Oil at $100.00 a barrel? That seems to be the talk of the day. Is $100.00 a barrel a new tipping point for oil? Will the economy blow right past that benchmark and not even notice? How will these economic factors impact the housing industry? All good questions. Lets break it down.

Higher Oil Prices, Tightened Lending Standards, Runaway Foreclosures

According to Time magazine the demand for oil world wide keeps getting greater. Meanwhile the available supply and our ability to refine that dwindling supply is decreasing. I remember from my first economics class that increasing demand and decreasing supply can only lead to higher prices. Now that we all agree on the direction of oil prices, what does that mean to the US housing market? Two possibilities leap to my mind.

1. Higher oil prices convince the Federal Reserve to fear inflation more than the housing markets woes. This results in no further rate cuts.
2. Higher oil/energy prices hit the tipping point where they push the economy into recession. I can’t imagine a recession ever being good for the housing market.

On Monday CNNMoney .com reported that lending institutions are tightening their underwriting standards. This will lead to a reduction in the supply of money available to potential buyers of new homes.

On November 1st John W Schoen of MSNBC reported that foreclosures increased 30% in the 3rd. quarter of 2007. According to Mr. Schoen 446,000 homes were foreclosed on during the last 90 days. These homes now get added to the already staggering 9 month supply of homes available in the market. The new foreclosures will be added to an already over supplied inventory. Mortgage institutions eager to recoup some of their investment will be motivated to sell these homes at a discount to move them fast. This will put further downward pressure on already reduced market pricing.

Matthew Grahm of MortgageNewsDaily puts it all togather nicely in an article titled Current State of the Mortgage Industry I highly encourage you to read his post. He even includes a graph from Yale economist Robert Shiller which is an enlightening look at home values over time.

Getting back to my initial question, How will these economic factors effect the housing industry? I don’t see anything good in the short term. Increased housing supply being sold at a discount. A reduction in the qualified buyer/borrower pool. Interest rates that may not move the way the Fed wants them to because of supply and demand forces out of the Federal reserves control.(Underwriting guidelines) A weak or recessed economy. All add up to bad news for the housing industry.

What are your thoughts? Is there a silver lining that I have not yet seen?

As a sales person we are always setting the expectations of those around us. Like it or not, it is just part of our job as a professional communicator.

When we set expectations unconsciously we set those around us and ourselves up for disappointment. When we consciously set good expectations, we create an environment where the people we interact with are satisfied.

Sales people strive to satisfy their customers. It is hard for any salesperson to give their customers news that will disappoint or upset them. I have always found that it is good to set proper expectations from the very beginning. When I first interact with a potential customer, I always have a conversation about the topic of things in my control and things out of my control. It is helpful to let the prospect know that it is my personal goal to not ever disappoint them on anything under my control. They then know that when I give an estimate on price or timing, I will strive to be accurate. If there are variables involved, I will provide the most conservative answer. This means price estimates will be a little high and time estimates will be a little long. I repeat this topic often. This sets the stage for me to over deliver.

The conversation on things out of my control is similar. Using the construction of a new home is an great example. I tell each of my future homeowners that building a new home is an imperfect event. Homes are made from imperfect natural materials and built by dozens of imperfect humans. Weather, product delivery schedules, subcontractor mistakes, are all by their nature directly out of my control. We then put together a plan to deal with the unknown when it happens. (This is an important step.) I put a system in place that revolves around a written communication trail. This again gives the prospect the peace of mind knowing that there is a system in place to handle their concerns. When almost none of what I laid out for them actually happens, the customer now feels that they have had a great building experience.

When you set and manage customers expectations you relieve the stress on them and yourself. To sum it up in one line… Always under promise and over deliver!

The jobs report released this morning, as reported by CNBC.com, is causing jubilation on Wall Street. Traders are excited about the news which is twice what conventional wisdom expected. Markets around the world are reacting positively to the news. If everyone is so happy why does my headline say Ouch?

Yesterday the Fed poured 41 Billion into the markets to shore up liquidity. The fear was that the markets would run into the same liquidity crunch they faced in August 07. Today’s news should have been that the Fed had made the largest infusion of liquidity since September 19, 2001. That infusion was made to combat market fears right after the attacks of 9/11. Today’s job report is so strong that traders are now saying, “credit crunch, what credit crunch?”

The simple fact is that good economic news is bad for the housing market. Two days ago the Fed made a 25 basis point reduction, which was widely expected. Conventional wisdom is that the small reduction signals that the Fed is more afraid of inflation than it is of the economy moving into a recession. Today’s job numbers, which have blown away expectations, is so strong the fear of recession has become greatly reduced. The signal to the Fed is clear. No more rate cuts will be required at this time. This is very bad news for the housing industry. The housing industry, facing a glut in inventory, free falling prices and margins is in desperate need of lower interest rates. Don’t look for any help soon. Ouch!

The Federal Reserve board cut rates again today. The rate cut was a modest 25 basis points off the federal funds rate. “The Fed made the right decision” says NAHB President Brian Catalde in a National Association of Home Builders press release. He went on to say that this should be good new for new home builders. Not everyone was as optimistic as Mr Catalde. Businessweek’s Ben Silverman and David Bogoslaw saw more a lift for the stock market in the Fed’s decision. Bankrate.com sees the rate cut as more of a boom to the stock-market than to the sagging housing market. While they are not overly optimistic on the housing recovery, they do provide a nice graph on historical interest rates. InmanNews is interpreting the news as strong economic results are reducing pressure for further Fed cuts. According to Inman’s report the Fed feels this will further add downward pressure on the housing industry.

Think of giving not as a duty but as a privilege.
-John D. Rockefeller

It has been said that our society is measured by how it treats its weakest and most helpless citizens. As URBaCS continues to grow we will continue to support those in need from our local community.

In Indianapolis alone, there are hundreds of charitable organizations supporting those in need. Most have a specific focus. Some include: underprivileged children, battered women, drug addicts, alcoholics, gamblers, homeless persons, military veterans and abandoned pets. In addition, organizations like the United Way exist to serve as a sort of charity clearinghouse where you can donate to a general fund and your monies are distributed as needed. The point of this post is not to tell you how to spend your money.

If you don’t have the financial latitude to donate money, why not donate some of your time? Sign up to read to an underprivileged child or play bingo with a lonely elder. I know your time is valuable but trust me that you will reap great emotional rewards for sharing with others.

With the vastness of all of the problems in the world, there must be something you can do, however small it may seem.

Don’t hesitate to get started today. Most municipalities have charity directories. Grab one today and see how you can help.

This is our first crack at a training video. Any feedback would be greatly appreciated.

A few big companies have started using viral marketing. Production costs are minimal and reach is exponential. Here are a few examples that I really like:

1. When MBNA merged with Bank of America merged two employees sang a song at a company meeting. Someone posted the video on YouTube.

2. The Indiana Pacers basketball team created a unique viral video to generate excitement for their opening game of the 2007-2008 season.

Our hearts and prayers go out to everyone effected by the massive fires in southern California.

I can’t help but wonder how this is going to effect the building industry. Will this be a boom to the industry, or just another nail in the coffin?

When Katrina hit New Orleans the home building industry was in the midst of the biggest boom in recent memory. The rebuilding efforts increased the demand for building materials and contractors. Increased demand lead to shorter supply with the consequences of higher prices. We were fortunate at the time because we were so busy no one noticed. Solution, raise prices, delay starts, problem solved.

Today we find ourselves in the midst of the largest market downturn in 20 years. How will the increased demand of supplies and labor impact us today? New Home prices are falling. Margins are almost non-existent. Builders are struggling to survive. Contractors have gone out of business. Can they absorb increases in hard cost of materials and labor?

On the surface it would appear that the answer would have to be no. But what if there is a silver lining to be found in the tragedy of the California wildfires? During the massive rebuilding effort of Katrina contractors flocked in from all over the country. Supplies also arrived in such large quantities it created shortages elsewhere. All of the goods and services required to rebuild the property destroyed in the California wildfires may be the saving grace for the new home building industry. It may keep some suppliers and contractors busy enough during this down turn to allow them to survive long enough for inventories to be reduced and the market to regain some form of equilibrium.

In nature fires are a way to cleanse the environment allowing for a renewal of growth. I for one hope this tragedy can clear some of the economic brush, providing new growth for our troubled industry.

If you’ve never heard of GrandCentral.com, just remember that you first heard about it from us. GrandCentral is a young company that was started by two guys: Craig Walker and Vincent Pacquet, both from Yahoo!. The company was recently purchased by Google for an undisclosed sum and is currently in BETA.

I was lucky enough to receive an invite to participate in the BETA and I must say that there are some really great things coming. In the span of a few hours I have moved all of my contacts from Facebook, Outlook and my cell phone to my new online address book on GrandCentral. I have setup my new voicemail and configured GrandCentral to work with my cell phone, home phone, work phone and Skype softphone.

Intrigued? Here is a how GrandCentral.com works: www.grandcentral.com/support/howitworks

On its own I have yet to find a more comprehensive online phone system. But pair it with Skype and you can achieve phone successes that have yet to be found online. Here is what I mean:

• I setup a free GrandCentral account
• I setup a SkypeIn number: $60/year (US dollars)
• I added all of my contacts into my GrandCentral address book
• Whenever I need to make a call: I click on the person’s name in my GrandCentral address book and it calls my SkypeIn number, then it calls them.
• No long distance. No fees.
• And the best part: my GrandCentral number shows up on the other person’s CallerID (a problem that Skype has yet to solve)

More info about GrandCentral
More info about SkypeIn

Now that the blog is starting to take shape, I thought it would be a good idea to add additional content that you may find useful. One of our goals with URBaCS is to make it so simple even a cave man can do it. Oops. Sorry big and powerful insurance company. What I meant to say is so easy even a middle aged executive can use it. Which when you think about it, it’s kind of the same thing. So our topic today is ‘how to get started.’

If you are a builder, the easiest way to get started is to visit www.tryurbacs.com/trial.php. This will take you to the sign up page. All you need to do is put in your company name, website address, an email address, and a password. Click on the ‘Create Free URBaCS Account’ button and you are done. That’s it.

You will immediately receive a couple of emails outlining how to start using your new URBaCS account. Each page inside the system includes a set of operating instructions and we have also created Tour and Frequently Asked Questions sections. In addition, I will be posting the next steps in upcoming blog entries.

If you’re not ready to sign up for a trial account, please visit www.urbacs.com to find more information about how URBaCS can help your company.

We would also love to speak with you directly. Please email us or call us.