CONSUMER CONFIDENCE DROPS TO RECORD LOW POINT
FHA LOANS, INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
November 1st, 2008
Blame it on the stock market tanking, the upcoming election, the world economy or any number of 
issues impacting our financial markets today but the Consumer Confidence Index dropped by a staggering 23.4 points to a record low of 38.0 (base 1985=100). This is the third largest monthly drop in the history of the index. The index was 61.4 in September.
Considering the amount of money that evaporated out of American’s retirement accounts, the only positive news moneywise I have seen recently is the dramatic drop in gasoline prices. Despite all the media coverage regarding frozen credit, I have not heard of any local lender pulling the plug on funding a loan. Friends, family and clients are stunned by recent events but have faith things will get better, eventually.
Brace yourselves for the possibility of more bad news as the impact of October’s Wall street events are reflected in financial statistics released in November. The real estate market was just beginning to see the light at the end of the tunnel when the stock market tanked. This may knock the legs out from under the real estate market recovery, delaying the long-awaited statistical indicators pointing to the bottom of this business cycle trough.
Locally, there are no indications the national events have impacted the local market significantly. Inventory (1735 active home listings) is dropping as it normally does this time of year. Open escrows are declining (338 pending home escrows) as sales slow in anticipation of the holiday season. Sales are up dramatically year-to-date due to huge price declines that have opened the door to first-time buyers frozen out of the market during the peak, three years ago. Investors are scooping up bargains in the form of distressed properties-bank repos and short sales.
The affordability index in California doubled from 24 to 48 year-to-year. I expect this index to rise as prices decline further. Interest rates remain low but have been going up and down 1/2 to 3/4 percent from 
one day to the next. Local lenders want you to know they have money to loan as long as you have a job, good credit and some money for a down payment. The bar has been raised on credit scores with the prime A loans requiring credit scores above 720 or so. Government backed FHA and VA loans are more liberal with their credit thresholds.
I would also predict that consumer confidence will improve as credit thaws, lower gas prices reduce the cost of shipping goods and the stimulus measures passed by our government gain traction. The key is stemming the tide of foreclosures that have had a significant destabilizing affect on the housing industry. Putting the election behind us should be a positive step, no more negative political ads that claim the world will end if so and so is not elected or if a proposition passes or fails.
At least there will be plenty to talk about at holiday gatherings!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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