There was not much in the way of data yesterday other than the July personal income and spending report.  Income came in up .2% while spending was also slightly better up .4%.  Lots of news due out this week highlighted by the Weekly Jobless Claims and July Pending Home Sales on Thursday followed by the big one – August Unemployment due out Friday morning. 

The good news from the mortgage rate side is that there really isn’t any strong evidence indicating rates will increase while the economy continues to struggle.  Stock, bond and mortgage markets should continue to see extreme volatility this week.

I was at lunch the other day with an executive from one of Saint Louis’s largest publicly held corporations who recently relocated to Saint Louis.  We were talking about the economy and how much the landscape has changed in so many different industries.  I knew he was eventually going to get around to real estate because that was the main reason we were meeting.  He was interested in to discussing his options on whether he should lease or purchase his next place.  Finally, he asked the question, “How are things in the real estate business?” This is my favorite question.  We all know how things are in the real estate business if we are strictly talking about sales.  Clearly, if you read the front page of this past Tuesdays Post Dispatch and if you haven’t been in hibernation the past few years, you know the answer is not good.

A few other questions and topics we touched on that I thought would be helpful to our followers….

How is real estate in Saint Louis?

Saint Louis is a very interesting market.  Overall, things are not as bad as they are in other cities.  There are a few pockets were some movement is taking place; like Clayton, Ladue, Chesterfield just to name a few. Sure prices have dropped a bit but nothing like other parts of Saint Louis.

Other parts of the Saint Louis Metro area are struggling.  It is all about supply and demand.  If there is inventory, there is an issue.  You can take almost any town in any city and apply that statement.  With a huge shortage of buyers due to economic conditions, it is inevitable that where there are tons of for sale signs, prices will continue to drop.

How is Upper End Properties adjusting to this environment and how are you different?

We are taking advantage of what opportunities are being presented by the current economy.  Being a full service real estate company doesn’t mean just representing people to buy and sell.  Sure, that is a big part of our business, but as you can see in a recent article in Barron’s other related items like leasing are a going to be a big part of the housing market equation going forward.  We are seeing a lot of people looking for homes to lease upwards of $4000/month.

We are also seeing many of our clients who are having trouble selling their properties sit tight until the market gets better and lease their home should they need to relocate.  This has been a very good option for some of our clients that allow them to cover their current home and then hopefully sell their home once the market improves over the next couple of years.  Many real estate companies don’t like to deal in leasing and property management for many reasons.

From the beginning, it was important to me that we remain solution-based and client-focused.  We do not view our clients as transactions, but as long term relationships.  Being full service means we can provide a solution for someone looking to buy, sell, lease, short-term lease, furnished lease, manage, and advise on anything real estate related.  Our owners are adamant about being our clients “real estate quarterbacks.”

What do you suggest I do right now, lease or buy?

That is dependent on what your long-term plans are.  It is definitely a buyers’ market right now and if you are here for the long-term, there are many opportunities to purchase a house at historically low prices. If you know that you may only be here a couple of years, it may make sense for you to lease something.  If you are in a situation where you are unsure how long you are going to be here,   you may even want to consider a lease with an option to purchase.

Is there an end in sight to a housing recovery?

In my opinion, we are a few very big economic indicators away from a housing recovery.  My guess is a few years at best.

How is the residential real estate business in general for agents?

This market is going to define real estate companies and real estate agents ability to adapt and survive.  There has already been a huge flush out of thousands of agents in Saint Louis and nationally from 2007-2010.  The strong multi-million dollar agents will continue to do well.  They might see business drop from selling $5 million in homes to selling $3 million in homes, but still make a nice living.  However, the average real estate agent is going to struggle over the next five years.

Cory Spielberg

The treasury will be borrowing about $102 billion worth of 2 yr, 5 yr and 7 yr notes or roughly $2 billion less than it borrowed last month.  July existing home sales are due out and are expected to be down roughly 13% while new homes sales are actually expected to have increased 3%.  Existing home sales fell 5.1% in June and 2.2% in May.

So – it looks like the trouble for the housing market continues and is even increasing with the expiration of the homebuyer tax credits.  May and June sales were up 19.2% and 9.8% over the same months last year (again most likely a result of the tax credit).  New home sales saw a nice little push in June, increasing 23.6% after a decline of 36.7% in May.  Some of that push could be attributed to such a low volume in May.

Weekly jobless claims, which caused the interest rates markets to decline last week are again expected to decline, this time from 500,000 to 485,000.

Last week, they were expected to decline but ended up increasing 12,000 to 500,000.  Last week the mortgage bond market saw a bump Thursday when jobless claims were released and mortgage rates took a dip.  We’ll also see the 2^ndquarter revision of GDP which is expected to be up 1.4% after a decline of 2.4% was reported last month prior to the release.

Mortgage rate levels will most likely continue to test current low yields.  The only other news due out this week is the Mortgage Bankers Association (MBA) weekly mortgage applications release Wednesday.  Many experts believe that the 10 yr note and 30 yr mortgages are losing momentum in the short term while the longer term still appears bullish.

Recently I began helping a first time homebuyer find a condo in St. Charles. He was ready to move out of the downtown area and make the switch to the suburbs. While the house hunt started out normal, it took a complete 180 when I got a phone call from him that would change the whole “normal” first time home buying experience.

A short time before starting this process, my client signed himself up to go thru all the ups and downs on a show called  My First Place. Ever hear of it?  Yeah if you are anything like me (a total fan),  the next thing I’m about to tell you would probably not shock you.  Now after a long pause over the phone, I asked if he was serious and then my heart starting beating with nervousness and excitement at the same time. Not only was my buyer stressing about his first place, he was now stressing about being featured on NATIONAL TELEVISION!!!  Oh and what about me, his agent….I was going to be on too and like I stated earlier I LOVE THAT SHOW.

Fast forwarding a bit. I called my boss and co-workers at Upper End Properties to tell them the good news and believe me, they were excited! What an awesome opportunity we would have to spread the word about our agency!

The next step was to start filming. We began meeting a production crew at different times and venues to get all the exciting events on film.  Totally not easier, especially if you’ve been involved in the “home buying” process before.  The hardest part for me was trying to keep my mouth shut long enough and to not spoil the real emotion that HGTV was trying to capture.

I had no idea that filming a reality show was so intense. Getting fitted for my microphone pack, running over exactly what I wanted to say and how I wanted it to come out, smiling, walking without tripping and standing up straight were the duties and thoughts going thru my head at each taping.

The neatest part about filming for My First Place is how natural and normal they try to keep the process. The film crew really wants the scene to play out as it actually would.

We are still in production for our show and I will have lots more to share as this process continues.  But for now please let me know your thoughts about all of this and will you watch?

Megan Rosenkoetter

Listen to the economic forecasters such as Peter Yen from the National Association of Realtors.  He was recently in St. Louis speaking about how the unemployment rate is directly tied to real estate trends.  He believes if unemployment goes down in the next quarter we can most likely consider the worst is behind us.  Listen to an established real estate professional; These are the ones that have made this their career.  Every single day they access the latest available property list.  He/She can tell you what has gone down in price, what is under contract, and what has sold for less than asking price. Point being, they actually do know what is happening in the market place and it’s not just from watching the nightly news.  Listen to what these people are telling and follow their advice. Remember this is why you look to them.

Learn to adapt to this market.  Realize that what worked before is not necessarily going to work today so learn how to price your property appropriately and then learn how and when to adjust it.  If you are looking to buy, learn how to make a solid offer before your dream home becomes available.  You don’t want to be caught in the dark, being prepared is always best. Learn all of the parts of a sale contract and the process of buying/selling a house so that you feel comfortable discussing all possible scenarios and variables when that contract is written.

Let go of anger and resentment about the economic climate.  Let go of blaming anyone or anything for the current state of the market.  Let go of comparing neighborhood sales from the past 3 years to what they are selling for now.  If you can get past these things and understand that it is a fact that people still need to move for their own reasons. Then you are truly “letting go.”   A house may not be worth as much as it was in 2006 (when it was, in all probability, over-inflated) but that should also come as good news if you are looking to buy.

By listening to the information provided by professionals, learning how to react and adapt to this market, and letting go of negative re-enforcements, I believe you hold the keys to a successful real estate transaction.

Jen Ross

The bond and mortgage markets opened stronger this morning while US stock indexes and global markets opened weaker.  In the last few weeks it appears that investors have realized that despite Washington painting a picture that the economy is in recovery, the world economy is not in good shape.  This has caused investors to move into the safety of long-term treasuries and in turn caused mortgage rates to fall even lower.  Mortgages opened up .25 basis points from Friday’s close while the DJIA traded down about 13 points at 10:30 this morning.  At 8:30 this morning, the August NY Empire State Manufacturing data hit with the overall index increasing to 7.0 from 5.08 in July.  The new orders component took a hit and went negative for the first time in a while to -2.71 from +10.13, the employment component was better at 14.29 from 7.94 and prices paid for materials decreased due to price declines in commodities.  The National Association of Home Builders housing index came in at 13 down from 14 in July.  This may imply that housing starts which are expected to but up over 1% could actually come in lower tomorrow.  Its becoming very clear that until the housing sector begins some sort of recovers, the US economy will continue to struggle.

Other data due out this week includes July housing starts and permites, PPI, Industrial Production and Capital Uilization Tuesday.  Mortgage Bankers Association weekly mortgage applications come out on Wednesday.  Weekly Jobless Claims, July Leading Economic Indicators, and August Philadelphia Fed Business Index are all due out Thursday.

All of this poor data for the economy has been very good for mortgage rates and they continue to find new lows.  The 10 year note finally broke through a level of resistance at 2.88% and will likely go lower as the economy continues to sputter.  On the week, the 10 year note declined a total of 10 basis points.

Next week will probably begin with some pressure on the rate markets with the Treasury set to auction $74B of notes and bonds.  The Treasury is borrowing at a rate of $178B per month in 2s through 30s, funding a deficit budget that will top $1.6T this fiscal year.  Scary!

The Federal Open Market Committee (FOMC) meets Tuesday and Wednesday this week.  The key economic data will be released on Thursday and Friday of this week with the weekly jobless claims, July retail sales, July CPI and the mid-month University of Michigan consumer sentiment index.

With the current conditions of the real estate market people have been able to purchase high end properties that they may not have been able to afford in a steady market.  This recent trend to buy that great deal has also left that purchaser wondering what to do with their “old” property.

We see this on a daily basis…in efforts to rid themselves of their old property; sellers are steadily lowering their asking prices with very little to no bites.  This has made the option to put the property up for lease not so bad.  This option that you would think as bad actually can turn out to be profitable in just a few weeks time.

Why is leasing Hot?  People are relocating to St. Louis and are more interested in scouting the area out, so leasing a place has become more appealing.  Some other reasons for the increase in the leasing trend include are attributed to the rise in status of Washington University’s medical school and the nationwide recognition that some of our area hospitals are starting to receive. It’s attracted Medical Students from all over the world to come and do their fellowships.  The rise in divorces has left those couples in dismay scrambling to get some sort of property, so the lease has appealed to them.

Why open your home? We have a lot of clients who are timid about opening their homes to a renter.  What if they damage the place?  What if they don’t pay their rent… etc?  When a lease is done properly it can not only cover your mortgage but could lead to a possible sale.  We make sure to screen prospective tenants for our clients, by running background, employment, income verification and criminal checks.  We also offer a guarantee, if they tenants do not pay their rent in the first six months, we refund our commission.  For the record we have not had to do that.

So when your realtor says the “L”word, don’t be afraid! Leasing can turn out to be a very lucrative move in the long run.

Liz Rainey

Housing continues to show very little improvement and there is an increasing recent concern that deflation is looming.  June pending home sales were expected to be up 5% but actually declined 2.6% from May levels and year over year sales are down 20.1%.

On the brighter side, earnings reports have been positive recently and are possibly indicating that the economy may be improving after all.  Although nobody really knows who is buying the products that manufacturers are producing.

The consensus economic outlook is for slower than average economic growth for several years. The Gross Domestic Product (GDP) report released this week was consistent with this view. GDP increased at a 2.4% annual rate during the second quarter of 2010, which was below the long-term average of about 3.0% per year. With a high Unemployment Rate, below normal economic growth is far from ideal for the labor market, but this is what investors expect. If the economy performs much more poorly, however, the consequences could be severe. The Fed’s Bullard stated this week that he is worried about the risk of a deflationary period in the US similar to that of Japan, which would be very undesirable for the economy, but which would likely lead to lower mortgage rates. He emphasized that he thinks that the most likely scenario is for continued modest economic growth.

The best steps to take to stimulate the economy are being highly debated right now. It’s not clear whether further monetary stimulus from the Fed would be effective enough to offset the downside effects. As a result, most Fed officials feel that they should not take additional actions unless the economy experiences a major downturn. Given enormous budget deficits, fiscal stimulus (more government spending) is also a highly contested option. The Fed’s Fisher pointed to uncertainty about government policies and regulations as a major obstacle for faster growth, but this may not change very quickly. In any case, if the economy follows the expected path for modest economic growth, it may be difficult for the Fed or the government to launch any major new stimulus actions.

When it comes to the housing market a great number of home owners looking to sell have decided to use leasing as a way to maintain ownership in a dismal market.  The reason for this can be attributed to the downfall in the country’s economy, which has lead to a record number of foreclosures and short-sales in the recent years.  The option to lease has given home owners a chance to “hold” and wait for the market to recover.

For some, leasing is really not an option it is a necessity.  With the down turn in the housing market home owners have progressively been losing value in their property. The ones who can afford to wait, do just that.  For the ones who can’t wait, but don’t want to take the loss on their property, leasing has been that light at the end of the tunnel.

There is definitely much to consider when making the decision to lease or buy. During these times loss in equity, poor credit scores, and stricter guidelines on loan approvals have pushed many towards the words “l-e-a-s-e.”

Cory Spielberg and Doug Cohen will shed more light on the recent leasing epidemic on All Things Real Estate this Sunday morning at 10am on KFNS.

The list, which ranks Ladue High School at 282 in the nation and #2 overall in the state of Missouri, ranks public high schools on the number of Advanced Placement, International Baccalaureate or Cambridge (AICE) tests given compared to the number of seniors graduating. Newsweek compiles this list every year on how hard a staff works to challenge students. Six percent of the list consists of public high schools.

For St. Louis this list couldn’t have come at a better time.  If your student is interested in performing arts and you are determined to live in the St. Louis Metro area, then Metro Academic and Classical High School should be on your list. Upper End features a few properties here.

Other schools on the list include Parkway West, Rockwood Summit, Eureka, and Lindbergh high schools, just to name a few.

This is a telling list that has home buyers’ attention. It’s also got the attention of community leaders across the country.  Finding the right location is always top on a home buyer’s mind because the purchase of a home is often seen as a long-term investment.

It is no surprise to see that Texas and Florida were the leaders on this list. The lack of sales taxes and the warmer climate are plus, but adding top schools to that list is surely a bonus. But if the Midwest is where you call home or plan to call home, Missouri has to be on the short list.

Looking ahead, many economists believe that U.S. interest rates will remain low for an extended period of time.  Words from Fed Chairman Bernanke last week seemed to reiterate that the economy continues to struggle particularly with jobs and a housing sector that remains in recession.

After a strong week last week in the stock market and selling in the bond market, one focus will be treasury auctions. Strong demand continues for treasury bills with a total of $104B set to be sold Tuesday, Wednesday and Thursday this week.  June new home sales are to be announced Monday and are expected to be up 4.25% from May. Other key data announcements this week include early estimates of 2nd quarter GDP and the Chicago Purchase Managers’ Index.

30 year conventional bonds increased 69 basis points, 30 year FHA bonds increased 100 basis points and 15 year conventional bonds increased 84 basis points.  Overall these bond price increases led to a decrease in mortgage rates of approximately 8 basis points on average.  Analysts believe investors flocked to bonds last week due to growing concerns with the United States economy.  Two key manufacturing indexes came in weaker than expected and the consumer sentiment index plunged (indicating that consumers are not nearly as comfortable with the state of the economy as Wall Street and Washington would like them to be).

Mortgage markets this week will be affected by the June housing reports that are due out.  June housing starts and permits are due out Tuesday while existing home sales are due out Thursday.  Both numbers are expected to be down from May.  Federal Reserve Chairman Ben Bernanke will speak Wednesday and Thursday.

Overall, the equity markets are expected to struggle this week, adding support to low mortgage rates.

As people continue to consume huge amounts of energy at alarming rates, we add to our ever growing Shaquille O’Neal sized carbon footprint on this planet.  We now have scientific evidence of the negative effects of carbon emission in our water, land and air.  As the realization that our methods of generating energy are destroying our planet sets in, the importance of moving into the future with cleaner and more efficient means of energy production and consumption becomes clear.

We understand that it is important to save the rainforest and clean up the gulf coast but who has the time to fly Costa Rica and chain themselves to a tree?  Realistically, we can all make a difference by making our homes more energy efficient.  You don’t need to pitch a teepee or trade your car for a horse, but switching to efficient appliances and using proper insulation techniques can reduce your footprint.  Hey, you might even save some money too.  Take a look at these ways you can make a positive change!