6-30-06

    Even though we have had some changes in the market and Fed working against us, the second quarter of 2006, I've added $1,000,000 of new investor's monies. I have $10.7 million in the portfolio. That is a lot of new money, but it was still quite easy to put it all to work! I think the next goal should be a big one, $15 million.

   The Fed is hell bent on knocking down the economy and slowing down the boom in the housing industry. They have proven effective. They increased the rate by a much anticipated ¼ point. However, they left their statement to be interpreted as if they would, perhaps, pause in the next meeting, based on what economic numbers of tell of the past quarter.

   The yield curve is basically flat, and the stock market has taken a hit this quarter. Both are saying enough is enough, but the numbers have proven to the Fed that they have in fact done the job they were hoping to accomplish.

   Mortgage rates are continuing to move upward. This week they are at a four year high, but most would agree, a 30 year 6.75% fixed is still a darn good rate! The change in rates is having a larger affect on people with existing adjustable mortgages. Those people are going to find it harder to afford the increase in their monthly payment. This may lead to more people selling their homes, which in turn could add to more houses on the already saturated market.

   The number of houses on the MLS has leveled off somewhat in recent weeks. I am not sure if this is the peak and we'll start seeing the numbers drop, or it's just a pause. It's too soon to say. If the numbers start dropping, it will be more likely from people taking their homes off the market, deciding that if they can't get the price their neighbor did six months ago, they'll just stay put.

   I have recently seen an increase in payoff requests on properties I've financed in the past months. That trend should continue through summer. Yes it's hot, but the school year still dictates many families' relocation plans.

   Prices for houses have flattened and in some cases even come down. The low end to mid range price, $100k to $250k, has stayed flat. The higher end, $250k to $500k plus, is seeing some price declines. Not large, but to see a house listed for $325k and see it sell for $300k isn't out of the norm. I have tried to limit our exposure to high end loans and I have been very conservative on the comps.

   I have updated the pictures of the current properties on the site. Thanks for your trust, investment, and referrals.

   Denny J. Chittick