Austin is one of 79 metro areas across the country to be officially out of the recession, according to Moody's. Although the state of Texas is still considered to be suffering the constraints of the recession, Austin and seven other Texas cities have been given the all clear. This determination was based on an index that included employment, housing starts and home prices.

In fact, the latest poll of economist says that at least 80 percent of them agree that the recession is over. Unfortunately that piece of good news may not mean whole lot as the American economic landscape looks completely different than it did two years ago. The survey by the National Association for Business Economics released recently said to expect a slow recovery. Here are some reasons the recession recovery may be slow:

Unemployment
There seems to be little doubt that the unemployment rate, which is currently 9.8 percent, will reach 10 percent by the first part of next year. Even with the number of new jobless claims down for the fourth week in the last five, layoffs continue. Federal Reserve Chairman Ben Bernanke has warned that unemployment is likely to remain above nine percent through 2010.

Consumer Spending
Worries over unemployment affect consumer spending habits, even of those Americans who have jobs and job security. The personal saving rate is up for the first time in two decades and the cautious spending that began during the height of the recession has not changed appreciably in recent months. For example, when gas prices hit the $4 per gallon mark in the summer of 2008, people significantly changed driving habits. The annual American Community Survey showed that the numbers of Americans commuting to work, a habit stared during the high gas prices, remains the highest number in more than a decade. People are generally not eating out as much or making as many big purchases. It remains to be seen if holiday spending this season will help revive the suffering retail sector.

Real Estate
The economists surveyed expect housing in 2010 to contribute to the overall growth of the economy for the first time since 2005. However, the census data shows that less people are moving these days, with population trends to the sunbelt states actually being reversed. Real Estate prices nationwide are down and the percentage of Americans owning homes dropped to 66.6 percent this year from the high of 67.3 percent in 2006.

Credit
Even with the Dow Jones industrial going over 10,000 and banks reporting billion dollars profits, credit remains tight. A recent report from the Federal Reserve shows that households have reduced their borrowing for the seventh straight month, while at the same times banks are lowering credit limits. Banks seem to be enemy number one when it comes to this recession, yet they have to play an integral part in the recovery. Until credit for both businesses and individuals starts flowing again, employment and housing is likely to remain stagnant.


Ki lives, and works, in Austin, Texas. His site provides potential homebuyers a free search of the Austin MLS. He also provides detailed information about Austin real estate on this site along with profiles of neighborhoods like Westminster Glen in central Austin.

It is hard to believe just two years ago in October the Dow Jones industrial set a record high of 14,164. According to the Associated Press, just one year after that it was at 8,451 in mid October 2008. Today the Dow is around 9,800. Stocks have rallied recently on signs that retail sales are improving. The last two years have been a bumpy ride.

The AP recently broke down the economic numbers, putting into perspective just where the U.S. economy stands today. "The panic of last fall has been replaced by the resignation that the worst is over but it might be years before the economy booms again." It seems for every gain there is something else to put in the loss column. For example, while the stock market is steadily gaining ground, the total losses in the stock market from the peak of October 2007 to the bottom of March 2009 was a mind-boggling $11.2 trillion.

A positive sign is that after steadily declining for fourteen months, retail sales increased 2.7 percent in August. But the unemployment rate in October 2008 was 6.2 percent and today it is 9.8 percent. Consumer confidence, which is measured on a scale of 1 to 100, was at a record low of 25.3 last October and this month it is 53.1. To put these numbers in perspective, two years ago consumer confidence stood at 95.2.

Some oddly positive side effects of the Great Recession have been the increase in personal savings rate from 0.5 percent in 2005, when home prices were soaring, to 6.9 percent in May 2009. Also, credit card debt held by Americans last September was a staggering $975 billion. That number is down 8 percent now to $899 billion.

To put the housing numbers in perspective, 2005 was a record year with 7 million home resales. January 2009 the annual rate of home resales was 4.5 million, but rose to 5.1 million in August. On the other hand, the median price of homes sold in 2006 was a record high $245,000. The median price of homes sold last October was $213,000 and dipped to $195,000 in August.

Some other signs of the time: Starbucks launched an instant coffee product in September. PepsiCo Inc announced recently that it will continue to offer and develop products with price in mind, feeling customers will continue to be price-conscious even after the recession ends. Retailers will need to stay creative to entice shoppers this holiday season amid rising unemployment. Wall Street may be seeing a smoother path to recovery, but it's still a bumpy ride on Main Street.


Ki works in Austin real estate. He works to help buyers find the perfect property. His website provides general information on Austin real estate. It also allows buyers to search for homes in the Austin MLS along with providing a free mortgage calculator.

The recent headlines have trumpeted a rebound in the American housing market. According to the Associated Press, July's 7.2 percent increase in home sales was the biggest month-to-month jump in the last ten years. But before breathing a sigh of relief and checking Zillow for increased home values, it might be a good idea to look at the story behind the new and improved numbers.

A big chunk of the recent increase is first-time home buyers taking advantage of the tax credit. One third of recent home sales are due to the $8000 incentive for first-time home buyers, which will end in November. Another third of the recent sales across the nation are actually foreclosures. According to a recent report on NBC news, home prices overall are down 23 percent in the last year, largely due to the number of foreclosures across the country.

NBC news broke down the numbers even further, showing that the biggest surge in home sales are for homes under $100,000. While sales of homes in this price range rose an impressive 39 percent in the last month, sales for homes over $250,000 are actually down. In fact, the higher the price tag the fewer homes are selling.

Better numbers in several sectors of the economy, including housing, have led Federal Reserve Chairman Ben Bernanke to announce that the U.S. economy is on the verge of recovery. He said at a Federal Reserve conference in Wyoming that "the prospects for a return to growth in the near term appear good." Not a resounding endorsement of the world economy, but certainly keeping to the more positive tone he has taken lately.

According the Associated Press, Bernanke continues to stress the importance of freeing up consumer credit, stating this is the key to any kind of long term economic recovery. However, banks continue to be careful with lending to consumers. Mortgage defaults remain at an all time high--which brings us back to the housing numbers. While foreclosures continue to less of a factor in Austin as they are in other parts of the country, they are taking a toll on the economy as a whole.

As the latest housing numbers have indicated, foreclosures are great for bargain hunters but bad for the housing sector and the overall economy. It only takes one foreclosure in a neighborhood to skew the assessment of overall home values in that area. Mortgage defaults that lead to foreclosures cost banks a significant amount of money. The banks in turn raise rates on credit cards and fees to recoup some of these losses, along with making fewer loans overall.

The real estate industry is lobbying Congress to get an extension on the first-time buyers' tax credit, because many industry analysts are predicting a plunge in the housing numbers after November. "I would not be at all surprised to see a dip at the end of the year once the tax credit expires," Robert Dye, senior economist with PNC Financial Services Group, told the AP.

Austin continues to weather this long recession better than the rest of the country, but let's hope the story behind the national numbers gets better.


Ki moved to Austin for school. After graduation, he started working in the Austin real estate market. He has a website where future owners can search the Austin MLS. His website also has a blog with updates in Austin Texas real estate.

So it has been a week since the feds came in and took over Freddie Mac and Fannie Mae. While it will obviously take some time to know the long term repercussions I wanted to look at some of the immediate reactions to the move.

First let's look at the reaction from the media and the general public. One would expect there to be some political fallout from the largest takeover in government history. But because of the election and Hurricane Ike the reactions have largely been muted. There have been of course the expected positive reactions that this was a shrewd move to help the real estate market and negative reactions that the government should limit its involvement. But for the most part their has not been a big reaction one way or another. I have actually seen more stories about the reactions on the takeover from the presidential candidates than stories simply about the takeover.

While the media reaction has been muted the reactions in the financial markets have not been. Not surprisingly, the stocks of Fannie Mae and Freddie Mac plummeted after the announcement. The government said before hand that the common shares of Freddie Mac and Fannie Mae would lose most of their value in the event of a government takeover. So following the news of the takeover the share promptly lost 80% of their value.

The mortgage markets have reacted very favorably to the news. Considering the Fed has cut interest rates multiple times this year mortgage interest rates have remained relatively high. The reason for this was that banks were unsure about the financial stability of Freddie Mac and Fannie Mae which provides insurance for about half of the residential loans issued in the United States. This risk has now been lowered since the government takeover. Consequently mortgage rates have plummeted in the last week. 30 Year mortgages have dropped from 6.35 to 5.93. This is after rates have moved down from 6.63 to 6.35 partially on expectations that Fannie Mae and Freddie Mac were going to be taken over. I have seen some reports that this is lowest rates have been in the last 4 months. I think this understates how low rates have come down. Besides two brief drops at the beginning of 2008 this is the lowest rates have been since 2005.

The lower interest rates should have a positive effect on the real estate market. Lower rates pull down the mortgage on a house and tend to have a positive effect on real estate values and market activity. In another positive sign although their has not been too much media coverage the coverage that has come out has been mostly positive. To be honest I was a little surprised by this. I would have expected the coverage to be a little more mixed. But regardless the favorable media reaction combined with lower interest rates should help the real estate market. And based on what I have heard from different realtors their does seem to be an upswing in activity. But we won't have any hard data on this for a month or so.

So, at least in the short term, it seems the Feds have accomplished their goals of helping the real estate market with the Freddie Mac and Fannie Mae takeover. We will of course have to wait over the next few years to see if this move turns out to be wise. But for now the Fed has finally been able to push down mortgage rates.

Ki is a real estate broker working in the Austin real estate market. He maintains a website with a Austin MLS search and a frequently updated Austin real estate blog.

So on Friday it was leaked that the government is taking over Freddie Mac and Fannie Mae. On Sunday it was official. Freddie Mac and Fannie Mae have now been taken over by the federal government. But what does it mean for the real estate market, mortgage interest rates, and the US economy.

First let's look at what it means for mortgage rates. I would expect that the government takeover will result in lower mortgage rates, possibly a full point lower. Why? Basically the Fed has been struggling to lower mortgage rates for the last year in an attempt to assist the troubled real estate market. The Fed has lowered prime rates several times in an attempt to pull down mortgage interest rates, with mixed success. Now with full control of Freddie Mac and Fannie Mae (which provides insurance for most mortgages in the US) they will have much more control over the mortgage market and mortgage rates. As long as their objective stays the same, we can expect lower rates.

What does the takeover say about the current situation in the real estate market? This should have been obvious from all the events that preceded this but the takeover shows that the real estate market is in serious serious trouble. The federal government doesn't just take over large companies on a whim, especially an administration with a Republican president that believes strongly in free markets. This is not simply a government takeover. This is the largest takeover in US history. Basically the takeover happened because it was believed if nothing was done we were headed for economic catastrophe.

How is this going to effect the real estate market? Although the takeover is a bad sign about our current situation it should have a positive effect on the real estate markets moving forward. First lowering mortgage interest rates should be quite a boon for the real estate market. Lowering rates lowers the effective cost of a house. And historically lowering rates has a positive effect on real estate values.

Additionally, if the Fed is smart they will reduce some of the mortgage restrictions Freddie Mac and Fannie Mae have created in the last year. While I would not like to see the mortgage market return to the free-wheeling lending of a few years ago, some of the current rules are bizarrely restrictive. The lending environment typically works like a pendulum moving from one extreme to another. Currently lending restrictions are not just stricter than what we saw during the real estate boom a few years ago but they are more restrictive than anything we have seen in the last 15 - 20 years. Hopefully a federally controlled Fannie Mae and Freddie Mac can help return us to normal as far as lending restrictions.

Lastly the government takeover could put taxpayers in the lurch for billions in loan losses. In the short term the government is going to have to infuse money into Freddie Mac and Fannie Mae. They have been losing money for quite some time and that is not going to change overnight. If the market improves over the next year or two, which was likely before, and the takeover improves the outlook for the real estate market, the government will have to infuse maybe a total of 20 to 30 billion into Fannie Mae and Freddie Mac to get them back to financial solvency. That sounds like a lot but to put the number in context, the cost of the Iraq War has been running at about 100 billion a year for the last 7 years. So a 20 billion dollar expense is an unpleasant but manageable expense. But if real estate market gets a lot worse over the next two years, I can't think of the adjective to describe how expensive things could get.

Fannie Mae and Freddie Mac provide insurance for 5 trillion in loans or about half of the residential loans in the United States. Because of the takeover, the federal government now provides insurance for 5 trillion in loans. If we are just on the cusp of severe real estate problem that means that the federal government is on the hook for 5 trillion in loans. That's more than double the entire federal budget for 2007 and 10 times what the US has spent on the Iraq War. So as taxpayers we should hope things improve soon because if the rate of foreclosures skyrockets over the next 2 or 3 years, we are basically going to be paying for it.

Does this mean the federal government is insane? It depends on how you look at the issue. This was certainly a risky move. But on the other hand allowing Fannie Mae and Freddie Mac to fail would have devastated the US economy and likely lead to a severe depression. So doing nothing was equally risky. And while taking over Freddie Mac and Fannie Mae was a risky move for taxpayers, in a depression those that keep their jobs have to make up for all the lost tax revenues for the large number of people that lose their jobs. So in summary the federal government found itself in a tight spot and decided to bet the farm they can fix the real estate market and for our sakes, let's hope they are right.

Ki lives and works in central Texas. He provides a search of the Austin MLS on his site along with current information on the Austin real estate market. His site also provides a tool that show current trends for mortgage interest rates.

An area of Austin which is currently undergoing revitalization is the old Mueller Airport area, near the intersection of Manor Road and Airport Boulevard in East Central Austin. This location offers residents and visitors alike many interesting opportunities. Housing is very affordable in the area, including single family homes and duplexes, and also numerous nice but inexpensive apartment complexes. Since this area is just a few miles from the University of Texas campus, it is ideal for students and faculty members, as well as downtown area employees who are looking for a neighborhood which is affordable yet extremely close to downtown business and entertainment districts and the college area. Manor Road itself is home to many fine restaurants, including El Chile, and El Gringo, both wonderful restaurants specializing in Mexican cuisine, and Hoover’s , a southern-style restaurant specializing in BBQ and various other regional Texas specialties. The Eastside Café, a popular restaurant which specializes in natural and fresh from the garden choices, is situated on Manor Road just across the interstate and is very convenient for U.T. students, faculty, and visitors to the campus area. The Eastside Café has a reputation for very fresh seafood as well as tempting steaks and other entrees. All of these restaurants have been patronized by well known political visitors recently, including Bill Clinton’s visit to Hoover’s while campaigning in Austin with his wife Hillary and family.

The University of Texas sports facilities are also very close to the east-central vicinity of Austin, especially Dish Faulk field, for Longhorn baseball fans, and Royal Memorial Stadium, for Longhorn football fans. Both of these sports venues are near the intersection of Interstate 35 and East Martin Luther King Blvd, which runs somewhat parallel to Manor Road, east of Interstate 35. The Erwin Center is also just a stone’s throw away, at Red River and Martin Luther King, just west of the interstate.

Prior to closing in 1999, Mueller Airport was the oldest municipal airport in Texas, and it originally opened to the public in 1930. After the new Bergstrom International Airport was established south of Austin at the site of the old Bergstrom Air Force Base, Mueller Field closed to air traffic, and is presently being redeveloped as a center for the arts, affordable homes, and many other exciting businesses and attractions. The old airport site encompasses 711 acres of space, and is designated for “mixed use” development now, including many movie-making related facilities. The site is home to the new Austin Studios film-making complex, which includes soundstages, sets, and various other commercial ventures associated with Austin’s burgeoning motion picture, theater and arts communities. Many of the old airport hangars have been converted to use as soundstages for these endeavors, and the area is ideal for this type of activity, since it is such a large area, and so conveniently located, but is still very quiet and has a rural feel to it since it has not been developed or inhabited much in the past, especially since the airport relocated.

The site will eventually be home to 10,000 residents and has been referred to as an “urban village”, with its proximity to the major urban areas yet its small town flavor. The site will eventually include schools, shops, homes, apartment complexes, entertainment and various other businesses and services. In addition to these exciting, revenue-generating ventures, the area is projected to include 140 acres of public open spaces and 13 acres of hike and bike trails, making the neighborhood very pedestrian-friendly as well as offering immediate access to Austin’s fine mass transit system, the Cap Metro bus routes.

Right across Manor Road from the old airport entrance is another attraction for sports fans, the Morris Williams Golf Course, which is an eighteen-hole public golf course, with green fees of twenty dollars or less on a year-round basis. This area is also very accessible to out of town visitors, since both Manor Road and Martin Luther King eventually intersect with U.S. Highway 183 when travelling east or northeast. U.S. 183 serves the Austin metro area as a loop around the eastern perimeter of the city, where it is referred to as Ed Bluestein Blvd. It also intersects with Highway 290 East and Highway 71 East, as well as Interstate 35, so it is very convenient to get in and out of the east-central community around the old Mueller Airport.

This area is sure to become a vital part of Austin in the very near future, and offers the finest attractions and amenities now for every segment of the population, young and old alike!

Ki works as a Realtor in the Austin area. His site is filled with information about Austin real estate and provides visitors a free search for Austin Homes. You can also find updated information on mortgage interest rates.

The US appears to poised on the very brink of recession. Investors are reacting as news of a contraction within the service sector for the first time in five years, an FBI investigation into predatory lending, and increasing unemployment statistics, has sent shock waves of panic through stock markets worldwide. Who wins out in a crisis of this magnitude? And how can an individual take advantage of such a difficult scenario? While volatility in recent months is hardly a comforting phenomenon, recognizing its continued presence (within relatively unstable areas of the economy such as the stock markets) is key to weathering such a crisis. Even though most areas of the US economy are contracting in some fashion, the saying that the US's sneeze makes the world catch cold is less true than ever before. As China and other Asian economies become increasingly decoupled from America, the tendancy of compensating mechanisms to come into play should increase. Someone will be able to profit from the US shoring up spending, even if it is only oil companies for some period of time. Most of these companies are reinvesting the money they make in stable companies like American financial institutions, thus tying their fate to that of the US without risk of takeover bids or boardroom posturing. While the transmission of wealth from the American middle class to wealthy overseas oil giants is gradually becoming a less attractive proposition to the average American (with increasing energy prices helping this along), the climate crisis may be able to facilitate a reduction in dependence on foreign oil that balances this feedback loop in the future. Americans are right to begin saving on a more realistic scale, if a bit slow to react. Most of America's weaknesses in this regard are only sustainable if nothing goes wrong, and the sub-prime crisis is destined to affect many other industries such as credit card companies. If a significant amount of consumer spending turns into savings, Americans will be hurting. But like an unpleasant vaccination, they will be safer in the long run. Perhaps a lesson or two in solubility and risk management has been learned. As far as an individual's best chances for taking advantage of these weakened sectors, buying a house couldn't be smarter now as the glut of unsold houses in many areas continues to drive down prices. Emerging economies will continue to grow even if America stagnates for some period of time, so investment in these regions is a safer bet than ever before. Global GDP will still grow, even if the rest of the world no longer wants to hold the West's hand while they cross the street. In fact, the complex financial instruments that have fueled the credit crunch were created in order to minimize risk. As we can see, they have only made it less obvious and harder to bring ontol a balance sheet, which costs much more. If layoffs begin to increase, government action on a larger scale is practically inevitable. The Federal Reserve is obviously prepared to drop interest rates considerably further, which means there is still some breathing room (even if it is shrinking). Ki works as a realtor helping people interested in Austin real estate mostly central. His site is filled with information such as profiles of the downtown Austin condos. He also has a blog devoted to Austin Texas real estate.

The recent sub-prime crisis is unlike any faced by the financial system before in one dubious distinction: Its effects are exacerbated by globalization to an unprecedented degree. Recent developments help illustrate exactly how this credit crunch can be differentiated from others, such as the savings and loan scandals of the 1980's, by its fundamentally larger scale and complexity. To explain the sub-prime crisis adequately, first the causes must be clearly identified. Like the savings and loan problems, predatory lending on the part of real estate brokers and agents, combined with a fair amount of financial fan-dangling, many banks loaned out more money than they normally were allowed to. By keeping these loans off their balance sheets, they were able to loan out much more than the rule-of-thumb ten times their deposits. If you consider that the sub-prime fallout is considered by most to be over $250 billion dollars, then the loans made could be in the trillions. The vehicles in which the debt was stored were basically invented for the purpose of deceiving potential investors into believing that they were sound investments, not risky sub-prime mortgages. The savings and loan crisis took a similar tact, and ended in similar levels of indignation, consumer despair, and regulation. As the years have gone by, those who cried for deregulation in order to help the already unprecedented economic growth skyrocket higher still have gotten their wish, but at a price: now that the Fed has instituted more clear standards for informed consent for borrowers, a crisis like this will likely not emerge again for some time. However, this is a lone consolation for the amazing amount of debt that has yet to be declared throughout the financial system. The reason this crisis is so much larger is because the repackaged sub-prime debt was sold not just to other Americans, or even Canadians and Europeans. It was sold all over the world, to China and India and many other countries. This means that the problem increases in complexity, as differing international regulations for the timetable on debt declaration and a financial system that has turned a boom into a spider's web of uncertainty contribute to higher risk to any institution that lends money. This, in turn, places a de facto cap on the amount of economic growth that can happen. But the problem is also much, much larger because the entire world has some degree of stake in it. Now European central banks are cutting their interest rates as well, in order to combat a problem that won't even really exist in a measurable form until two million Americans default on their mortgages in the new year. When the fallout was limited to the US, as was the case with the savings and loan banks, the turnaround time was a matter of two years, give or take. Now, the sub-prime crisis has been high on the international public radar for well over a year, but less than a tenth of the lowest estimates on the total debt have been acknowledged by lending companies. This means that recession is a much more likely outcome of this global problem than it seemed even three months ago. Living in Austin Ki works for a small realty company focused on Austin real estate. They provide information about the market on their blog about Austin real estate news along with a allowing users to start searching for Austin homes online through the Austin MLS.