Everyone has felt some of the impact of slumping real estate prices over the past two and a half years, from homeowners trying to tap into shrinking equity to commercial property investors seeing smaller returns and greater vacancies. As 2009 reaches the halfway mark, however, the case for real estate's turnaround is becoming more and more apparent. By 2010, home and commercial property prices will have stabilized further, and interest rates will certainly have risen somewhat. As a result, the next three to six months may be the best opportunity to lock in an attractive mortgage rate, while still reaping the benefits of the best buyer's market in decades.

Many factors influence the real estate market during a recession. However, in the United States, geography plays a much larger role in deciphering statistics which tend to be quoted as national averages. When home prices fall across the country, there is legitimate cause for concern. But the recently released Case-Shiller index provides some promising clues that suggest otherwise. In 7 of the 20 surveyed areas, prices increased between March and April. In several other metropolitan areas the decrease in prices was much smaller than in previous month-on-month comparisons. Most importantly, the nationwide aggregate pace at which home prices have fallen is slowing, with the difference between April and March prices falling a meager .78 points.

This trend points towards stabilization across the board, even as several regions continue to experience contraction. These parts of the United States experienced increased growth throughout the "bubble period," which gained momentum after the dot-com bust, culminating in the spectacular drops seen throughout mid-to-late 2007. This period was marked by two unusual phenomena: the context in the real estate market of speculative and historically high home prices, combined with artificially low interest rates and under-regulated financial products.

These factors are essentially risk-based, and as the financial sector melted down the risk was priced into the record write-downs and subsequent contraction. The extent to which this effect will reinforce any further nominal decreases in home prices remains somewhat uncertain. Their effects will still likely be minimal and take more time to observe. In some of the more adversely affected areas, foreclosures are still high, but no longer the record-setting numbers seen in previous quarters. In addition, any government measures that may be implemented may stem foreclosures further and reduce potential risk to a marginal level.

This systemic and speculative risk has now largely been priced into the market at this point, as evidenced in recent data. Many investors have already begun buying into the markets which continue to grow quietly. This has been occurring in areas which prices have been more stable, such as the Northeast and in states like Texas, where places like Round Rock have continued to grow seemingly unabated. In fact, according to recently released census data, four of the fastest-growing cities in the US are in Texas. This is also reflected in the S&P Shiller index on Dallas home prices, which swung upward 1.7 points between March and April. Many other larger cities in New England and the Pacific Northwest have also continued to experience some growth despite the recession, albeit less than in boom years. These area's track records make them strong contenders for investment or home purchase.

In the broader picture, the Federal Reserve has forecasted a positive GDP in the last half of 2009, after which more competitive investment will end the current buyers market. Buying a home or commercial property will likely not be such a bargain for some time to come, as history shows cycles such as these tend to come every thirty years, with larger dips every sixty or so. That means if you're in for the long haul (or even if you're not) the time may have come to look at real estate once more.


Ki lives in Austin Texas and helps people looking to invest in Austin real estate. On the site, buyers can search for homes in the Austin MLS. He also publishes a monthly blog with trends and statistics on Austin Texas real estate.

After moving down for the last 3 weeks mortgage rates finally started to move up. The 30 year rate jumped from 4.78 (equaling the all time low) to 4.84. This is the highest the 30 year rate has been since April 9th. The other 3 major mortgage rates rose this week as well. The 15 year rate moved up slightly from 4.48 to 4.51. The 5 year arm moved from 4.80 to 4.90 pushing it farther above the 30 year rate. It's been sometime since the 5 year arm was below the 30 year fixed rate. It looks like the 5 year ARM is becoming more of a relic for the conventional residential buyer. The 1 year arm kept mostly steady rising from 4.77 to 4.78. Below are rates for the major mortgage products for the last few weeks. We also looked at rates from November 6, 2008 (6 months ago).

May 07, 2009
30-yr 4.84 15-yr 4.51 5-yr ARM 4.90 1-yr ARM 4.78

Apr 30, 2009
30-yr 4.78 15-yr 4.48 5-yr ARM 4.80 1-yr ARM 4.77

Apr 23, 2009
30-yr 4.80 15-yr 4.48 5-yr ARM 4.85 1-yr ARM 4.82

Apr 16, 2009
30-yr 4.82 15-yr 4.48 5-yr ARM 4.88 1-yr ARM 4.91

Apr 09, 2009
30-yr 4.87 15-yr 4.54 5-yr ARM 4.93 1-yr ARM 4.83

Nov 06, 2008
30-yr 6.20 15-yr 5.88 5-yr ARM 6.19 1-yr ARM 5.25

In addition to mortgage rates we always like to look at mortgage payments. We took today's rates and converted them into a mortgage for a 200k loan. We did the same thing with rates from last week and rates from November 6th, 2008.

May 07
30-yr $1054.17
15-yr $1531
5-yr ARM $1061.45
1-yr ARM $1046.91

Apr 30
30-yr $1046.91
15-yr $1527.94
5-yr ARM $1049.33
1-yr ARM $1045.7

Nov 06
30-yr $1224.93
15-yr $1674.77
5-yr ARM $1223.64
1-yr ARM $1104.4

Compared to last week a mortgage payment on a 200k loan would be $7.26 higher a month. This pales in comparison to the difference between today's payment and what the payment would be on the same loan 6 months ago. Compared to November 6, 2008 monthly payments today are $170.76 less or down 13.94 percent.

It's hard to know how much longer 30 year mortgage rates will stay below 5 percent. Last week the government auction of 30 year bonds was met with a cool reception. If the US is not able to auction off its increasing debt we should start to see higher mortgage rates. Add this to the general perception that inflation is coming because of the massive stimulus plans that have been enacted along with an improving economy its unlikely mortgage rates will stay this low much longer.

Although some are seeing signs of improvement in the economy lenders have remained extremely strict in their lending practices. People that would have easily obtained a loan at most times in the last 20 years are being routinely denied. Therefore if you are considering getting a loan in the next few months it's important to start researching your credit score and talking to different banks or mortgage brokers early on in the home buying process.


Ki created a site escapesomewhere.com that has information on the Austin market. It also has a mortgage rates widget and a free mortgage calculator.

Budgeting and financial planning are the cornerstones of responsible money management. Not only that, but they are vital in developing a workable plan for the future, and can even reduce stress. While many people shy away from the accountability and responsibility required to create and maintain an accurate budget, buckling down and building a budget can ultimately help reduce stress and worry, and lead to a more pleasant and fulfilling life. So, what are you waiting for?

Before getting started, it's important to define what a budget is, and what it is not. It is not just a list of where your money goes each month, and it is not a hard and fast rule that can't be bent or broken. A budget is a comprehensive overall picture of your financial situation where money comes in, where it goes out, and what it's spent on. A budget is a plan, a map of the financial future. It should include salaries, bonuses, bills, insurance, savings, and other expenditures. It should be divided into wants and needs and should be organized as a line-item list, with each item categorized and accounted for.

Most importantly, a budget should be accurate. Creating a budget that is inaccurate is a complete waste of time. People often create budgets that reflect where they want to be financially, or that ignore certain one-time-only expenditure this is not going to be effective. Instead of focusing on where you want to be and fudging the lines of where you are, make your budget an accurate and honest reflection of your current economic situation. Once you have that in place, you will be able to more easily identify where changes can and should be made, and you can begin to transform your financial situation by spending and saving responsibly.

Just as a budget should be honest and accurate, it should also be flexible. While, whenever possible, we try to plan for the unexpected, it is a fact of life that there will be times you need to go beyond your budget a family emergency, for example. This is understandable, and does not indicate some failure on your part to plan. In such situations, simply keep account of your spending and adjust your budget for subsequent months, where possible, to make up for the extra expenditures. Situations like these are not negative, in fact, they are one of the reasons saving is so important, and should be made a habit. One way to begin this habit is to include saving in your budget, as if it were a monthly bill. Determine what you can afford, and pay it out as you would any other necessary expense, like your mortgage or electric bill. When circumstances arise out of your control that require more spending than you had planned for or anticipated, having a healthy savings can save you an immense amount of stress and frustration.

The most important thing to remember about a budget is that it is a living, breathing thing "well, not really, but it should be treated as such. A budget will do you no good if you create it then put it aside and never look at it again. A budget should be updated monthly and kept on hand for quick reference and revision. Keeping your budget up to date will allow you to see not only where you are financially, but will help you see how to get where you'd like to be.

Ki helps investors in Austin Texas. He manages a site which provides a graphical search of the Austin MLS. Their is also statistics on their site about Austin real estate and Round Rock Texas real estate.

Over the last year the US, once flying high, has fallen and face planted into a somewhat ugly recession. For people with steady jobs the fear is of course the dreaded pink slip. But as long as they can keep their jobs their paychecks in most cases will remain the same. For small business owners a recession is often felt in the pocketbook. With less people buying their goods and services their revenues and profit margins can start to sink. And it can be painful for a number of reasons. First many business owners have an emotional attachment to their business. When the business starts to flat line its hard to readjust to the new realities of your surroundings. If you are a restaurateur it might be hard to scrap plans for opening a new location across town even if the economic realties of the market make it clear that continuing ahead with previous plans is illogical. The second difficulty is that it's hard to readjust ones life to deal with a lower take home pay. So while a small business might see a 20% drop in revenue that could translate to a 40-50% drop in profits. And while you might have lived on a smaller revenue 10 years ago it's hard to go back to that. Living without regular out of states vacations is one thing going back to that point is even more difficult. And these somewhat harsh realties are what drive people to look for something, anything that can restore their business to its previous health and prosperity.

In some cases advertising in a recession can be a wise move to increase market share and take advantage of a bad market. But more often what I see is this.

"Our revenues are way down"
"That's horrible"
"Let's spend a ton of money on advertising and hope we can put this behind us"

The problem is that the difficulty for this business is not that they didn't spend enough on advertising last quarter. The problem is that we are in a world wide economic depression caused by billions of crappy loans real estate loans given out over the last few years. And yes everything is interconnected but putting out more ads for a local restaurant is probably not going to change this.

Simply put sometimes business owners make asset allocation decisions based on emotion instead of their current economic realty their business exists in. A few reasons that increased advertising might be a bad idea for your business.

A) The number of potential customers is decreasing
B) In many industries your competitors are increasing advertising to "spend their way out of a recession"
C) Increased advertising and decreased customers is a bad market to ramp up your advertising budget


Ok so if the answer is not doubling or tripling your advertising what is the answer? Here is my advice

1) Cut Expenses that are not needed. Comb through your budgets for extras you added during better times but are not needed.
2) Keep current advertising that is working. Whatever is currently providing you business I would stick with.
3) Cut advertising that is not working.
4) Adjust

Number 4 is probably the most difficult but important. If ones business is affected by the recession (and most are) it might be a good idea to simply accept the possibility of a reduced monthly income for awhile. I am not saying people should give up on their business or not attempt to increase profits. But during a recession it might be a good idea to keep working to achieve higher goals but at the same time when you are doing your monthly personal budget accept the possibility that a weakened economy often results in less customers and lower revenue. This means if you planned on buying a new car or taking an extra vacation it might be a good idea to change those plans.

In the end by operating in a logical manner a business can survive a recession and hopefully be in a position to flourish once the economy recovers.

Ki lives in central Texas. His website provides a guide to Austin Real Estate it also contains a search of the Austin MLS and updated information on Mortgage Rates.

With living costs rising at a seemingly constant rate, simple, everyday expenses are getting more and more difficult to accommodate, and many people are finding their budgets getting tighter than ever. While there are plenty of areas people can trim their budgets, such as spending on entertainment or shoe shopping, the rising costs of necessary items like food and gasoline make it harder and harder for people to cut enough spending elsewhere in their budgets to accommodate the increased expense of these everyday necessities. And despite the need, it's simply unrealistic to eliminate all extraneous spending in order to make room for the ever-increasing expense of groceries and gasoline.

Thankfully, with a little budgetary reorganization, some planning, and a dash of creativity, you can maximize your food budget to make sure you get the best value for your dollar. Here are a few tips to help you spend wisely at the grocery store, and stretch your food budget as far as possible.

Plan ahead
All too often, people approach grocery shopping with an impulse-buy mentality. "I'll just go see what's on sale," is an extremely ineffective approach to grocery shopping. Sit down with a cookbook and plan your meals at least a week in advance. Scheduling meals out in advance will allow you to maximize your food spending, as you can organize meals by primary ingredients, using them from one day to the next. Also, planning ahead will help you avoid impulse buys when you get to the store. Make a list and stick to it.

Buy in bulk
The larger quantities you're able to buy, the more you'll save. While memberships at wholesale discount clubs aren't cheap, they pay for themselves almost immediately in big savings. Buying items like individually packaged frozen meats, toilet paper, paper towels, laundry detergent, etc., is significantly more cost effective than buying these items in smaller amounts at your local grocery.

Keep it simple
Sticking to simple, basic ingredients is a great way to save at the grocery store. Creative recipes and exotic spices can make even the simplest items (chicken breasts, for example) a culinary treat. So skip the fillet and get creative with your recipes. You'll still eat well, and your budget will go much farther.

Be prudent with produce
While buying in bulk is great for some items, it's rarely wise when it comes to produce and other perishables. Less is more when it comes to items that have a shorter shelf life. When buying produce, only buy what you're certain you'll use. This will help you avoid unnecessary waste, and will help you save money.

Keep it close to home
Eating out is one of the fastest ways to blow through your food budget. Between overprices meals, drinks, tax, and tip, it's extremely difficult to get enough value in a meal out to justify it over eating in. Sure, there's more work involved in cooking for yourself, but it's significantly more cost effective. Save eating out for special occasions only, and you'll find your food budget will go much farther.

Escapeso Realty is a small real estate company assisting buyers looking for Austin homes. Their site provides a search of the Austin MLS and information on mortgage interest rates.

Responsible budgeting and money management are skills everyone needs to learn as is the discipline required to put these skills into action. Many people find it difficult to stick to a budget; oftentimes, this is because the budget they created is not realistic. Regardless of the economic climate, it is important to know how to manage your finances and keep track of your spending. In order to do this, you need a budget that you can live with. Here are a few simple steps to get you started.

First things first: before you can put together a reasonable, livable budget, you have to know what the greater scope of your financial situation actually looks like. This doesn't just mean knowing how much money you make every month you need to take into account your income, your fixed expenses (like rent, gas, groceries, day care, and insurance) you pre-existing debt, as well as other random spending needs (summer vacation, birthdays, etc.).

Once you have all of this information in front of you, organize it into three categories: Income, Needs, and Wants. Income will obviously be your salary and any other wages you may receive. Needs are your fixed expenses, not including entertainment and other superfluous expenditures (just because you like going out to dinner and a movie once a week, doesn't mean you need to). You should, however, include monthly bill payments in your fixed expenses, as paying off debt is a crucial step in establishing financial stability. Finally, "Wants" are things like entertainment spending, new clothes or jewelry, trips, etc.

Now that you have an accurate picture of your financial situation in front of you, it's time to do the dirty work. What can you afford, and where do you have to make cuts? The first things that need to be taken into account when determining where your money goes each month are your "Needs". Once those are accounted for (including, if at all possible, paying into a savings account), you can start adding some of your "Wants" to the list prioritize these, as it's unlikely you'll be able to accommodate them all. Also, be honest with yourself when identifying "Needs" vs. "Wants". A top-tier cable service with 1,000 channels is not necessary. Neither is a fancy gym membership (especially if you don't use it much). Being honest with yourself and limiting over-the-top expenses is not only the financially responsible thing to do, it will free up more cash for other items (like occasional dinners out, or a movie rental membership).

Once you have a budget worked out for yourself, make sure you keep it on hand a budget is useless if you don't use it. Update it often, and feel free to make changes and alterations if you need to. Think of your budget as a fluid, living document. Your needs may change from month to month or quarter to quarter, and your budget should reflect that. Finally, don't get discouraged if you go over budget one month. Remember, it's a tool, a guideline. If you use it correctly, it will help you achieve long-term financial stability.

Escape Austin real estate operates in central Austin. Their site has map based search for Austin homes along with a Austin real estate blog.

During the subprime crisis we saw the advent of numerous bizarre loan products. In general the new loan products were designed to get people into houses they could not normally afford. As people started to default on their mortgages banks realized many of these loan products were not a good idea. During the subprime crisis we saw most of these new loan programs fall to the wayside. I think in most cases this is a good thing. Many of these new loan products reduced the chances that individuals could gain equity in their homes by paying off principle. When difficult times arose for people they were in a difficult position because although they had made years of payments their loan balance had not changed. The worst of the new loan products had "teaser rates" so that individuals made low payments for a few years until the rate and their mortgage shot up. Its a wonder why banks are surprised by the number of foreclosures.

The one product that has seemed to survive the subprime meltdown is the 40 year loan. I am not a fan of the 40 year loan. Mostly because the savings are minimal. Lets look at the current mortgage interest rates from Wells Fargo for a 40 year, 30 year and 15 year loan.

40 Year Loan = 6.375
30 Year Loan = 5.75
15 Year Loan = 5.125

Now using a mortgage calculator lets look at the mortgage payments on a 200k house.

40 Year Loan = 1153.14
30 Year Loan = 1167.14
15 Year Loan = 1594.64


While the difference between a 30 year loan and a 15 year is substantial, $441.50, the difference between a 40 year loan and a 15 year loan is only $14 per month. A little savings but is it really worth adding a whole extra 10 years to your mortgage. So over 30 years $14 dollars a month amounts to $5040. On the other hand an extra 10 years of mortgage payments comes out to $138,377. To run the numbers a different way by putting down a mere $2400 on your 30 year loan you would get the same mortgage payment as you would on a 40 year loan.

Obviously everyone's situation is different and in a small number of cases a 40 year loan might be warranted. But in general the 40 year loan adds extra years to a person's loan for a minimal benefit.

Ki works as a realtor in the Austin real estate market. He provides updated stats on the market on his Austin real estate blog along with a free search of the Austin MLS.