Are Municipal Bonds the Next Big Unknown Unknown?
Thursday, August 14th, 2008
Image Source: www.rwsbroker.com
In the financial crisis of today, to use a popular maxim of Donald Rumsfeld’s invention, “there are known unknowns and unknown unknowns.” Some major unknowns have surfaced to become economic hurricanes reeking havoc on financial markets worldwide, such as the failure of Freddie Mac and Fannie Mae. But what unknown unknowns are still lurking under the surface, waiting to be discovered, buried in the media headlines, that could have an equally devastating effect on the economy and real estate markets across the country? One such potential dangerous unknown unknown that hasn’t received very much press attention recently is the current lack of financial stability in the municipal bond market.
Municipal bonds are sold by cities and municipalities across the nation to fund large real estate and infrastructure construction projects. They offer investors a tax free stream of income and offered by brokers around the nation as a low risk way to receive income without increasing the investor’s tax burden. Well, it turns out that the municipal bond markets now are starting to sound like a familiar story. Municipalities across the nation have taken advantage of low interest rates over the past two years to fund construction projects. However, about a one third of these funds were borrowed using a variable rate of interest. Now the municipalities are having trouble paying back their investors.
Walt Disney Co. has signed up an exclusive marketing agreement with KB Home and they will be featuring Disney branded home furnishing products in progress all over the nation. Eight model homes with Disney fashions will be featured in Central Florida, the home of Walt Disney World. Although Walt Disney is more popular for its toys and movies, floorings, window coverings, lightings and many more can also be found from Walt Disney. The many selections will be integrated into select model homes and will be subjected for review in KB home studio which is 15,000-square-foot in size located in South Orlando.
The “For Sale” signs that can be seen in front yards of many houses all over the country are blooming like spring flowers. Many concerned sellers are confronted with the worst scenario for the past ten years. Because of the crashing economy, home prices are declining and mortgage foreclosures are intensifying. The promise of a brighter tomorrow may seem dim because the housing industry is headed for a storm right now. From 2001 to 2005 sales of new and existing homes are in a boom and the industry is souring up for five consecutive years. Right now, the situation of the housing industry is definitely incomparable to those years.
The Internet has gained its popularity in any kind of businesses. Real estate business is not an exemption to this. In fact, a house or a piece of land can be bought through the Internet only for the price of a used car. An example is a four-bedroom, two-bathroom home in Cleveland which was sold for $6,050 on eBay. Actually not every property available at auctions is cheap but generally speaking, the market is fast becoming popular as an effective tool to move properties that have long been sitting for months and this is something that can not be ignored by agents.
According to a Canadian economist, housing market in Canada is no longer in boom. Another one commented that there have been convincing evidences that popularity of real estate has come to an end. However, there are reports showing that although the market has no longer its record-breaking pace as compared to the previous years, it is still considered healthy. In the past 10 years, housing market in Canada stayed on top but according to Canada Mortgage and Housing Corp., MLS sales is expected to drop by 8.5 percent this year and by 2009, there will be another 2.3 percent decrease.