2/3 of 2016 is Over

More than likely, if you are reading today’s entry, you don’t collect a salary.  Like me, your ability to put food on the table is a function of how many deals you put together.  Since I like to eat, and have four growing boys at home who really like to eat, I have a pretty good responsibility to make sure that there’s something of substance on their plates at least three times a day.

To that end, I set goals at the beginning of each year.  I track closings to be sure.  But closings are dependent on applications, which are dependent on pre-approvals, which are dependent on leads.  To get leads, I make phone calls.  I know that to accomplish my income goal for the year I need to make 2,500 phone calls, which is just over 200 per month, or 10 per day.  That’s really the only thing over which I have any control.  I can’t control the number of applications or closings that I have directly, but I can exert myself to make a few extra phone calls to complete my 10 per day.

After doing this for 19 years, I have a pretty good handle on how the number work out.  Individually the percentages of conversion ebb and flow, but collectively I know that to get one closing I need to make about 15 phone calls.  What’s always interesting to me is that the formula works.  Since tomorrow is the first day of September and the year will be 2/3 of the way over, I decided this morning to see how I am coming along.  And since we are friends I thought I’d share my progress with you as a percentage of completion of my goals for the entire year.

Calls: 66.92%
Leads: 70.8%
Pre-Approvals: 85.6%
Applications: 70.8%
Closings 67.3%

I can see that I have gone through the pre-approval process for a larger percentage of people this year who for whatever reason have not purchased a home.  But in the end my call percentage, statistically speaking, matches my closing percentage.  And what makes me amazed, is that both are 2/3 of the way along to path toward my goal for the year.

There is still a lot of year left and I hope that you are accomplishing your personal objectives!  If I can help you in any way, let’s get together!

Spicing up Homeownership

I speak Spanish every day as a fairly good portion of my clients are Latino.  Nevertheless, I was still surprised by some statistics that I came across this morning.  The Urban Institute predicts that through the year 2030, Spanish speakers will account for only 40% of all new household formations, but 52% of new homeowners be Hispanic.  I know that was three numbers in one sentence, so let me explain it another way: for at least the next 14 years the Hispanic/Latino population will markedly outpace non-Hispanic/Latino first time home buyers.

You want proof of the ethnic shift from another industry?  Salsa is the number one condiment sold in the United States, and tortillas outsell hamburger buns.  Think about it.  How long has that bottle of ketchup been in your refrigerator?

Jargon in Jackson

Once a year, economic chiefs and finance ministers from around the globe get together in Jackson Hole, Wyoming to drink beer, wrestle steer, and talk about monetary policy.  I am actually not sure about the first two events, but the gathering’s theme “Designing Resilient Monetary Police Frameworks for the Future” does include a symposium with Janet Yellen as the keynote speaker.  Since most you were probably not in attendance at the rousing rhetoric delivered by the Chair of our very own Federal Reserve, here are the Cliff Notes:

The Fed has the tools to fight off the next recession.  They may choose to broaden their asset purchases (they already own more now than at any other time in history) to regulate longer-term Note yields.  Ms. Yellen anticipates gradual rate hikes over time, and the case for a hike by the end of the year has strengthened in recent months.

If I may collide worlds again by educing the elocution into a tidy metaphor: regarding current interest rates, now is the time to strike while the iron is hot. (!)

Janet in Jackson

Durable Goods orders are up 4.4%, quite a bit above expectations. Jobless Claims are down by a thousand, which also beats expectations.  Those are two encouraging pieces of information, but what people really want to hear is the thoughts of one woman, who will be speaking at a symposium in the Cowboy State tomorrow about the future of interest rates.  Fed Fund Futures are prognosticating a 21% chance of a rate hike in September and a 41% probability in November.

Home Prices

New Home Sales yesterday were measured at 12% jump from the previous and a nine-year high.  Today, Existing Home Sales show a 3.2% slump, though the price on an existing home is up 5.6% from this time last year.  One thing is still certain: homes sold by a Realtor command a much higher return to the seller than homes sold by the owner.

Fannie Mae reports that the average loan out there being closed right now raised to 3.67% this week from 3.64% the week before. I am offering better rates than that.

The Doggie Paddle

In swimming there is this thing called the doggie paddle.  It’s not one of the strokes you see in the Olympics because it’s not the most efficient way to use your arms to propel yourself through the water.  Dogs use it because they can’t do the butterfly or back stroke (through frogs seem very adept at the breast stroke).  Kids use it when they are learning how to swim.  The doggie paddle is used often when one is tired of swimming, or when you just don’t know where you are going.

If I was asked what stroke the mortgage bonds are demonstrating at the moment, I would have to say that it looks like the doggie paddle.  There is a lot of intraday movement happening, but rates have stayed stagnant now for six weeks.  Bond traders are expending a lot of energy and not really getting anywhere.  They have been at it since the first week in July, and my guess is that they are getting tired.

And I don’t think that the doggie paddle is limited to movement in the Bond arena.  The main topic for this weekend’s Jackson Hole economic symposium (attended by finance ministers and central bankers from around the globe) will be “Designing Resilient Monetary Policy for the Future”.  Because economies all over the world have been doggie paddling for a very long time now.  Good luck to you on your speech and your design Ms. Yellen.  The next Fed meeting starts on the 20th of September where there is an 18% chance that the FOMC will raise rates.

Summer Comes to an Uncertain Close

Summer break is all but washed away.  At our house the boys head back to school on Monday, which means that I need to try to remember how to set an alarm clock again.

Aside from Great Britain leaving the European Union a few months ago, the economic news has been really light.  The lack of coverage might have something to do with the political productions playing out on stages large and small across the country.  It’s reality TV that is actual reality, on TV.

Three Fed Governors spoke at various functions this week, and their message is all but congruous. San Francisco Fed President Williams said that the central bank should raise rates sooner rather than later.  Dallas Fed President Kaplan said that because of the domestic economy’s sluggish momentum, the Fed really has no room to hike rates.  St. Louis Fed President Bullard said that he can only see a single rate hike coming in the next two years.

Uncertainty typically breeds an environment in which interest rates remain low, as investors push their money into a vehicle offering a guaranteed return and the safe haven of capital preservation–bonds.

Seven Peaks Party

This Monday is our Client Appreciation party at Seven Peaks Water Park in Provo.  We have rented out the entire facility from 5-9 PM so that you and your family can come and enjoy one of the last days of summer!  Tubes and parking are also free!  Watch for your ticket in the mail today and I’ll see you there!

Strong retail earnings and lower unemployment filings are boosting stocks and hurting bonds today–though mildly.  Rates are terrific.  I spent the last nine days with my family in New York.  It was a whirlwind of a trip, covering the state from north to south and east to west, and even on up into Canada. I’d like to say what my favorite part was but I am still digesting the whole experience.