February 15, 2010
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2009 Local Market Reports – 3rd QuarterEvery housing market is unique. These Local Market Reports (LMRs) — which reflect data available through 3rd Quarter 2009 — provide insights into the fundamentals and direction of the nation’s largest metropolitan housing markets. Each downloadable report evaluates a number of factors affecting home prices, including:
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February 13, 2010
Vice President Joe Biden made his latest eyebrow-furrowing prediction Wednesday night, declaring confidently that another Sept. 11-size terror attack is “unlikely” in the U.S., despite signs that Al Qaeda and and other terrorist groups are actively planning more attacks.
Top intelligence officials told congressional lawmakers early this month that the terror network can be expected to try another attack in the next three to six months. But Biden, interviewed on CNN, downplayed the risk.
“Look, let me put it this way. The idea of there being a massive attack in the United States like 9/11 is unlikely, in my view,” the vice president said.
It was the latest in a line of sweeping forecasts Biden has made in recent years.
Perhaps most famously, Biden predicted shortly before the 2008 presidential election that Barack Obama, as president, would face a “generated crisis” from the international community to “test the mettle of this guy.”
One could argue that the events of the past year and a half have proved him right many times over — with the North Korean nuclear test, the Iranian election crisis, the Fort Hood shooting and the failed Christmas Day attack, among other things.
But Biden may have a long way to go before he can call himself a true Joestradamus.
He admitted in an interview last July that the administration had been way off in its estimates of how the stimulus package would affect the unemployment rate, having “misread how bad the economy was.”
Now the veep is making economic predictions again, saying late last month that the U.S. should start to see a net increase in job creation on a monthly basis, starting in the spring.
Biden on Wednesday did not rule out the possibility of a terror attack in the U.S. — he said a future terror attack might take an unfamiliar form.
“What’s happening, particularly with Al Qaeda and the Arabian Peninsula, they have decided to move in the direction of much more small-bore but devastatingly frightening attacks,” he said on Wednesday. “The concern relates to somebody like a shoe bomber or the underpants bomber, the Christmas attack or someone just strapping a backpack on them with explosives that are indigenous.”
December 13, 2009
At Lutz Tavern in Portland, Ore., the beer-drinking crowd goes through about 20 to 25 cases of Pabst Blue Ribbon beer on a Friday night. “It’s our No. 1 seller, no questions asked, hands down,” says Lilias Barisich, whose family has owned the bar since 1954.
Here — where tin and neon PBR signs adorn the walls and the clientele includes students from nearby Reed College — Pabst has been a top seller since Lutz introduced it in the 1990s for $1 a can. And these days, drinkers are even more likely to go for a PBR: Since the economy has put a limit on free-flowing bar tabs, Barisich says some drinkers are trading in what she calls “frou-frou” beers for $1.65 PBRs.
And Lutz Tavern isn’t the only place seeing a boost for the blue-ribbon brand. The beer is up almost 30% in dollar sales in the U.S. for the 52 weeks through October at retailers like supermarkets and drug stores, beating out the beer category’s overall 1.1% increase, according to market-research firm Information Resources. Meanwhile, Budweiser and Corona Extra are down about 7% and 8%, respectively.
But the lagging economy isn’t the only thing energizing PBR. The brand has also cultivated a reputation as a hipster, offbeat beer — or what the president of the National Beer Wholesalers Association, Craig Purser, likes to call “retro chic” — positioning itself as an alternative to big, mainstream brands.
“If you’re a certain kind of beer drinker and can’t bring yourself to drink Budweiser, there’s your answer — drink Pabst instead,” says Maureen Ogle, author of “Ambitious Brew: The Story of American Beer.”
Case in point: Ogle says when she’s attended the Great American Beer Festival in Denver, the crowd boos every time Anheuser-Busch (BUD) wins an award, but Pabst always gets cheers.
While PBR’s success stems from its niche, dive appeal, it isn’t actually the cheapest of the cheap. PBR is at least $1 a case more than Busch Light and Keystone Light, says Benj Steinman of Beer Marketer’s Insights. PBR drinkers may want to look down-market, but they’re willing to spend a little bit extra to make sure no one mistakes them for the mainstream.
But as Ogle points out, while fans might like to think of the 165-year-old company as a boutique relic of the family-owned, all-American breweries of the past, it actually doesn’t own its own brewery. All of its brewing is done at contract facilities (including some owned by MillerCoors), with Pabst brewmaster Bob Newman overseeing the recipes. Pabst Brewing Company’s portfolio also includes beers like Colt 45 and Schlitz. Pabst declined to comment for this story.
And Pabst is not family-owned but instead held by a charitable trust, which recently put it up for sale. In 1985, Pabst was bought by Paul Kalmanovitz, who also snatched up other semi-defunct brands such as Lone Star and Olympia. When Kalmanovitz died in 1987, he left Pabst to a charitable trust in his name. But as charities aren’t supposed to own for-profit companies, the IRS has given the foundation until 2010 to sell off the business.
With Pabst on the market, one potential offer has emerged with a gimmick as quirky as PBR itself. In what he says started out as a joke, Michael Migliozzi — managing partner of advertising agency Forza Migliozzi — is attempting to crowdsource the purchase of Pabst by creating buyabeercompany.com, a joint venture with ad agency the Ad Store.
Anyone over 21 can go to the site and pledge a minimum of $5 toward the reported $300 million sales price for Pabst. So far, would-be beer moguls have pledged more than $20 million in about a month. If the collective raises enough money, Migliozzi says contributors will get enough beer to match their pledges and ownership in the company.
Today, with PBR’s underdog cache and strong sales, it’s clear why your average beer drinker might want a piece of the action. But PBR hasn’t always been such a successful brand. When Neal Stewart started working for Pabst back in 2000 as a divisional marketing manager, he says the brand was down for almost a quarter of a century. At its low point in 2001, Pabst was moving less than 1 million barrels per year of PBR, an abysmal number for a brand that in the late 1970s moved about 20 million barrels.
But then PBR started to see a huge increase in Portland, and Stewart was sent there to figure out why.
“We found it was the hipster crowd, the music crowd,” says Stewart, who became the PBR brand manager in 2002 before leaving the company four years later. “They liked it because it didn’t have a lot of advertising behind it.”
That image stuck: In 2002, the brand was up about 5%, and then turned into one of the fastest growing beers in the country.
“People don’t like to be shouted at,” says Jack Anderson, CEO of brand design firm Hornall Anderson, which works with beer companies. “It’s more authentic and cooler if you discover it or you’re told by a friend. ”
PBR still does minimal marketing, which continues to be part of its allure. And what little marketing the company does do has a distinctly non-traditional feel: PBR fans have a chance to win beer for a year and a cash prize when they enter their Pabst-inspired art in the company’s annual art contest.
And some of the work ends up displayed as murals or in other public forms, so the promotion both engages consumers and provides some free user-generated advertising — without it actually being advertising at all.
However unconventional Pabst might strive to appear, if the number of drinkers who call PBR their “usual” keeps growing, the brand does risk alienating some fans who don’t like to follow the crowd.
Pabst got close to that line when it started touting itself as the largest American brewer after Belgium-based InBev bought Anheuser-Busch in 2008. For drinkers who get a buzz from a beer that’s edgy and on the fringe, publicizing PBR as a powerhouse could backfire.
But whatever damage a move like that could’ve had, Pabst has managed to keep its beer far from flat. And it does seem that this moment — from the recession to the hipsters to the crowdsourcing — belongs to PBR. 
October 22, 2009
By Erica Christoffer, Contributing Editor, REALTOR® Magazine
Erik Qualman uncovered these startling statistics and more, which he lays out in his new book Socialnomics: How Social Media Transforms the Way We Live and Do Business (Wiley, 2009). Social media has created a fundamental shift in how people communicate, Qualman says. One only needs to look as far as Qualman’s Socialnomics YouTube video that went viral just weeks after its release, topping out at nearly 1 million views. He believes that soon people will not have to search for news, products, and services — but rather news, products, and services will find them via social media. Thus, in order to be successful in business today and in the future, the social interaction with potential clients must be embraced.
What was your first social media experience and what were your thoughts at that time?
Erik Qualman
QUALMAN: I joined MySpace, like a lot of people, in 2005. An 18-year-old introduced it to me and it was like she was addicted to crack. She’d always have to check her MySpace to see if she had more friends or to see in anyone commented. It was obvious to me that it was something big, especially for someone to be so ingratiated with it. I hopped on and it made sense to me right away. It wasn’t a surprise once Facebook opened up their platform to go beyond just college students that Facebook became so popular. Then the world was turned on its head when they opened up their application program interface to allow anybody to write applications for Facebook. That decision was so far reaching that it actually caused Apple, which has typically been a very closed environment, to open up and allow others the ability to code applications for the iPhone. That was really the game changer.
What do you say to people who consider social networking just another fad?
QUALMAN: I like to throw out statistics at them, that’s why I made the video for YouTube. I mention, first, that the Pope is on Facebook, he’s on YouTube, he has an iPhone application – so I don’t think it’s just a fad. It’s fundamentally changing the way businesses have to work, to the point that companies are no longer going to be advertisers; they’re going to look more like content providers or party planners.
What I mean is that companies are not going to be spending money on a 30-second television spot as often. Rather, they’re going to provide free tools that are branded with their company brand, and in the long term it will get people excited to use their products. For instance, it might be a travel company that offers free language or translation tools.
There are four main steps to succeeding on social media:
How did you conduct the research for your book?
QUALMAN: I started looking at how people are using social networks, how they are succeeding, and how they are failing. I collected all the statistical data about the platforms people are using, where people are aggregating, what businesses are doing to leverage social media, and why consumers use these tools. The statistic that if Facebook were a country, it would be the fourth largest because they have 300 million users is significant. If you ask someone if they’d rather give up their Facebook or their e-mail, if they are from Generation Y, they’d rather give up their e-mail. That struck a chord with me.
You say in the book that youth under the age of 17 are seeing significantly fewer traditional ads. Do you think social media will completely replace traditional advertising at some point?
QUALMAN: I don’t think it will completely replace it; there will always be that need to see the visual fundamentals of traditional advertising. But it will become less. Social media is not an ‘or,’ it’s an ‘and’ in marketing. Dell recently released a statement that they originally had 40 people focused on social media. But they realized it’s not just the 40 people speaking for the company on social networks, it’s the entire company. Every person, whether it’s someone on the phone answering customer service, or any other employee, they have a Facebook account, they have a Twitter account, and they are representing Dell.
Everyone is engaged, and because humans run companies, you’re going to get that human touch in the dialogue between the consumer and the employees. The companies that listen the best, and are willing to make changes from interactions and feedback, those are the companies that are going to win in the long term.
Are you suggesting that social media is making businesses more honest?
QUALMAN: Yes, transparency drives honesty. It also drives what I call in the book, the elimination of social schizophrenia. For example, in the past someone could go to work and be the best employee during the week. But on the weekend, you have a whole different subset of friends who are party animals. Now with social media tools, it’s not possible to maintain those two different personalities – and the same holds true for companies. If a company claims to be the greenest company out there, but they actually hold a subsidiary in Dubai that’s dumping waste into the ocean, that’s going to be found out. In the end, the transparency is better for society as a whole – both on the individual level and on the company level.
How do people filter through rumors that can spread via social networks?
QUALMAN: Rumors will get sniffed out a little faster. If you think about Wikipedia works, one of the statistics I found is that only one out of 10,000 people contribute to Wikipedia. But since it’s on such a massive scale, it’s more accurate that Britannica, which has opened up its encyclopedia to be edited by people. If you have 20,000 people editing a post, it’s going to be more accurate than if three people worked on it. Social networks are like the world’s largest referral program on steroids.
For someone in real estate, could you name the main points they can take away from your book?
QUALMAN: The first point is really to listen to what’s being said out there. Go to search.twitter.com and type in key words. Maybe you’re selling houses in Alfreda, Ga. Type in Alfreda and see what people are saying. Once you do that, start to slowly interact with these folks, softly at first because they don’t know you. Maybe someone is having trouble selling their house and they tweet about it. Send a message letting them know you’re here to help. Eventually you might develop a relationship and sale. It’s so important to listen to people’s needs.
Secondly, they can look at Delicious.com and Digg.com to see what real estate articles are being bookmarked the most.
Next, they should really be true to themselves and figure out their core. Social networks are making the world more niche. In real estate, you’re going to have to find what you want to specialize in to differentiate you from someone else. You can’t be everything to everybody. And figure out which social networking tools will work for you and help connect you to your customer base.
Lastly, don’t be afraid of these tools. You’re only going to learn by jumping in. It’s better to fail in social media than do nothing, because at least you are going to learn something.
October 21, 2009
Jumbo Freeze Might be Thawing
October 15, 2009 by Robert Freedman · 4 Comments
Filed under: Economics, Mortgage Financing
By Robert Freedman, senior editor, REALTOR® Magazine
It’s still early but there are signs the availability of jumbo financing might be improving—although underwriting standards probably won’t ease any time soon. That means the days of creditworthy borrowers having a tough time getting financing for an amount over the conforming loan limit might be ending but they’ll still have to come up with a significant down payment and be prepared to show lots of documentation, like three years worth of tax returns instead of the customary two.
NAR Chief Economist Lawrence Yun says lenders are slowly getting back into the game because the climate of dread is lifting: Wall Street analysts and business executives have recalibrated their performance scenarios to reflect the greatly improved conditions among lower-priced homes (thanks to the home buyer tax credit and steeply discounted pricing). That in turn is creating a virtuous cycle as the improved scenarios help relax concerns over the economy, pushing up equities, which in turn creates the wealth that further increases confidence.
In other words, the improving lower-end housing market and the rising stock market are helping to push big financial services companies back into the business of loaning money rather than hoarding cash. As a result, it’s not just safe agency loans that lenders are willing to make (Fannie, Freddie and FHA) but also non-conforming jumbo loans. That helps further the narrowing of the interest rate spread between comforming and non-conforming loans.
I spoke with Las Vegas luxury home sales specialist Kenneth Lowman yesterday and he says the jumbo market has a long way to go before it’s back to where it needs to be, but, importantly, big loans are being made again. Earlier this year, that wasn’t so clear-cut.
“We recenty did a jumbo loan in record time,” he says. It was for a home listed at a couple of million dollars—obviously not an everyday deal for most salespeople—but it closed in just 22 days. Six months ago, he says, that never would have happened.
Yun predicts that financing for jumbo loans, second homes, and commercial real estate will show marked improvement by the middle of 2010. By late 2011 or early 2012, we might even see more non-agency, private-label loans securitized by Wall Street.
Yet the mortgage market by then will surely be different than it was during the housing boom, and in a good way. Buyers will be far more careful about staying within budget and lenders will be far more cautious about making loans to buyers who aren’t staying within budget.
Yet there remains a big concern: inflation. Although prices remain stable because of continuing slack in the economy (high unemployment, excess business capacity), once the enconomy starts growing again federal budget deficits will create inflationary pressure. The main way to head that off, says Yun, is for the government to produce a credible plan for getting the deficit under control.
Hear some more from Yun in an audio podcast he recorded earlier this week, mainly to talk about the need for Congress to extend the tax credit, and in his latest video interview, below, in which he talks about home-sale trends.
October 19, 2009
Buyers who are considering the purchase of a condominium should inspect the health of the home owner’s association before they close.
The seller should provide the buyer all financial documents relating to the association in time for an attorney for the buyer to review them before closing.
Here’s some advice from Leonard Baron, professor of finance at San Diego State University, about the information that the seller should consider:
October 19, 2009
All the leading indicators say housing is definitely on the mend, economists reported in advance of the official release of several pieces of good news expected this week.
Bloomberg News surveyed 53 economists and asked them where they expected the numbers to fall. Here are their predictions:
October 19, 2009
Here’s what we’ve been sharing with our/your clients! For those of you we are not yet working with, this is relevant information for you to communicate effectively to your clients…
Since the Fed began purchasing mortgage bonds and intervening in the mortgage markets, interest rates on fixed rate mortgages have dropped a full percentage point below where they would be otherwise. Take out the Fed’s subsidy, and mortgage rates are likely to drift back up by at least one percent.
To put it in perspective: A one percentage point increase in mortgage rates – from 5.25% to 6.25% – would cost an extra $127 per month and $45,730 in interest over the life of a $200,000 fixed rate 30 year mortgage. This is exactly what could happen in 2010 once the Fed stops buying mortgage bonds.
The way mortgage companies set their interest rates is by figuring out the price that Fannie Mae and Freddie Mac are willing to pay them for the mortgage. Fannie and Freddie set their price by figuring out what investors on the bond market are willing to pay them for the Mortgage-Backed Securities (mortgage bonds) that they issue. When the Fed stops buying mortgage-backed securities, the demand for these bonds will be much less, and mortgage rates will go higher.
Fed officials have been signaling for some time that their unprecedented interventions in the mortgage markets may come to an end or even be reversed once the economy begins to improve. While we don’t believe the Fed will start selling mortgage bonds right away, we do believe that rates will start drifting higher in 2010 once the Fed stops purchasing mortgage bonds. After all, it’s not every day that the Fed spends a whopping $1.25 trillion to subsidize mortgage rates.
Take out this enormous subsidy, and the average person with a $200,000 mortgage who refinances or buys a house stands to lose $45,000 over the life of their home loan.
Let us help you, help your clients get off the fence! The window of opportunity to buy and refinance is here! It’s NOW! While home prices and rates are “artificially low”. Lower interest rates = more home affordability.
The Meredith Mortgage Team closes loans clean and on time! We dazzle our clients with the best service in the mortgage business….hands down!
October 14, 2009
Prediction: Homes Sales to Rise 11 Percent Sales of existing homes will rise 11 percent in 2010, and sales of new homes will climb 21 percent over this year, Mortgage Bankers Association Chief Economist Jay Brinkmann predicted in a speech Tuesday at the organization’s annual meeting. “We still see a concentration in the lower end of the market,” Brinkmann said. “The entry level homes are in demand.” Brinkmann also predicted further declines in existing home prices, with the median falling to $164,200 in the first quarter of 2010. David Stevens, commissioner of the Federal Housing Administration, concurred, adding that mortgage rates will rise to 5.6 percent by the end of 2010, though not enough of an increase to discourage a 12 percent increase in mortgage applications next year.
October 14, 2009
Greg Vogel | October 6, 2009
It’s late 2009 and the consumer credit world is still in turmoil! You have MANY new changes:
1) You have a new credit law, The Credit Card Accountability Responsibility and Disclosure Act of 2009, which partially became law in August 2009 and will completely become law in either February of 2010 or December 1, 2009 if Democrats have their way.
2) You have a new FICO® score, FICO 08, which is now live and commercially available at all three of the credit reporting agencies. This new FICO score promises to do a better job of predicting future credit risk.
3) You have millions of credit card holders who have seen their credit limits reduced, accounts closed, interest rates increased and/or their minimum payment requirements increased.
4) In addition you have billions in lost home equity, which means no more safety net for those consumers who have excessive credit card debt.
5) You have debt settlement companies aggressively marketing their services like vultures circling a dying carcass without fully disclosing the downside of possible lawsuits and severe credit damage to their customers who use their services.
6) And finally, you have media and the undereducated that are spreading fallacies about the credit world, and are causing panic.
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