Historic Fed Move Cuts Both Ways for Borrowers

Hot on the heels of its surprise inter-session rate cut of 75 basis points last week, the Federal Reserve cut key interest rates again, the fifth straight cut since September 2007. In its statement last week, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth." In other words, economic data suggests the US is on the brink of recession, and the Fed is acting accordingly.

Who benefits from this cut?
If you have a loan that is directly tied to the Prime Rate, you will see an immediate benefit. Home equity lines of credit (HELOCs) and variable rate charge cards are the types of loans that will have an interest rate reduction on their next statement.

What does this mean for long-term rates?
Long-term mortgage rates, the lowest we've experienced in years, could actually increase after today's cut, based on historical performance and recent trends. So if you're waiting for long-term rates to fall further, don't count on it. Your best chance to lock in the lowest rates since 2005 is now. Getting your application in process now will allow you to capture a great rate before it's too late.

What REALLY moves mortgage rates?
Fixed-rate mortgage rates aren't directly tied to Fed interest rate moves. Instead, they tend to follow in the direction of other long-term government bond yields, such as the 10-year Treasury, which historically moves in accordance with the economic outlook and in advance of Fed actions. The performance of Mortgage Backed Securities, issued by Fannie Mae and Freddie Mac, is what really determines long-term mortgage rates.

How does the economic stimulus package fit into the picture?
The economic stimulus package from Congress and the White House could be a double-edged sword for borrowers. Combined with recent Fed actions, the package could create inflation and bring about higher long-term interest rates. On the positive side, conforming loan limits are likely to be raised from the current $417,000 to upwards of $625,000. This means great potential savings for purchase and refinance candidates who live in 20 high-cost areas across the country.

What should you do next?
If you're unsure how the rate-cut or the proposed legislation affects your mortgage, don't worry, you're not alone. There's no one-size-fits-all answer. Contact your lender & they'll review your mortgage and see what, if anything, can or should be done to make the most of your individual financial goals and needs.

Don't have a great lender? Contact us at we'll send you a few names of super lenders in the Austin area.

Austin listed as Best Place to Buy a Home by Entrepreneur.com

Best and Worst Places to Buy a House - Whether you're looking for an investment property or a place to live, here's a look at the cities you should seek out and avoid in 2008.
By Danielle Babb January 23, 2008

The housing crunch and the excessive inventory--exceeding 10 months on resale homes--continues to take its toll on housing prices. But over the long term, housing is still a good investment. In fact, it's more than an investment; it's a home. Plus, you're not really saving anything by renting, as the costs of renting and owning are about equal (well, owning may be a little more). The tax benefits of home ownership far outweigh renting, too. With good housing prices in many great areas, this may indeed be the time to buy.
So now that I've convinced you this is a good time to buy a home, the next question is, Where do you buy one? No matter where you look, you should check out some basic economic fundamentals before buying. Is job growth stable in the area? Is income keeping up with inflation? Is crime above the national average? Is there a higher-than-average rate of foreclosures? These issues and others play a factor when deciding where to buy a house.
As a real estate investor and analyst, it's my job to provide buyers with qualified information on where to buy--and where to stay away from. Here are my thoughts for 2008 based on the indicators noted above.

The Top Places to Buy

Whether you're an investor like me or you're looking to purchase that next move up, here are my picks for the best areas to buy a home:

• Killeen, Round Rock, Austin, Texas: Killeen has the lowest average home price in any market in the nation while still maintaining quality. Round Rock and Austin have seen incredible job growth and very stable home prices despite the downturn nationwide. Jobs continue to grow here--a factor for keeping inventory low and prices stable.
  
• Mission Viejo, California: Mission Viejo has the lowest crime statistics in the nation. With no murders in 2007 and a low rate of violent crime, this is a good place to raise a family. Prices are relatively stable, and the job market in the nearby cities of Irvine and San Diego means there is consistent demand from job seekers.
  
• Palm Beach, Florida: I'm taking a risk here because this area has been pummeled by foreclosures in 2007. But there are also a lot of boomers retiring, and Palm Beach is looking mighty attractive. If you don't like this high of a risk (which translates to great prices), check out Tampa or Clearwater in the same state.
  
• Las Vegas, Nevada: Yes, Las Vegas has been hit hard by incoming investors, who watched their home values disappear and then left those homes empty. Las Vegas comes in quite high on the national foreclosure list, almost always within the top three metro areas. But there's an upside--a very strong job market. In 2007, Las Vegas experienced a 12 percent increase in population, partly driven by retirees looking for Sunbelt states to move to. Coupled with low prices, we could see inventories reduced here, which would also stabilize prices. Be careful what you buy, but I like it.

To see the Places to Avoid: see the full article at: http://www.entrepreneur.com/money/personalfinance/article189454.html

Google signs lease in Austin at Scarbrough Building

Google is headed to downtown Austin.
The Internet search leader has leased the second floor of the historical Scarbrough Building for an engineering center, said Office Leasing Advisors Inc., the Austin firm that represented Google Inc. in the deal.

Google will occupy 25,000 square feet of the art-deco-style building at Sixth Street and Congress Avenue, Office Leasing said.
Mountain View, Calif.-based Google did not respond to inquiries about the Austin office.
In recent months, Google has posted Internet job listings for an engineering director in Austin to head up a group of 100 or more engineers. It also has posted listings seeking software engineers in Austin. The Scarbrough office could hold 125 to 150 people, according to real estate brokers.
The entrance of a high-profile, national tech player like Google is a coup for Austin's technology industry, tech recruiters and executives said.
"Google is another marquee name in the technology world that we can say we have in Central Texas, and in addition to getting the Google name, we'll probably get some good-paying jobs with it," said David Porter, senior vice president of development for the Greater Austin Chamber of Commerce.
The Google news follows announcements by other California-based firms to relocate or expand in Austin, including PayPal Inc., an eBay-owned online payment system that is locating a data services center in Austin that could have up to 300 workers by next year. Also, Borland Software Corp., a personal computer software company, is moving its headquarters to Austin from Cupertino, Calif., and expects to have 150 to 200 employees in Austin this year.
High-tech recruiters said Austin is a natural fit for Google, which has nearly doubled its work force every year for the past four years and now has about 12,200 employees worldwide.
In addition to the specific technical skills that match Google's personnel needs, Austin's youthful, freewheeling attitude that encourages risk-taking makes it a good cultural fit, said Kim Butler of Greywolf Consulting Services Inc.
Google, which has become a high-powered recruiter on college campuses and has opened a number of research and development centers near university communities, stresses that it looks for ability more than experience when it hires.
"It's a tremendous match for the city," Butler said. "They're looking for innovation, and that's what Austin brings to the table."
In turn, Google will accelerate growth in Austin, he added, saying, "It's like if you're trying to start a fire, you can twirl the stick in the pit and wait for friction or you can get one of those Duraflame logs and light it up with a match. That's the kind of impact that a Google can have on a city like Austin."
Google's choice of ZIP code is also a boost for downtown, which is undergoing major changes, from the new shops and restaurants in the Second Street retail district to a residential building boom that is adding hundreds of apartments and condominiums. Tech companies expanding downtown include Silicon Laboratories Inc., the chip design company that has 430 employees at its headquarters on West Cesar Chavez Street and is negotiating to buy a neighboring six-story building.
"Downtown has always been home to state government and accountants and attorneys, and now we're becoming a destination for tech companies," said Molly Alexander, associate director of the Downtown Austin Alliance, which represents downtown business and property owners. "They're looking for unique and unusual spaces that are reflective of their culture."
When a player like Google lands downtown, Alexander said, "it raises the profile for others to say, 'If we want to go to Austin, we need to go downtown.' "
lhawkins@statesman.com; 912-5955
Scarbrough Building history
• The Scarbrough Building was Austin's first skyscraper and marked the beginning of Austin's downtown business district.
• It was built for Emerson Monroe Scarbrough, a successful merchant.
• It was designed in the Chicago style by Fort Worth architects Sanguinet and Staats and opened in 1910.
• Bets were taken on whether it, the city's first steel and concrete structure, would stand or fall.
• Art deco elements were added in 1930.
• The second story, which will be home to Google, housed the Scarbroughs department store for years until its closing in 1983.
Sources: Austin History Center, American-Statesman archives

By Lori Hawkins and Shonda NovakAMERICAN-STATESMAN STAFFThurs., January 24, 2008

AUSTIN: Top 10 Best Performing Housing Markets

As anybody who has ever sold real estate knows, there are no national markets, only local markets. That adage holds true when you look at the condition of the real estate business nationwide. Business may be tough in many places, but it’s not tough all over.

In Salt Lake City, Charlotte, N.C., and San Jose, Calif., prices have climbed relentlessly. In the Northeast, the biggest gainers are the gritty cities of Buffalo, N.Y., Pittsburgh, Pa., and Philadelphia.

In the West, business is brisk in Northern California and the Pacific Northwest.

Here are the top 10 best performing housing markets, according to Forbes magazine, their third quarter median home sale prices, and the percentage that prices have risen compared to third quarter 2006.

Salt Lake City — median home sales price: $246,700; Percent change: 14.1 percent
Charlotte, N.C. — $220,000, 11 percent
San Jose, Calif. — $852,500, 9.4 percent
San Francisco — $825,400, 8.6 percent
Raleigh, N.C. — $229,500, 7.5 percent
Austin — $188,200, 7.2 percent
Pittsburgh — $127,700, 6.1 percent
Seattle — $394,700, 6 percent
San Antonio — $154,700, 5.7 percent
Portland, Ore. — $299,700, 5.2 percent

Source: Forbes, Matt Woolsey (11/21/07)

Forbes votes Austin one of the Best Cities For Jobs In 2008

The Lone Star State shines brilliantly in a list of the best places to work in the U.S. when some economists peer into their crystal balls for 2008.
Austin, Fort Worth, Houston and San Antonio all rank high on the latest forecast data from Moody's Economy.com. McAllen, Texas, is expected to have the highest job growth rate, as its leisure and hospitality, educational and health services and commercial construction jobs flourish.
"While the economy is cooling, Texas continues to generate more jobs than the national average," said Krista Piferrer, deputy press secretary to Gov. Rick Perry. "Unemployment is low in Texas, thanks in large part to a favorable business climate that encourages businesses to expand or relocate to our state."In Pictures: Best Cities For Jobs 2008
Even still, Salt Lake City, in all its tech-job abundance, looks like it will remain No. 1 since Forbes.com's most recent ranking ( see last year's story).
To compile the rankings for the Best Cities For Jobs list forecast, we used five data points, weighted equally: the state's unemployment rate, job growth, income growth, median household income and cost of living for full-year 2006 (only partial data is available so far for 2007). We measured the largest 100 metropolitan areas, as defined by the U.S. Census Bureau, and obtained the data from Moody's Economy.com.
The numbers are compiled based on greater metropolitan areas; it's also important to note that this list doesn't weigh specifics like job composition or job stability, two significant characteristics that will appeal to any job seeker.
Mark Zandi, chief economist and co-founder of Moody's Economy.com, acknowledged the housing market depression the company is facing and said the destinations that prevail on this list weren't as heavily vested in the real estate development boom, which ultimately led to a historic bust.
That's not to say the highest-ranking cities on this list are completely in the clear, though: "If we have a national recession, if problems intensify nationwide, these economies are going to struggle," Zandi said.
The top cities on this list also include Atlanta, plentiful in transportation, distribution and financial services careers. Indianapolis has a strong showing in agriculture, too. Omaha, Neb., Warren Buffet's hometown, offers jobs at opposite ends of the spectrum, in financial services and agriculture as well. The Emerald City--Seattle--brings aerospace and global trade professions to the table.
Kurt Ronn, president and founder of HRworks, an Atlanta-based job recruitment and consulting firm, said Americans gravitate to certain locales based on opportunity and affordability, both offered right in his backyard.
He noted that, on a broad scale, the employment picture has been strong in the areas of technology and logistics, such as in distribution and sales.
Some notables: Honolulu is the best in the pack for low unemployment, a good sign that tourism there remains healthy. Edison, N.J., ranked the highest in the median income category. Buffalo, N.Y., has the lowest cost of living, while San Jose, Calif., has the highest. New York sits at No. 58 on the list, while Los Angeles is No. 87.

http://www.forbes.com/leadership/2008/01/10/jobs-economy-growth-lead-careers-cx_mk_0110cities.html

The State of Austin's Housing Market

The end of 2007 will see the Austin Housing Market sell about 94% of the number of homes that were sold through the Austin area MLS in 2006, the most prolific year ever in Austin home sales. Historically this will place 2007 Austin homes sales in second place.

Yet, concert has arisen about the slowing housing market due mostly to headlines comparing ’07 with ’06. Comparing any year to the best year ever is going to give less than impressive numbers; however, our average home price is up $16,000 over ’06 (through October ’07). Our total value of homes closed is above ’06, but the number of homes sales is down 5.7% and the days on the market is up slightly.

Austin’s job and population growth is very strong (4+%) and appears to be getting stronger. The report that Property & Portfolio Research, Inc. of Boston recently completed indicates that Austin has possibly the highest office rent growth in the nation and is projecting 2008 at a 9.2% increase. Google is nearing finalization of a lease for 25,000 square feet in the downtown area (ABJ) and is one of many such companies locating offices here. Our direct monetary impact from tourism is up 19% over three years (ABJ). Apartment occupancy rates rose 1.43% in the third quarter to 94.14% overall at a rate of $.95 per square foot (highest in the state and rose 6.2% over ’06) on an average of 834 SF apartment (Austin Trends Report and ALN). Unemployment is at 3.5% and more employers are being announced weekly.

So, why all the concern? Too many people read national stories and apply it locally. Austin is not a declining market. Austin’s inventory is growing and this means more days on the market and more motivated sellers. Our inventory is growing for only two reasons: fewer buyers and more homes. Why has this happened? We have fewer Buyers due to lack of easy money. We have more homes a 4.6 months supply which is up from our 3.1 months supply in 2006. The truth is, we has drifted into a period that anyone who wanted a loan could get one and the foreclosures are mounting so the lenders went back to the former standard.
Bottom line, this is healthy adjustment. Austin just happens to be in the right place at the right rime. The nation’s situation is bringing interest rates down while we are experiencing a rental boom.
There is no better place to invest today than Austin!