Mortgage rates moved higher in Cincinnati last week on lingering concerns about inflation, the fourth straight week in which rates rose.

Mortgage rates are now as high as they’ve been since October 2007.

Because inflation devalues mortgage bonds, market players are quick to unload them when signs of inflation are present.  

Last week, there were several such signs:

1. The American Consumer is spending undettered despite economic uncertainty
2. The Cost of Living is rising faster than expected
3. The Federal Reserve reports that some business are passing higher costs on to consumers

Hence, the higher mortgage rates.

This week, only Tuesday registers as a “big data day” with reports on housing, productivity, and Producer Price Index — the “Business Cost of Living” report.  

There will be four members of the Federal Reserve speaking, though, and that will add some volatility to the market.  Fed Chairman Bernanke is among the speakers, addressing Congress this morning at 10:00 A.M. ET.

So, expect mortgage rates to continue to jump and dip in the Queen City this week, taking their cues from inflation.  More inflation means higher rates and a slowing economy should cause rates to retreat. 

(Image Courtesy: LA Times)

There was no rest for the mortgage-rate weary last week. 

As mortgage bonds sold off early in the week, sharp rate hikes followed. A steady stream of better-than-expected economic reports had re-ignited inflation fears, drawing money from the bond market.

On Friday, however, the money flow reversed on a triple threat to the U.S. economy:

1. The Unemployment Rate took its biggest one-month jump in 22 years
2. Oil made its biggest one-day gain
3. The U.S. dollar lost a lot of value

By themselves, each of these events normally would be bad for mortgage rates but the Friday combination of all three led to a huge stock sell-off and renewed demand for bonds — including the mortgage-backed kind. 

Despite Friday’s reversal, mortgage rates were higher on the week, overall.

This week, there won’t be much economic data this week but there will be six Federal Reserve members making speeches to the public. 

The most anticipated of the set is Fed Chairman Ben Bernanke’s address Monday evening on the topic of “inflation”.  Markets will be closed when Bernanke speaks so expect a delayed market reaction Tuesday morning.

Throughout the week, markets should continue their long-standing battle between the fears of inflation and the fear of recession.  It’s the same back-and-forth that we’ve seen since late-2007.

It’s also the primary reason why mortgage rates rarely stay still anymore.

(Image courtesy: The Wall Street Journal Online)

We have written here about the changes in Cincinnati’s property values over the last two years. A part of the real estate downturn that is being overlooked is the assessments for property taxes. Locally we have seen our home value decline between 5% and 11% depending on where we live but it has not been as bad as California. Their property value has declined so much that there is now a company that will help homeowners obtain a break on their property tax reasons.

Prop8.org takes advantage of a California proposition that allows for homeowners to get a reduction in their property taxes. Prop8.org charges a fee to help homeowners navigate the legal paperwork, and submit the necessary papers. We do not have this luxury in Cincinnati but it is important that the next time your property is assessed that you pay attention and gather the recent sale data for your neighborhood so you understand you new property assessment.

Last weekend Dan and I attended a cooking demonstration and dinner on Saturday night at a business called Garnish Catering in Blue Ash, Ohio. We went with a group of people and had a wonderful time. Garnish caters to a unique local market by providing not only catering services, but cooking demonstrations and classes for adults and children, as well as gourmet carry out meal preparation.

Kim Baretta owner of Garnish publishes the prepared meal menus on a weekly basis and will email them to people who opt in to her mailing list. The facility is an ideal location for shower events, small parties, and other events.

So, I’ve been the victim recipient of a meme (pronounced “meem”). 

A meme is a tag-like game that passes from blog-to-blog in which the author reveals some stuff about himself.  Jeff Belonger memed me but claims that RSS Pieces’ Mary McKnight is responsible for making the meme multimedia.

I guess some people take memes pretty seriously, but it’s more like a Bubble Gum interview to me.

8 questions, 8 answers, 8 more to meme…

Who is your favorite musical artist? (Post a YouTube video)

So many of us like so many different artists that a better question can sometimes be “What’s your favorite Beatles Album?”  For me, it’s Abbey Road.

Who is your favorite artist?

Like the musician question, there are so many to choose from.  Does Hugh McLeod count?

Who is your favorite blogger?

There’s no blogger that I read above everyone else, but I’m absolutely partial to postive thinkers that dwell on the good in the world.  Having a good attitude in life takes a lot more more effort than being negative about everything.  I respect that trait when I see it in other bloggers.

If you could meet anyone alive or dead, who would it be?

The two babies hanging out in my wife’s belly.  She tells me to be patient.

What did you want to be when you grew up?

I wanted to be the inventor of the most useless device ever.  Sadly, somebody beat me to it.  Loan Officer is not a bad second choice, though.

What’s the most interesting piece of trivia that you know?

The number you are thinking of right now is 7.

If you could live in any point in history, when would it be and why?

November 5, 1955.  It’s the day the Flux Capacitor was invented.

What’s the most interesting job you’ve ever held?

Father.  I spent years studying mathematics, chemistry and physics in school for my formal education.  Then, I prepared for fatherhood in an hour, reading a 100-page book called “Rookie Dad” .  Shouldn’t it have been the other way around?

8 More To Meme:

1. Lani Anglin-Rosales — Agent Genius
2. Jim Cronin — Real Estate Tomato
3. Joel Burslem — The Future of Real Estate Marketing
4. Jonathan Miller — Matrix
5. Mark Davison — 1000 Watt Blog
6. Todd Carpenter — RE Blog World Blog
7. David Gibbons — Zillow Blog
8. Linda Davis — Eastern Connecticut Real Estate Blog

Thanks.  It’s been fun everyone…

The market optimism that had pushed mortgage rates lower since late-March reversed last week on ever-rising oil prices and a bleak outlook from the Federal Reserve. 

When gas prices reached $4.01 around Cincinnati Friday, it re-ignited inflation concerns and inflation, you’ll remember, is the enemy of mortgage rates.

As expected, mortgage rates spiked into Friday’s market close.

Markets were closed for Memorial Day but re-open this morning with traders feeling apprehensive about mortgage market investments. There are many reasons to park money elsewhere, after all.

1. The U.S. dollar is trolling near all-time lows against the Euro
2. Oil markets are returning incredibly high rates of return
3. Big banks are still writing off large mortgage losses

All three of these reasons reduce demand for mortgage bonds and — because mortgage rates move in the opposite direction of mortgage bond prices — mortgage rates rise.

This week, a few inflation-related data points will cross the wires including the Fed’s preferred inflation gauge — PCE.

PCE stands for Personal Consumption Expenditures and it measures the cost of living for ordinary people. It’s the Fed’s preferred measurement because PCE accounts for Americans buying more chicken when meat gets expensive, or buying more fruits when vegetables get expensive, et cetera.

PCE is different from the Consumer Price Index because CPI is a “fixed” basket of products.

If PCE is running high, expect the exodus from mortgage bonds to continue and rates to run higher. If PCE is flat or lower, mortgage rates should fall.

(Image courtesy: Gasbuddy.com)

Spring time in Cincinnati, depending on the year, is also Cicada time. Mt. St Joseph University has a map tool that is allowing community members to report where they see Cicadas. Looking at the map it is interesting to see the clustering around certain areas such as Loveland, Indian Hill, and Mariemont.

The University benefits because as the community sends in Cicada sightings they gather useful data in their research. We benefit because we know when it is time to cover up our new bushes and trees to protect them. Be a part of the Cincinnati community and report your Cicada sightings.

Everyone I know has been asking us “So how is the market doing … really.” The honest answer is that it is not as bad in Cincinnati as other place but of course, we would like it to be better. When we pulled up numbers and took a statistical look at both sale price and units sold the number show a decline, but not the catastrophic drop some other parts of the country have seen.

Cincinnati saw a decrease in sales of 14% (3137 to 2697) in the first five months of 2008 compared to the first five months of 2007. In the same time period sale price fell slightly by 11% ($169,617 to $152,360).

The challenging part about these numbers, particularly the sale price is that there are so many bank owned homes being sold now at a fraction of their market value. With fewer overall sold properties, the higher volume of bank sales is having a greater impact on the average sale price in Hamilton County.

Each year Newsweek puts out a list in the spring of its top 1300 public schools. This year 5 Cincinnati area public schools made it into the top half of that list. Sycamore (585), Mariemont (449), Indian Hill (120), Wyoming (87) and Walnut Hills (56) are excellent examples of the high quality public education available across greater Cincinnati.

The quality of the educational system, and the perception of quality of an education system can weigh heavily on the minds of buyers. It is important to do the research yourself by consulting comprehensive lists of school rankings and looking up Cincinnati School Resources on your own.

Do you believe in Ghosts? I’m not sure if I do…but then I don’t think I can be hypnotized either. I do love magic and magicians or illusionists.

What about haunted houses? If you believe in ghosts then you believe there are haunted houses. Some of the phenomena generally associated with haunted houses, including strange visions and sounds, feelings of dread, illness, and the sudden, apparently inexplicable death of all the occupants, can be attributed to carbon monoxide poisoning. It has been proven that in some extreme cases of suicide or accidental death preceded by the occupants witnessing paranormal activity were actually victims a failing gas furnace or improperly installed gas water heaters.

This brings me to the topic of stigmatized properties. An attorney friend of mine called me last week and asked me what I knew of stigmatized properties. The best explanation I could offer is …a property that is mentally distressed. Distressed in the mind of the beholder, whomever that may be. A property being stigmatized has nothing to do with its habitability or use or operation of its systems. It has to do with desirability based on certain occurrences or happenings in or around the house and these occurrences could effect the value of the property.

For example. Would you want to buy a home where the previous owners had committed suicide or murder or both? Of course not…lets face it this property will possibly never sell if these facts are disclosed, yet the suicide and/or murder has nothing to do with the usage of the home itself. The doors still open, the furnace still works, the appliances all function, everything works. This home has been compromised by unfortunate happenstance and no amount of decorating, staging or aggressive pricing or incentiveswill help it sell anytime soon.

The key here is “If the details are disclosed“. This brings me to the question my attorney friend had. Do I as a licensed Realtor have to disclose these facts? My answer is that disclosure is the responsibility of the seller of the property. If a buyer were to ask me straight forward “Did anyone commit murder or die in this home?” I would have to answer them honestly. However, do I automatically offer these seedy details to every buyer that calls on or looks at this home?

There was a case of a rape that occurred in an upscale neighborhood near Cincinnati a few years ago. The new buyer had just moved in when the next door neighbor revealed why the previous owners decided to move. The wife and daughter were raped inside this house. The new buyer was appalled and sued their real estate agent, the listing agent, the lender and the title company. They sued everyone involved with this sale. It was dragged out in the courts for several years and their buyers agent ended up filing bankruptcy and leaving the real estate business. The court decided on the side of the defendants that the rape had nothing to do with the habitability of the property and no one did anything wrong. It was a day late and a dollar short for some of the defendants. This is a lesson worth learning. Anyone can sue you for anything legitimate or not. It is best to do whatever you can to avoid going to court. Everyone loses. No one wins.

God bless you and pray for our troops.      

Real estate markets differ from town to town and so does the Cost of Living.

Courtesy of CNNMoney, this calculator compares living expenses changes between any major city in America and Cincinnati.

The living expenses compared are:

• Groceries
• Housing
• Utilities
• Transportation
• Healthcare

Comparison data is provided by C2ER which, on its own Web site, charges $4.95 for each city-to-city comparison.  At CNNMoney.com, however, the exact same data is licensed and available for free.

Recently at the National Relocation Conference in San Francisco, Cincinnati was named the 10th best city for relocation. The study compiled a number of factors important to relocating families for large, medium and small markets. Some of the factors included housing costs, commuting ease and access to educational and medical facilities.

Of significant note was that 30% of the top 10 cities were Midwestern; Indianapolis, Columbus, and Cincinnati. Additionally, real estate costs and access to good public education may have been significant contributors, considering the relative stability of the housing markets in all three cities.  A bit further down the list Cleveland was ranked #12 adding to the overall assertion that the Midwest is a desirable place to relocate to.

CNN Money published a study today on the future value of homes all over the nation. After looking through the home value tool, the outlook for Cincinnati real estate is fairly similar to that of the rest of Ohio. The state will see about a 5% drop in home values over the course of 2008 with the depreciation slowing to a less than 1% fall in 2009.

What this means to the average home buyer is that if you are looking to move up market, it is time to take a look and make a move. Moving up market in a housing slowdown is a financially rewarding thing if you are in a position to take advantage of the value changes and potentially save money in the equation.

If you are moving from a $150,000 home to a $250,000 that is a $100,000 jump. If both homes sell for 5% less due to the market you are moving from a $142,500 home to a $237,500 home in a $95,000 jump. Same homes in question. $5,000 savings. Moreover the new house property tax will be assessed at the 5% lower sale price.

Forbes Magazine published a study that shows Cincinnati has the 9th best commute in the nation. The survey looked a number of factors including traffic delays, average commute time, and public transit / carpool use.

The Queen City’s public transportation system services a very small percentage of the population. Those who use it are traveling mostly by bus, within the city, and not to and from the suburbs. Traffic isn’t quite fluid, but at 27 hours in annual delays per traveler, it’s still better than average for cities of its size. As gas gets more expensive and economic woes in Ohio continue, expect to see more carpooling long before an expansive train system is needed. Right now, only 9% of commuters carpool, one of the lowest rates in the country.

There are ways that we can make our commutes more efficient, and one trend that seems to be emerging is moving back into the city. The cost of the Cincinnati commute from the exurbs is beginning to add up and there are some attractive living options in closer-in neighborhoods. There are a few other factors pointing to this trend and we will look at one more later this week.

This Sunday, May 4th has been deemed Super Open House Day in greater Cincinnati. Cincinnati Real Estate Agents have schedule 2,000 open houses so buyers can get an idea of the homes currently available for purchase. This event is something that can be attended by anyone who is interested in touring the available inventory, even if you are not actively looking for a home at this time.

As we wrote in the article Cincinnati: Rated One of the Top 6 Cities for Steady Home Prices for 2008, buying a home in Cincinnati makes good financial sense. According to Money Magazine, here are three major reasons why now is a good time to buy: 1) Good Inventory on the market; 2) Lower interest rates means more buying power; and 3) Homeownership is a good long-term investment.

I will be holding two open houses this Sunday. From 12pm-2pm, I will be at 3869 Mt. Vernon Ave in Oakley. From 3pm-4:30pm, we will be at 420 Carrington Lane, Unit 103 in Loveland. We welcome you to come by.