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Financial Conversations with Fitz #23 - Closing Acreage Comments, General Real Estate Comments - 06/16/2009

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It is spring/summer!!!!     Ground temp above 60 degree.  Corn and beans are growing slowly.  Now we just need lots of sun to get some color (green) to the crops. It is no surprise that our heat units are below last year at this time.

We had a good turnout for our Septic Tank new Rules seminar.  A good showing by realtors, attorneys, bankers, contractors and general public.   Had lots of questions from all areas.   It will take us a while to get used to the new way.   Long term it will be better for our water quality.   Some people figures approximately 80% of septic systems are not in compliance with the new rules in the 77 counties that haven’t had regulation before.   They will start working on compliance with “transfer” properties.  Our main speakers were our two county recorders and two county sanitarians.  We also had a “certified” pumper and inspector helping with questions.   The main point is if your septic tank does drain into ditch or creek you might as well save the inspection fee and plan on updating.   NO sense spending a couple of hundred dollars to be told it doesn’t meet specs because it drains into ditch.  WE had about a dozen questions that we didn’t get answered in the group.   Sent those off to DNR for thought and answers.   Will cover those in another broadcast.  The consensus with the entire group was this will definitely raise the cost of acreages as that little home in the country.   New septic system about $6,000 to $8,500.    If you need new water well system about $10,000.   Be sure to get informed before you head out into the country.

This brings up a lot of questions we get asked: “Is now the time to buy?”……Interest rates are certainly favorable even with the secondary market going up over 1 ½ points in just a week.  Long term money is on its way up worrying about inflation around the corner.  The economy is sort of like a field that has dried up and we start pumping water to save it.   If we forget to turn the pump off we eventually will have a flooded dangerous situation.   The economy is in that dilemma.  In reviewing housing data put together by Karl Case of the S&P/Case-Shiller Prices Indices since the 1890’s; the last 8 years have been an aberration rather than normal.   Normal increases in house cost has been 2.5% to 3.0% for all those years.  Some prices in certain areas doubled in six years rather than the normal 15%.  So has the real estate market returned to normal????   Not according to his index.  IN our area we may be closer than the coasts.   I think too many people purchased too much house for their income because the rates were so much below the 8% that most of us were used to.  What happened: if you were paying 8% for a $100,000 house and the rate dropped to 6% you could spend $133,000 instead of $100,000 for the same interest costs.  So people bought more house than they could afford with an income or interest change.

Don’t forget our Forest City Pool Party on Friday night….For a small donation toward the pool you can swim and eat hot dogs for two hours from 5:00 to 7:00.  Bring the Family..Will be warmer..40% chance of rain for Friday night.  Thompson and Titonka will be having their later.  Will let you know.

Remember that you should deal with people in community banks and organizations that when they put something together for you that they will be sitting with them at ball games, church or community events.  So, if in doubt give us a call.