The problem for me when there is bad economic news is it feels sometimes as if it’s ALL we talk about when it comes to finance web pages.  Mortgage rates are down, but no one is buying.  The real estate market has been in a slump for four years now. Home owners are in upside down so can’t afford to move.

While month after month of bad news has finally turned into years, another writer admits to sticking her head in the sand.  BripBlap guest writer Emily talks about lessons this economic downturn has taught her,

I stopped reading the news after I found each day’s trending articles were upsetting me so much that I couldn’t focus on my own work.  And although I am the daughter of a financial planner and have had a lifelong interest in money and investment, I have simply stopped paying any attention to the recent stream of bad news about our economy.  I don’t feel particularly mature for this attitude, but sticking my fingers in my ears and singing “la la la” seems to be working for me.

Click through and read Emily’s good advice on what to do besides sticking your head in the sand.

Foreclosure can affect both regular people and the famous.  Whenever it occurs, it is a sad time for those affected.  It looks like Burt Reynolds – sexy star of the 60′s and 70′s and the famous “Bandit” of the Smoky & the Bandit franchise – could be on the list.

From our friends at PopFi,

As it turns out, Burt’s been forced to turn his back on Florida and his massive 4.5-acre estate in Martin County.  Burt Reynolds owes Merrill Lynch a staggering $1.19 million dollars in back mortgage payments, more than a years’ worth of payments!

Hope it all works out for Burt.

Photo from mail online.

According to Fannie Mae, mortgage interest rates keep dropping.

Mortgage borrowing costs continued a downward trend this past week, according to Freddie Mac, as 30-year fixed rates dipped to the lowest point of the year and 15-year fixed interest fell to an all-time low. Freddie Mac said interest on the former averaged 4.32 percent, while the latter settled at 3.5 percent. The favorable rates sent loan applications up more than 20 percent, the Mortgage Bankers Association indicated, with refinance activity climbing 30 percent.

If you can get a loan, now is a great time to buy.

It’s almost like the desire to own a home is hardwired in our psyche.  It was almost as if I yearned for my own house when I was a renter.  I wanted my own dirt.  Even with the unemployment rate where it is now, it surprised me that home ownership is as its lowest since 1965.  According to CNN Money,

As the foreclosure crisis continues to wreak havoc on the housing market, a source of national pride has taken a sour turn. Home ownership is on the decline and, according to a recent Morgan Stanley report, the United States is fast becoming a nation of renters.

I will say the idea of not having to worry about property maintenance (after paying $1500 for a new water line to be run from the street to my house) sure sounds good.  The idea of not mowing a lawn sounds good, too.  But in the end, I like my own space.

Photo by Natalie Maynor.

There is a lot of speculation about why sales remain slow in the real estate market – especially while interest rates are low and houses are very affordable.  Qualifying for a home loan is more difficult, that is true.  However given the ease in which buyers previously qualified – especially when they really could not afford to buy a home – the stricter rules are a huge necessity.

George Souto of MIddletown, Connecticut has a different theory about why sales remain slow in the very generous interest rate climate,

Until homebuyers stop being worried about a recession, fear of losing their jobs, and confidence restored in our economy, it will not make much difference how low the mortgage rates get, and home prices drop, Real Estate Recovery will most likely remain in its present state. Washington needs to restore confidence to the American people, and jobs need to once again be created. If that happens we will then see, homebuyers return to purchasing homes, and the true Recovery of the Real Estate Industry.

While I’m not an economist, I do know that the flight of jobs overseas has had an enormous impact on consumer confidence. Where our skilled labor force had been able to find jobs fairly easily, now it takes a year or five to land a manufacturing job.  And manufacturing has been a backbone of the American economy for decades. Perhaps by everyone in the nation making a concerted effort to buy American-made will send the message to industry that they are better served keeping the jobs on-shore.

Photo by Frank Kovalchak.

While mortgage interest rates are low and while the housing market continues to offer homes at low prices, there are areas of the country that offer THE MOST affordable homes.  CNN Money explores several cities across the nation,

#1 Hunter’s Creek, Florida – What was once just a swamp in central Florida has turned into a thriving community of 12,000 residents.

#2 Lake Jackson, Texas – Dubbed the “City of Enchantment,” Lake Jackson was originally planned in the 1940s to house employees of the Dow chemical company.

#4 Johnston, Iowa – Local crime news for Johnston is telling: A recent headline proclaimed that a driver for a trash collection company spilled garbage on the highway and was issued a citation.

And my favorite (as it also happens to be MY hometown)…

#13 La Vergne, Tennessee – The high point on the calendar is the annual Old Timers’ Festival, which is expanding to three days from one in 2011 and includes midway rises, juried craft contests, a pageant and a parade, all around a “good-old-days” theme. (An event that I am helping to organize!)  (By the way, we have midway rides and juried crafters).

Congratulations to all the towns named affordable!  Especially my own little corner of Tennessee!

The problem with a Broker Price Opinion – in my opinion – is that it’s really just an “opinion” on the price.  When a bank orders a BPO, that the real estate broker is out of town and has no idea what the area is like is not taken into account.  That the agent inflates the value of the house is not taken into account.  That the agent deflates the value of the house… also not taken into account.

Agent Patty Da Silva of Davie, Florida is also not a big fan and believes an appraisal is the better choice,

For argument’s sake let’s say it costs $100 to hire a BPO agent to do a BPO, and roughly $400 to hire an appraiser to do a proper appraisal. It costs $100 to hire someone who isn’t necessarily licensed (and definitely not regulated), to spend less than 5 minutes in a house, and to not take into account all the factors an appraiser would. I have heard BPO agents say that they do 500-600 BPOs a month. That’s impossible for ONE person to do! We have all heard that some of these BPO agents hire (unlicensed) people to drive around and take pictures of the outside of the property, and I have actually seen BPO agents recruiting these drive-by photographers on Craigslist.

As Patty said, there are good BPO agents.  But why have a middle man when an appraisal will have to be ordered eventually anyway?

Word from RealtyTrac is that foreclosures have slowed down.  Word on the street is that the next wave is about to hit.  A banker friend of mine said the robosigning is being quickly cleaned up so that foreclosures are gearing up again to full court press and could possibly be even worse than the first round.

However according to Stop Foreclosure Daily Blog, RealtyTrac says they are slowing,

There were some small glimmers of hope in RealtyTrac’s report. One promising sign was the steep plunge in initial notices of default, which fell 39% year-over-year to fewer than 60,000. The decline may indicate that fewer borrowers are falling behind on payments. Or, it could mean lenders are not filing those notices as promptly as they have in the past, according to Rick Sharga, a spokesman for RealtyTrac.

Let’s hope this is good news at last.

The drop in the credit score of the United States sent a shock wave throughout the world.  People with money invested in the stock market felt the repercussions almost immediately as the market dropped faster than a roller coaster headed south.

However according to Bryan Robertson of Los Altos, California, there is a silver lining,

* Lower energy prices: Gas, oil, etc will all drop because a weekend economy means less spending on things like driving. This means lower utility bills and more money for borrowers to save or spend.
* Lower food prices: The cost of farming and shipping food will drop as energy prices drop. This could reduce the monthly grocery bill which means more money available to stay in existing homes or homebuyers to save.
* Interest rates will stay low allowing buyers to obtain excellent 30 year loans or further reduce the cost of a loan modification. It all depends on what your mortgage is tied to. An ARM is usually tied to short-term, more volative interest rate moves and could go up.

I hope Bryan’s crystal ball is working!

Photo by Katrina Tulaio.