Market Update
10/17/2011
INFO THAT HITS US WHERE WE LIVE...One dream that, happily, doesn't seem to be going away is the one we Americans have of owning our own home. In fact, in spite of all the negative news we hear about housing, the percentage of Americans who own their home is still the second highest on record, according to the Census Bureau. Even better, new research reveals that up to two million people are planning to jump into the housing market in the next two years.

The study from a business-to-business media company confirmed that Americans place a high value on homeownership across demographic groups, across the country, even where there have been larger declines in home values. Given today's prices and super low mortgage rates, 72% of homeowners and 59% of renters polled said that right now is a "good" or "very good" time to buy! Another study found that 80% of homeowners plan to buy another home and most view homeownership as one of the best long-term investments.

BUSINESS TIP OF THE WEEK...Do not cut corners in anything you do in business. Make sure your client's experience with you is an absolute delight.
>> Review of Last Week
BEST WEEK IN AWHILE...Awhile is actually more than two years, as stocks hadn't had a weekly performance this strong since July 2009. The broadly based S&P 500 was up a surprising 6% and stocks have now advanced in seven of the past nine sessions, gaining more than 11%. What made investors so upbeat was evidence that Europe is getting serious about paying its debts. Eurozone officials made a commitment to develop a full plan to stabilize the financial situation and shore up capital at European banks. This is good news for U.S. banks who have loaned money to their friends across the pond.

There was good economic news over here as well. The trade deficit remained flat for the month. Initial jobless claims ticked down for the week and the four-week moving average is well below where it was this Spring. Same-store chain store sales are up 2.8% over a year ago by one survey and up 4.8% by another. We ended the week with September Retail Sales UP 1.1% overall and UP 0.6% excluding autos. These are the strongest monthly increases since Q1 and say to some economists, if not to the media: no recession!

For the week, the Dow ended UP 4.9%, at 11644; the S&P 500 was UP 6.0%, to 1225; and the Nasdaq was UP 7.6%, to 2668.

With investors rushing back into the riskier stock market, bond prices suffered. The FNMA 3.5% bond we track closed Friday at $100.23, down .94 for the week. Plunging bond prices edged up yields and interest rates. Yet national average mortgage rates were up only a bit from last week's record levels, and are still historically low.

DID YOU KNOW?...Currency in circulation is the total amount of paper currency, coins and demand deposits held by consumers and businesses. A decline in this number can make fewer loans available, because banks don't have as many demand deposits in their reserve.
>> This Week’s Forecast
BUILDING NEW HOMES, SELLING EXISTING ONES, CHECKING UP ON INFLATION... This week gets us back to a look at the housing market. September Housing Starts are expected to be up a tad, just shy of 600,000 new homes a year. But analysts are predicting a slight dip in Existing Home Sales for September, although that figure should still hover near 5 million per year.

With the Fed's easy money policies, we have to keep an eye on inflation. For businesses, prices are forecast up slightly for the month, as measured by the Producer Price Index (PPI). The Fed's big focus is always on the Core Consumer Price Index (Core CPI). This excludes volatile food and energy prices and is projected to be up a little, but well within the Fed's target range. 
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Daily Benchmark
09/14/2011
Mortgages started out slightly worse this morning but have since tracked back to where they closed yesterday.  Long term bond auctions are this week and have so far been weak (mostly because investors feel as though they have enough long term paper, given all the buying that has been taking place the past few weeks).  The 30yr auction goes off at noon the results of which will likely have an effect on mortgage pricing.  Europe also continues to be front and center influencing borrowing costs.

Market Update
09/12/2011
INFO THAT HITS US WHERE WE LIVE...The great opportunity now is for home buyers to get a mortgage at an historically low rate. Freddie Mac reported national average mortgage rates set new record lows last week. But according to most observers, buyers shouldn't expect further rate dips. Lenders are seeing plenty of loan volume, so they don't have to lower pricing to get more activity.
Opportunity was also one of the themes in Fannie Mae's August National Housing Survey, where 69% of Americans polled say now is a good time to buy a home. And in spite of all the talk about more price declines, people expect home prices to dip only 0.5% in the next year. This is why some observers feel we're at a price bottom now. A strong 46% of Americans expect rents to go up in the next year, so that should motivate purchases as well.

BUSINESS TIP OF THE WEEK...Business school researchers found that the businesses able to survive economic downturns were ones who continually changed in response to the business climate, adapted to the headwinds and constantly tried new ideas.
>> Review of Last Week
CONTINENTAL DRIFT...In four days of stock trading, the Dow drifted down for the sixth week out of the last seven, all because of financial dramas on the European continent. Europe's Central Bank President failed to offer any plan to stimulate growth following the downward revision to his GDP forecast for the region. Friday there was talk that Greece might default on its debt over the weekend. On our shores, news that weekly initial jobless claims are still above 400,000 didn't help matters either.

Even a couple of surprisingly good U.S. economic reports couldn't overcome all these bad vibes. The August ISM Services Index was UP, to a better-than-expected 53.3, showing expansion in the non-manufacturing sector responsible for about 85% of our jobs. Following this, it was reported that the July Trade Deficit shrank, thanks to a $6.2 billion INCREASE in exports, which are UP 15.1% in the last year, ahead of imports, up 13.6%.

For the week, the Dow ended down 2.2%, at 10992; the S&P 500 was down 1.7%, to 1154; and the Nasdaq was down 0.5%, at 2468.

Friday the bond market saw a huge flight to safety by investors motivated by those rumors of a weekend Greek default. A  government spokesman in Athens said that wouldn't be so, but Wall Streeters opted for sleeping undisturbed until Monday. The FNMA 3.5% bond we track closed Friday at $102.03, up .81 for the week. Mortgage bond prices were up and, as mentioned above, national average mortgage rates set new record lows.

DID YOU KNOW?...The CPI inflation indicator measures the change in the cost of a fixed basket of products and services like housing, food and transportation. The Core CPI favored by the Fed excludes food and energy prices because of their monthly volatility.
>> This Week’s Forecast
This week began with the observance of the 10th anniversary of the September 11 terrorist attacks. Our thoughts are with all those who lost their lives and with their families, whose lives were forever changed.

INFLATION, RETAIL, MANUFACTURING...Wholesale inflation is expected to be well under control in Wednesday's Producer Price Index (PPI) and Core PPI readings for August. Thursday, the critical Consumer Price Index (CPI) and Core CPI inflation measures are also forecast well within the Fed's target range. August Retail Sales should still show consumers doing their part, although sales growth is predicted to be less than July's.

Manufacturing is expected to be down a tad in the August Industrial Production and Capacity Utilization readings. And the Empire Manufacturing Index for New York and the Philadelphia Fed Index should still show contraction in those regions, although less than in the prior month.
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Sep 12 – Sep 16
DateTime (ET)ReleaseForConsensusPriorImpact
W
Sep 1408:30Producer Price Index (PPI)Aug0.0%0.2%Moderate
W
Sep 1408:30Core PPIAug0.2%0.4%Moderate
W
Sep 1408:30Retail SalesAug0.2%0.5%HIGH
W
Sep 1408:30Retail Sales ex-autoAug0.3%0.5%HIGH
W
Sep 1410:00Business InventoriesJul0.5%0.3%Moderate
W
Sep 1410:30Crude Inventories9/10NA–3.963MModerate
Th
Sep 1508:30Initial Unemployment Claims9/10410K414KModerate
Th
Sep 1508:30Continuing Unemployment Claims9/33.700M3.717MModerate
Th
Sep 1508:30Consumer Price Index (CPI)Aug0.2%0.5%HIGH
Th
Sep 1508:30Core CPIAug0.2%0.2%HIGH
Th
Sep 1508:30Empire Manufacturing IndexSep–4.0–7.7Moderate
Th
Sep 1508:30Industrial ProductionAug0.0%0.9%Moderate
Th
Sep 1508:30Capacity UtilizationAug77.4%77.5%Moderate
Th
Sep 1510:00Philadelphia Fed Manufacturing IndexSep–10.0–30.7HIGH
F
Sep 1609:55Univ. of Michigan Consumer SentimentSep56.355.7Moderate

>> Federal Reserve Watch   
Forecasting Federal Reserve policy changes in coming months...Economists see a hike in the Funds Rate as the farthest thing from the Fed's collective mind, clear through the first half of 2013. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
After FOMC meeting on:Consensus
Sep 200%–0.25%
Nov 20%–0.25%
Dec 130%–0.25%

Probability of change from current policy:
After FOMC meeting on:Consensus
Sep 20     <1%
Nov 2     <1%
Dec 13     <1%

Daily Benchmark
09/09/2011
Mortgages opened worse this morning off of the 450 billion dollar jobs package introduced by Obama, although worries of Europe, more specifically Greece, not passing or implement proper austerity measures have pushed bonds and mortgages to flat.

Market Update
09/02/2011
INFO THAT HITS US WHERE WE LIVE...Major progress has yet to be made in the housing recovery, but we can keep believing in it, since the data isn't all negative. For example, Pending Homes Sales (contracts on existing homes) were down 1.3% in July, but were UP 2.4% in June, so Existing Home Sales should be up for August. In addition, July's reading was UP 14.4% over last year. The National Association of Realtors chief economist said, "rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge" bode well for real estate.
The latest Case-Shiller National Home Price Index reported home prices UP 3.6% in the second quarter compared to the first, though still down 5.9% from a year ago. This puts home prices at the level they were in early 2003. The 20-city composite index was UP 1.1% for June, but down 4.5% versus last year. Best of all, none of the 20 cities posted monthly declines in June and 19 out of 20 showed increases. Also, data aggregator and analytics firm CoreLogic reported home prices up in July for the fourth month in a row.

BUSINESS TIP OF THE WEEK...Be prepared to succeed when the chance presents itself. We can't control when an opportunity will happen, but we can control how well we're prepared for it.
>> Review of Last Week
NO JOBS...No new jobs were added to payrolls in August, according to the national Employment Report released Friday. That was all investors needed to hear to start a stock selling spree, as the Dow lost 253 points for the day and ended down a fraction for the week. Jobs are important to the health of the housing market, but real estate is local. So earlier in the week it was encouraging to see the Bureau of Labor Statistics report that unemployment rates in July fell, compared to a year ago, in 69% of the 372 metro areas they track.
A mix of good and bad news continued. The Consumer Confidence Index for August hit its lowest level since April 2009. But the August ISM Manufacturing Index came in better than expected, a tick above 50, still indicating expansion. Final Q2 Productivity was down a trifle, but Personal Income was up for July. And Core PCE inflation (excluding food and energy) was well within the Fed's target range, up only 1.6% since last year.

For the week, the Dow ended down 0.4%, at 11240; the S&P 500 was down 0.2%, to 1174; and the Nasdaq was flat, at 2480.
The weak jobs report, combined with continued concerns over European sovereign debt, had investors scurrying to the safe haven of bonds, sending prices higher. The FNMA 3.5% bond we're tracking closed Friday at $101.22, up .97 for the week. With mortgage bond prices up, rates were down, as national average mortgage rates stayed at or near historic lows.

DID YOU KNOW?...This week's Fed Beige Book is a summary of economic conditions in each Federal Reserve region around the country. It's an indicator of what the central bank may do at its meeting in two weeks.
>> This Week’s Forecast
HAPPY LABOR DAY!...All the best to you this Labor Day, as we honor the contribution that working men and women make to our country.

The financial markets were closed yesterday and the rest of the week is light on economic news. ISM Services should stay above 50, showing modest expansion in this sector of the economy, which accounts for about 85% of our jobs. Initial Unemployment Claims are expected to hold just above 400,000, not where they should be, but well below their worst levels. The July Trade Balance is forecast to shrink a bit with more export activity from U.S. firms.
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Sep 5 – Sep 9
DateTime (ET)ReleaseForConsensusPriorImpact
Tu
Sep 610:00ISM ServicesAug51.052.7Moderate
W
Sep 714:00Fed Beige BookSepNANAModerate
Th
Sep 808:30Initial Unemployment Claims9/3400K409KModerate
Th
Sep 808:30Continuing Unemployment Claims8/273.700M3.735MModerate
Th
Sep 808:30Trade BalanceJul-$51.5B-$53.1BModerate
Th
Sep 811:00Crude Inventories9/3NA5.281MModerate

>> Federal Reserve Watch   
Forecasting Federal Reserve policy changes in coming months...Since the Fed announced the Funds Rate should stay near zero through the first half of 2013, no one is predicting any hikes. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Daily Benchmark
09/02/2011
Nonfarm payrolls came in at zero jobs added far below the expected 75k, although this appears horrible this did include 45k strikers from Verizon and 22k gov’t workers returning to work in Minnesota after a shutdown, still overall way below expectations.
Mortgages are trading as expected after a poor economic number and have improved, although the widening from the 10yr trsy continues.

Daily Benchmark
09/01/2011
Mortgages are improved this morning with weak initial jobless claims and a weak ISM number.

Daily Benchmark
08/30/2011
Mortgages are improved this morning driven by a much lower than expected consumer confidence reading and comments from Chicago Fed President, Evans, telling us he is in favor of more quantitative easing to stimulate the economy.

Daily Benchmark
08/26/2011
Mortgages are improved this morning with weak GDP data, possibilities of the Greek bailout falling through, as expected consumer sentiment and Bernanke reiterating what he said two weeks ago.  The headline from the Fed continues to be fiscal policy needs to be the next step and monetary policy still has tools left and will use them if needed

FHFA: Home Prices Down Again in Second Quarter
04/24/2011
The Federal Housing Finance Agency (FHFA) has released its seasonally adjusted purchase-only house price index (HPI) for the second quarter of 2011 and for the fourth consecutive quarter it reports that those prices declined nationwide.   The HPI measures prices recorded for repeat home sales using Freddie Mac or Fannie Mae mortgages.  During the period which ended June 30 there was a deterioration of national home prices of 0.62 percent.  During June, the last month in the current reporting period, however the HPI did rise 0.9 percent.  Over the last four reporting periods the HPI has dropped 5.9 percent and, at the end of June was down 18.8 percent from the price peak reached in April 2007.  A second index, the all-transactions HPI which includes refinancing as well as purchases, decreased 1.9 percent in the second quarter and is down 4.5 percent over the last year.
The four-quarter decline in home prices over the last four quarters stands in contrast to the prices of other goods and services which rose 4.5 percent during the same period resulting in an inflation-adjusted change in the price of  purchased homes of -10 percent in one year.
The seasonally adjusted purchase-only HPI declined from the first quarter to the second quarter in 31 states and, over the last year, only three states have recorded any home price appreciation, Oklahoma (+0.28 percent), North Dakota (+3.87 percent) and the District of Columbia (+12.23 percent.)  The largest price decrease over the last year was reported in Arizona (-14.91).  Idaho, Georgia, Nevada, and Oregon all had one year negative price changes in the 13 to 14 percent range
Of the nine census divisions, the New England and West South Central divisions experienced the strongest price gains in the latest quarter, with both posting 0.7 percent price increases. Prices were weakest in the Mountain census division, where prices fell 2.3 percent.
The HPI tracks average house price changes in repeat sales or refinancing of the same single family properties.  The purchase only index covers more than 6 million repeat sales transactions while the all-transaction index covers 43 million repeat transactions.

New Mortgage Rate Lows Lost as Stocks Rally and Bonds Correct
09/01/10
Compare rates in your area:    Refinance rates provided by Mortgage rates had a great day yesterday. This is the message we communicated to readers...
ATTENTION: Mortgage Rates Hit New Lows
If you've been floating your loan or have yet to apply for a refinance because it just didn't seem worth the hassle, congratulations, mortgage rates hit new lows today, it's now worth the hassle! If you've refinanced in the last 20 months, there is a darn good chance your refinance option is back in the money, again!
Today was not so great...
After weeks of stagnation, stocks finally took their turn in the spotlight today.  As money moved out of the bond market and into equities, mortgage-backed security prices fell and lenders were forced to reprice for the worse.  Consequently, consumer borrowing costs are higher than they were yesterday afternoon. The damage was not terribly dramatic though...
The best 30 year fixed mortgage rates are still in the 4.125% to 4.375% range for well-qualified consumers, but less lenders are offering rates below 4.25% today. If your lender is still willing to offer a rate below 4.25%, your closing costs are about 25bps higher today (0.25% of your loan amount).  Actually, borrowing costs are about 25 basis points higher across the board.
While a better than expected read on the manufacturing sector has been cited as the stock market's prime motivation and the bond market's sole source of weakness,  we think other factors were at work.
Call it exhaustion, blame it on boredom, but it is a new month and market participants took advantage of an opportunity to try something different.  The bond market rallied all summer and has been viewed as "overbought" by many investors for the last two weeks. Unfortunately, weak economic data has prevented the bond market from correcting itself.  Better than expected manufacturing data, a sector the market views as weak, gave investors the chance to let that correction take place today.
We're not panicking over this sell off. There has been no change in our fundamental economic outlook, we see no new reason to be optimistic about a rapid recovery. What we witnessed today was a technical adjustment, an adjustment that could reverse course on Friday morning if the Employment Situation Report fails to match economist expectations.  It also an adjustment that could be built on if the employment report meets or surpasses forecasts. Either way, the market remains non-committal and fluctuations are expected to occur within a range. The overall outlook remains highly supportive of low mortgage rates.
Now that doesn't mean we're all aboard the float boat though. If you've been offered a rate at or below 4.25% and can still execute it, we think you should cash in your chips and lock your loan. If you've lost this quote and are back to square one, we think you can afford to float as long as you're not on a deadline. Your borrowing costs might rise a few basis points in the near term, but we think you'll have another opportunity to lock in at today's pricing, and potentially yesterday's pricing, sometime in the next month. 
Remember our advice. This is extremely important!
The "best executed" lock/float strategy comes down to finding an originator who knows the loan market, studies underwriting guidelines, and just plain old gets the J.O.B done.  You have to let the loan officer earn their commission. That's how you "ride the float boat" in this environment...make sure you have a damn good skipper. Plain and Simple.

New Home Buying Tips and Buyers Block
7/14/2010
You really, really want to buy a house. But, after six months of looking, you have found nothing to move you beyond just looking. Your agent is getting impatient and you are sick of the process. Still, you haven’t even made an offer. If you have an underlying fear of commitment or are employing passive-aggressive behavior toward your spouse, then you might need a good therapist. But you may just be suffering from “Buyer’s Block.”
Buyer’s Block is the result of fear, uncertainty, a lack of specific knowledge, and most of all, the ability to focus constructively. A mild case can stall home buying plans; a severe case will wreck havoc, leaving a buyer a looker and a renter for years to come.
This is no exaggeration. I know real estate agents who have worked with the same buyers for up to eight years, with no end in sight. Some customers made successful offers and then pulled out before signing a contract, some never found a house that suited them, others apparently settled on house hunting as their weekend hobby. I am not sure what this says about the emotional health of the agent, who is, of course, an enabler, but that is a subject for another day.
Are you (or is a customer) a blocked buyer? There are several variations, but most common is the buyer who is seeking perfection.
Everyone wants the perfect house, but a rational person realizes that there is no such thing. A blocked buyer, however, is not particularly rational and convinced that if he just looks long and hard enough, the perfect house will appear.
Week after week his debriefing with agent and/or spouse will sound like this:

“Well it had a decent kitchen, but the yard isn’t very level for the kid’s games and there is no separate shower in the master bath.”

Or

“The bedrooms were certainly nicer than in the place over on Oak Street, but the house next door has a terrible yard.”

Even with all the money in the world, you can’t buy the perfect home. Some goals are simply unattainable. There are communities that don’t have any Victorian homes. They just don’t. You can’t buy one, and if you build one, it would look terribly out of place.
There is a very desirable New England town which began to sprout two-car garages only in the 1950s. For one thing, who needed them? And, most of the older lots were too narrow for even a one car attached. But many 1990’s buyers had to have a lovely, gracious 1930’s colonial with a two car garage. No amount of argument could convince them (and there were dozens of such buyers) that such a creature hardly existed. They just continued to look.
There will always be trade-offs. Less money = more compromises, just like life. Not a hard concept, but one that a blocked buyer is unable to accept.
You must prioritize (or work with your spouse or customer to do so). Make a list of what the house absolutely must have: three bedrooms, formal dining room or a quiet street? Each of these carries a stiff price tag, so what will you give up? Can you live with 1-1/2 baths for a few years – a half bath does, after all, contain the real essentials. How often will you use a formal dining room? How about dragging out a cleverly designed convertible table for Thanksgiving and Passover? With your true priorities laid out, you must then accept that every other amenity is a bonus. You will get a few of the other things you wanted and you should be grateful for them. Now give this list to your real estate agent; tell her you don’t want to look at anything without the must haves but see everything with. She was probably so confused by your earlier behavior that she will be thrilled with concrete direction.
This sounds really harsh. Reality is harsh. But remember two things.

1. Homebuyers remain in their first homes for an average of five years. Is it be better to spend the next five years in a less than perfect home you own - or an imperfect apartment you rent?

2. Not all flaws are permanent. A terrible kitchen, 1950’s bathroom, or scraggly yard can be redeemed, maybe not tomorrow, but as money and energy permit. Even a busy street or lousy view can be less obvious with creative landscaping. But some things can’t be changed, you can’t grow a too small lot; adding a fireplace to the living room may be highly impractical; and the gas station across the street isn’t going away any time soon. Remember also that the price you paid for the property probably took the less pleasant realities into account, and most thoughtful improvements will create “sweat equity,” allowing you to continue that march toward perfection even more quickly.

Buy A New House or Sell Your Old House First - Chicken Or The Egg ?
07/01/2010
If you thought that buying that first house was scary, wait until you gear up to buy the second.
It doesn't matter whether it is a buyers' market or a sellers' market a homeowner who needs to relocate or wants to "trade up" is never in the catbird seat. Why? Because he has realized the American dream, he owns a house. And so the huge question looms: does one buy the new house first? Or sell the old one?
A first time homeowner does not have this problem. Maybe there is an apartment lease to consider or timing issues involving kids and school, but first time buyers are relatively footloose and fancy free. Not so the second-or third-time buyer. There is the matter of an existing house, ongoing mortgage payments, and the cash needed for the down payment needed to close on the new house. You have the money of course, there is real equity in your current home, but until that home is sold that cash is locked up securely in your current mortgage bank's vault.
So, what we have is a conundrum. What comes first, the chicken or the egg? Sell first, and, particularly in a sellers market, risk becoming homeless, or perhaps worse, moving in with the in-laws while furniture, clothes, kids toys, and the files requested yesterday by that nice IRS auditor languish on a pallet deep in the climate controlled, fireproof walls of a moving and storage company.
Or, in a buyers market, one finds the perfect house and is unable to make an offer because that less than perfect house you already own has a mortgage payment due next week and there is no way anyone is going to take it off your hands the way the furnace is acting. How long might it take to find a buyer and actually close on the sale?
If the market is tough enough, maybe the owner of your next house will be willing to work with you. If the market is strong enough, maybe selling your existing home is only a weekend away. But who knows? And how courageous must you be to bet the ranch on either scenario?
When I was a real estate agent, I worked with a lot of customers who froze in place because of the buy first or sell first decision. In one memorable case, Karen was frantic to move to a town with a better school system but David was terrified that they might have to move twice and that the intervening accommodations might lack the comforts of his existing home. They did make offers on two homes which did not come close to being accepted, not because there was anything wrong with the price, just with David's insistence on a contingency allowing them to first sell their home in a rather unappealing town. Since there were other competitive offers without such restrictions, they never got a second glance. I gave up on them after four years and some 125 house showings. They passed on some real gems, and as far as I know they are still looking. I do know that they had invested close to $20,000 in private school tuition for two of their three kids by the time I bid them goodbye.
What should they have done? There are options. Granted, none of them are ideal, but would you rather spend the rest of your life in that two bedroom one bath condo with your husband and four kids? I didn't think so.
Do your homework. This is the same drill you went through when you bought your first house. Get pre-approved for a mortgage, line up a hardworking and responsive real estate agent to help you find the new house and, if geographically appropriate, to list your current home.
Get your house ready to sell. Clean out the closets, paint the front door, pick up the yard, and fix the furnace if it needs it. Talk with a real estate agent, get an approximate listing price and discuss timing the listing, how long might a sale really take at each of several price points.
Pick your poison. As stated above, none of your options are perfect, but is your financial and emotional situation better able to handle owning two houses for a (hopefully) brief period, or moving into short term housing should your old house sell before you are able to locate and secure a new one.
If you opt for the possibility of owning two homes, get your financial situation in order. Look into a bridge loan (which will give you the funds for the new down payment and maybe even enough to subsidize a second mortgage for a while) or arrange for a home equity loan.
A bridge loan might cost a little money for an origination fee and an appraisal, but you will not owe any payments or interest unless you close on the loan, and you will not do that until you actually purchase your new house.
Home equity loans are like a big MasterCard (and equally dangerous if you are not disciplined in their use) but banks are eager to grant them and most are financed at the lender's expense. Again, there are no fees until you actually draw down the funds. However, you must put that loan in place before listing your house. The bank will send out an appraiser and he will probably notice and report the Century 21 sign on your front lawn.
You need also to be honest with the bank financing your new mortgage. It may be very nervous at the prospect of your carrying two mortgages and maybe a bridge loan as well. Find out what its lending requirements will be in such a situation. That may well automatically eliminate the "buy first" option.
If you must sell before you buy, get your plans in place. Are there family members who can put you up short term? What other options are available in your community? Residence hotels are suitable for really short terms. Many large apartment complexes maintain furnished apartments for their corporate customers. These are usually much more expensive that other units in the complex but won't require a lease and may be available for as little as a month. Check out the cost of household storage and the timing. Some moving companies are very inflexible about when and how they will release and deliver goods in storage.
What about your pets? Most short term rentals do not allow them. Can you afford (or stand) to board them for an extended period? Maybe you have a friend who loves Fluffy and would be willing to care for her for a while.
Be creative. I generally discourage unusual contingencies in listing contracts or offers to buy, but no rule is hard and fast. If you are caught up in a market where houses are selling in a heartbeat, making an offer to buy contingent on selling your own home just won't fly. However, in such a market, you could insert a provision in the listing contract making the sale of your existing home dependent on reasonable time to locate and arrange the purchase of the new one. First time buyers are flexible and might actually appreciate extra time to give notice and avoid a penalty on their lease or even sock away more money toward the purchase. Maybe another homeowner will appreciate the leeway to resolve their own chicken and egg situation.
Since the real estate market is seldom in equilibrium - when there is a balance between the number of active buyers and the number of homes available to them - you are probably going to encounter the chicken and egg decision any time you want to buy or sell. Just don't freeze (or sit on the nest). Recognize the situation, evaluate your options and get moving in one direction or the other.
MORTGAGE NEWS YOU SHOULD KNOW


WILLOW BEND MORTGAGE