RateWatch - We Control the Market

Market: We got hammered today because...well, because. We're down 59bps at the moment, and you can thank us here at the Chris Jones Branch of City 1st that it isn't worse. It was worse, but we fixed it. I will tell you how below. This translates to a rise in rates of .25% over the past two days.

Analysis: Employment numbers came in right in line this morning, followed by home sales numbers that are so anemic they'd be confined to bed in any other market. The stock market euphorically rose to over 9000 on this news. Whatever. Who can analyze this stuff?

But I know how to control it. This has been tested so many times now that it's as good as proved. We know here at the office that when we lock a loan, we reverse the market (this only works when the market is tanking). In the last two weeks we've done it several times. The market starts to fall, so we call up one of our loans and lock it. The second we do, the rally begins. Happens 100% of the time.

Why didn't we do something about the terrible crash of Black Wednesday two months ago? Funny you should ask. We TRIED. Lenders stopped accepting locks, so we couldn't get one down. We sent in the request, and it was eventually honored - at the open of the market the next day, which sparked the largest up day for bonds in several years. I'm telling you, it's a curse having this much responsibility.

But I promise you I will use it with discretion and wisdom. I also promise that your personal loan will not be the one we sacrifice on the altar of the gods of mortgage rates. We'll get someone else.

Cj

P.S. Thought I'd again thank all of you for following me, and let you know that it matters a great deal to me. Today I picked up a gig writing for the Scotsman Guide, somewhat because of RateWatch. You are all very important to me, and you do get service that's not available to just anyone. Thank you again, and welcome to our new signups. Hope you like it here.

RateWatch - Drifting, but Which Way?

Markets: Yesterday was a good day up, and today is down only slightly, so it appears we might hold our gains. We gained 65 bps yesterday and have lost back 16 so far today, which on net is pretty good. For the uninitiated, there is a strong correlation between mortgage-backed securities (mbs) and mortgage interest rates. When mbs rise, rates fall, but the correlation is not 1-to-1. A 50bp move in mbs corresponds to at least a .25% improvement in rate price, which means about .125% better rate (see detailed explanation here). Usually. Not always. Not for every program. Not for every lender. Professional mortgage guys get paid for their services, and there's a good reason for that.

Analysis: Markets liked Ben Bernanke's testimony yesterday. He's forecasting more unemployment, and the conomy hitting abottom here and starting to climb late this year or early next. But he's also telling us that he sees a slow climb, with no huge bounce, especially in real estate. This is what is called an "L" recession, where things fall and then plateau at the new, lower level. I think that's a good analysis. I expect the same, for a good while, until US households shed more debt and build more cash. Right now it is the cash dearth that is starving the economy. That dearth has been created by huge appetites for debt. Eventually, all debt payments come a'cropper, and that's what is happening now. It will pass, if we're smart, and if the government doesn't insist on a recovery according to some electoral timetable.

Which is why I'd get my own house in order as fast as possible. We're not all that smart, and the government always acts according to electoral timetables. The basics still work, though, people. Save some, pay off your debt, find someone to help and help them. That's the way through.

Cj

Chris Jones

City 1st Mortgage Services

801-310-3407

Social Media and Real Estate, Vol. 1

I only address this topic because I can't find a lot of good commentary out there about this specific subject. I'm also no great expert; my experience with social media is pretty small compared to the Great Lords of Twitter and the Ancient Kings of Facebook. I confess this.

On the other hand, since according to Mortgage Strategy only 19% of the real-estate industry is even kind of using social media (this from a tweet this morning), and from experience I can testify that 90% of that 19% is using it badly and doing harm to itself, I thought I might at least give my opinions about how social media might be used well in a real-estate context. I am certainly using these tools better than most in my industry, and that has translated into gigs at Zillow and the Daily Herald Newspaper, so apparently my ideas do not entirely suck. Take them for what they are worth.

Here's how I got to writing this:

From Seth Jenson, a really good Realtor in Colorado: "Chris, what do you think about Twitter vs. Facebook? Do you think I need to be on both?"

Seth-

Whoo. What a question.

Facebook is a terrific way for people to connect. I'm no huge FB-er; I have about 400 friends, which is not a big number by any stretch of the imagination. I don't spend a lot of time trying to find friends on FB, or I likely could have a couple hundred more. And maybe I ought to do that. Probably I ought to do that. But it depends on what I'm using Facebook for.

If I'm using Facebook to keep tabs on people I know - my family, my close friends here in town, a few of the guys I went to HS with - then I'm doing it the right way. You can't possibly keep track of the doings of 1000 people every day. Impossible. However, if one of the reasons for you to be on Facebook is that you want people to remember YOU, well, then you might want a few more friends. You'd want to update your status at least once a day, and probably more than once. These wouldn't all be real-estate updates. In fact, most of them would be about anything except real estate, and would be only for the purpose of strengthening relationships. It is those relationships that bring the referrals that make you successful, and coincidentally, it is those relationships that make your life richer and more rewarding, so that's a happy thing. Facebook makes strengthening those relationships easier than ever, so I would definitely be on Facebook.

Twitter is very different. I love Twitter, myself. I like Twitter better than Facebook. Where I post or comment about 5x a day on Facebook, I do that twice as much - or more - on Twitter. Twitter is a research tool as much as it is a communications network. I get a lot of my news from Twitter, most of my reading material, and have most of my online conversations there, even more than email. Now, again, it depends on what you're using the tool for. Twitter can be a huge and pointless waste of your time. It can also do you harm, I think. But if you use it with respect, I think it has the potential to be incredibly valuable.

Here are some examples. I am not a big noise on Twitter. I have fewer than 200 followers. I'm following only about 100 people. I determined when I got involved that I wouldn't try to amass a gigantic following until I had some idea what I was doing it for. I didn't know enough about Twitter to know what I was doing, so I figured I'd start by following some people that DID know, namely, those that have good blogs about social media. So I followed Amber Naslund, Olivier Blanchard, Beth Harte, and some others, and learned about what Twitter could do, and more importantly, what I should NOT do on Twitter.

Then I started using the search functions of TweetDeck - TweetDeck is an indispensable tool for using Twitter - to follow mortgage news. There were some interesting conversations that came out of that, which resulted in my following Tyler Osby, Dan Green, and Agentopolis and a few others. They are doing most of the blogging and commenting about what's going on in the mortgage industry. There were two or three other topics that I thought would be good (hobbies, etc.) so I started running searches on those as well. I've acquired my 160 or so followers through conversations, not spam. In fact, most of those that are following me would unfollow if I used Twitter to promote myself ad-style. But because I blog, many of them are reading what I write, and following them allows me to read what they write, get smarter, and engage them in conversation. Again, for me it is about the relationships. It's made me better at mortgages, even though I haven't spent a great deal of time on Twitter talking about mortgages per se.

Bottom line? Yes, you should be on Facebook and on Twitter. Figure out what you want these tools to do for you, and design a strategy to get them to do that. Expect it to take time. If you do it right, it will take a lot of it, and a fair amount of work as well. Farming does.

Good luck. Follow me on Twitter @chrisjoneslehi, or find me on Facebook at www.facebook.com/chrisjoneslehi.

RateWatch - What Goes Up, Must Come Down

Market: Bonds are taking a hammering the last couple days (off 65bps today), with economic news better than expected. Empire State manufacturing numbers were, well, not UP, but a lot less DOWN than expected, and core CPI doubled from .1 to .2, so the stock market moved up and bonds are coming down. This takes rates higher. We're in the low 5% range and moving toward 5.5%.

Analysis: A manufacturing reading of 0 means that the industry is stable, so today's reading of -.55 is not good news except in the context of last month's reading, which was -.9.45. So things are looking up. Sort of. The inflation number continued to be higher, boosted by a spike in oil prices, but stripping that out the core CPI was still higher than expected, the second such inflation reading to the high side this week. Mortgage-backed securities have dropped about 100 bps this week so far, a now three-day negative run. We've given back most of what we got last week.

The economy is still in a shambles, but just as nothing goes up in a straight line, nothing comes down in a straight line, either. There are inevitable plateaus, and every plateau looks like a potential bottom, especially to a population starved for good economic news. In the macro sense, I hate to say this, but in the mortgage rate sense, I'm happy to report, that the economy is still moving the wrong way and doing so with some rapidity. We are not at the bottom yet. Repeat. NOT at the bottom yet.

Look for rates to make a small rise here, then drift back to where we were last Thursday, or even a skoshe lower.

Cj

Chris Jones

City 1st Mortgage Services

801-310-3407

RateWatch - It was the best of times, it was the worst of times...

Markets: Doing well again today. Yesterday broke the string of 5 straight days of rising bonds and falling rates (we have never had, in the years I have been following this, 6 green days in a row, so it was expected), and today we've continued the trend of the past week. Rates continue to improve. We're very close to some exciting things in mortgage rates. Stay tuned.

Analysis: Folks, the economy is in the soup. The things that got us here didn't happen in four months, and they're not going away in four months, either. This morning @agentopolis (I love Twitter) put me on to this article about unemployment, predicting that we'll see it hit roughly 14% in the coming months. I heard a very convincing analysis last night that put the CURRENT unemployment rate at 20% right now, if you count everyone, which the government numbers do not.

Do not worry about this. You cannot stop any of it. Work hard. Do your job. If you lose your job, it happens. Call me and tell me. I know people. We're doing things. We'll help you if we can.

Find someone worse off than yourself - this will not be hard - and help them. There's no better cure for recession than a lot of people working hard to help each other. No, let me amend that. There is no OTHER cure for recession than a lot of people working hard to help each other. Be part of the solution where you are, and let the markets do what they will.

Have a good weekend.

Cj

RateWatch - Hmmmmm. Interesting.

Market: We're up 19 bps so far today, picking up 3 bps every 45 minutes or so. Slow movement on heavy volume. That's pushing us back into the low 5% range on rates.

Analysis: This is really quite interesting. The government auctioned off $8 billion in 10-year notes this morning and the demand was very solid, both domestically and internationally. There was more money out there in that auction than there has been in years. That's a much different result than the auction of two weeks ago, let alone the one a month ago, which was disastrous. What it means is that there is a good deal of pressure in the market forcing bonds higher, and if you've been paying attention, and of course you have, you know that bonds moving up means rates moving down.

But it's more than that. Just the bond level is not entirely indicative of where rates are going to be. There's also the question of risk and liquidity on the bank side. The more liquid bank assets are, the lower they can set rates without exposing themselves to rate risk. As the credit markets froze up last year, banks had to raise rates to protect themselves, and had to chop programs until essentially only a-credit borrowers could qualify. It's too early to say that we've started the pendulum swinging back again, but today's auction was a thing that makes you go hmmmmmm.

We'll be keeping a close eye on the auctions later this week.

Cj

Chris Jones

City 1st Mortgage Services

801-310-3407

What Half of the Day Do YOU Work?

@TylerOsby asked a question this morning on Twitter - "how long do you work every day?" Apropos of this, I also read an article this morning by Tim Ferriss, who wrote The 4-Hour Work Week, about how he works, um, 4 hours a week. Obviously. But anyway, what I found was that I could not give a straight answer to Tyler's question. I've had trouble with this for a while, and it's getting worse.

On the surface, it seems simple. You work when you're working, and you aren't working when you're not working. Oh, if only. Here's an example: right now, am I working?

I don't know.

The blog, in general, is a marketing vehicle to let people know that I have a certain level of expertise in mortgages. I do. In fact, I'm very good at them. I've been doing them a long time, in several capacities, and I understand them well from many sides. But the part of this blog that establishes that credibility is primarily the RateWatch segment, which I love, but which this post is not. So is this post work or not?

Um.

There's so much more. In 20 minutes, I'm meeting with Nathan Larsen from Classic Books and Gifts to talk about a really innovative book contest we're putting together. There is practically no chance that this contest will pay me any money, though it is about 90% certain that I'm going to be headmanning it. It will take volumes of time and some money. Is the meeting work? It will be benefitting the bookstore. It will employ (eventually) many people. It has lots of outgrowth possibilities that could make many of the people I know better off. It's also fun. So what is this meeting? Work?

I'm going out to garden at some point today. Is that work? I spent half an hour reading articles this morning and some of those led to this post. Was that work?

I know there's all this fancy talk about balance these days, how to balance your professional and personal life, how to balance family with work, how to keep your different compartments separate and weighing about the same. Perhaps it's just me, but I find that philosophy so stupid my eyes cross. I can't for one second separate all the different parts of my life. Practically no activity that I engage in has no spiritual component. Practically every activity has some family aspect. When I'm with my family, much of the time, my phone is on and on my hip. Am I working? I'm on call. Isn't that working? On the other hand, when I'm sitting in the office, often I'm discussing the Jazz with my brother. Is that working?

Much of what I do every day produces no direct financial benefit. Nearly everything I do EVERY day produces some indirect financial benefit, and the part that doesn't produces other kinds of benefits in friendships, quality of life, larger vegetables, and suchlike. It's not a job, that's for sure. But isn't "work" the thing you add to the universe to stop it from going straight to crap? Am I not ALWAYS working?

I need help here, obviously.

So I told Tyler that my first communication with the outside world happens between 6:30 and 7am, and my last communication between 6pm and 11pm, depending on the day, which was true but not what he asked. He responded that that was a long day. I replied that everyone's day is that long; mine just has more in it than most people's. I got the sense, though, that that wasn't very satisfying to him. It wasn't all the way for me, either.

Can you help?

It's a Start for the Main Street Gang

Lehi Utah is my home on purpose. I grew up outside Washington DC in a sprawling suburb, but spent a lot of time in the city and got to know it pretty well. I like cities. They’re fun. I’ve been to most of the big ones in the US (with the sole exception, I think, of Houston), and I like the unique character of each. Except Cleveland, but that’s another story.

But a city isn’t a big mass of people. A city is a very large conglomeration of smaller communities, that all happen to be in close proximity. Nobody knows “Manhattan”, no matter how long he’s lived there. He knows his deli, his bookstore, his side of the street. The ones that love New York the hardest are the ones that know their neighbors the best. Those are the people that build communities. The people I admire most are the ones that start making friends with the locals fifteen minutes after arriving.

Contrary to generally accepted ideas, this kind of community is just as possible - and just as critical - in Manhattan as it is in Lehi. In small towns, it’s easier to get to know the locals because those are the only people there, but smart people, those that are the most fun to be around, get to know the locals wherever local is. Maybe that’s harder when the local coffee shop is Starbucks instead of Beans and Brews, and the local burger joint is Burger King instead of Emmetts, but I wonder.

Most of you know that I am a relentless advocate for local business. I love small business in whatever locale, no matter how small. I have been known to drop a $20 bill on a lemonade stand. When I moved to Lehi about 5 years ago, it was the smallest city I had ever lived in by some hundred thousand people. I loved it immediately. I started shopping at Kohlers instead of Albertsons. I joined the Chamber of Commerce and got an immediate tour of historic Lehi from Carl Mellor, who runs the 120-year-old Lehi Hotel. I ate at Porter’s Place. It felt like home.

But I noticed that that wasn’t universal. Lehi was in the process of tripling in size over an 8-year period, and there was a lot of new housing going up with people in it that used Lehi like a hotel; they slept here and ate room service, but went to work somewhere else and generally took entertainment and meals in other cities. Part of that is Lehi’s fault - there is now a movie theater in town, but there wasn’t until recently, and the number of restaurants is tiny - and part of that is just bad luck, with the main arterial road in town being owned not by the city but by the state of Utah (hence largely unimprovable). The Home Depot in American Fork killed off Peck’s Hardware on Lehi’s State Street, and the WalMart and Lowe’s and Costco seemed poised to do the same to other local businesses, such as they were. I worried that Lehi would fail to maintain its character in the face of this chain-store onslaught. Worse, I feared that Lehi would lose its sense of community, the ties that bind people together with the places they live.

Let me add parenthetically that I love big business as well as small business. I shop at these chain stores, too (though not nearly as often as I used to). I have nothing against WalMart and Lowe’s, Applebee’s and Chili’s. This is not a rant against globalism and multi-national corporations. Far from it. I have, however, something else in mind. Money spent in your local community stays there far more surely than money spent in a chain store. It’s a more efficient delivery vehicle for value. If you want your local city to provide services, your local stores to thrive, and your local housing market to retain (or increase) its value, the best way to do that is to inject your money into the local economy, and you do that much more efficiently at Broadbent’s General Store than at WalMart (see the 3/50 Project for more). It’s not just good for the local business owners; it’s good for you.

So I moved my business to Main Street. I’d have gladly bought a building - almost did, though thank goodness I was denied the loan (the building later collapsed) - but I settled for renting the place at 60 West. That’s the address. 60 West Main. No suite number. No floor number. Heck, there’s only one room in the building, unless you count the bathroom. We all work in the one area, no walls, no cubicles.

Then I wanted to find a group of people that was committed to local business. Not just “yeah, we like it”, but “I stayed awake all night thinking of how to get more people to go to your store”. I wanted people around that were desperate to make a Lehi community. I had Jonathan Heaton and his excellent insurance agency. And Olivia Votaw of Girl With Red Lipstick. And Amy Jo Yates, a longtime friend. And for a long time, they was it.

So we decided to start knocking doors. Since then I’ve met Mark Wilson in the architect’s office next door (he’ll be the Lehi Rotary Club President in about two weeks), and Sebastian moved in one door farther down about a year ago with his sign company. Jonathan and his excellent insurance agency went in with me to also rent the building at 68 West, just next door. I met Bob Trepanier, who’s run Porter’s Place for a generation, and Charlie and Sterling, who put Charlie Boys’ Carolina BBQ in the cottage a couple doors down (get the beans). Then Nathan and Daniela Larsen put Classic Books and Gifts in on the corner, Lehi’s first and only bookstore. Pam Mayfield, one block down, cuts my hair in the Lehi Old Town Barber’s (look for the barber pole; if it’s twirling, she’s in). Fire Chief Dale Ekins (another Rotarian) owns the Pioneer Party and Copy, then there’s the Lehi Bakery (legendary square donuts). There’s Carl at the Lehi Historic Hotel (now the Rockwell Hotel), and down another block is Flowers on Main and the incredible James and Kris Belcher. That’s what we call the sunny side of the street.

On the shady side there’s Dave Lym’s insurance agency, and next door to him Pastor Chuck runs the Timp Baptist Church. There’s the Bridal Shop there that has been in that spot for almost 100 years. To the east, Emmett’s makes the best food in town (as long as you like burgers) and Ethel’s is the ice cream shop (real hard ice cream!). That place can give you heart failure if you don’t watch it. But just today, Allison’s Organics opened Lehi’s first organic market (between the tattoo parlor and the karate studio), so now we have some balance.

There’s something started here on Main Street. There’s a group here now that wants to see Lehi become something better, both what it used to be, and what it always wanted to be but never was. I’m just a Lehi Utah mortgage guy, and just one guy at that. Things aren’t so rosy out there for any of us. The economy is huge and much more powerful than I am. I don’t know how big a difference I can make.

But I’m encouraged by the last few weeks. There are only a few of us. But it’s a start. And we believe.

P.S. If I forgot you, you’ll have to remind me in the comments. I tried to get everyone, but again, I’m just a guy. And if you didn’t know that the Main Street Gang existed, if you didn’t know that anyone was organizing this kind of “Shop Lehi First” effort (kudos to Local First Utah as well for their work in this area), well, now you know. Join us (chris@lehilender.com, or tweet me @chrisjoneslehi).