Ok let the housing speculation begin! As everyone knows, the homebuyer tax credit expires at midnight tonight. In some parts of the country we have seen buyers racing to get contracts signed prior to the expiration. However in other parts of the U.S. we have seen only modest increases in purchases. I personally have met a number of prospective home buyers that have stated that "they are not going to make a rush decision on purchasing just to get the tax credit". These sentiments seem to be a lot more popular than many media outlets have been reporting.
I was hopeful that I could once again be writing about positive news in the housing market for a second consecutive week. However, my plans have been somewhat derailed. The Case-Shiller Housing Value Index dropped by .9% showing that housing values are not rebounding at all.
Traditionally in the spring, house values tend to rise based upon increased demand. What we have been witnessing is that values are not rising due to the fact that a high percentage of homes being purchased are either foreclosures or distressed sales. The pattern of declining prices has many worried that foreclosures and distressed sales are likely to increase as homeowners continue to see their equity deteriorate resulting in what is now being called "strategic defaults".
The one bright spot on housing is that mortgage rates are continuing to remain low despite the government's withdrawal from the mortgage backed security re-purchase program that ended in March. Many experts were predicting rising interest rates starting in April and that fortunately has not materialized. Demand for government bonds remains strong which is part of the reason that rates are remaining low. Another catalyst to rates staying low is that in a 9-1 vote, the Federal Open Market Committee announced the intention to keep interest rates low for an extended period of time.
Thankfully other sectors of the economy are showing continued signs of promise and improvement. The stock market has been showing small increases as of late and has rebounded to rise back over the 11,000 mark. Additionally, initial jobless claims have been dropping slightly for the last two weeks as well.
A major area of concern in the stock market is that many investors are becoming increasingly concerned over the Goldman Sachs investigation. The government announced on Friday that the Goldman Sachs investigation may be turned into a criminal probe.
Promising reports on GDP, manufacturing and consumer sentiment all came in strong showing signs that many areas of the economy are improving. As said earlier, housing continues to remain a drag on the economy however we are fortunate to see that overall, the health of the economy is improving slowly.
Economic reports on tap for next week are:
• Monday May 3rd - Construction Spending
• Tuesday May 4th - Pending Home Sales
• Thursday May 6th - Jobless Claims
• Friday May 7th - Employment Situation
Your Mortgage Professional,
JJ Mack
916-517-1800 x300
Friday, April 30, 2010
Monday, April 26, 2010
Weekend Update - 04/26/2010
Finally a week that I don't have to search for something good to say about housing or the economy as there was plenty of good news to go around. The housing market reported data that is the strongest we have seen in quite some time.
The report of a 6.8% increase in existing home sales shocked the market as the expectation was for a slight decline. After weeks of commentary that the homebuyer tax credit had lost its steam, it appears that the surprise increase in existing home sales was directly attributed to the soon to occur tax credit expiration on April 30th. After months of pondering whether they should purchase or not, it appears that buyers are making a mad dash to take advantage of the tax credit before it is gone forever. It is very clear that the government has no intention of extending the credit for a second time.
In more great housing news, new home sales reported an increase of 26.9% from the prior month. This report is the strongest we have seen since July of 2009. The hope is that this rising trend will continue however nobody will know exactly what role the tax credit is playing in these better than expected numbers until the reports for May are released..
The housing reports are certainly providing long overdue optimism for the real estate market. Time will tell whether the increases are a true reflection of an improving market, or simply an aberration based upon the tax credit expiration. Regardless of the reason, I am personally very excited about the real estate reports and I am optimistic about the future even though challenges to the market still remain.
Mortgage rates were very stable this week in the absence of any significant economic news. Despite the positive housing news on Thursday and Friday, mortgage rates did not react with any major movement. Concerns about the Greek debt crisis are weighing on the minds of many investors as evidenced by their recent purchase of U.S. treasuries which has been part of the reason that mortgage rates have remained low.
The stock market has continued its rally and no let up is in sight. In this past week we experienced 5 straight days of increases of the Dow Jones Industrial Average.
Next week will be a moderate week for news. Many of the reports are expected to show stability and not have any major impact on the markets.
• Tuesday April 27th - Case-Shiller Home Value Index
• Tuesday April 27th - Consumer Confidence
• Wednesday April 28th - FOMC Announcement
• Thursday April 29th - Jobless Claims
• Friday April 30th - Consumer Confidence
Your Mortgage Expert,
JJ Mack
916-517-1800 x300
The report of a 6.8% increase in existing home sales shocked the market as the expectation was for a slight decline. After weeks of commentary that the homebuyer tax credit had lost its steam, it appears that the surprise increase in existing home sales was directly attributed to the soon to occur tax credit expiration on April 30th. After months of pondering whether they should purchase or not, it appears that buyers are making a mad dash to take advantage of the tax credit before it is gone forever. It is very clear that the government has no intention of extending the credit for a second time.
In more great housing news, new home sales reported an increase of 26.9% from the prior month. This report is the strongest we have seen since July of 2009. The hope is that this rising trend will continue however nobody will know exactly what role the tax credit is playing in these better than expected numbers until the reports for May are released..
The housing reports are certainly providing long overdue optimism for the real estate market. Time will tell whether the increases are a true reflection of an improving market, or simply an aberration based upon the tax credit expiration. Regardless of the reason, I am personally very excited about the real estate reports and I am optimistic about the future even though challenges to the market still remain.
Mortgage rates were very stable this week in the absence of any significant economic news. Despite the positive housing news on Thursday and Friday, mortgage rates did not react with any major movement. Concerns about the Greek debt crisis are weighing on the minds of many investors as evidenced by their recent purchase of U.S. treasuries which has been part of the reason that mortgage rates have remained low.
The stock market has continued its rally and no let up is in sight. In this past week we experienced 5 straight days of increases of the Dow Jones Industrial Average.
Next week will be a moderate week for news. Many of the reports are expected to show stability and not have any major impact on the markets.
• Tuesday April 27th - Case-Shiller Home Value Index
• Tuesday April 27th - Consumer Confidence
• Wednesday April 28th - FOMC Announcement
• Thursday April 29th - Jobless Claims
• Friday April 30th - Consumer Confidence
Your Mortgage Expert,
JJ Mack
916-517-1800 x300
Friday, April 16, 2010
Weekend Update - 04/16/2010
This week the housing market received a mixed bag of both positive and negative reports (this is nothing new). On the positive side as we break down the reports below we can see that there are certainly signs of economic improvement. On the negative side evidence still remains that we are far from being out of the woods and reminders continue to appear of just how fragile the economy still is.
In a welcome surprise, housing starts jumped 1.6% from February as builders increased filings for new construction permits. This increase beat forecasts and was welcome considering the decline reported in the prior month.
Foreclosure reporting this week was mixed in that actual home repossessions by banks dropped for the first time in four years. On the flip side of the coin, unfortunately in the first quarter of 2010 foreclosure filings rose 7%. Additionally, foreclosure filings were reported 16% higher than for the same period in 2009.
At long last there is some positive news coming from the Obama administration's loan modification program. Month after month there are an increasing number of homeowners being moved from trial modifications into permanent ones. The process of obtaining a modification still remains challenging however the banks are certainly showing signs of being able move the process faster than ever before.
In other economic news, the mixed reports of recovery continue to come out.
• Retail sales increased by a more than expected 1.6% where as the consensus was that the increase would be 1.3%. Slowly consumers are opening their wallets and making purchases that go beyond bare necessities.
• Industrial production rose .1%. An increase of .8% was anticipated however any increase is still welcome.
• Fed Chairman Bernake announced that the economy continues to recover at a very slow pace and the government expects to keep interest rates low for some time and that no increase is forecast at the present time.
• The 10YR Treasury security has dropped back to 3.81% from a high of 4.00% and mortgage rates have also declined from their recent highs as well. Demand for treasuries remains strong as continued concern over Greece's debt crisis is keeping downward pressure on bond yields.
• Consumer prices increased 2.3% which was driven up primarily by rising energy costs. When you factor out the energy prices, the core CPI rose only.1% once again showing that inflation is not an issue at the present time.
Next week will be for the most part a quieter week however important housing data will be released on Thursday and Friday:
• Thursday April 22nd - Producer Price Index, Existing Home Sales and Jobless Claims
• Friday April 23rd - New Home Sales
Your Mortgage Professional,
JJ Mack
916-517-1800
916-390-2463
In a welcome surprise, housing starts jumped 1.6% from February as builders increased filings for new construction permits. This increase beat forecasts and was welcome considering the decline reported in the prior month.
Foreclosure reporting this week was mixed in that actual home repossessions by banks dropped for the first time in four years. On the flip side of the coin, unfortunately in the first quarter of 2010 foreclosure filings rose 7%. Additionally, foreclosure filings were reported 16% higher than for the same period in 2009.
At long last there is some positive news coming from the Obama administration's loan modification program. Month after month there are an increasing number of homeowners being moved from trial modifications into permanent ones. The process of obtaining a modification still remains challenging however the banks are certainly showing signs of being able move the process faster than ever before.
In other economic news, the mixed reports of recovery continue to come out.
• Retail sales increased by a more than expected 1.6% where as the consensus was that the increase would be 1.3%. Slowly consumers are opening their wallets and making purchases that go beyond bare necessities.
• Industrial production rose .1%. An increase of .8% was anticipated however any increase is still welcome.
• Fed Chairman Bernake announced that the economy continues to recover at a very slow pace and the government expects to keep interest rates low for some time and that no increase is forecast at the present time.
• The 10YR Treasury security has dropped back to 3.81% from a high of 4.00% and mortgage rates have also declined from their recent highs as well. Demand for treasuries remains strong as continued concern over Greece's debt crisis is keeping downward pressure on bond yields.
• Consumer prices increased 2.3% which was driven up primarily by rising energy costs. When you factor out the energy prices, the core CPI rose only.1% once again showing that inflation is not an issue at the present time.
Next week will be for the most part a quieter week however important housing data will be released on Thursday and Friday:
• Thursday April 22nd - Producer Price Index, Existing Home Sales and Jobless Claims
• Friday April 23rd - New Home Sales
Your Mortgage Professional,
JJ Mack
916-517-1800
916-390-2463
Friday, April 9, 2010
Mortgage Update - 04/09/2010
In a week absent of much major economic news, we certainly have had more than enough reporting on the return of Tiger Woods to entertain us. I'm sorry but can someone please explain to me how what Tiger does every second of his life impacts my ability to earn a living? (Sorry I just had to vent for a moment) - Now let's move on to less important things like the markets, interest rates and the state of the economy.
Before I go any further, let me apologize in advance for any sarcasm you may see in this weeks report. I am coming to the realization that there are no experts in the prediction of the economy and my report below will prove that.
Pending Home Sales reported in the month of February increased 8.2%. Experts were expecting a decline of 1%. (Between me and you, I am wondering what information the experts use to make their predictions. I think almost anyone in the real estate or mortgage business could have told them that there was an increase in contract signings in February from January, but somehow the experts were predicting a decline.)
"Hey housing experts, try asking those of us in the business and you will be far more accurate in your predictions."
The rapid increase of mortgage rates running from last week into this week has subsided for the moment. Last week's better than expected economic reports were the driving force behind the increases. This week's economic reports have once again renewed concerns over the pace of the recovery and the global economy. The major reports contributing to the reversal in optimism are:
• Concerns over the stability of the Greek economy have the dollar rising in value and pushing investors toward the purchase of U.S. securities driving down bond yields..
• Jobless claims unexpectedly rose this week renewing concerns about employment.
• The 10YR treasury auction had much greater demand than expected driving bond yields lower.
In regard to the treasury auction, the concern has been that once the Fed stopped their bond re-purchase program, investors would demand higher yields driving up interest rates. Although it started out like that last week, the focus now seems to have turned back to the fact that the economy is still not very strong and the safety of U.S. treasuries is where institutional investors want to invest their money.
Ben Bernake also released a statement on the economy which was interpreted as the government still predicting economic growth and recovery to remain slow for quite some time. Additionally, housing continues to remain a big concern and a drag on the recovery as well.
Next week may be a very volatile week in the markets in that unlike this week which was quiet, next week a number of significant reports are being released. (Buckle up it could get rough)
• Wednesday April 14th - Consumer Price Index and Retail Sales Reports
• Thursday April 15th - Weekly Jobless Claims, Industrial Production and the Housing Market Index
• Friday April 16th - Housing Starts and Consumer Sentiment
Your Mortgage Consultant
JJ Mack
916-517-1800 x300
Before I go any further, let me apologize in advance for any sarcasm you may see in this weeks report. I am coming to the realization that there are no experts in the prediction of the economy and my report below will prove that.
Pending Home Sales reported in the month of February increased 8.2%. Experts were expecting a decline of 1%. (Between me and you, I am wondering what information the experts use to make their predictions. I think almost anyone in the real estate or mortgage business could have told them that there was an increase in contract signings in February from January, but somehow the experts were predicting a decline.)
"Hey housing experts, try asking those of us in the business and you will be far more accurate in your predictions."
The rapid increase of mortgage rates running from last week into this week has subsided for the moment. Last week's better than expected economic reports were the driving force behind the increases. This week's economic reports have once again renewed concerns over the pace of the recovery and the global economy. The major reports contributing to the reversal in optimism are:
• Concerns over the stability of the Greek economy have the dollar rising in value and pushing investors toward the purchase of U.S. securities driving down bond yields..
• Jobless claims unexpectedly rose this week renewing concerns about employment.
• The 10YR treasury auction had much greater demand than expected driving bond yields lower.
In regard to the treasury auction, the concern has been that once the Fed stopped their bond re-purchase program, investors would demand higher yields driving up interest rates. Although it started out like that last week, the focus now seems to have turned back to the fact that the economy is still not very strong and the safety of U.S. treasuries is where institutional investors want to invest their money.
Ben Bernake also released a statement on the economy which was interpreted as the government still predicting economic growth and recovery to remain slow for quite some time. Additionally, housing continues to remain a big concern and a drag on the recovery as well.
Next week may be a very volatile week in the markets in that unlike this week which was quiet, next week a number of significant reports are being released. (Buckle up it could get rough)
• Wednesday April 14th - Consumer Price Index and Retail Sales Reports
• Thursday April 15th - Weekly Jobless Claims, Industrial Production and the Housing Market Index
• Friday April 16th - Housing Starts and Consumer Sentiment
Your Mortgage Consultant
JJ Mack
916-517-1800 x300
Sunday, April 4, 2010
Weekend Update - 04/04/2010
This week's economic data has shown a rising trend in the stock market, manufacturing and consumer confidence. As we have all witnessed, the stock market is hitting a new 18 month high and does not seem to be relenting on continuing to climb. The manufacturing index and consumer confidence have been showing small signs of steady improvement as well.
The questionable side of this week's economic report seems to be mostly real estate related. Depending on how you want to interpret the The Case-Shiller Housing Value Index report you can draw a conclusion that the news is either positive, or negative.
I consider myself reasonably astute in understanding the markets and economic reports, however I am at a loss with this latest report. For this reason I pasted the commentary from Bloomberg.com below so you can draw your own conclusion regarding house values.
From Bloomberg.com
Case-Shiller points to continued gains for home prices in January, gains that may be accelerating given more recent data on new and existing homes. Case-Shiller's adjusted reading for its composite 10 index shows a solid 0.4 percent gain in the month, the second straight 0.4 percent gain. The 20 index shows a second straight 0.3 percent gain. Note that home prices swing lower in the light demand months of the winter, a factor to keep in mind when looking at the unadjusted rates. Unadjusted data, which the news wires run prominently, show a third straight 0.2 percent monthly decline for the 10 index and a very deep 0.4 percent decline for the 20 index.
So, what do you think? Is it Positive or Negative? (I couldn't figure it out myself however when I drink a beer, or a few of them this weekend, I will revisit the report. Although by then it won't matter because it will be considered old news.)
Regardless of your interpretation of the above Bloomberg.com report, more and more concern is being expressed over the future of housing values. With the combination of the tax credit expiration only 30 days away, along with the end of the government's bond re-purchase program, housing is expected to be impacted. The end of the tax credit is expected to drive down already hurting housing demand. Additionally, if mortgage rates rise as is predicted, then that will be a double whammy impacting the housing market.
As much as the odds on housing being negatively affected in the coming months due to the above circumstances, the reality is that it will be more perception than financial. The reason is that lower house prices with higher interest rates have little impact on housing affordability as long as the changes are not extreme. Although a housing decline will not be favorable news to any existing homeowners, the news of lower housing prices will most likely bring more buyers into the market even if interest rates rise half to one percent.
Economic data to be released next week:
• Monday April 5th - Pending Home Sales
• Wednesday April 7th - 10 YR Note Auction
• Thursday April 8th - Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
916-390-2463
The questionable side of this week's economic report seems to be mostly real estate related. Depending on how you want to interpret the The Case-Shiller Housing Value Index report you can draw a conclusion that the news is either positive, or negative.
I consider myself reasonably astute in understanding the markets and economic reports, however I am at a loss with this latest report. For this reason I pasted the commentary from Bloomberg.com below so you can draw your own conclusion regarding house values.
From Bloomberg.com
Case-Shiller points to continued gains for home prices in January, gains that may be accelerating given more recent data on new and existing homes. Case-Shiller's adjusted reading for its composite 10 index shows a solid 0.4 percent gain in the month, the second straight 0.4 percent gain. The 20 index shows a second straight 0.3 percent gain. Note that home prices swing lower in the light demand months of the winter, a factor to keep in mind when looking at the unadjusted rates. Unadjusted data, which the news wires run prominently, show a third straight 0.2 percent monthly decline for the 10 index and a very deep 0.4 percent decline for the 20 index.
So, what do you think? Is it Positive or Negative? (I couldn't figure it out myself however when I drink a beer, or a few of them this weekend, I will revisit the report. Although by then it won't matter because it will be considered old news.)
Regardless of your interpretation of the above Bloomberg.com report, more and more concern is being expressed over the future of housing values. With the combination of the tax credit expiration only 30 days away, along with the end of the government's bond re-purchase program, housing is expected to be impacted. The end of the tax credit is expected to drive down already hurting housing demand. Additionally, if mortgage rates rise as is predicted, then that will be a double whammy impacting the housing market.
As much as the odds on housing being negatively affected in the coming months due to the above circumstances, the reality is that it will be more perception than financial. The reason is that lower house prices with higher interest rates have little impact on housing affordability as long as the changes are not extreme. Although a housing decline will not be favorable news to any existing homeowners, the news of lower housing prices will most likely bring more buyers into the market even if interest rates rise half to one percent.
Economic data to be released next week:
• Monday April 5th - Pending Home Sales
• Wednesday April 7th - 10 YR Note Auction
• Thursday April 8th - Weekly Jobless Claims
Your Mortgage Consultant,
JJ Mack
916-517-1800
916-390-2463
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