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Archive for June, 2011

What is the Velocity of Money and How Does it Impact Home Loan Rates?

velocity1.jpgBy Eric Clonch, Mortgage Loan Originator, NMLS# 327193
Beverly-Hanks Mortgage Services

ASHEVILLE, NC - If you’re an observer of economic news, you’ve probably noticed that market experts and traders keep a close eye on the Commerce Department’s Personal Spending and Personal Income reports. These reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home.

Here’s why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money.

With the job market still very sluggish, consumers aren’t spending as much money these days, and businesses are still reluctant to make investments in their business. With the present velocity at low levels, inflation remains subdued and that’s good for home loan rates. That’s because rates are tied to Mortgage Bonds and inflation is the archenemy of Bonds, so low inflation is good for Bonds and rates. However, once velocity increases, the excess money in the system will cause inflation – which is bad for rates, since even the slightest scent of inflation can cause home loan rates to worsen.

While we certainly want to see better economic recovery news in the near future, we have to remember that there’s an inverse relationship between good economic news and Bonds and home loan rates. Weak economic news normally causes money to flow out of Stocks and into Bonds, which helps Bonds and home loan rates improve. Strong economic news, on the other hand, normally has the opposite result.

Currently, home loan rates are near their historic lows, but that situation won’t last forever. Now is an ideal time to purchase a home, or refinance, before the velocity of money – and rates – change. If you or anyone you know would like to learn more about the current economic situation and how to take advantage of historically low home loan rates, then please contact Eric Clonch at (828) 654-6402 or at eclonch@beverly-hanks.com.

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Blue Ridge Log Cabins Selected For Extreme Makeover: Home Edition

5407558457_6c8efc0579.jpgBeverly-Hanks would like to congratulate its partner, Blue Ridge Log Cabins for being selected by Extreme Makeover: Home Edition to build a log cabin home for a deserving family in Fayetteville, NC.

“Move that bus!!” These are the words residents of Fayetteville/Cumberland County will soon be hearing.

Extreme Makeover: Home Edition, the popular Emmy Award-winning ABC Television reality show, is bringing their famous bus to Fayetteville to surprise one very lucky local family with a complete home rebuild. Along with host Ty Pennington and the rest of the Extreme team, local volunteers and builder Blue Ridge Log Cabins will race against time to construct an entire house for a deserving family.

To watch the video announcement CLICK HERE

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How to Tell if Your Housing Market Has Hit Bottom

Three essential clues may signal if better times are ahead

wsj.com
By David Crook

At first glance, you’re not likely to see a lot of similarities between stately Cambridge, Mass., and sprawling Denton, Texas. Cambridge (population about 105,000) was already more than 200 years old when Denton (120,000) was founded in 1857. From the center of Cambridge, it’s an easy stroll across the Charles River into Boston. Denton, in contrast, sits where Interstate Highway 35 divides—to the west, it’s 41 miles to Fort Worth; to the east, 39 miles to Dallas.

But both are college towns. Cambridge is well known as the home of Harvard University and the Massachusetts Institute of Technology. Denton has North Texas State University and Texas Woman’s University.

They have something else in common, too. Both have pretty much recovered from the five-year-and-counting housing recession. And both provide invaluable clues for those looking to decipher whether their own markets have seen the worst of the crisis.

According to a statistical analysis performed for The Wall Street Journal by the online real-estate information and search firm Zillow, home values in a handful of communities are where they were just before the most frenzied days of the real-estate bubble.

To read the entire article CLICK HERE

For professional real estate assistance analyzing our local area’s market, please contact Beverly-Hanks.com or to request a copy of the latest Beverly-Hanks Quarterly Market Report: CLICK HERE

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2011 Hendersonville Luxury Home Tour presented by Beverly-Hanks

The 2011 Hendersonville Luxury Home Tour will be held Saturday, June 25 from 10 am - 4 pm.

125-interlude-front1-860x350The tour will be a showcase of five private luxury residences in the Hendersonville, NC area.  Each residence is a unique architectural masterpiece and four have been beautifully decorated and carefully staged to reflect the owners’ tastes and varying interests.  One home is new construction.  The self-guided tour is also an opportunity to enjoy a relaxing day in the mountains.  Tickets are free and may be requested via hendersonvilleluxuryhometour.com or (828) 290-9176.

For more information about the Hendersonville Luxury Home Tour or the Hendersonville real estate market, please contact Lynn Huffman at beverly-hanks.com.resized-mcmannis-outdoor-pavillion-860x350

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Altos predicts a ‘catfish recovery’ for housing market

underwater1-e1307054902149-11by JON PRIOR

Historically, the normal housing market is volatile, and finding the inflection points for when prices bottom or surface at the ZIP code level is essential for netting a profit when it comes time to unload a property, according to a presentation from Altos Research.

The S&P/Case-Shiller housing index showed a new low for home prices in the first quarter of 2011. But Scott Sambucci, the vice president of market analytics at Altos, said he and his team disagree with the chairman of the S&P/Case-Shiller index committee when he said prices would continue “their downward spiral with no relief in sight.”

“We were quite surprised to see that,” Sambucci told a group of housing investors during a presentation Thursday. “We are actually showing an uptick. There’s still plenty of upside.”

Going into the summer, this new bottom for the housing market, Sambucci said, should prove to be the start of a new housing cycle.

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To read the rest of the article: CLICK HERE

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“Bad News” Doesn’t Mean A Bad Real Estate Market

Neal Hanks, President

nealhankssitting-croppedThe media reports have not been friendly to the real estate industry these last few months with numerous articles about an industry struggling to gain momentum. Particular emphasis has been placed on sales as compared to the prior year. As those of us in the industry know, this is an inaccurate comparison as the sales in January through April of 2010 were fueled by tax credits and as expected, sales this year have been below those levels.

graphMay is the month in which the tables have turned. As you recall, sales dropped dramatically in May of last year. Beverly-Hanks & Associates sales will be up over 40% for the month of May 2011 when compared to 2010. This trend should hold for the balance of the year, not just for us but across the country. Hopefully, the real estate news going forward will be rather positive as the market does appear to be gaining steam, particularly when compared to a weak second half of 2010. Consumer confidence will rise which will add fuel to the fire, albeit a smoldering one.

People who act in this transitionary market will reap large rewards. Will you be one of those?  Be careful though markets are still in a state of flux. Properly analyzing your real estate opportunities will be the key to being successful in this market. Again, good counsel supported by solid data will provide the insight necessary to prosper. I believe that we now have the wind on our backs, instead of in our face, and the opportunity to capitalize upon it is now.

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To obtain a copy of our 2011 Quarter One Market Report: CLICK HERE.

If you would like assistance evaluating your real estate opportunities in Western North Carolina, please feel free to contact us at customerservice@beverly-hanks.com.

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