Perhaps you’ve heard the news that the Federal Reserve announced today that it will buy $40 billion per month of mortgage backed securities to keep rates low. Lots of terms have been thrown around, like quantitative easing, QE3, short term rates, and I even heard one guy mention Malaysian nutmeg, but I think he was talking about his lunch. But the fact remains that the news, which sounded good, is still difficult to understand for many.
That is why I am in your life. I make the complex incredibly simple. So here’s the deal.
For decades, banks would loan money in the form of mortgages and then sell the loan to GSEs, or Government Sponsored Entities, like Fannie Mae and Freddie Mac. Then, in 2008, when the financial crisis hit, many large financial entities failed or were gobbled up in government brokered acquisitions. The government passed the TARP bailout bill which was supposed to inject close to a trillion to bail out many banks and enable them to continue to loan money. Regardless of what your opinion of that move is, the money supply suffered greatly, and the banks became historically stingy.
As an aside, if they were 10% as careful in 2004-2005 as they were in 2008-2009 after the crash, we’d be in a far smaller mess than we are now.
The banks raised the bar so high for mortgage qualification that the housing market suffered a double whammy- the market was flooded with foreclosures, and many people who wanted to buy simply couldn’t because of the new crazy standards. Things have loosened up since then, but the Fed’s move today is actually a step in the right direction. In 2008-2009 when Fannie Mae and Freddie Mac teetered on insolvency, banks didn’t loan enough money and the recovery was sabotaged. Now, the Fed is committing to buy more mortgage backed securities-enormous amounts- and the money supply will benefit.
Now, to do this they will pretty much just print money, which causes inflation, but they have promised to monitor things to make sure that events can be controlled. We’ll see about that.
This will keep rates low and it will ensure that the mortgage industry has a more liquid money supply. Some of this is my own interpretation, and there are those who will believe that anything done under President Obama is wrong no matter what happens. These are the same people who would have praised the move if it were made by a Republican administration.
This move, coupled with the shrinking inventory and flattening out of the market, will be seen in future years as an aid to the recovery.
So how will this effect Westchester? As I said above, it will widen the pool of borrowers and make those who are currently qualified jump through fewer hoops to get their loan approved. More qualified borrowers leads to more ready, willing and able buyers, and that leads to more homes sold. Expect things to slowly improve. We are entering a flat period and exiting the annual declines which were so emblematic of the past 4 years.
STOP Posting Your Listings on Social Media for the Love of God
When a real estate agent lists a property, they become just the second person on the planet to care in an invested way about that property: it is now them and their client. In their quest to find that third person, the buyer, some licensees make the mistake of pushing their listing in inappropriate forums when they should be pulling. You do not push in a pull world.
I’ll repeat: Our job is not to push. It is to pull. Do we have an obligation to give our listings vast exposure? You bet we do. Does that mean we pass out flyers at cocktail parties, send out spam email or post spam? No, because all that does is annoy people. No one ever said “I am going to log onto Facebook and search for a house.” People go to Facebook to catch up, socialize, look at kittens and huff at political rants. They don’t care about a 4 bedroom colonial 5 states away. You don’t solicit there. You don’t advertise there.
The way you sell real estate is to make sure it is everywhere people who are looking for real estate would find it. If a platform is where people go to search real estate, then that is where you put your marketing. You never post on social networks unless it is a company page. Doing so is spam, it is annoying, and it undermines the very presence you are trying to build in the social media word. Oh, and it is against the Terms of Service on every platform I know of, and that can get your account suspended.
There is business, and there is social. They don’t mix. Posting your listings on social media is spam. Just say no.