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In some markets prices are still dropping. Along the CT Shoreline and Lower CT River Valley prices have stabilized. I just read an article in the Commercial Record stating that CT is among the best for states for home appreciation (Read it here: http://www.commercialrecord.com/news140979.html)

Ok…so let's say you're not buying the fact prices are at the bottom and you think home values may still go down a bit. Is it still a good time to buy? YES, YES, YES, YES, YES!!!

 

Here's a great example why now is the time to buy your home;

You find a home to buy at $225,000 and put $25K down which has you seeking a $200,000 mortgage. Now let's say the market drops another 5% but let's just say that's the case. So let's get to some math. 

The interest rate you'll get right now is 4.25% so your numbers look like this: $200k @ 4.25% = $984 per month over 30 years at a fixed rate. However, you wait until next year and that house dropped 5% and you put the same $25K down so your new loan amount is $188,750. That's great right? If you were a cash buyer our conversation ends here. However you're not and if mortgage rates go up to 5.25% (not high by historical standards) your payment would be $1,132 per month. So buying now in the market you know right now with the interest rates we have right now would save you a handsome $148 per month putting you ahead by a grand $53,280 over the life of the loan. Back out the 5% price drop and you're ahead $42,030. It's really a temporary drop in price. I say temporary because all markets correct and if you stay in your home for 5 or 10 years this little correction won't mean much.  One thing we have been assured of is that interest rates have to and eventually will be going up as our economy improves.

I am writing this blog also because it's on the heals of a recent experience. I had a first time home buying couple in my office the other day contemplating making an offer on their first house. They got so stuck on wanting the house for about $10,000 less than I knew the seller would accept. Here's why being stubborn and wanting simply to win in one's mind may cost you dearly.  In this case I tried to point out the payment they were shooting for at their desired purchase price was $1,033. If they gave the seller what they wanted, their payment would be $1,082, just $49 more which for some is not even their Starbucks and fast food bill for the month. By waiting a few months risking an interest rate rise say to 5.25% their payment for the same house at their desired price their payment would be $1,160 or $127/month more. So winning for this couple would be losing. As one's REALTOR we're trusted advisors and it's our job to give you the facts. The decision is yours of course. In this case waiting or bogging down over this price difference doesn't make sense….at least to me. 

DID I SCREW UP BY MISSING THE TAX CREDIT? 

No, no, no!!. When the tax credit expired the interest rate was around 6.0%. So using the two examples above you can clearly see that you're actually better off now. In spite of all the glum news homes are still selling. They do in every economy. The River to Shore Group at Page Taft Real Living, exclusive affiliate of Christie's Great Estates, is getting the job done no doubt. 

If you're a buyer you can create an automatic search for homes in any area that meets your specific criteria. When new homes come to market they'll show up in your email inbox and relieve you of manual searches. It's free, confidential, and you won't need to speak to an agent…visit: CTHomesByEmail.com

If you're contemplating selling visit this site to get your homes value without talking to an age. All for free: ValueMyCTHome.com

If you want confidential info on how to avoid foreclosure or to get information on short sales visit: CTShortSaleInfo.com

Want great interest rates from a mortgage company that's honest with great service? We can connect you with the person who'll match your loan to your needs. In fact we can connect you with the right attorneys, inspectors, movers, contractors, and more. All for free and with our compliments which is quite helpful to our relocation customers for sure. 

 

The Kramer Capital Management Newsletter

by Mick Marsden

I really look forward to each of Andy Kramer's insightful newsletters and analysis of the stock market. Here's October's outpouring from a brilliant mind. He and assistant Shu Wu have served me diligently for years and the trust and confidence continues. Here's this month's newsletters posted with permission:

Dear Investors:

 

In the third quarter of 2010 the S&P 500 closed up 11% on the heels of a blistering 9% September rally.  KCM accounts continue to modestly outperform, primarily due to our overweight gold mining companies, as gold continued to appreciate, up 20% YTD.  The 4% YTD return on the S&P does not reflect the bizarre, herky-jerky action.  In 2010 there have been no fewer than 4 swings of greater than 7% in both directions (Appendix A).  In early July the markets looked ready to embark on a new bear trend only to hold the previous support level around 1000.  The subsequent 12% rally had all the characteristics of a short covering rally: when those most negative on the markets cover their bearish bets because important technical support levels hold.  The market then rolled back over, weighed down once again by the inevitable reality of the harshness of our current deflationary debit debacle.  The market bottomed again at the aforementioned support level in late August (after another 8% sell-off) where the current 11% up move commenced.  The current rally, like the previous one, is a “reflationary” trade: a “risk on” mindset.  The current meme, QE2, widely anticipates further Federal Reserve easing and monetary stimulus.  Unfortunately, we believe this new attempt by the central bankers will inevitably fail.  It remains our contention that while brief periods of calm and optimism are possible, there is no magic elixir for what ails our economy.  We continue to anticipate difficult and volatile markets for years to come.

 

While Appendix A highlights the large swings that have characterized the market in 2010, Appendix B shows a longer-term picture that reflects the trading band that has transpired for over a year.  Apart from a brief attempt in April to break out to the upside, which was quickly and emphatically rejected, the market has meandered in a well defined trading range.  The difficult trading environment reflects the opaqueness of future outcomes.  There are many more questions than answers.  For the remainder of the letter we highlight three areas that are critical to understanding potential outcomes.

 

Perhaps the largest and most important unknown is the future direction of interest rates.  The Federal Reserve continues to firmly state that low short term rates will be with us for the foreseeable future.  There is little doubt that they have the necessary tools to insure this outcome.  Perhaps we are alone in our skepticism, to paraphrase the great American novelist John Steinbeck, “the best laid plans often go awry.” 

 

The latest US Treasury data list approximately $2.4 trillion in federal publicly-held debt maturing within one year.  This is approximately three times greater than any previous yearly maturity. Will the market be able to absorb this gargantuan supply (not to mention the trillions of debt financial institutions will need to refinance as well as the borrowing needs of state and municipal governments) and keep short term interest rates at generational lows?  Chairman Bernanke assures us he can.  If he is right—and we are not sure he is—it would mean another large round of money printing (quantitative easing is the new Orwellian term for this) which will result in new lows for the dollar and highs for gold.  One reason we suspect that keeping rates low is not a high-probability outcome is the enormous faith bond investors have placed in this outcome.  Fund flows in 2009 and 2010 have seen large moves out of equities into bonds.  The size of the crowd (enormous bond inflows) strongly argues for caution.  Simply put, if all these investors are right at this extreme, it would be the first time ever that such large flows in one direction correctly forecasted future prices.

 

Another area where large unknowns exist, along with a uniformity of belief, is China. Chinese economic growth continues to be an important theme in most investment managers thinking.  Strength in emerging markets and commodities is generally attributed to the voracious appetite of this new economic giant.  At KCM we are very familiar with this theme and have used it ourselves to justify our long-term belief in commodity investing.  We are much less sanguine today.  The Chinese growth story is certainly a major economic force that will continue for many years; however, recent data and commentary from experts in the field show some potential cracks in this view.  Growing income disparity has led to social unrest and large wage concessions in some industries.  In addition to wage inflation, real estate prices have appreciated rapidly; this also concerns authorities.  Environmental problems caused by breakneck industrialization combined with reports of excess capacity in certain industries indicate the potential for a concerted effort by Chinese authorities to slow down economic growth.  The potential for Chinese authorities to put the brakes on their torrid growth trajectory could have large consequences for global growth.  We also note that within the equity sector, emerging markets is the only sector enjoying inflows.

 

Finally there is the issue of the huge fiscal crisis in many of our states and how these deficits will impact future employment and federal spending projections.  There are a number of negative economic consequences that seem probable.  Perhaps the most consequential of these will be the negative drag on employment that strained state budgets will cause.  Since the onset of the financial crisis in 2007, private payrolls have declined dramatically but some of this retrenchment was mitigated by state and city governmental hiring.  This trend is over.  As states’ revenues continue to decline, state and local employment will suffer.  In a Wall St. Journal op-ed, Meredith Whitney estimated “that austerity measures will cost between one million to two million jobs for state and local government workers over the next 12 months.”  It is important to understand that talk of additional stimulus is illusory.  Any new stimulus approved by the Federal government, albeit an unlikely possibility at this juncture, will be needed not to stimulate per se but to maintain current programs and spending.  

 

Our list of concerns and questions is much longer then the three we discuss here.  Perhaps the hardest thing for us to understand is why there is not more outrage, social acrimony, and hostility against the current entrenched power structure.  Perhaps we are again just early in understanding what the probable outcomes will be.  We note with foreboding the debacle that is unfolding in residential housing.  First there were the homeowners who legitimately couldn’t afford their homes and stopped paying mortgages.  Next came the “strategic default” when the homeowner, acting rationally, realized there is no economic value in making their payments if their house price was under water.  We now see large financial institutions announcing foreclosure moratoriums.  Why should anyone pay their mortgage?  Perhaps this is civil disobedience in the 21st century?

 

Obviously this letter, like many of our previous ones, continues to rationalize our long-term bullishness on gold. We are no longer the lone wolf singing gold’s praises, however, and while we have no expectation that we are close to a long term top we do worry that the current ubiquity of bullish opinion argues for a correction.  We are watching closely and might try to hedge some of our exposure to help mitigate some volatility in the days ahead.  In other news, we are now fully ensconced in our new home at Northeast Securities.  Our new partners continue to impress us with their level of professionalism and friendliness.  It is with a heavy heart that we close this letter with the news of Shu’s father’s passing.  It was as sudden as it was tragic.  Our extended KCM family has been a tremendous support for Shu during this terrible time and we thank all of you for your kindness.

 

Andy Kramer

Portfolio Manager

The Mortgage Bankers Association Hypocrisy

by Mick Marsden

 

This blog is on what irks me most about the media these days. They don't really cover things that expose the hypocrisy and abuse from thieving CEO's and politicians alike. It seems like the last bastion of radical thinkers and those shining a light of the truth is left to folks like Jon Stewart. A few weeks back there was minimal news coverage on homeowners doing strategic defaults on their mortgages. A strategic default is where some one who can actually pay their mortgage payment defaults because it makes no short or long term sense to keep paying for an asset that is worth so much less than the balance they're paying down. Businesses do it all the time. Many businesses don't hesitate to simply not pay a vendor or keep to an agreement that no longer works for them. They selectively screw a few people they promised to pay to fatten their bottom line and to turn towards more profitable situations…even thought they could have been honorable kept to their word. 

I was blown away by the true and humorous spot that exposed the Mortgage Banker's Association's hypocrisy. After thinking about it, I wasn't surprised. It's the status quo of the power wielding CEOs and politicians doing the old do what I say not as I do deal. So here's the story:

Hypocrite John Courson talking out one side of his face...

The Mortgage Bankers Association bought  a building for their headquarters 3 years ago for $79 million dollars with just 5% as a down payment. A real sub-prime dream deal that no doubt was packaged up with the rest of the crap they sold to investors, retirement accounts, and even other countries. The very sliced and diced crap they shorted because they knew it was going to fail. The Mortgage Bankers Association most likely could have continued to pay their payments but decided to default on their loan and walked away from it’s headquarters in Washington DC because it was so underwater.  This does have a familiar ring to it, no?

Many homeowners over the past few years have been dealing with the very issue with their slice of American pie, their humble abode, their home. For most homeowners there's significant anguish, guilt, and shame. There's also a fair amount of fear. They may ask themselves questions like: Where can we go?  What can we rent? Will anyone rent to us after with my credit is trashed from this default? Will I ever be able to buy another home? All legitimate concerns for sure. 

However, CEO, John Courson of the Mortgage Bankers Association added to the emotional burden for these homeowners in an interview about people deliberately walking away from their mortgages. He said that it was a “moral imperative” that homeowners need to continue to make their payments. (Mostl likely a position driven by his need to be overpaid for his services). This is an amazing statement coming from this pedantic, narcissistic hypocrite that strategically defaulted on his MBA headquarters loan that screwed the investors who bought their mortgage of $75m!  

So where did the MBA go? They rented just a few blocks away and they no longer have the nastily underwater property on their balance sheet. 

Am I advocating Strategic Defaults?  You bet because it's done by the very corporations who are buying elections and dismantling our middle class. I can't stand on ceremony and state that I don't advocate them when the CEO of the MBA has done it on a huge scale and represents the very industry that's party at fault for where our housing market is.  

My main message here is that if you are having trouble making mortgage payments, then a short sale may be your path to getting out with the least damage. You need a real hardship here. Get help sooner than later in this case. Visit: http://CTShortSaleInfo.com and https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.html. 

If you can afford your payments and are considering a strategic default consult with your accountant and lawyer and weigh out your options carefully. Create a plan that will be solid for the future instead of sitting and waiting for things to happen. 

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Foreclosure Crisis
www.thedailyshow.com
Daily Show Full Episodes Political Humor Rally to Restore Sanity

 

Want to laugh and get the sad truth that the real media wouldn't report? Watch the Daily Show's report about the Mortgage Bankers Association Strategic Default. It’s about 5 minutes and worth it.

If your a member of the Mortgage Bankers Association and don't like this blog. Too bad. The truth hurts. If you're not then you'll probably agree with me 100%.

Who pays the commission on a short sale?

by Mick Marsden

One of my clients got behind in payments with an underwater mortgage and didn't want a foreclosure on his record. Although a short sale is not quite as damaging to one's credit as a foreclosure, it's still a significant hit. 

 

He attempted to try to short sale the house himself to avoid paying a commission. The bank told him to go get represented. Why? For one because they want a professional handling the negotiation and second, the bank pays the commission and not the seller who is obviously in arrears.

 

If you're underwater and behind in payments or it looks like that's where you're going you should consult with experts immediately. If there are two mortgages on the property this further complicates the process and extends the amount of time it takes to get everyone on board, but we have been successful in getting the sale closed more times than not.

 

Although banks do not have to follow the new government guidelines, HAFA (Home Affordable Foreclosure Alternatives Program) offers some incentives line $3000 in borrower relocation funds, $1,500 to servicers to cover costs, and up to $2,000 for for investors to allow proceeds to be distributed to subordinate lien holders.  The official Fannie Mae site that has this info and more is below:

 

https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.html

 

The most important step in deciding if selling short is what is best for you is to become as educated as possible. The HAFA site above is a great place to start.

 

If you're a homeowner looking for a confidential consultation or further information without speaking to anyone then visit:

 

CTShoreSaleInfo.com

 

 

Get all the information you can so you can decide on what's right for you. 

Looking for a farm and farmer partner

by Mick Marsden

 

It's been a while since I had the time and health to write a blog. I love writing blogs so I'm glad the Lyme disease my other maladies are behind me. I did get well enough to travel abroad for a couple of weeks in Toscana. It is here where the lifestyle is a bit slower and the norm is to prepare and eat foods that are in season and local. The food was wonderful whether we dined in restaurants in Toscano, Pisa, or Marche. It was fantastic. 

 

Ristorante Cateni is a family restaurant in Orgia, Tuscany, Italy that is the epitome of simple and wonderfully flavorful dishes made from local ingredients. 

 

It is this commitment to eating local and fresh that separates their restaurants from many of ours. It's also why one can't really duplicate Tuscan food in the US. It's about the ingredients. While you can't duplicate Tuscany here, you can eat as well as you can with off the hook taste and over the moon quality. Just buy local meats, produce, breads, eggs, and the like from local producers. You can certainly make getting local goodness easy by going to CT Farm Fresh Express (ctffestore.com) and order your food from over 35 farms and have it conveniently delivered to your door all year round. Which brings me to what I really want to put out there. 

 

A wonderful farm I sold last year in No. Windham that will soon be a pick your own berry farm. They should produce blueberries in quantity for the first time

 

An opportunity for the right farmer


I have a gentleman who is seeking a farm. But not just a farm. A farm with a farmer. So I'm more than just buying a working farm from some moving on or land to start one, I am not  looking for just the physical part of a farming operation but a person who fits with my investor's sensibilities, goals, desire to have a sustainable farming operation, with some but little hands on himself. This farm can be located anywhere in Connecticut. 

 

Here are some scenarios that would work. Call me if:

 

1. You have an existing farm and want a cash influx, stay on the farm and work it. It must be large enough to allow a residence to be built for the gentleman to live in during the times he wishes to be onsite. The farm must be at least 100 acres to be considered of have the ability to be expanded to this size. 

 

2. You're a farmer or one with the skills to be one and you always wanted to have a farm but no funds to buy one. You'd be considered when we locate the physical farm. 

 

3. You'd like to sell your existing farm, preferably currently working, or the 100 acres we're looking for to create one. 

 

4. You currently own and operate a farm and don't have the funds to expand it to 100 acres and are ok with the aforementioned conditions. 

 

5. I'm open to creative ways to make this work for my investor so call me with what you're thinking about. 

 

I think you get the idea. I'm looking for a 100 acre farm with a farmer willing to partner with my investor interested in organic and sustainable farming whereby the investor will have the ability to build a place to live during the limited hands on time he wishes to have. 

 

My other networking strategies have failed to locate either the appropriate property or partner and hope this blog will do the trick. Contact Mick Marsden via 860-334-1379 or email at mickmarsden@me.com if you are the one or can connect me with the person who is. 

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