New and Preconstruction Chicago Real Estate Specialists - Condos, Townhomes, Single Family, Rental Management

Real Estate Bubble Theorists No More Than Squealers - Realty Times Nov. 2005
by M. Anthony Carr

Have you ever squirted a little kid in the back with a stream of cold water on a hot summer day? I've seen this
throughout our neighborhood and it's actually sadistically humorous to watch the little tykes squeal and run away
from their parental tormentors.

Those who keep whining about the coming "burst" of the "real estate bubble" remind of these squealers.
Sometimes I feel like the lone voice of reason crying out in the wilderness.

The real estate bubble naysayers whine about the "bubble" as if the whole national real estate market were
nothing more than another over-inflated stock exchange -- like the New York Stock Exchange and Nasdaq. Folks
-- it's not. Real estate, like politics, is local and I wish those real estate journalists scaring the buyers with quotes
from their stock market experts would just stop what they're doing and consider some real facts.

Fact: The top hot real estate markets in the U.S.A. are also the top hot job markets.

Fact: Houses are where the jobs go at night.

Fact: Without enough houses in a hot job market, your housing inventory will escalate in price.

Fact: There are "pockets" of over inflated real estate

Fact: Unlike the stock market -- you have to live somewhere. Whether renting or buying, there is an automatic
necessity for the ownership of real estate -- either by a homeowner or an investor.
There is no built-in necessity for owning stocks, thus all comparisons between the two products is moot.

In the midst of the hot markets across the country (where the squealing is the loudest and most piercing)
citizens of those jurisdictions must look to the local economy to determine their risks.

In the Washington, D.C. area, the Northern Virginia Association of Realtors looks at those numbers every single
year at its annual Economic Summit held at George Mason University. Unfortunately, most of the press gives it
passing coverage -- I think especially this year, because the economists did not fall in line with "the sky is falling"
mantra heard by critics of a strong housing market.

The summit was reported on in the trade association's latest monthly publication, The Update. "In a nutshell, you
couldn't be in a better market," according to Dr. Stephen Fuller, Director for the Center for Regional Analysis and
School of Public Policy at George Mason University. "If you're worried about some bubble, or slow down, or
something that's evil, just put yourself in any other market," he said. "They envy us."

To put it bluntly folks, we're going to have a housing problem in the future -- but it's not the bursting kind. It's the
"How can I make $60,000 a year and have to live out of the trunk of my car" kind. You see, in the Washington,
D.C. area and other hot job market areas, the reason housing is climbing in value is simply because there's not
enough of it.

Dr. Fuller reports the regions surrounding Washington, D.C. have done a fantastic job of drawing jobs to the
area -- 287,000 in the last five years. However, they have done a sorry job in providing houses for all these
people. This year, there's a deficit in housing in this region of 463,300 units. That means that while people can
take jobs here, they won't be able to live nearby to work them. They'll have to commute in a couple of hours.

The numbers don't get any better, Fuller says. By 2030, there will be a shortfall of housing units in the
Washington, D.C. area of 716,000 units.

Okay, bubble squealers -- where's the bubble?

The vocabulary being used by journalists is leftover from when the stock market inexplicably rose in value when
there was no reason but hype driving the market. Companies were raising lots of venture capital and creating
products that they couldn't sell, meaning they ate through the borrowed funds and finally burst.

In hot real estate markets, there's no hype. There are real jobs being created by real companies, creating real
products and selling them to real consumers. Real money is being made and these real companies need real
employees to make it happen -- local governments should wake up and realize that we need real houses to put
them into as well. If you want to quell the fear -- build more houses.

Now -- would all the squealers please stop? You're giving me a headache.

Mortgage Rates Fall For the First Time in Thirteen Weeks- Realty times Nov. 25, 2005

McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM
(PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.28 percent, with an average 0.6 point, for
the week ending November 24, 2005, down from last week's average of 6.37 percent. Last year at this time, the
30-year FRM averaged 5.72 percent.

The average for the 15-year FRM this week is 5.81 percent, with an average 0.6 point, also down from last week
when it averaged 5.90 percent. A year ago, the 15-year FRM averaged 5.15 percent

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.75 percent this week, with an
average 0.8 point, down from last week when it averaged 5.86 percent. There is no annual historical information
for last year since Freddie Mac only began tracking this mortgage rate at the start of this year.

One-year Treasury-indexed ARMs averaged 5.14 percent this week, with an average 0.7 point, down from last
week when it averaged 5.20 percent. At this time last year, the one-year ARM averaged 4.27 percent.

"Lower oil prices -- at least compared to the last several months -- have helped to alleviate some of the inflation
fears that the market has been experiencing lately," said Frank Nothaft, Freddie Mac vice president and chief
economist. "That helped to reduce upward pressure on interest rates last week, allowing mortgage rates to
ease a bit for the first time in 13 weeks."

"This should be a quiet week as the nation officially begins the holiday season, but next week existing and new
home sales figures, which are expected to be lower, will be released. Consumer Confidence for November,
which is expected to be up, will also come out next week. And these figures may well influence the direction of
mortgage rates over the next few weeks."