The Law of Unintended Consequences

Nancy Russell Vice President CBRB www.nancyarussell.com e-mail: Nancy.Russell@NEMoves.com It was the tale of the consummate under-achiever being given a shot at the title. When in the end Rocky Balboa went the distance with the champ Apollo Creed. The radio airwaves were filled with the Eagles' "Hotel California" and Fleetwood Mac's "Rumours." Two of the more popular TV programs, "Laverne & Shirley" and "Happy Days," beckoned back to a more innocent time 20 years earlier. Such was the year 1977. It was also the year that President Carter signed into law the Community Reinvestment Act (CRA). The CRA was the answer to an unfair "redlining" practice whereby minorities could not get access to home loans.

Jump forward to the mid-1990s when President Clinton's top housing official, Henry Cisneros, loosened mortgage restrictions with the sole purpose to increase the percentage of home ownership in the U.S. With the housing expansion that he helped create, Mr. Cisneros then went on to join the board of the now beleaguered Countrywide Financial.

Fast forward to today, when the world's most powerful financier, U.S. Treasury Secretary Henry Paulson, begged while on his knees for politicians to provide $700+ billion in bail out money. While Treasury Secretary Paulson was groveling at the feet of the U.S. Senate, the Chairman of the House Financial Services Committee, Barney Frank, was all along assuring us that there was nothing wrong with Fannie Mae and Freddie Mac. That is, until they collapsed.

The Law of Unintended Consequences is the actions of government always have eff ects that or unanticipated or unintended. The other piece of news is that social engineering's ill eff ects sometimes takes decades to unfold before the cancer spreads throughout the patient. The practice of redlining loans prior to 1977 was unconscionable and expanding home ownership sounds like a noble goal. However, when sound business practices are discarded, then there is no other possible ending, but a bad ending. And, boy oh boy, this was a bad ending.

OK, so where do we go from here? First let's take a look at the economy. For over two years now the major news media have cried that we were in a recession. Well, their prophecies may be coming true. Today there is no question we are in a middle of a major economic slowdown. So much so that the Federal Reserve Chairman stated that he will lower rates (again) and he is now favoring a second government stimulus package. Whether the second stimulus package is passed or not, the economy will recover. The unadulterated fact is that markets fluctuate, it's their nature and government's tinkering sometimes makes things worse.

As far as the housing market goes, we are still near historical lows for 30-year fixed rate mortgages. As of the writing of this article, I have seen 30-year rates hovering around 5.65% and inventory is solid. Last month I sold a home in nine days. The home was smartly priced, staged properly and marketed effectively. Other similar homes that were priced a little higher are still for sale. The good news is that my sellers got a great deal on a new home. While they could not get a higher sales price like they could have a few years ago, they were able to buy the home of their dreams for a lower price. If you qualify for a mortgage, you may never find a better buying opportunity in your lifetime than there is now. If you are looking to sell you may never have a better opportunity to upgrade to the home of your dreams.

Rocky Balboa was knocked around unmercifully by Apollo Creed. He was sent to the mat several times, BUT he always got up. Similarly, our economy and housing market has taken it on the chin, BUT they both will recover. Whether you are looking to sell a home or buy a home in this market, give me a call and I will navigate you through the process.

"Whatever Nancy touches turns to SOLD." Call me at 508-243-8128 or by e-mail Nancy.Russell@NEMoves. com. For more information, visit my website at www. nancyarussell.com.