You probably don’t need us to tell you that Michigan’s economy is currently on low. We’re facing one of the worst housing meltdowns of all time, foreclosures are at near record levels, many people have lost their jobs, and a lot of once proud local business establishments are either shutting down or moving to more fertile ground.

(Incidentally, Dante Chinni has an interesting little take on our local economy in an item appearing in today’s The Christian Science Monitor: “In affluent Michigan, a firsthand look at the trickle-up recession.”)

In any event, if you’re thinking about buying, fixing up, and eventually flipping a property, you may want to read an article featuring our founder and CEO (Ralph R. Roberts) in this week’s edition of Crain’s Detroit Business:

For more, including Ralph’s own thoughts on flipping houses in this economy, read “Some area house flippers find upside to housing downturn” by Tom Andrew of Crain’s Detroit Business.

According to a recent study, Detroit had one the three highest foreclosure rates among the nation’s 100 largest metropolitan areas during the first six months of this year. Detroit’s woes–one foreclosure filing for every 29 households–ranks it second in the nation. The metro area, comprised of Wayne County, reported 28,705 foreclosure filings, which translates into a 26 percent increase from the previous six-month period and nearly double the number reported in the first six months of 2006.

If you are one of the many Michigan residents caught up in this subprime lending/foreclosure mess of ours, this blog entry may interest (no pun intended) you.

First though, a little background information: Subprime lending is highly controversial. Opponents say that the subprime lending companies engage in predatory lending practices such as deliberately lending to borrowers who could never meet the terms of their loans, thus leading to default, seizure of collateral, and foreclosure. Proponents of subprime lending maintain that the practice extends credit to people who would otherwise not have access to the credit market.

The controversy surrounding subprime lending has expanded as the result of an ongoing lending and credit crisis both in the subprime industry and in the greater financial markets. This phenomenon has been described as a financial disease which has led to a restriction on the availability of credit in a number of financial markets. Hundreds of thousands of borrowers have been forced to default and several major subprime lenders have filed for bankruptcy.

Well, last Friday, in a widely publicized address from the Rose Garden, President Bush said that a bailout is out of the question: “A federal bailout of lenders would only encourage a recurrence of the problem.” This is certainly true. Bailing out the lenders would simply lay the burden on taxpayers and provide the carpetbaggers with another opportunity to pillage.

The President did reach out to some distressed homeowners–those with good credit histories who could probably pull themselves out of their current crises with a little help from the federal government. The FHA (Federal Housing Authority) will be given more flexibility to assist homeowners who have subprime mortgages. Homeowners may also be spared having to pay additional taxes in the event that the lender forgives a portion of their debt. Perhaps this will encourage lenders to work out reasonable solutions with homeowners.

Nevertheless, what about all the other consumers–what about hard-working American families who are too deep in debt to be saved? What about the children of these people who are going to be uprooted from their neighborhoods and the school districts where all their friends go?

Government officials, lenders, and people who have not been victimized by the shoddy lending practices of the last decade are quick to judge. After all, they are not the ones paying the price. The people who are suffering are the same people who usually suffer in these situations–consumers. These are the people who were sold ARMs (adjustable-rate mortgages) that ended up costing an arm and a leg. They were told that they could refinance before the rates went up or could build higher credit scores by making their payments on time and then refinance with a low interest rate mortgage later.

Then, the bottom dropped out of the housing market, making it nearly impossible for these hard-hit homeowners to refinance. Some of these loans even came with stiff prepayment penalties to further discourage people from refinancing. These folks were led down this path simply because they trusted an “expert” in a fancy suit with a silver tongue who failed to warn them of the looming trouble and the risk they were taking on. Where are these smooth talkers now? Probably out of work and seeking more fertile fields to ply their trade. They turned the American Dream of Homeownership into a nightmare, but they certainly are not the ones having to wake up to it.

Instead of letting them off the hook, they should be forced to take ownership of the problem they created. Instead of waiting around to see whether the federal government is going to bail them out, they should be actively pursuing the homeowners they led astray and offer them real solutions that can help these distressed homeowners regain their financial footing.

If you catch the doom-and-gloomnews on TV and in our newspapers, you would think we should see people hanging themselves from every visible yardarm in Macomb County and the metro-Detroit area. However, I am seeing new and exciting things happening this spring. The grip of winter is over and fear is lifting from people who are banding together! Putting aside their competitive instincts, other Realtors are calling me and we are working together to make things happen. We are not only thinking outside the box, but we are taking positive action.

In addition, homebuyers are peeking their heads out and making decisions again. The phones are ringing, the emails are filling up and homes are going on the market, which means more buyers are shifting.

With these facts in mind, if you are considering making a move, the time to act is now. In the dead of summer, it will be just that: dead. The Macomb County real estate market is very predictable in that regard. Sure, you will have to take less money for your home this year, but you will also get the deal of the century on your next home. There are deals out there that will simply amaze you. The key is to plan your Macomb County real estate move wisely and with care and take advantage of the spring surge.

Call Jeannie Sample for answers to all your Macomb County real estate questions: (810) 614-2120.

When you’ve been in the real estate business as long as I have, you start to develop your own language. In my new book, Flipping Houses For Dummies (ISBN: 0470043458 / John Wiley & Sons / November 2006), I cover how the housing market follows the law of supply and demand, and why its important for flippers to pay close attention to supply and demand-related trends.

I also introduce readers to the “Dontwanner”… a property that the owners don?¢‚Ǩ‚Ñ¢t want so much that they?¢‚Ǩ‚Ñ¢re willing to do anything to get rid of it, including offering it for sale at a deep discount. Think of a dontwanner as a ?¢‚Ǩ?ìYour Trash Is My Cash?¢‚Ǩ¬ù opportunity. As I tell my readers, one man’s trash is another man’s treasure.

If you look hard enough, you can find dontwanners in nearly every town in the United States. Locally, in the Warren/metro-Detroit area, we have more than our fair share of dontwanners. For more information on dontwanners–or any other type of home for that matter–give my office a call. Our talented agents and staff are ready, wiling, and able to make your next sale or purchase a fast and pleasant experience.

The July 24th issue of Time magazine had an interesting write-up about what inflation means to the average citizen. If you’re thinking about buying a house, and you do not subscribe to Time, here are some things to consider:

Inflation’s Impact on Your Debt:

Every time the Fed ups interest rates in response to inflation, that takes a bite out of anyone carrying a lot of credit-card debt or holding an adjustable-rate mortgage–the tools that have fueled the housing boom, particularly in the big metro areas of California and South Florida.

Ann Johnson, 57, a saleswoman in Kansas City, Mo., cringes thinking about what could happen to the mortgage that looked so appealing two years ago and wonders if she’ll be able to sell her condo in a cooling market. “I tell my sister to keep that spare bedroom open for me,” Johnson says. She also buys gas strategically on long trips to lower the cost of a tankful (hint: skip Kansas). Painful as it may be, that’s exactly the effect that Bernanke is looking for. As consumers limit their spending, inflation follows suit and tapers off in turn.

Inflation’s Impact on Your Salary:

One indicator that has lagged most others is the one attached to labor. Average weekly earnings rose 4% in May–not enough to keep pace with inflation. So even with a few extra dollars in their pockets, most workers have to cut corners to stay afloat. Believe it or not, economists consider this a good sign. If workers were successfully pressuring for higher wages, that would reflect an expectation of even more inflation to come and lead to a spiral of rising wages and prices.

It’s the job of the Fed, Bernanke has said, to use smart policy to keep those expectations in check by consistently taking action as soon as inflation starts to cut loose. “The Great Inflation of the 1970s,” as he calls it, is “an example of what can happen when inflation expectations are not well anchored.” So as long as we can stand a little lead in our pockets, relief may be in sight.

Inflation’s Impact on Your Wallet:

While tame compared with the double-digit rises of the 1970s, oil prices are again the driving force behind inflation, with energy costs rising 31% at an annual rate so far in 2006. That ripples through the rest of the economy, showing up as fuel surcharges on services like airline tickets (up 7.9% so far this year) and higher prices on pretty much anything that travels before reaching a store. Even clothing has been inching up after months of deep discounting. “I wouldn’t expect a lot of relief on gasoline prices,” says Richard Berner, chief U.S. economist at Morgan Stanley. In addition to geopolitical tension, the hurricane season and its potential to disrupt refineries on the Gulf of Mexico lie ahead. And as we grudgingly get used to $3-per-gal. gasoline–it’s been nearly two years since crude oil broke $50 a barrel–companies feel more comfortable passing along their own higher costs to customers.