home and six blocks over you have 500k fixers. Real estate is local and often block by block. The smart money is looking at this as the best of times. Sure prices in all markets can go lower but how many people have bought the bottom of any market? It is better to be a little early to the show than to be late and have missed it all together. Welcome to the FIRE SALE SHOW. Where cash is king.