Recently the news has been dominated by developments with the 700 billion dollar bailout package, and rightfully so. 700 billion is an astronomical sum of money. The first problem is that the 700 billion dollar bailout adds a huge amount of money to the national debt. Not only that, some have hinted that the bailout is so large it could actually lower the US Credit Rating. The second problem is just as serious. There is no guarantee that the bailout will work.

The idea behind the bailout is that by taking on billions of dollars of toxic loans the government hopes to "influence" banks to start lending again. The past attempts of the government to "influence" banks have all failed. The fed lowered the fed rate to influence banks to lower mortgage rates. While the banks were appreciative of lower rates they did not lower mortgage interest rates. In fact after the fed cut rates the banks increased mortgage rates because they saw negative prospects in the housing market. In a similar way, after the US government takes over the toxic loans away from them the banks could continue to see negative prospects in the housing market and therefore would continue to have strict lending practices. The idea of spending 700 billion with no guarantees seems like a poor use of capitol.

When people hear the word "National Bank" the first thoughts are of a socialized banking system. A national bank would not replace the current banking industry. It also does not "introduce" government involvement into the banking industry. With the Fed influencing interest rates and the government rushing in to bailout every bank that runs into problems the government already has a large hand in the banking industry. I don't want to argue whether the government should have a role in the banking industry. Currently the government already has a significant role in the banking/mortgage industry. My argument is that if the government does have a role it should be effective and cost efficient.

A national bank would be a cheaper and more cost effective way to steady the financial markets. To understand how a national bank would work lets first talk a little more about what is currently causing the housing crisis. The mortgage market operates a little like a basketball game. Lenders go from one extreme to another. For awhile lenders will lend to anyone that walks in the door with a pulse. During these periods lenders accept less and less qualified applicants in an attempt to gain market share. Then the lenders get freaked out (often because someone realizes they have been giving out billions in loans to unqualified applicants that are unlikely to pay their mortgages) and lenders run to the other extreme and practice extremely restrictive lending practices (the insurance industry sees the same cycles but that is another topic). If you haven't already guessed currently we are in the second scenario with lenders practicing extremely restrictive lending practices. The problem with the second situation is that such extreme changes shocks the housing market and basically causes a financial crisis. The banks are in a catch 22. If collectively the banks don't lend the housing market will continue to deteriorate. But no one wants to lend because they are worried the housing market will continue to deteriorate because collectively they are not lending. It's kind of like at a party where you don't want to be the first person to jump into the pool because if no one else does you look foolish. Substitute looking foolish with going bankrupt and you kind of see where banks are coming from.

The great depression and the S&L crisis were both basically examples of this same problem. Initially during the great depression the conventional logic was the government should not intervene. As the stock market continued to drop (it dropped over 80% in less than a year) and people realized how bad an economy can get (pretty bad) the idea of government intervention seemed more palatable compared to the alternative.

So now during periods where lenders are freaked the government attempts to "influence" lenders. The problem is its extremely expensive. Currently the government is taking on years and years of bad loans in an attempt to "influence" lenders to loosen their current restrictive lending practices for the next 6 months to pull us out of the housing crisis. This is kind of like trying to influence your local school to spend money on new textbooks by building them a new school. Not only is it ridiculously expensive after you build the new school you have no guarantee they will buy the textbooks. It's not simply a poor use of government funds it's utterly outlandish.

So how would a national bank operate? During periods where banks are giving out loans to everyone that walked in the door the national bank would practice have average lending restrictions with interest rates slightly higher than what is available at most banks and give out very few loans. When the banks became ultra restrictive the bank would again have average lending restrictions. During these periods it would give out more loans.

So the government would not practice the outlandish lending practices we saw during the boom they would not be as restrictive as the banks are now. In fact this would probably do more to influence banks lending practices than the 700 billion giveaway. Remember how we talked about banks not wanting to lend money because no one else was lending money therefore making them nervous about the prospects of the housing market. Knowing that money would always flow provides some stability to the market. Also it would be much less expensive. Having the government provide some loans over the next 6 months with average restrictions during a low point in the market would be much better than taking on years of crappy loans given out during the peak of the market to very unqualified home buyers.

Would some banks go under? Yes. But you know what they should. Bailing out foolish banks that threw caution to the wind and had wildly risky lending practices almost guarantees that we will be faced with another housing crisis in the future. Instead we should allow some of these banks to die. First it prevents these banks without a sense of risk from causing these problems again. Secondly, it influences other banks to exercise more caution during boom times. The bailout sends a message to banks that during the boom they should ignore caution because the government will come in and take all their bad loans away like some kind of bizarre magical bad loan tooth fairy.

I realize this article might bother people that want the government to have no role in the banking/mortgage market. But if we accept that the government already has a role in the banking industry (the possibility of the government taking itself out is pretty much nill for the next decade) to stabilize markets at the least it should do so in a way that is effective and cost efficient.

Escapeso Realty is a small company in central Texas. Their site has up to date information on the Austin real estate market. It also has a search of the Austin MLS for visitors and a tool that tracks mortgage interest rates.

Staging a home can end up being a valuable tool in selling the house. Not only can it assist in selling a house, but it can also help the seller get top dollar.

The amount of staging needed varies wildly from a small scale de-cluttering of a home to hiring staging professionals to the tune of several thousand dollars, but the goal is the same- creating a pleasant mood by making a house appear bigger, brighter and warmer while neutralizing the area so prospective buyers can visualize how their own furniture and belongings can be incorporated into the home.

In a good or bad housing market, some studies have shown that staged homes can add between 10 and 15 percent to the sale price of many homes. Sellers who don't take the time to properly stage may end up with their house on the market for longer periods of time, and agreeing to a lower selling price to a buyer who can see the potential the home has that other viewers did not.

Though professional home stagers may be needed if a home is completely empty, the majority of staging can be accomplished by the seller. A quick visit to some newly built model homes can help a seller get an idea of how interior designers and stagers prepare a home. There's a delicate balance between keeping the home sparse enough to appear as spacious as possible, and picking the right pieces to maintain a warm and livable space.

The first impression a potential home buyer will have of a house will be of the exterior, so nice curb appeal is important. A fresh coat of paint on the front door, a nicely trimmed lawn, and fresh flowers in a garden or on the front porch are easy and effective staging techniques. A brightly colored patio set in the backyard can help the home's exterior appearance when the buyer steps out the back door.

Kitchens and bathrooms are two of the most important rooms in buyers' eyes. Kitchen counters should be clear of all small appliances and other items that tend to gather on them. When counter tops are cleared of clutter, the amount of working surface increases. A splash of color, such as a bowl of fruit is acceptable, but a refrigerator, covered in personal pictures and comic strip cutouts, is not.

Bathrooms should look as open and airy as possible, and above all clean. A new white toilet or tub, or a new set of sink faucets could be a worthy investment during the staging process. Personal toiletries, like toothbrushes, should be removed from sight, while the addition of scented soaps, lotions and clean white towels could give the room more of a spa type feeling.

For bedrooms, remove as much unnecessary furniture as possible, and keep it in the garage or in storage if need be. For smaller rooms, hang curtains high on the wall, and do not cover the actual window with them. Doing so will increase the apparent height and width of the room. Neutralize the rooms by removing all personal pictures and keeping wall colors a nice warm, clean color.

By following a few simple and effective staging guidelines, a home seller can increase his or her chance to sell the home quickly, and the time and effort will pay off by netting the highest offer as well.

Working as a realtor in Austin Texas Ki helps people search for Austin homes. He provides general information about Austin real estate online as well as tool that graphs mortgage interest rates.

As the Austin Texas real estate market expands in all directions, areas we used to think of as “way out there” are not only seeming closer, but are getting their own infrastructure. Maple Run in Southwest Austin is just one of those areas. Located south of William Cannon, north of Slaughter, west of Brodie and east of Mopac, this little oasis offers quiet streets, attractive and affordable housing, burgeoning businesses and is a hop, skip and a jump to one of the city’s cleanest, newest and nicest parks.

Each street in the area seems to have its own personality. The Deer Park subdivision is full of brick homes, with meticulously manicured gardens and lawns. These folks do a magnificent job with holidays – their Christmas lights are worth a trip, and Halloween is always scary! A few blocks down, you will find a more relaxed atmosphere, maintained just as nicely, but with a more casual feel. The busiest street is Copano, which is not busy at all! The houses in this area can run the gamut from a 3,000 square foot two story brick home with a pool to a 1200 sq. foot one level 2 br/ 2 bath with a nice yard. Many of these homes back to a greenbelt – nice and quiet.

Brodie Lane, one of the main north-south thoroughfares of the area, is full of convenient businesses closer to Ben White, but as you follow the street south of William Cannon heading down to Slaughter you find new business popping up almost every day. Take the intersection of Alexandria and Brodie – you have the best Cajun food and live music in town, an Austin Regional Clinic, Love Pet Hospital, Shipley’s Donuts, a florist, nail salons, a JiffyLube, and more! Just up the road is a Montessori school, just down the road is the Kid’s Zone preschool and daycare. Austin Telco and Advance Auto just came to the area, although the property adjoining them still has cattle on it – a truly Austin juxtaposition.

Families will love the Longview playground and park located at the eastern end of Harper’s Ferry. Swings and a play structure perfect for toddlers on up to school age are in great condition, and there are lots of trees for shade. A big field is perfect for kicking the ball or throwing the Frisbee, and there is a basketball court right up the hill. If you are looking for a little more, just head over to Dick Nichols – just west of Mopac off Davis. The toddler structure here is brand new, and the bigger kids one is in great repair. Picnic tables, a fountain for splash play, volleyball courts (or the world’s largest sandbox, depending on your age), tennis courts and a hike/bike trail can all be found here. Their pool is one of the best, with separate shallow and deep ends, plus a toddler wading pool – all crystal clear and in excellent condition.

It might seem “way out west,” but Southwest Austin is only 15 minutes to downtown, and the bang for your housing buck make it well worth considering.

Escapeso Realty helps buyers looking for properties in the Austin Texas real estate market. Their site allows potential to home buyers to search the Austin MLS and read about the latest market updates on their blog about Austin real estate along with info on mortgage interest rates

There are some home renovations that really should be left to a professional. Finding a good contractor that is trustworthy and dependable can sometimes be a challenge, but with some preparation it can be done.

Before accepting to work with a contractor, ask for a list of references. Ideally, the list will be fairly long, and not rigged towards a few happy customers. Call these references, skipping around from recent customers to older ones to see how the work has held up. If possible, visit one of the remodel sites in person. Ask about the quality of the work, and if the contractor stayed on budget and finished in a timely manner. Also, check how the contractor dealt with problems that arose, and if the reference would use him again.

A good contractor is one that the client feels comfortable speaking with. He should have clear solutions to your remodeling ideas. The contractor may be in your house for an extended period of time, and some problems will arise, so having good chemistry with this person is key to having a positive remodeling experience.

After getting a few different bids, do not base the job on lowest price alone. Read the details of the bid. It’s possible that if the cost for materials is cheaper than other bids, it could be an inferior product that won’t last. If one bid is significantly lower than the others, the contractor could desperate and his workmanship may be poor.

Make sure that the contractor is a professional. Verify he has workman’s compensation insurance in case a worker is injured in the home, and general liability insurance for any damage that might accidentally happen to house. Major remodeling improvements legally require a building permit so inspectors will check over the contractor’s work. Make sure the contractor applies for these permits. Certain industries allow contractors to get professional designations, such as Certified Remodeler and Graduate Certified Remodeler. Check if the contractor is part of any trade association, as they are more likely to be keeping up with current industry standards and practices.

Once a contractor is chosen, it’s good to have a contract written up so there is no confusion during the actual remodel. The contract should have the starting and projected ending dates, as well as a payment schedule which details when payment is due, and how much each payment will be. Usually, certain amounts will be paid after particular milestones are completed in the project. Also, have the contractor put any warranties he offers into the contract. Outline which duties the contractor or the homeowner will perform, such as cleanup when the job is completed, in the contract to avoid butting heads when the time comes.

Though a contractor may be needed for large remodel jobs, a homeowner can save money along the way by doing some of the low level work, such as painting walls or ceilings. Some contractors will allow the homeowner to pick up materials, such as lumber, toilets, flooring, etc, which would have been added as a surcharge on the final bill.

After some research, well thought out questions, and open communication, landing the perfect contractor for those large remodeling jobs can be achieved.

Ki operates as a real estate broker in Austin Texas. His site is filled with information about Austin real estate along with providing visitors information about mortgage interest rates along with a graphical search of the Austin MLS.

A fireplace is meant to be the centerpiece of your living space, the heart of your home. Sometimes, however, this focal point is less than impressive and more than lacking in the drama factor. If your fireplace is bland, plain or simply unattractive, a quick color change can do wonders. The secret is using multiple coats to build up depth and create a faux finish, rather than just painting on one flat color.

You will need three complimentary colors for this project in progressively darker shades. Natural stone and earthy colors, such as grays and browns, are ideal. A quart of each color will be more than enough to complete your fireplace. Flat exterior paint works best, providing better resistance and more clemency for the hot environment of the fireplace surround than interior glossy paint.

First, choose a color for your base coat. This should be the lightest color of the three. For instance, if you are going for a stone look, choose a medium gray.

The next color will be used for ragging over the top of your base. This color should be several shades darker than the base color and will provide dimension to your finish.

Finally, choose an accent color. This color will be used in moderation, to highlight and further enhance the finish. It can be a varying color from the first two, as long as it is natural and complimentary.

Begin by protecting all surfaces you don’t wish to be painted with drop cloths and painters tape. Apply an even coat of your base color with a paint roller or large paintbrush. A second coat may be needed, depending on the surface and color being painted.

Once the base has completely dried, you can begin applying the next color. Working in one small area (for instance, if your fireplace is brick, do one brick at a time), daub several uneven streaks of paint on the surface. Using a rag, rub the paint, spreading it and pulling it randomly. Continue with another small area until the entire fireplace is complete. A spray bottle of water can be used to dilute the paint while you’re working, making it easier to spread and thinning out some areas, creating a more authentic look.

After you have ragged the fireplace to your satisfaction, use the third color to highlight some crevices, corners and other key areas (It is not necessary to rag this color on the entire fireplace). Use the same technique with the rag and spray bottle to soften the edges of the paint.

In addition to painting, you can enhance the look of your fireplace with a few tiles, appliqués, onlays or other architectural elements. In no time and with just a little paint and a few decorative touches, it can be simple to change a plain, ordinary fireplace into a showstopper.

Ki is a realtor in Austin. He helps buyers and sellers interested in the Austin real estate market. His site has a free graphical search of the Austin MLS along with updated information on his Austin Real Estate Blog.

Two beautiful areas of Austin which are also very historic are the Tarrytown neighborhood and the Deep Eddy neighborhood, and these two areas are adjacent to each other with Tarrytown being slightly farther north than Deep Eddy. These areas are situated in western Travis County, adjacent to Lake Austin, which is what the part of the Colorado River which is just west of Lady Bird Lake is called. These areas roughly encompass the part of Austin between Lake Austin Blvd. to the south, and Loop One to the east, which is also called the MoPac, since it runs alongside the Missouri Pacific railroad tracks for much of its length. The western border of both Tarrytown and Deep Eddy is the Colorado River, also known as Lake Austin in the area, and many homes in the area have lakefront access. The Tarrytown neighborhood is roughly bordered on the northern edge by 35th Street, near the old military base which is called Camp Mabry. Camp Mabry was named after Brigadier General Woodford H. Mabry, who was the adjutant general of Texas in the late 1800’s. The base originally covered ninety acres of land, but by 1911, Camp Mabry had expanded to 311 acres. During the onset of World War I, the Texas National Guard utilized the camp, which was later used to train auto mechanics for the army. At the present, the post houses the 136th Regional Training Institute, which is located in the Texas National Guard Academy building. The post celebrated its 100th year of operation in 1992, and enjoys the distinction of being the third oldest active military installation in Texas. The base had also been used for the Department of Public Safety training schools in the past, and has hosted many military dignitaries over the years. Numerous historic aircraft are displayed at Camp Mabry, and these planes are visible from Loop One to motorists. Camp Mabry is currently the home of the Texas Military Forces Museum and has many interesting exhibits on display.

The southern border of Tarrytown is the Deep Eddy area, and its southern boundary is the lake. The Deep Eddy area is frequently referred to as the Lake Austin area since Lake Austin Blvd. runs alongside the southern area of the neighborhood, and the Clarksville neighborhood area is just east and a little bit south of Tarrytown. All three of these neighborhoods meet around Eilers Park, which is where Deep Eddy Pool is located. The concrete pool at Deep Eddy was built in 1916, along with a bath house, and Deep Eddy Pool is the oldest outdoor swimming pool in Texas. Deep Eddy was originally a natural swimming hole on the river and is spring-fed. The pool and park are bordered on one side by the lake and the hike and bike trails that encircle the lake along the northern shore. Deep Eddy is a very popular spot for picnicking, swimming, wading, and many other family activities, and is surrounded by beautiful, stately Oak, Banana, and Cottonwood trees which provide shade to many of the seating areas of the park. Occasionally, well known family-oriented films are shown at the pool on weekend nights, called Splash Nights, and watching the Wizard of Oz or something similar on a Saturday evening from a float in the pool with family members and friends is a special treat for the residents of the area and visitors to the pool.

There are many nice restaurants in the Tarrytown and Deep Eddy areas, including Magnolia Café and Maudie’s, which are both near Deep Eddy, and which specialize in breakfast items as well as Mexican food favorites respectively. Kerbey Lane Café, which is farther north, reasonably close to Camp Mabry, is in the Tarrytown area, and Zoot, a continental restaurant which pairs very appropriate wines with its spectacular entrees, is closer to the Deep Eddy edge of Tarrytown.

There are many nice places to live in this old, historic region, including homes, apartments, condominiums, and University of Texas dormitories, and also many schools, a library branch, and excellent medical facilities at Set on Hospital. Tarrytown is a must-see area when visiting Austin, or for residents alike!

Ki's site provides a guide to Austin Texas real estate along with a search for homes in the Austin MLS. He also makes regular market updates on blog covering Austin real estate.

One of the most cost effective ways to renovate your home is to “do-it-yourself.” From sanding and painting to digging and planting, there are many projects that a determined homeowner can accomplish. There are some jobs, however, that are better left to the professionals. These jobs are too heavy, too labor intensive or require specialized tools and skills.

Case in point: installing new granite countertops. The weight of the granite alone is enough to send anyone running to a phone to call for professional help. If you have new countertops on the way complete with the manpower do get it done, you are probably thinking you get the day off. But don’t lay down your tools just yet. There is a way to cut costs on this otherwise costly project—by doing the demo work yourself. Some contractors charge as much as $550 to remove the old countertops, a relatively easy job that even the most inexperienced handyman can handle.

First, remove all the drawers from your cabinets. This makes it much easier to gain access to your work area. You will also need to remove the contents of your cabinets so you can get underneath to work. Fortunately, these are things you will need to do before your new counters are installed anyway, so you are already ahead of the game.

It will also be necessary to remove your old sink. To do this, simply detach the plumbing from the drains and faucet (don’t forget to turn the water supply off), and remove the fasteners from the underside of the sink. There will be some sealant around the edge of the sink, but it should easily lift from the countertop.

If you look at your existing laminate countertops, you will see that they are in sections. Each section is attached to the cabinet base by screws drilled through the underside of the countertop. The next step to removing the old countertops is removing all these screws. This requires getting down on the floor and inside the cabinets at all kinds of uncomfortable angles. Luckily, a power screwdriver can speed this process along (although a manual screwdriver may still be needed for those hard to get to angles).

Next, remove the sealant from the edge of the backsplash. You can use a putty knife or screwdriver to do this. Be careful to remove as much as you can from any surface that you plan to save, so that when you pull off the counters, it doesn’t damage the wall.

Before you try to remove the countertops, make sure you have removed any outlet covers that may be attached to your backsplash. Also, keep in mind that there may be some glue adhering the backsplash to the wall, requiring a little more elbow grease to remove.

Finally, you are ready to take the old counters off. Have someone assist you with the lifting and removal. If you have trouble getting a section off, double check that all your screws have been removed. If the backsplash adhesive is giving you trouble, try sliding a putty knife behind the backsplash to break the bond.

Now your old counters are gone, your kitchen is ready for the new ones, and you saved yourself a little money. Now, all that’s left to do is watch the professionals get to work.

Ki helps individuals looking for houses in the Austin real estate market. His site has information on mortgage interest rates along with a graphical search of the Austin MLS.

When Austin’s airport moved to its current location at the old Bergstrom Air Force base, the Robert Mueller airport became 711 acres of land just east of Interstate 35 ripe for developing. The city of Austin, along with the Catellus Development group, have created a master plan that includes a variety of housing styles, private businesses and retail stores, and are attempting to make the entire “city within a city” as green as possible.

This area, now referred to as the Mueller development, has three housing types available in their first phase of building: yard houses, garden court houses, and row houses. The prices for the first phase range from the $180,000s to the $600,000s, and are 900 square feet up to 3,700 square feet in size. Though 350 homes will be built in the first phase, the development is planning to build 2,200 in total. Six different home builders were chosen to participate during phase one, including 3 locally based builders, Saldana Homes LLP, Streetman Homes Inc. and Muskin Co.

Though some of the homes may be a little cookie cutter in appearance, others are built in a traditional Austin bungalow style, and seem to fit in with their new central location. None of the new homes are built in the currently popular modern style, but it’s possible that different builders will be chosen for future phases of building, to diversify homes as much as possible. All homes built in the Mueller Development have alley ways behind them, with garages built on the backside of houses leaving the fronts garage-free, with more room for larges porches. This also makes the streets and sidewalks more pedestrian friendly.

The initial phase of homes created a large amount of interest, and Catellus Development set up a lottery-style system by hiring a company to randomly create a priority list of buyers. To keep in line with the development’s vision of a mixed income neighborhood, a certain number of homes were set aside for families making at or below 80 percent of Austin’s median income. All of the “affordable housing” homes were sold, and 265 total homes were purchased, with the remaining homes offered to the public.

Many of the businesses in the Mueller Development opened before any residents moved in. Some big box stores are already open, such as Best Buy and Bed, Bath, and Beyond, but other private businesses are also moving in. Seton Family of Hospitals is building their 165,000 square foot headquarters in the development. Not only are they the second-largest private employer in central Texas, but this will also be the first headquarters of a large company to move east of interstate 35. Seton’s new facility, the Dell Children's Medical Center of Central Texas, will open next to the new headquarters in 2009.

One of the Mueller Development’s major objectives is to be as green as possible from the ground up. They will have shops, recreation, entertainment, jobs and transit close at hand, in hopes that driving will be kept to a minimum. Giant solar collectors are being built along the new hike and bike paths to provide shade in the daylight, and light up the paths in the evening. Austin Energy has also built a new power plant on site that not only supplies electricity to new residents, but also sends chilled water for air conditioning to nearby businesses. The power plant generates power in a cleaner fashion, while the shared HVAC system lowers energy costs.

The Mueller Development is the right spot for those looking for a newly built, centrally-located home, offered at a reasonable price.

Escapeso Realty operates in the Austin real estate market. They provide a search of the Austin MLS along with a free mortgage calculator.

On April 30th, the Federal Reserve announced a cut in their main interest rate by 25 basis points, to 2% from 2.25%. This is the seventh such cut by the US central bank since the beginning of the credit crunch some eight months ago, totaling 3.25% in cuts to the key rate that banks charge each other for overnight loans. These cuts have been made in an attempt to lower mortgage rates to help bolster the real estate market. As the fragile US economy staggers towards recovery, two major agents are working against American consumers: record inflation in food and energy. What can we expect in the future for these troubled yet lucrative markets?

In the short term, volatility will probably continue to dominate, but in the middle term inflation may take precedent over combating the slowdown, both for the central bank and regular consumers. Just as the Fed began to cut interest rates, the dollar's 5-year slide accelerated, pushing commodities that are priced in dollars like oil down relative to other currencies. This self-reinforcing process means that their futures markets are cheaper to buy in other currencies, which has led to a massive increase in speculation by flustered investors looking for a safe haven for their assets.

If the Fed were to continue to cut interest rates further, this process could keep consumer spending, which accounts for two thirds of the US economy, tamped down for some time. In March, spending only increased more than projected (0.4%) because of highly inflated energy and food costs. In addition, businesses have continued to feel the pinch of higher secondary costs that affect many other prices, even as output continues to fall. Nevertheless, the strong March activity index from the Institute for Supply Management was still stronger (48.6, with 50 meaning zero growth) than many economists had expected, implying some underlying resilience.

The lingering question remains: what is the Federal Reserve doing by cutting an inter-bank interest rate? It appears now that they are stoking inflation through price distortion, if the positive effects thereof (some stabilization of the troubled financial sector) is ignored. By making dollars cheaper, the value of oil and food is cheapened and necessarily must rise accordingly. Now exchange rates between the dollar and the euro have statistically matched fluctuations in oil prices for 52% of the last six months, compared to less than 1% for the years between 1999 and 2004. Investors and speculation have turned commodities into a superb place to dump cash, but such simplistic reasoning should be setting off alarms in the wake of the credit crunch.

In Washington and abroad, few have challenged the Fed's decisions, which have not been as noticeably correlated to price increases until recently. That may change as eurozone inflation remains stubbornly above target levels, mostly because the European Central Bank takes energy and food into its purview. While the Fed are still supposed to fight inflation first, their smaller focus means that their culpability is limited. As the election looms over Ben Bernanke's head, he is likely receiving pressure to stabilize first and ask questions later. However, a housing bubble and top-teir mismanagement led to the credit crunch now dragging down global growth. No one is looking to repeat this experience, especially because a commodity bubble is surely the worst kind.

Ki has a site dedicated to covering Austin Texas real estate. His site provides a graphical search of the Austin MLS for visitors along with providing up to date commentary on his blog about Austin real estate.

When thinking about the economic slowdown now gripping the United States, one might think of the naked emperor of yore, who could not realize his condition until told by a child. By the time analysts and the White House recognize the extent of the credit crisis, its effects will probably not be noticeable. So where are we now? Several times since last August's signs of an imminent drop in growth, markets have rallied due to speculation that problems in the area of sub-prime mortgages have "bottomed out." Alas, thus far it appears to have been in vain.

On April 25th, Reuters and the University of Michigan reported in their Survey of Consumers that consumer sentiment fell ever deeper in April to settle at 62.6 from 69.5 in the preceding month. Not only is this the third straight month that consumer's outlooks have remained downbeat, but this month's ratings are the lowest in 26 years. The last time consumers' finances were as stressed was in 1982, which was due to the "stagflationary" economy of the time. Stagflation refers to a stagnating economy with low or limited growth prospects coupled to high inflation. The recent recession came from a different set of circumstances, but consumers are feeling the pinch all the same. While inflation remains a key factor for monetary policy makers and politicians, estimates of core inflation (which excludes volatile food and energy prices) remain low for now.

This is a good thing, because it has allowed the Federal Reserve a lot of leeway regarding monetary policy. They have cut the interest rate they charge for lending to commercial banks by nearly three full percentage points since the onset of the credit crunch last summer, and are poised to cut rates 25 further basis points at their next rate-setting meeting April 30th. However, interest-rate futures contracts also predict a 20% chance that they may not cut the rate at all, signaling a possible end to further monetary stimulus. It is unclear whether inflationary concerns or macro-economic stability is guiding the Fed's decisions because, since rate cuts began, food and energy prices have also skyrocketed.

While this doesn't normally affect core inflation to a significant degree, over a protracted period of time prices will continue to increase for everyone. In addition, the Treasury's stimulus package is set to begin arriving to millions of American consumers at the end of April, four days ahead of schedule. The Bush administration and other prominent authorities have touted the $152 billion influx as a means to increase spending, which accounts for two-thirds of the US economy. While consumer spending should begin to pick up somewhat, surveys have shown that many people plan to spend their check one of two ways: relieving personal debt (which reached epic proportions in 2007), or adding to savings. This reflects both how necessary a lump sum of cash is to many poor Americans, and how much spending has been curbed. Until spending picks back up, the service sector will continue to ache. Promising numbers in manufacturing orders for April also reflect strong fundamentals, even as the housing and construction industries continue to slump It may be presumptuous to assume that the US is out of the proverbial woods, but there may yet be light at the end of the tunnel.

Ki lives in Austin and works as a real estate broker in the Austin real estate market. He provides a free search of the Austin MLS on his website along with information on mortgage interest rates.

In Greek mythology, the hydra was a beast that, when one of its many heads were severed, would grow new heads in their place. The sub-prime mortgage crisis has developed in a similar fashion, initially appearing to be constrained to a sector of unworthy credit borrowers who likely didn't have the financial ability to own a home normally. However, this expected loss translated into falls in construction, consumer spending, and widespread mortgage defaults in prime markets. This hydra doesn't respond well to lip service, such as the interest rate freezing plan ushered in by the US Treasury which is constrained to a statistically small minority of distressed homeowners.

Yet the knock-on effect of the sub-prime crisis that has gotten the most attention is relatively removed from those experiencing foreclosure: the financial sector, overexposed and reeling from massive writedowns due to investment in securities backed by these same sub-prime mortgages. However, both sides of this crisis can be traced to the changing relationship between monetary policy and reality. Real interest rates, those which banks charge each other for overnight lending, have remained stubbornly above their historical highs, reflecting the reluctance of banks to let go of needed capital. Consumer confidence is at its lowest level since the statistics were taken, asserting the credit crunch's diffusion into the larger economy. With such widespread signals of an economic downturn, the Federal Reserve has been the focus of many investors, especially after the unprecedented bailout of troubled investment bank Bear Stearns.

When the Fed lowers their discount rate, the cut is generally assumed to filter throughout the financial system, making loans cheaper for everyone and stimulating the economy. The US central bank has also not shied away from its ability to auction funds, which it has done liberally in order to stem further liquidity issues. While banks have taken advantage of more cheaper money, they have not passed all those savings on to others, and mortgage interest rates while low remain higher than would be expected. These rates affect both the returns on stocks for investors all over the world, but also rates for other loans from mortgage payments to fundraising efforts to buy up the troubled derivatives that began wreaking havoc on balance sheets a year ago. If the Fed is to maintain its credibility as a viable beacon of stability, then they will need to rein in with regulation further in the future or risk losing their legitimacy: that inflation remains within target levels, if on the high end of the spectrum. Until banks are completely through writing down losses, lending is not likely to get much cheaper. In fact, with plenty of investors jumping ship to profitable commodities, raising capital for necessities like student loans are going to be harder to come by. Analysts have projected that 10% of the lowest bracket of previous year's accepted borrowers expected not to qualify under recently tightened standards. Interest rates will reap an unprecedented level of control over the livelihoods of millions of Americans to an extent seldom seen.

Ki is a realtor/broker in Austin Texas working with homebuyers in the Austin real estate market. His site provides users a free graphical search of the Austin MLS along with a free mortgage calculator.

Many modern homes and condos are going up left and right in Austin, with local design and build companies behind the new residences. It is hard to pinpoint exactly why modern design is becoming so popular, but several factors possibly play a role.

One of the reasons Austin draws so many people to town is because at its heart, it is “different”. It is very different from big cities like Dallas or Houston, and also different from a standard cookie cutter town found all over the state. New modern homes are also different from traditional homes in both their exterior curb appeal, with large walls of glass, concrete and wood, as well as their modern and minimalist interiors. Those moving to Austin looking for a change could find themselves hunting for a home that reflects their personality. It’s also the same reason that most of the new modern housing is located in and around central Austin, where the vibe of the city is felt the most.

Though many builders are currently trying to take on green standards in their building practices, the local companies building these modern homes thrive on doing so, which appeases the home buyer who is also environmentally conscious. Modern homes often use renewable resources such as bamboo or cork flooring, and double paned windows, rain cisterns and tankless water heaters to conserve resources, and low VOC paint, which is less toxic than traditional oil and latex based paints. Even the majority of modern homes are xeriscaped, using landscaping plants that are friendly to the often harsh Texas environment, and cutting down on excessive watering.

Many new Austin transplants have come from large cities on the east or west coast, or possibly artsy cities like Portland or Seattle, and have a wide and eclectic taste. Others went to the university, and moved away, but are coming back to settle in central Austin. Those looking for a modern home are more into architecture and would prefer a home that makes more of an artistic statement than a traditional home. Also the growing popularity of magazines like Dwell, and house and home decor websites and blogs like Apartment Therapy, cultivate interest in unique modern homes and modern Austin condos.

In general, large home builders are sticking to traditional housing, since the demand for such homes hasn’t gone away, and much of the population would consider modern homes ugly, uninviting, or resembling a dentist’s office. Also building tract homes is easy and fast, since there are limited floor plans, and building sites are already plotted out.

Luckily, Austin has several small and medium sized firms who are willing to create more unique homes, and is another possible reason many modern dwellings are on the rise. Also, since many of the firms design and build their houses, the home buyer can have input on its design from the beginning, and feel assured that there won’t be anything lost in translation when their house is under construction. These firms also take the land and the surroundings into account, and “bring the outside in” with touches such as exterior brick walls forming interior walls, and well placed windows to capture site specific views. For those Austinites that can’t seem to find that perfect modern dwelling, a word into a local design/build firm can get the ball rolling.

Ki works in Austin. He has a site about Austin real estate where he provides a free mortgage calculator and a Austin MLS search.

Some streets lead to wherever it is you want to go. Some lead to surprises both bad and good. Some streets are destinations in themselves, stretches of thoroughfare where the journey itself is all that matters.

South First Street between Riverside and St. Elmo’s is one of those streets, one of the last in Austin where , block after block, the old magic of the city that once attracted musicians, artists and other creative minds to move and settle down here, is still palpable, still crackling in the air.

Going south from Riverside, you pass shops and boutiques on the right, converted from 1930’s private homes, turned into artsy clothing and import stores. They sit across the street from the broad, green campus of the Texas State School for the Deaf. Further south, the Bouldin Creek Coffee house serves up its eclectic, health-hip food and drink to its neo-Bohemian clientele. Beyond that, Jovita’s, one of the city’s more venerable but less well-known music venues, beckons the eye with Joyce Dibona’s colorful, Aztec-theme artwork adorning the outside walls.

As you drive still further south, you pass more colorful buildings and businesses that crowd the four-lane street. Some are well-established and thriving, some look almost abandoned, decrepit even. All are obviously small operations, like the Resistencia Bookstore. At the corner of Oltorf and South First, one of the more eye-catching businesses houses what may be the perfect Austin enterprise for the times, Baby Green’s, a fast health food joint.

Continuing on, you pass one of the less visually appealing buildings, which however happens to be the home of the GHS Lounge, an old neighborhood drinking establishment with street cred to burn. Boot repair shops, used book stores, bicycle shops, art galleries and a nursery in a converted private home line the street as you head towards the intersection with Ben White. Before arriving there, you may notice the Summermoon Coffee house on the east side of the street, one of the coziest and most intimate of neighborhood coffee shops in the city. The surrounding neighborhoods of Barton Hills and Travis Heights are populated by people that have a steadfast devotion to their local businesses neighborhood businesses.

Next door is the SHAC, the Self Help and Advocacy Center which is run by the Austin Area Mental Health Consumers, an organization of people with a mental illness. This community center provides services and information to people suffering from mental illness and to the community at large. The mostly volunteer staff here has helped many people to find housing, jobs and renewed hope to re-integrate them selves into society.

Of course, along the way there has been a colorful liturgy of Mexican food restaurants: Aranda’s, Polvo’s, Little Mexico, Mexicana Panderia, Evita’s Botanitas. Even San Antonio would be hard pressed to present a street with so many colorful and deliciously promising establishments in a stretch of so few miles.

And all up and down this road which has somehow escaped the clear-cut style of development that brings condos and super-centers and grid-locked traffic, there is still the green of the Austin hills. From a long stretch of the street, if you’re heading north, you can see the towers downtown floating in the hazy distance. This is indeed Austin without the cookie-cutter architecture of anywhere USA. It’s local in character, content and color, a true reflection of the creativity and productivity of the people who live here.

It may only be a matter of time before this fine old street cedes to the pressure of development and big money, like so much of the rest of the town has. But for now, it’s still Austin the way it used to be, or nearly, ready for a road trip with no clear destination when the trip itself was all that mattered.

Ki lives in Austin as a realtor in the Austin real estate market. His site provides a free mortgage calculator along with a search of the Austin MLS

One of the most timely and costly home improvement projects any homeowner can take on is a kitchen makeover. Whether a homeowner desperately needs a kitchen revamp, or is tired of the dated look of the kitchen, there are several options to freshen up the area.

The easiest fix for a sparkling new(ish) kitchen is a good thorough cleaning. Over years of use, kitchen cabinets take on food, heat, and grease that tends to build up. Though it might seem simpler to leave cabinet doors attached to clean them, taking time to remove the doors allows for easier access in the long run, though it’s advisable to number the doors to keep track of which goes where. There are many cleaners on the market, but trisodium phosphate, known as TSP, has a great track record as a heavy duty degreaser and cleaner.

After cleaning doors and cabinet sides, the hardware will also need a good soak. Remove the hinges and drawer pulls, and let them sit in a good soapy water mix for 30 minutes. Giving them a light scrub and polish can make them look brand new. If the kitchen needs some updating, changing the hinges and handles or pulls on cabinets is inexpensive, and can dramatically change the look of a kitchen.

For those looking to make a bigger change, and spend a greater amount of time on their cabinets, they can also be refinished. Before refinishing, it’s still advisable to clean the wood thoroughly, as sanding them down could embed dirt and grime even further without a proper cleaning first.

To remove old stain or paint, the easiest way is with a chemical, or paint, stripper. By following the directions of the stripper, the chemicals end up doing most of the work, and the old stain should easily peel away. After the stripping is done, it’s time to sand.

Starting with 120 grit sandpaper should help remove any of the old paint or stain left behind by the stripper. Afterwards, smooth out the wood with 220 grit sandpaper. After the cabinet is properly sanded, apply a primer if painting, or a sanding sealer if staining (which works much like primer, allowing stain to absorb evenly). Once the paint or stain is applied to the cabinets, add a final finish, such as varnish or lacquer to protect the wood. Water-based polyurethanes also do a great job, and are environmentally friendly.

If refinishing cabinets won’t help the kitchen’s appearance, and an entire renovation is out of the question, there are companies that specialize in refacing. After measuring the sizes of the current cabinet doors, a refacing company will custom build new cabinet doors, with a wide choice of stains, finishes and hardware to choose from. This is a good option for those living in older homes whose kitchen cabinets are sturdier and well crafted compared to today’s modular cabinet options.

Lastly, if a brand new kitchen is needed, IKEA has become a popular source. At a much greater discount to other big box stores, IKEA also has user-friendly software to create unlimited kitchen combinations that fit a home’s current dimensions. Also, with kitchens starting at around $2,000, the prices are hard to beat, and may have some savings leftover to contract out the installation.

Ki is a realtor in Austin. He helps people in the market for Austin real estate. He also provides a free mortgage calculator and a free search of the Austin MLS.

In the past I used to tell people to look at different mortgage rates for different loan products and determine what was best for them. If they were planning on moving soon a 5 Year ARM might work. If they planned on staying on the house longer they might consider a 30 Year Loan. I don't say this any longer. Why? Because of recent developments the 30 Year Loan is king. If you can get a 30 Year loan in the current market 95% of the time it's the best choice.

If we look back to the beginning of 2006 both 5 Year ARMS and 1 Year ARMS where significantly lower than the rates on 30 Year Loans.

Begin 2006
30 Year Fixed - 6.22
5 Year ARM - 5.79
1 Year ARM - 5.15
At the time banks saw 5 and 1 Year ARMs as a short time commitment. But now banks are starting to see more foreclosures on ARMs than they are on 30 Year Fixed loans. This has started to make banks more nervous about ARMS. In response banks have raised rates on 5 and 1 Year ARMs even as rates on 30 Year loans have decreased. Using a tool that graphs mortgage interest rates Here is a chart comparing the loan products over the last few years.



What we will notice is that historically all 3 products moved in concert with each other. But recently that trend has changed. 5 Year ARMs and 1 Year ARMs have gone up while 30 Year Rates have come down. So if we look at the rates today we will find them much closer together than what we saw at the beginning of 2006.

Today
30 Year Fixed - 5.85
5 Year ARM - 5.67
1 Year ARM - 5.24

So how much does this affect your potential mortgage payments? Let's look at the mortgage you would get on a 200k house based on the interest rates.



First let's look at the mortgage payments you would make at the beginning of 2006.

Begin 2006
30 Year Fixed - 1227.53
5 Year ARM - 1172.23
1 Year ARM - 1092.05