Mortgage rates are on the rise, leading many to jump into the home buying market sooner rather than later. Rates have risen again to over 5%, a full percentage point higher than they were two months ago.

Still, these rates are bargain basement compared to how they were just a few years ago. Many home buyers who have been waiting or making a prolonged decision should reconsider; most likely the mortgage rates will continue to rise resulting in a higher necessary down payment and obviously monthly payments.

New home buyers may find themselves frustrated since many spend years saving for the down payment, but 5% now is better than 7% six months from now.

Since this trend is most likely to continue, those considering purchasing real estate should accelerate their plans.

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Although, high net worth clients say they are recovering their losses from recent years, they are still concerned about their financial future. After the recent election, investors feel the economy is looking brighter, but there is still cause for concern. There are many questions unanswered regarding regulations facing the financial securities industry that will affect most advisors.

A positive note is most clients are happy with their current financial advisors. They have managed to ride out the downturn with their advisors without jumping ship and are happier for it. This year, the rebounding of the financial markets has helped investors regain some of their losses.

Investors may still be conservative with purchases and investments, but they remain confident the economy will continue to rebound.

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Many people are concerned the economy may take another turn for the worse in the upcoming months and are still wary about where it is safe to invest. However, some strategists believe a double-dip recession is not likely to happen. According to Milton Ezrati in an Investment News article, Partner and Senior Economist and Market Strategist, Lord Abbett states, “History…offers only one true double-dip experience, and that grew out of a policy error.”

There are many reasons why investors should have confidence in our economy. Two reasons are consumer strength and housing. According to Milton Ezrati, “…the market took it to heart when reports some weeks ago showed that retail sales in May dipped by 1.4%. But that sales decline followed a powerful 10% advance in retail sales during the prior 12 months.”

Some investors were falsely encouraged by the monthly housing statistics because of the first-time homebuyer’s credit. This did not prompt someone to purchase a home, but rather hurried sales of homes by the credit expiration date. However, Milton Ezrati states, “…the more significant consideration is the drop in the inventory of unsold homes by 27%; in fact, during the last 12 months, from the equivalent of 13 months’ supply during the 2008-2009 crisis to about eight months’ supply more recently.” The housing prices have increased as well this year and continue to do so.

Business spending and overall production levels have increased this year helping improve our economy. Companies also seem confident because they are beginning to rebuild their inventories. Milton Ezrati states, “Stocks of finished goods on hand rose at 6.0% annual rate between March and May (the latest month for which data are available), and work in progress increased at a 4.3% annual rate.”

Although unemployment rates are sluggish, they are still decreasing showing we are headed towards a healthier economy. Milton Ezrati states, “…the jobs market is slightly ahead of schedule according to…historical benchmarks.”

While the economy is still trying to recover from 2008, investors should try to focus on the upward trend in business and consumer spending. These two factors can help avoid a double-dip recession.

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Ok, I admit; my familiarity with Keynesian Economics as proposed by the late British economist John Maynard Keynes was very limited until I read the LA TIMES article “Stimulus Dusts Off An Old Theory” by Washington reporter Peter G. Gosselin on Sunday, January 11.

It seems that Keynes argued in the 1930’s that governments could end the Depression by spending heavily to maintain demand for goods and services until frightened consumers and damaged businesses gained the courage to resume buying and selling on their own.

The success was dependent not so much on the amount of money government spent, but how CONVINCINGLY it signaled that the economic game was reviving, and consumers overcame their fears and began spending again. Timing and political atmosphere were key components.

Gosselin goes on the say that for decades conservative economists dismissed Keynes as misguided, but with the speed with which the present economic crisis has developed, what we are witnessing now is the incoming administration embracing FDR, the New Deal and Keynesian economics with a stimulus package beyond anyone’s wildest dreams.

Will it work?

I have a strong conviction that OPTIMISM by all sectors, including Main Street and the Media, will be the key components for success of the stimulus package.

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It started September 7^th when the federal government started a new program called “bail it out.” This created the domino effect which is still falling as I write this.

There seems to be this mentality out there that if the government does not step in with taxpayer money the world will come to an end. Ok, enough, I say…we taxpayers are experiencing bailout fatigue and it is time to let the free market do its work.

Believe me, two years after the “BIG 3” come out of bankruptcy, they will be lean, mean auto-making machines and will be able to produce cars Americans will buy! I say let the free market work out the economy!

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Remember my “GOOD” sheets from Starbucks? Well, this past week was a “wrap-up” of their seven weeks of topics to help inform and stimulate conversation as we all head to the polls on Tuesday.

Last week’s “GOOD” sheet took a look at some of the closet elections in recent history…yes, every vote DOES count; so make the most informed choice possible and get to the polls!

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Blogger Evan Newmark, for Deal Journal, on 09/17/08, posted Dear Main Street – A Letter of Explanation from Wall Street

In essence, he states that Main Street America must share the blame with Wall Street for the financial markets meltdown. “The mess was made together and now we must pay for it together”

Check out the overwhelming responses that came in on this one! My thoughts on this were stated in the previous blog entry. Something has got to change…

Moving forward, how are we to avoid a new era of risky debt making?

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Will all the eggs fall in one basket?
The week of September 15-19^th will obviously make the history books!

To say it was a roller coaster ride for not only Wall Street, but for the global economy, is an understatement…more like a head spin I would say!

As we watched the events unfold over the past week, (the collapse of Lehman Bros.; the buy out of Merrill by Bank of America; the bailout of AIG; the government rescue plan for banks in debt; and finally, the ban on short selling) I can’t help but ponder where this will all go.

My question is, down the line, will all the “eggs” fall in one basket?! Will the phones keep ringing for financial services recruiters? What changes in the industry will we see?

Your comments are always welcome!

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