Here we are, the final Friday of 2011. Today’s newsletter will be a combination of both the latest economic news along with some news highlights of the year.

This week the Case-Shiller Home Value Index showed that home prices are still declining. The index reported an average drop in home values in 20 major cities by 1.2% in the month of October. Additionally, the report indicates that values are down 3.4% from a year ago. The one saving grace in this report, and the reason why I don’t put too much emphasis on it, is that the numbers reflected are for October. We are now at the end of the year and in the last two months we have had mortgage rates hit all time lows as well as many real estate firms reporting an increase in activity recently. I believe that January and February reports will show significant improvement.

To reinforce my feelings about future reports, the National Association of Realtors released the November data on Pending Home Sales. The upward trend continues with a strong increase of 7.3% which follows October’s increase of 10.4%.

Consumer Confidence continues to improve month after month. The latest reading shows that consumers feel more optimistic about the economy today than they have in the last eight months. I guess nobody is watching the political ads and debates otherwise they wouldn’t be feeling this way. (Sorry, you know I couldn’t finish the year without at least one piece of sarcasm)

First Time Jobless Claims reversed their downward trend with an increase of 15,000. Although this increase was more than anticipated, I see no reason to worry about this one report. The trend for claims has been steadily declining. In fact, the 4 week moving average for new jobless claims along with on-going claims are both at the lowest point since the beginning of the recovery from the recession.

The DOW Jones Industrial Average is slated to finish the year with total gains of approximately 9%. The NASDAQ and S&P are both very close to where they began the year. They are down .47% and up .43% respectively.

Some Headlines from 2011 to reflect on…

Car sales increased 10.3% from 2010 showing a strong recovery for the automobile sector.
Congress has the lowest approval rating in the history of government. (As Ricky Bobby said in the movie Talladega Nights, “If you ain’t first… your last”)
Washington DC has the distinction and honor of being known as the region in which it takes the longest to complete a foreclosure with an all time high average of 1053 days. Florida is second with an average of 1027 days and New York a close third with 906 days.
The National Association of Realtors over estimated homes sales by more than 14% since 2007. Lawrence Yun, the chief economist for NAR was told 3 years ago that NAR was over counting sales yet he did nothing to fix it the reporting. Despite the huge error, he remains employed by NAR. (Just how long and how many times do you have to make the same mistake to get fired from NAR?)
The Euro Debt Crisis wreaked havoc on the global markets with the constant back and forth of reports that the problem was isolated. (Fortunately the crisis is solved...no its not…yes it is…no its not…)
Bank of America still tops the list of America’s Most Hated Bank.
Casey Anthony acquitted of murdering her daughter however is currently on probation for check fraud.
Osama Bin Laden is killed.

Last but certainly not least, the passing of Steve Jobs. A man who set out to change the world, and did exactly that. Thank you Steve for your vision, you passion and all you gave to us.

As your mortgage professional, I look forward to a great 2012 and I wish you a very happy healthy and safe new year.

It is the Friday before Christmas and the markets are barely stirring. As is normal, market action is somewhat subdued as many investors have started their holiday vacations. Although you may still see movements in the stock market, it is based upon low trading volume. At this time of year, those that remain trading in the markets have the ability to impact significantly the indices, however any movements are less reflective of true investor sentiment.

For the most part, the economic data continues to show signs that the economy is improving at a slow but steady pace. For now, the euro debt crisis is not contained, however it seems to be one of those things that after so long… we just seem to ignore it.

First Time Jobless Claims hit the lowest level since April 2008. At 366,000, this represents a significant improvement in what we have seen over the last 9 months. Additionally, the trend of claims going down has been sustained now for a month. It seems as if finally the job picture is legitimately improving. By no means are we out of the woods yet however we are heading in the right direction.

The housing market continues to show slow signs of improvement with three key reports all pointing a more promising housing picture.

The Housing Market Index, which indicates builder sentiment on the future of new construction, came in at the highest reading since May of 2010.
Housing Starts jumped a healthy 9.3% in November. Overall the data is quite strong however the only part of the report which limits my enthusiasm is the breakdown of the type of building being done. Multi-family construction represented the majority of the new building, whereas single family home construction only increased 2.3%. The heavy weight on multi-family construction reinforces the sentiment that the demand for rental units is very strong throughout the U.S.
Lastly, Exiting Home Sales rose 4.2% continuing the growth pattern of home sales. Despite the fact that the National Association of Realtors restated home sales figures for the last five years down by average of 14%, the trend for housing is still improving. All the revision by NAR means is that we were worse off than we originally thought we were. The revision does not change the trend of improvement.

Durable Goods Orders continue to improve as well. The consistent increase in this measurement indicates that not only is economic growth happening, but the prospect for economic growth in the coming months remains positive as well.

Finally, Consumer Sentiment also continues to rise. Consumers are spending money and the feeling that 2012 will be better than 2011 has the consumer sentiment index growing steadily.

It is my wish to you reading this newsletter to enjoy whichever holiday you may celebrate. Enjoy your holiday weekend and I look forward to writing to you in my final newsletter for 2011 next Friday.

Great News for the Housing Market!

Last week I wrote about Friday’s crazy stock market rally based upon the tentative agreement reached in Europe to avert the debt crisis. If you recall, I asked, let’s see how long the agreement will last? Although the agreement remains intact, after carefully digesting and analyzing the terms of the agreement, investors, economists, and almost anyone else you can think of, feel that the plan will not work and once again fear has gripped the markets.

The Federal Open Market Committee released their report on Tuesday, and with little surprise, they have reiterated their plan to keep interest rates exceptionally low through mid 2013. The FOMC reported that the economy continues to grow at a moderate pace however unemployment remains uncomfortably high and that a rebound in the employment sector will be a very slow process. (No surprises here)

On the positive side of the employment picture, First Time Jobless Claims dropped to 366,000 which is the lowest level since 2008. This second consecutive week of a drop in claims may point to an improvement trend.

Despite next week being one of the major housing data reporting periods of the month, The National Association of Realtors made sure we had some drama this week. NAR announced that they have been incorrectly reporting existing home sales data for the last 5 years. (Yes 5 years) NAR has issued an advisory that existing home sale data has been overstated since 2007. NAR is waiting until next week’s monthly report on the 21st to provide the latest housing data along with the 5 year correction figures. In NAR’s statement, they reported that the overstatement of figures was due to double counting of sales in certain regions. You may not remember, or even be aware of this, but NAR was accused of making this miscalculation about 4 years ago however they denied that there was an issue then.

It has been a while since I have written about foreclosure data so let me give you the latest. November foreclosure filings are down 3% from October and 14% below the same time a year ago. This could be good news for the housing market. The only downside to this latest report is that there is a 13% increase in the number of auctions scheduled. There is a slight possibility that if the auctions prices are lower than current home sale prices, values could be negatively impacted. On the positive side however, most experts don’t believe that this latest round of auctions will have a negative impact on home values.

In a final housing note, mortgage rates have tied the lowest level on record. Imagine a 30 year fixed rate below 4%. Despite these crazy low interest rates, fears and uncertainty about the economy and employment have many home buyers remaining on the sidelines. The good news is that despite the fact that the MBA reported that mortgage applications for purchases declined 4.2% last week, the real estate agents I have been speaking with have all said they have seen an increase in buyer traffic in their offices in recent weeks.

Finally, Retail Sales continued to show improvement in the month of November. The increase of .2% was less than experts forecasted however… improvement is still improvement right?. Does this mean that the kick off to the holiday season was not quite as strong as many had hoped? It is still too early to tell. The December final retail sales tally will be the true indicator on how the consumer opened their wallets for gift giving this holiday season.

Interest Rates are at an All Time Low! Heres My Mortgage Blog For The Week!

After 3 consecutive weeks of mostly positive economic reports, this past week has fallen back slightly to more a position in the middle of the road. Although many positive reports were released this week, there has been some retraction in areas which had been going strong.

As mentioned in my last newsletter, this week has been light as far as economic reports. Any movement in the markets has been attributed to happenings in Europe. The craziness continues in the Eurozone continues…one day there seems like there is a plan to fix it, the next day there is a problem. Friday morning once again the headlines read that there is again hope for averting the debt crisis as a majority of the European leaders have agreed on a new deal. (Let’s see how long this agreement lasts?)

As I have mentioned so many times in the past, investors will always look for, or create movement in the markets, as that is the only way profits can be obtained. Unfortunately, when there is a lack of significant market impacting news, the media and investors will manufacture reasons to either be concerned or optimistic so the market changes.

Factory Orders for last month declined .4% which is the first reduction we have seen in months. I certainly would not look at this one month as any indicator in a reversal of the growth we have seen. It would be wonderful if growth took a straight line upwards however it never happens that way.

Mortgage rates continue to remain insanely low. In fact, once again refinance applications are increasing as they rose 15.3% last week. Refinance applications are not near their peak level however they are still going strong. What I find amazing is that there are still people that have not yet refinanced.

Mortgage applications for purchases have also been rising in recent weeks. Applications for the past week increased 8.3%. The recent data shows that housing, although still a major concern for the health of the recovery, is in fact improving slowly. Sales have been rising and housing inventory has been dropping which are both positive indicators for a housing recovery in the making. It will not happen overnight, but it will happen.

First Time Jobless Claims dropped 23,000 to 381,000. This is yet another positive trend for the economy. This recent report is the lowest claims have been in 9 months. The employment picture, like housing, is still in poor shape however the trends are heading in the right direction.

Next week we resume more significant economic reports which can have a great impact on the movement of the markets. Additionally, as mentioned earlier in this newsletter, as of right now Europe seems to have an agreement on dealing with the debt crisis, however we have heard this before only to see it burst into flames. The promising aspect today is that the plan and agreement appear to be more stable than any other one presented before.

Make it week number three in a row that we have very strong economic data pointing to economic recovery. I know you are reading this and saying, “Huh…Recovery, What Recovery?” Here’s the deal, outside of modest employment improvement, there are signs everywhere that the economy is rebounding. Now you are probably asking yourself “how can we have improvement when un-employment is still so high?”…“The answer is simple my dear Watson”.

Technology is advancing so rapidly that the need to hire back people into the same positions simply does not exist. The great recession of the 2000’s taught major corporations and small business owners how to leverage technology. In addition, I am sure that you have also noticed that employees are being required to do more for the same money. Just as our parents that lived through the Great Depression learned how to save money, today those of us that lived through the Great Recession have learned how to maximize resources and technology.

As far as proof that the economy is improving for real, let’s take a look at the data that has been coming out for the last 3 weeks.

Housing data has been improving in that we have seen increases in Existing Home Sales, New Home Sales, Pending Home Sales, and New Construction.
Manufacturing has increased for the last 3 months and the demand for goods and services continues to rise.
Consumer Confidence is at its highest point all year.
Retail Sales have been increasing for 3 months straight.
Sales on Black Friday, as well as Cyber Monday set all time records. Not only did they break records, they blew through every analyst’s expectations.
Many major companies are showing increasing profits and sales.

As you can see there are many things improving in the economy. It may not feel like that to the average consumer but the data does not lie. Also remember the media focuses on reporting the negative, so no matter how much things are improving, negative headlines will always dominate the broadcasts which keeps us feeling that things are not getting better.

If you own a home, or are thinking about purchasing a home, right now I can’t tell you what is happening with home values because this week we have two reports on home values that contradict each other. The S&P Case-Shiller Home Value Index reported that home prices dipped another .6% in September for 20 major metropolitan areas. On the flip side, the Federal Housing Finance Agency reported that home values increased .9% during that same period. (In poker terms, I will call this a “push”)

National Unemployment for the month of November dropped a much larger than expected .4%, down to 8.6%. Although this is great news, the numbers don’t reflect the real picture. There are two reasons why unemployment dropped, the first being that the economy added 120,000 jobs in the month of November. The second reason is that the overall size of the workforce decreased which makes the increase in jobs have a more dramatic impact on the percentage of change. Regardless, employment has improved and this news is a great shot in the arm for the psychology of the country.

Your Mortgage Consultant,

JJ Mack
916-517-1800

The Europe Debt Crisis is a problem, no it’s not…yes it is…no it’s not...yes it is………….

Never in my life have I seen the craziness of the media changing their story literally every single day. How in the world is it possible that a financial crisis of the magnitude Europe can change on a daily basis?

One day the stock market rallies because the media says the Euro crisis seems to be under control. The next day it seems like Italy is sure to default on their debt and the stock market plummets almost 400 points. Then the next day there is once again hope and the stock market goes up 275 points. (I just don’t get it) On the U.S. front, there was little economic news this week that moved the markets so we relied on Europe to give us an ulcer.

Mortgage rates once again started to rise slightly. However, the recent rate drops drove more buyers to purchase and more homeowners to refinance. The MBA reported that purchase applications increased 4.8% last week while refinances jumped 12.1%.

First Time Jobless Claims dropped 10,000 from the prior week down to 390,000. This is cause for optimism as this is this is the lowest we have seen claims since April. In addition, continuing claims have also been trending downward over the last few weeks. Let’s keep our fingers crossed that this trend continues.

Despite the stock market losing almost 400 point in one day, it will finish the week up approximately 150 points. The improvement in the employment picture combined with, at least for the moment, the latest plan for saving the Euro, is giving cause for market optimism.

Friday is Veteran’s day and government offices are closed however the stock market is open. Trading volume is lighter than normal as many schools and banks are also closed and many investors seem to making it a long weekend.

In a final note, do you remember all the political wrangling that went on in regard to the debt ceiling?

In addition, do you remember that in order for the debt ceiling to be raised, Congress created this Super Committee that would have to come up with a debt plan by November 23^rd otherwise massive Federal cuts would automatically be triggered?

Well…all indications are that the Super Committee is most likely not going to come to an agreement. So what does this mean? IT MEANS ABSOLUTELY NOTHING!!!

The November 23^rd deadline is virtually meaningless because Congress has the power to extend the date. So in other words, this drop dead date was nothing more than a political agreement that posed no real dooms day scenario for the Fed. (Please understand that Congress would have to agree to extend the date however the odds on them not doing that are slim to none.) With an economy as fragile as ours, do you think either party is going to let these massive Federal cuts go into place creating the real risk of us falling back into a recession?

This week there are many economic reports that may have a significant impact on market movement:

• Tuesday November 15^th – Producer Price Index and Retail Sales
• Wednesday November 16^th - MBA Applications, Industrial Production, CPI and Housing Market Index
• Thursday November 10^th - First Time Jobless Claims and Housing Starts

Your Mortgage Consultant,

JJ Mack

916-517-1800

Mortgage Market Update - 10/21/2011

I consider myself a well educated individual. I read as much as I can about what is happening in the economy and the markets so I can provide as up to date information to my clients on significant market happenings. As intelligent as I think I am…I have to tell you that I cannot for the life of me understand how every day the markets go back and forth regarding what is happening in Europe and the Debt Crisis.

One day the market is not worried about it and the stock market rallies. The next day the business headlines are that “Euro Debt Worries Investors” and the market goes down. This back and forth that goes on almost every day is making me sea sick. I have even gone as far as to speak to people who are very active in the markets and even they don’t understand the whiplash that is going on. Maybe, it is more about creating headlines so the market has large jumps so investors can make profits. We all know that unless the market moves in one direction or the other, profits cannot be made in stock trading. Yeah, that’s it, I have just put the Harvard MBA’s to shame because little ol me figured out how the market works.

The housing market continues to remain in the doldrums and the recent rise in mortgage rates seems to be the primary cause. Mortgage applications for purchases declined 8.8% last week while refinances dropped a whopping 16.6%. The one and only culprit is the rise in interest rates. It is often debated whether an increase in interest rates will spur fence sitting homebuyers into action or not. Well…if last week’s numbers are any indication, we know that rising rates will only delay homebuyers from taking action.

Additionally, existing home sales on single family homes declined 3.6% nationally. It appears the combination of appraisal issues and buyers changing their mind due to employment concerns are the main concerns driving the decline.

There were two small bright spots in the housing reports this week related to new construction. The National Association of Home Builders in a recent survey indicated that they are more optimistic about the future of home building in the coming months then they have been in over a year and a half. The second positive report is that Housing Starts last month jumped 15% which is a positive sign.

In other news, First Time Jobless Claims continue to remain above 400,000. It is clear that employers are afraid to bring on employees and there seems to be many factors creating this fear. In some areas of business the new regulations tied to the Wall Street Reform Bill and Health Care Reform are making the cost of doing business more onerous on business owners. In other areas companies are simply afraid to take on more expenses without knowing whether demand is going to increase.

A positive note in the economic data is that inflation continues to remain under control at the core level. Outside of volatile food and energy prices, wholesale inflation rose .3% and retail inflation .2%. Both reports clearly indicate that inflation is not a major factor in impacting consumer behavior outside of food and energy prices. I am not dismissing that we all know food prices have been soaring, however it is when food, energy AND consumer prices all go up, that is what can easily derail the economy and a recovery.

As the saying goes, we just keep limping along towards recovery. One more bright spot to mention. The talk of a double dip recession has virtually disappeared from the media so that can assist in improving consumer sentiment.

Next week’s market moving reports are:

• Tuesday October 25^th – S&P Case-Shiller Home Value Index and Consumer Confidence
• Wednesday October 26^th – MBA Applications, Durable Goods Orders & New Home Sales
• Thursday October 27^th – First Time Jobless Claims, GDP & Pending Home Sales

As your mortgage professional, it is my pleasure to be a resource to you for all of your mortgage financing and real estate needs. Please feel free to contact me at any time with any questions you may have. I can always be reached at 916-517-1800.

Thank You,

JJ Mack

Your Mortgage Consultant

Mortgage Market Update - 10/14/2011

I know I have toned down the sarcasm as of late in my newsletters at the request of some of my faithful readers. Unfortunately I must dip into the sarcasm well once again based upon some recent happenings.

By now you must have heard about the “Occupy Wall Street Movement” that is spreading throughout the country and the world. It has been going on for 27 days now. The movement is citizen’s exercising their right to free speech so I support them making their presence felt. My only question is “What are they trying to accomplish”? (Every time one of the protesters is interviewed on radio or TV they don’t seem to have a clue as to what they are actually trying to accomplish other than blaming Wall Street for them being out of work and for the real estate market crashing.)

In fact, when you really pay attention to what is being said by protesters, it appears that there are many different factions within the movement. It seems like different people have their own agenda’s and that the movement does not have a unified goal. However, according to the founders of the protest they state they have already accomplished their goal which is making people aware of the inequality of wealth in this country. This is something new? (By the way a recent survey shows that 66% of the people disagree with the protesters.)

OK my sarcasm is done for now and I do apologize for reverting back to my old self.

In the markets and economic news we have both good and not so good reports this week. Unfortunately mortgage rates have been rising lately which will certainly put the brakes on the number of people refinancing their homes. The bigger question is will the rising rates spur home buying or slow it? Mortgage rates remain very low and home affordability remains at one of the highest points in history. What is needed is for the media to continuously relay and reinforce the message to the public that now is a great time to purchase a home.

The Federal Open Market Committee released the minutes of their last meeting and it appears that the divide on what they should do to help the sputtering economy remains. Based upon the minutes it is clear that there still seems to be no agreement on whether another round of economic stimulus should be launched.

On the positive side is that Europe slowly but surely seems to be getting things in place to avoid the collapse of the financial system which is related to the debt crisis that we hear so much about. The governments in Europe have been working diligently on containing the crisis and have been working out solutions to avoid debt defaults.

Employment continues to remain a challenge to the recovery in that last week the national unemployment rate remained at 9.1%. Additionally, First Time Jobless Claims once again were reported over 400,000 which reverse’s the declining trend we had been seeing. Last week claims were also above 400,000 but it was the first time in many weeks so many experts though it may have just been a momentary rise rather than a trend.

The highlight of this week’s economic reports is the better than expected Retail Sales announcement. Last month sales increased 1.1% which was the second consecutive month of better than expected results. This is proof that consumers are continuing to increase spending and that the trend is improving little by little each month.

Next week important statistics will be released on housing and inflation.

• Monday October 17^th – Industrial Production
• Tuesday October 18^th – Producer Price Index
• Wednesday October 19^th – MBA Applications, Consumer Price Index & Housing Starts
• Thursday October 20^th – First Time Jobless Claims and Existing Home Sales

As your mortgage professional, it is my pleasure to be a resource to you for all of your mortgage financing and real estate needs. Please feel free to contact me at any time with any questions you may have. I can always be reached at 916-517-1800

JJ Mack

Sales Manager/Mortgage Consultant

Housing is the driver to economic recovery!!!

We have all the heard the expression "you must seize opportunity when it presents itself". Well...that is exactly what I am going to do right now. There is finally some good news about housing and I am going to write about it.

I am excited to announce that for the first time in many, many months, we experienced an increase in mortgage applications for both purchases and refinances. The MBA reported that purchase applications increased by 7% while refinance apps went up 6%. Mortgage rates remain incredibly low and most likely the absence of stock market insanity helped to move homebuyers in to making a decision to purchase.

In addition, reports from real estate and mortgage professionals all over the country are coming in showing that activity in real estate has dramatically increased. Many people that I personally spoke with from coast to coast have indicated a significant jump in homebuyer activity. ("Now that's what I am talkin about")

Next week is what I like to call real estate report week. Get ready for a barrage of real estate data regarding new construction, house values, existing home sales and mortgage applications. As much as you know that sometimes I can be a cynic, regardless of what the reports say next week I am going to remain optimistic about housing because as far as I'm concerned, next week's housing reports will be old news.

Next week's housing data will be for the month of August. Being a mortgage professional I can tell you that I would be shocked if these reports come in at all positive. The August real estate market was very slow in most parts of the country and I don't expect the reports to reflect anything much different than that. However, that was then and this is now... and now is looking better than it has in a very long time.

I have always said that the economists need to consult with real estate and mortgage professionals in the street to know what is really happening in the market. They always talk to the bean counters that sit behind a desk all day looking at a computer screen. I consider myself and expert in real estate and I can say for certain that there has been a jump in real estate activity this month and that is going to be reflected in next month's reports. (It feels soooo good to be writing positive news about housing and I am not going to let any other news ruin my mood)

Other reports about the economy remained mixed. Inflation on the wholesale level has eased significantly. Despite the fact that consumer prices on the retail level show inflationary pressure, it is likely that the wholesale price decrease this month will translate into reduced retail inflation next month.

Unfortunately First Time Jobless Claims seem to be on the rise again. Not only did we see that last week's numbers were revised upward by 3000 claims, this week claims jumped another 11,000 to 428,000 which is the highest we have seen in quite some time. Lately I have been hearing on the news that some large companies have started laying off people and that more layoffs may be on the way. Bank of American announced they will be cutting jobs by 30,000 over the next couple of years.

I have said it before and I will say it again, housing is a driver for the economic recovery. Let's keep our fingers crossed that increased activity is real, as I believe it is.

These "claims" really dont mean a thing to investors..

Call me "slow", call me "dumb", call me whatever...but I just figured out that the stock market has nothing to do with reality when it comes to the true direction of the economy. The stock market used to be a real indicator of economic direction, or let me say that the market used to react to the true direction of the economy. However, today, the stock market is nothing more than the world's largest gambling casino playing with the money we place in mutual funds and retirement accounts.

This week the stock market had its ups and downs, but the reason for the movements is what is not only surprising, but shocking. It is for this reason I finally learned that logic does not prevail in any way in the stock market today.

Despite the fact that we had a week of poor economic reports on housing, jobless claims, and other areas (I will provide you the details of these reports in a moment) it is clear that these reports just do not matter. When you read the next paragraph, you too will realize the stupidity of the markets and how it is nothing more than a game.

Investors this week primarily focused on the fact that they believed on Friday at 10:00AM when Ben Bernake speaks, he would give an indication that a 3^rdround of economic stimulus may be coming. Please understand that he has not indicated in any way that there will be a stimulus announcement. It is all speculation on the part of market investors.

Well... the stock market posted a nice rally on Wednesday in hopes of his stimulus announcement. On Thursday the stock market dropped because the European Debt Crisis was back in focus. (I didn't know that it ever should have stopped being in focus) Then on Friday, Bernake announces, essentially that the economy is going nowhere fast. In addition, he made it clear that the government has minimal resources to assist in the recovery. So what do you think the stock market did? It tanked over 200 within minutes of the announcement. (Am I the only sane person that realizes that all the market movement on Wednesday and Friday was based upon nothing but, well... nothing)

To further illustrate my point, I heard an interesting quote by an investor just yesterday. He said, "The market does not even verify the validity of any rumors. We trade on the rumors and then look to see if they are true later on, but by then we don't even care because we have moved on to other rumors".

Another day trader was quoted as saying "the current state and movements of the market can give a traditional investor a heart attack. However what is happening today in the market is a day trader's dream". The reality is that almost everyone seems to be day trading and that traditional long term investing principles do not exist.

The major economic reports that the market did not pay much mind to this week were that New Home Sales declined .7% last month. The MBA reported that applications for purchase mortgages declined 5.7%. Mortgage Rates rose ¼%, and First Time Jobless Claims continue to remain above 400,000.

By the way, if Bernake stated that the government is limited in what it can do to stimulate the economy, then do you really think President Obama's announcement after Labor Day will be of any substance?

Let us see what reports the market has on tap for us next week that investors will not give any attention

I'm telling it like it is!

Here I was thinking that this week I get to write about something other than the stock market...then Thursday came. Monday - Wednesday the markets were stable and fairly quiet. All of a sudden on Thursday, once again people started talking about the global economic slowdown and reduced expectations for future growth. Once that started we all know what happened... the stock market tanked 420 points.

Someone please, please, please (I'm begging) tell me how the economic picture can change from day to day. I am desperate for someone to explain this to me. I look at the economic numbers and reports just like everyone else and I cannot for the life of me see how the expectations for economic growth change day to day.

Here is the deal, the economy is struggling, the European debt crisis is not going away anytime soon, and housing remains in the toilet. (Sorry I am just telling it like it is) Oh yeah, I almost forgot about unemployment...that stinks as well.

Just as I predicted last week, the prior report on first time jobless claims was increased from 395,000 to 399,000.(Do you remember I wrote last week about how the market celebrated 395,000 people losing their jobs?) Bloomberg.com even went as far last week to state that the employment picture was improving. Well this week claims are back up to 408,000. I guess things are getting worse again huh? When are these prognosticators going to stop making judgment on the direction of the economy or employment based on a single report? (Hey Mom, I used a big word "prognosticator"...you see all of your money you spent on my college education did not go to waste)

Housing reports this week were worse than expected. Well...actually the reports would have been dead on accurate if the people making market predictions had bothered to ask mortgage and real estate professionals what is happening in the real estate market versus asking the bean counters at the National Association of Realtors who sit behind a computer all day and are completely out of touch with what goes on day to day.

Housing Starts declined by 1.5% in July after an unexpected jump in June. Existing Home Sales dropped 3.5% in July and the supply of housing has increased up to 9.4 months. Median home prices continue to decline and are down 4.4% from the same time a year ago.

Open Message to the President: "Hey Mr. President, It's housing that drives everything else. I know you don't understand that because you are clueless on general business practices, however as President you have the power to surround yourself with people that actually DO understand business.

Anyway, I digressed (Look Mom, I used another big word) Inflation remains in check. Despite a larger than expected increase in wholesale prices, retail prices remain stable outside of the volatile fuel and energy costs that change radically month to month.

Lastly, I hope you are as excited as I am about the President announcing that he is going to announce a new job and economic stimulus plan in September. Why would he make an announcement about an announcement?

Why you should choose a DIRECT LENDER!

A big question that many home buyers are facing today is which loan program they should go with, and who do they choose to be their Loan Officer. Big Bank? Broker? Or Direct Lender?

People often confuse the lender types, however it is important to understand the difference between the three types of lenders, so you know what to expect from them before, during and after the application process. The three types of Loan Officers we will be discussing are: A Big Bank, A Mortgage Broker, and A Direct Lender.

The first thing you think of when you’re looking at a home you love is making an offer!! But in today’s market, with the housing prices being so low, and interest rates where they are now, the only way to make a strong offer is to get pre-approved first! Choosing who you get pre-approved with for your Loan is important!

A Big Bank Loan Officer is usually an unlicensed representative of a lending institution, the bank, who works to sell and process mortgages and other loans originated by their employer. They usually are limited in what they can offer to only their own products, severely limiting your loan rate, cost, and product options. These Loan Officers represent the borrower to just their lending institution and will guide them through the selection, processing and closing of the mortgage loan. Loan officers can be paid a commission or salary for their services. They are NOT required by any state or federal law to have an individual license.

A Mortgage Broker is a personally licensed individual or firm that is the middle man between you and the actual lending institution, which can be a bank trust company, credit union, mortgage corporation, or finance company. They will originate your loan; collect your information, then submit your application to one or more lenders, and work with the chosen lender until the loan closes. They have no money of their own, and no underwriters. Mortgage brokers CAN NOT issue loan commitment letters. (Only the actual lender can --- although most brokers do anyway). Brokers can receive their fee from the borrower, or be paid from the “lender” if the loan closes.

A Direct Lender/ Mortgage Lender is a personally licensed individual or firm that originates, processes, underwrites, issues loan commitments, closes and funds their own loans with their own money. Most have in-house underwriters, and have direct access to loan products from all the big national players. If a loan product exists, they can usually offer it. Loan Officers with a direct lender will analyze your financial situation to determine which loan is the best fit for your financial needs. Direct Lenders typically bundle and sell your loan after closing to giant Fannie Mae or Freddie Mac servicing companies. Most are also able to broker loans if needed, giving you, the client, best of both worlds.

Because Home Buyers have so many choices for their lending needs, here at Granite Funding Group, your #1 Direct Lender, it is important for our clients to realize that we are here to provide nothing but superior service. From the time we discuss your application information, to the day we get to congratulate you on your new home! We want our clients to know that choosing us for your Mortgage needs is something we cherish. We are grateful to work with our clients, passionate about our expertise, and determined to meet your needs!

Why RENT, when you can OWN and save money!!

According to real estate web site Trulia, buying was cheaper than renting in 74% of the country's 50 largest cities in July. In just 12% of the cities, including New York, Seattle and San Francisco, renting was cheaper. In the remaining 14% of cities, renting was less expensive but close to the cost of buying.--- CNN MONEY

What a wonderful time to take advantage of this opportunity!

Please read this great article from CNN Money about the great news on owning your own home and SAVING money!!

http://money.cnn.com/2011/08/16/real_estate/buy_rent/index.htm?iid=HP_LN

Believe it or not there are a few bright spots to the carnage taking place on Wall Street!!

Is there anything for me to even discuss other than what is happening in the stock market? Well...I'm going to try.

It is rare when you can look at an event in the marketplace and know that no one, and I mean no one predicted it. I consider myself well versed on market happenings as I daily review as many economic reports and news stories as I can so I may keep everyone updated on market happenings.

Not one article predicted the meltdown we are seeing in the stock market. You haven't even seen a single person on a financial TV show say they knew this was coming. Everyone figured that once the debt ceiling was raised, business and consumers would go about their business and the economy would keep chugging along.

The debt ceiling accord was supposed to provide for a stock market rally, mortgage rates were supposed to rise and confidence in the U.S. Government was to be restored. Not one of these predictions came true. In fact, the exact opposite has occurred. Mortgage rates have dropped just about ½% in one week; the stock market is down 856 point through Thursday's closing bell and down over 1300 points in 2 weeks.

On Wednesday ADP released their estimate of unemployment stating that 157,000 jobs were created in July. Normally the market would have reacted positively to this news however ADP has been notorious for being far off on their estimates so the market no longer pays attention to them.

Anyway, as you must have already heard by now, the national unemployment rate dropped from 9.2% - 9.1% with the economy adding 117,000 jobs which exceeded most analyst's expectations. The better than expected report is jump starting the stock market in a positive direction. Let us hope that the momentum carries through the day and we can head into the weekend on a positive note.

First Time Jobless claims remain above the 400,000 level. Last week there was some jubilation in that claims dropped below 400,000 to 398,000. However the numbers, as they always are, were revised back up to 401,000. This week claims were reported at 400,000 which in all likelihood will also be revised upward next week.

Believe it or not there are a few bright spots to the carnage taking place on Wall Street. Oil prices have plummeted to well below $90 a barrel which should make gasoline prices at the pumps drop within a week or two. Additionally housing may get a boost from all that is happening.

Mortgage rates are approaching all time lows once again. Where housing may benefit is that that economy is in a much better position today than it was the last time mortgage rates were at this level. A better economy, combined with low mortgage rates and stabile home values can be the catalyst to move some fence sitting homebuyers back into the housing market.

I am not expecting a buying frenzy, however I do expect to see an increase in home purchasing activity. Even before the additional rate drops of this week, we have already experienced an increase of 5.1% and 7.8% in mortgage purchase and refinance applications With even lower rates now, more activity should be coming.

Investors purchasing government bonds, Keeping our mortgage rates low!!

Wow- last week I said that I had confidence in our government to resolve the debt issue. I hate to say this but I am beginning to have my doubts. If the Democrats and Republicans are as far apart in reaching an agreement as they say they are, then we have a potential economic train wreck on our hands. As I wrote last week, in the event that there is no agreement, the cost of borrowing will increase. In turn, if the ratings agencies lower the credit rating of the U.S. Government, then the interest rate increases could be significant.

Investors have been running scared out of the stock market purchasing government bonds in fear that the stock market will get hit hard if Congress does not resolve this issue in the next couple of days. You may ask, "Why would investors purchase government securities when there is fear of the government defaulting on debt and interest payments"?

The answer is that even though there is risk of default in the near future, ultimately once the debt ceiling is raised, the government will make good on all the payments and interest owed. This keeps investors comfortable in purchasing government debt. As long as investors continue to purchase government debt, mortgage rates will remain low.

The low rates for mortgages may play a part in the fact that this week we did receive both positive and only slightly negative reports on housing. The S&P Case-Shiller Home Value Index showed that home prices remained little changed in the last 30 days. Slightly negative news contained in the report is that overall home prices were lower by 3.6% from the same time last year. Although home prices remain lower, the gap is nothing significant.

The New Home Sales Report showed mixed information in that on one side it was reported that new home sales declined 1.0% from the prior month. The positive news in the report is that the median price of new homes being sold is actually higher by 7.2% from a year ago. That is a significant jump.

Mortgage applications were down slightly from the prior week. Purchase applications dropped 3.8% and refinances were down 5.5%. I personally am not paying much attention to this report in that the purchase drop can be something that fluctuates from week to week.

The most positive report on housing came from the Pending Home Sales Report. This report showed that sales increased 2.4% in June and that we also have 19.8% more homes in contract for purchase than the same time last year.

The true reading to determine if housing is moving in the right direction is the Existing Home Sales Report that will come out in July. This report will be a clear indictor of whether all these pending transactions actually make it to closing. Recently we have seen articles that have been talking about buyers backing out of contracts. July's report will tell us the real deal.

I believe that once the government takes care of the debt ceiling, housing reports will improve towards the latter part of the year. Let's remember, right now we are in the summer months and traditionally housing slows down.

The housing reports this week were filled with some nice surprises!!

Outside of the fact that our government has yet to come to an agreement on raising the debt ceiling, I am excited to announce that this week we have had primarily positive news on almost all fronts.

The stock market as of this report is up over 300 points for the week. Many investors believe that although Congress has yet to ink a debt deal, confidence remains that our that our elected officials will come through at the 11^th hour.

Everyone knows that a failure to increase the debt ceiling would have terrible economic consequences. Even our government officials are smart enough to realize that creating another financial and economic crisis, because they didn't come to an agreement, would be political suicide. Can you imagine not one single government official getting re-elected? (Hmmm, something to think about)

The housing reports this week were filled with some nice surprises. The Housing Market Index showed increased optimism from builders that future demand will increase. Exactly why they feel this optimism is not quite clear however we will gladly accept a positive outlook on housing from anyone at this point.

Housing Starts jumped 14.6% in June exceeding most analyst predictions. Additionally, housing starts are 16.7% higher than a year ago. Although the biggest jump was in multifamily construction, single family starts rose a healthy 9.4%. Increases in housing took place throughout all regions. The Northeast saw the largest increase of 35.1%. The Midwest increased 25.3%, the South 10.6% and the West rose 5.4%.

Existing Home Sales dropped slightly by a minimal .8%. Despite the slight drop, the good news in this report is that the median home price rose 8.9% in June and prices are slightly higher than a year ago. Without question if we can sustain home prices rising, it will bring buyers into the market as they perceive that we have hit bottom and they better act fast. It is still early and we will need a few more positive reports in the coming months before we can determine if a rising trend actually exists.

Mortgage applications for purchases declined slightly. Many people believe that homebuyers are afraid to make a commitment to purchase a home at this time given the uncertainty of the government negotiations on the debt ceiling, and continued uncertainty regarding unemployment. Unfortunately lately there have been some headlines of layoffs appearing in the media of government employees and Cisco Systems that are scaring buyers.

First Time Jobless Claims rose 10,000 from the prior week. A rise in claims was not unexpected however the increase was more than anticipated. As I mentioned in the previous paragraph, the announced government layoffs along with Cisco's layoff announcement may increase first time claims in the coming weeks.

Oil prices have been rising slowly and are sitting at just under $100 a barrel. Since we have seen these oil prices before it is not believed that the rising prices are going to set back the economy however many more consumers are certainly keeping their summer travel plans closer to home to save money.

What are they thinking???

Hey ALL!

It is no wonder the economy can't seem to get going. We have a government that has become almost completely dysfunctional. You may event want to add on top of that schizophrenic.
It is becoming clearer that business, and even consumers are becoming more and more concerned about the daily news and warnings regarding the government defaulting on their debt unless the debt ceiling is raised. To be honest, when it comes to this whole debt ceiling thing, I understand just enough to be dangerous, which I think puts me in the same category as most of the citizens of the U.S.

What I do know is that the government needs to borrow more money. The Republicans say they won't approve additional borrowing unless Congress commits to reducing expenses and not increasing taxes. The Democrats say they want to reduce expenses and increase taxes and that is the only way to balance a budget. Although I am all for not increasing taxes, I can't see how the government will balance a budget without doing both.
As far as the Fed, it is no wonder the country and economy is on pins and needles. The Fed is clearly confused about what they will or won't do to help the recovery and Bernake is the king "confuser".

On Tuesday the FOMC minutes that were released indicated that some people in the committee believe that another round of stimulus may be necessary to spur the economy, or at least get it moving again. On Wednesday Chairman Bernake stated that the Fed is prepared to offer more assistance if the economy continues to falter. On Thursday Chairman Bernake stated that the Fed is not willing to launch another stimulus program.

Well Ben which is it...are you going to help or not?

In other news, mortgage rates continue to remain very low and little changed from the prior week. The Mortgage Bankers Association reported that despite very low rates, mortgage applications still declined. Purchase applications dropped 2.6% while refinances declined 6.2%.

Foreclosures for the first half of 2011 showed a significant drop of 29% from the same time a year ago. That is the good news. The not so good news is that it appears the drop is more a reflection of the banks slowing the process of initiating and completing foreclosures than anything else. The banks are already overloaded with properties they own and they are clearly in no rush to add more houses to their real estate owned inventory. Either way, keeping people in their homes has to be a good thing for the economy both financially and psychologically.

Inflation continues to remain under control. Prices on the wholesale and retail level came in showing that inflation pressure is virtually non-existent and will most likely remain that way for some time.

Lastly, first time jobless claims edged lower to 405,000. This is the closest we have been to the 400,000 mark in eight weeks. The question that needs to be answered is...is the drop related to an improving employment picture, or is it because it was a holiday week? Next week's report should shed some light on what is really going on.
Economic Reports on tap for next week:

o Monday July 18th - Housing Market Index
o Tuesday July 19th - Housing Starts
o Wednesday July 20th -MBA Mortgage Applications and Existing Home Sales
o Thursday July 21st - First Time Jobless Claims

Mortgage Market Update - 7/1/2011

It is such a great day for writing my newsletter. We are heading into the July 4th holiday weekend and, believe it or not, I did not have to search hard to find good economic news to write about this week.
Now that the Greece Debt Crisis seems to be resolved, Wall Street is loving it. This week alone, the Dow rose over 550 points as of Friday morning. In fact this week is responsible for almost all of the gains in the market for the entire first half of the year.
Housing continues to send mixed signals as to which direction it is heading, however there seems to be a light shining on it for the moment. Although growth in mortgage applications has been virtually stagnant for both purchase and refinances, that does not mean there is no good news in housing.
The Case-Shiller House Value Index reported the first increase in home prices in 8 months. Although the gain is minimal, breaking the trend of house price declines is a very important milestone. Sometimes it is something as little as this that can move fence sitting buyers to take action so as not to miss out on the bottom of the market.
None of us know if we have hit bottom, however the recent increase in mortgage rates combined with the improvement in home values can have a strong psychological impact on the housing market. Even the media is finally beginning to discuss housing in a positive way. (It is a miracle)
As I mentioned in last week's newsletter, the National Association of Realtors alluded to the fact that this week there would be good news about housing. Well NAR did not let us down as they reported that Pending Homes Sales for the month of May jumped 8.2%, which is more than any so called experts had expected.
The other major change to housing is that with all of the positive momentum in the stock market, many investors are taking their money out of government bonds and dumping them into the stock market. When investors sell bonds, that causes mortgage rates to rise. In the last week we have seen mortgage rates jump almost ¼% which can be a positive or negative for the housing market.
The positive is that fence sitting homebuyer may jump into the market if they perceive that mortgage rates are on the way up. The potential negative to housing is that qualifying for a mortgage is challenging enough. Higher rates reduce home affordability which can once again have a negative impact on values in the future.
I personally am not concerned about rates at this time in that one week does not set a pattern for any direction on housing or mortgage rates.
Next week the markets will turn their focus to employment. Between the ADP Employment Report and the National Unemployment numbers to be released on Friday, these reports will warrant the attention of most investors.
Outside of the major employment reports, there is not much activity on tap for next week. Additionally, this is a big vacation week so although the markets can move radically, it can easily be driven by just a few investors because of the expected low trading volume.
Economic Reports on tap for next week:
o Wednesday June 6th -MBA Mortgage Applications and ADP Employment Report
o Thursday July 7th - First Time Jobless Claims
o Friday July 8th - National Unemployment

Your Mortgage Consultant,

JJ Mack
916-517-1800

Many months ago I had written that how given enough time, we get will get used to anything. Additionally, the more adversity we go through, the easier we are appeased. Well... this week my theory was proven true.
For nine straight weeks we have seen First Time Jobless Claims in the 420,000 to 430,000 range. This week they dropped to 414,000 which represents a 16,000 drop from the prior week. Any drop is good, however 414,000 claims is still very high. To prove my point about what we can get used to, Bloomberg.com reported that the drop of 16,000 is, and I quote, "very good news for the economy". (Since when is 414,000 people losing their job considered "very good news"?)
Housing is showing a little sign of life. Housing starts for new single family home construction rose 3.7% in May. This increase is a reversal from April's 3.3% decline. Most experts believe the increase is related to seasonal building as well as that some parts of the county have been facing abnormally harsh weather which delayed some builders from starting construction in the prior months. Housing permits also increased 8.7% in May which may lead to even more new construction later in the year. Future housing demand will determine if builders ultimately break ground on their permits.
Foreclosures have declined for the 8th straight month. In May they were down 33% from a year ago. Additionally the number of homes repossessed by banks declined 29% from a year ago as well.
Most of the other economic reports don't solidify that the economy is really going in one direction or the other. You may have been hearing in the media that there are many signs that the economy is once again slowing down. However, when you look into the actual reports, it appears that the economy is more like moving two steps forward and then two steps back.
Industrial production and manufacturing both showed modest increases in May. Although the increases did not meet economist expectations, overall manufacturing is fairly healthy. The main reason for the lower than expected production numbers is due to the March earthquake in Japan. Because of the damage to Japan's infrastructure, there continues to be a shortage of available automotive parts which has a direct impact on overall manufacturing.
Inflation on both the wholesale and retail levels remains very much in control. In recent months we were seeing that prices have been rising faster than we would have liked. Volatile fuel and energy prices contributed to the increases however we have seen recently that energy prices have declined somewhat. Oil prices have remained below $100 for more than a week, and now are actually below $95 which is the lowest we have seen in months. Can someone tell me why gas prices have not declined in line with oil price drops? (I really know the answer but I thought I would put it out there for comment)
In case you don't know the real answer...the reason gas prices are not dropping in line with oil prices is because the oil companies are padding profits. They will do this until Congress questions them about it. Unfortunately Congress has been unavailable to worry about gas prices because they have been focused on getting Anthony Weiner to resign, which finally happened. (Hallelujah, I will sleep better now - my apologies for the sarcasm)
Economic Reports on tap for next week:
o Tuesday June 21st - Existing Home Sales
o Wednesday June 22nd - FHFA House Price Index, FOMC Meeting Announcement & MBA Mortgage Apps.
o Thursday June 23rd - First Time Jobless Claims & New Home Sales
o Friday June 24th - Durable Goods Orders and National GDP

Your Mortgage Consultant,

JJ Mack
916-517-1800

Mortgage Market Update - 5/13/2011

If you are in the market to purchase a home, there is no better time than the present. The National Association of Realtors reported that foreclosures are crushing the values of home prices. NAR announced that in the 1st quarter of 2011 home prices were down 4.6% from the same point a year ago. The national median home price is down 30% from the high of 2006 and home values are down 7% already this year. (For home buyers this is all great news. Home seller, not so much - sorry)
Mortgage rates are almost all the way back down to the historic lows which makes home buying very attractive. The average 30 year fixed rate is at 4.58% and low down payment loans are still available. The combination of low mortgage rates and reduced home prices make purchasing now, especially for first time buyers, very attractive.
Other areas of the economy continue to improve at a steady pace, once again showing that housing is not a critical component to a sustained economic recovery. Whereas in months and years past so called experts would say we can't have an economic recovery without a housing recovery, well...that doesn't seem to be quite true now does it?
Although the economy is improving, without housing, the recovery can only be moderate at best. However, I believe that as the economy improves in all of the other areas, it will eventually move over to housing.
Despite high gas prices putting a damper on some consumers, Retail Sales are still going strong. Retail Sales reported another monthly increase of .5% indicating that consumer spending is continuing at healthy pace.
Oil prices have dropped below $100 and seem to be returning to a more reasonable level. In fact, where high gas prices are having an impact is in the way consumers are traveling. For the second week in a row, a higher than expected gas surplus was reported which has been showing that the public is either traveling less, or simply using more mass transit. The good news is that the recent drop in oil prices has seemed to stop the march towards record gas prices which is where we were headed up until a week ago.
First Time Jobless Claims dropped from 474,000 to 434,000. The drop is a welcome relief from the prior 3 weeks which have showed first time jobless claims rising rapidly. Jobless claims remaining above 400,000 for the 3rd week in a row has many experts concerned that the pace of the recovery is slowing and that unemployment figures may worsen in the coming months.
The Producer Price Index continues to show that inflation on the wholesale level is increasing however it is remaining under control. The main driver of the .8% rise reported for April has been volatile food and energy prices. When you remove this from the equation, core wholesale inflation remained the same as the prior month at a modest .3%. The Consumer Price Index released this morning showed that prices on the retail level are rising at the fastest pace since October of 2008. The inflation rate of 3.2% is due in part to the rapidly rising gas prices. The core inflation rate was up to 1.3% however still far below the target rate of 2% set by the Fed.
Reports due out next week are:
• Monday May 16th - Housing Market Index
• Tuesday May 17th - Housing Starts and Industrial Production
• Wednesday May 18th - MBA Mortgage Applications and FOMC Minutes
• Thursday May 19th - First Time Jobless Claims and Existing Home Sales

Your Mortgage Consultant,

JJ Mack
916-517-1800

Mortgage Market Update - 5/6/2011

"Houston, we MIGHT have an economic problem"!
James Lovell knew they had a big problem when there was an explosion on Apollo 13. The United States economy is not quite sure if we have a problem or not, hence the reason I changed Lovell's famous quote slightly.
Some economic indicators are pointing to the fact that the recovery is slowing. However un-employment is not one of them. This morning it was reported that job growth continues to recover nicely in that April the economy added 244,000 jobs. This piggybacks on the growth numbers we experienced of 68,000, 194,000 and 216,000 in January, February and March respectively.
Do not be alarmed that the national unemployment rate increased from 8.8% to 9%. This is related to the number of people filing unemployment claims. The most important number regarding unemployment is always the net number of jobs being added to the economy. As much as the economy added 244,000 jobs in the last month, we have been seeing a continuing trend of rising first time jobless claims which can ultimately derail economic growth if the trend continues.
Outside of the improving employment pciture, the economic data is showing signs of a slowing recovery. Corporate profit reports have been mixed throughout the last two weeks and many other reports are showing mixed signals. This week the ISM Manufacturing Index for April showed that manufacturing has slowed. Although back orders are still significant, new orders are beginning to slow down.
Oil prices have dropped from their recent high's however consumers have yet to see any drop at the pumps. Unfortunately it can often take weeks before gas prices follow the drop in oil prices. (Isn't it ironic that gas prices go up fast but they always drop much slower?)
Part of the economic slowdown is being attributed to the idea that consumers are finally beginning to change their spending habits because of higher gas prices. I do know that for the last two weeks I have written about the resolve of the American consumer and how they are still moving on with their lives despite rising prices at the pump. At this point it seems that consumers are starting to watch what they are spending and changing their travel habits to reduce the amount of gas they need. This is evidenced by the fact that this past week gasoline reserves increased by 2% which is one of the major reasons gas prices declined significantly this week.
Mortgage applications for the prior week remained flat despite the fact that mortgage rates have been steadily declining for the last couple of weeks. The real estate market continues to struggle and there is little expectation that the housing recovery will really take hold in the next few months. Housing prices in some areas have actually declined to lowest point since the recession began which lends credence to the idea that the housing market is in a double dip.
Reports due out next week are:
• Wednesday May 11th - MBA Mortgage Applications
• Thursday May 12th - First Time Jobless Claims, Producer Price Index and Retail Sales
• Friday May 13th - Consumer Price Index and Consumer Sentiment

Your Mortgage Consultant,

JJ Mack
916-517-1800

William and Kate were married this morning. They kissed on the balcony for all to see, so now I, along with the estimated 2 billion people that watched can now resume normal life once again. Oops, no we can't...I forgot that the media is going to video their every move of their Honeymoon, and what they can't film, they will make up.
There are increasing indications that the economy is on the path to sustained recovery. It may not be at an earth shattering pace, but evidence certainly points toward an improving economy. Of course there will continue to be set backs every so often, but the recovery trend seems to have really taken hold.
New Home Sales are starting to show signs of life. The increase of 30,000 units over last month was more than expected. Although the pace of new home sales is still at historic lows, the trend of improvement seems to be starting. As promising as this report is, it is important not to put much weight on the new home sale report for the simple fact that until existing home inventory declines significantly, home buyers will continue to gravitate towards existing home purchases. Existing homes tend to be more affordable due the fact that short sales and foreclosures make up almost 40% of all sales.
Existing Home Sales, which is the key to reducing existing housing inventory, showed a nice 5.1% jump for the month of March. The National Association of Realtors attributes the jump to improved job creation and rising rents. More and more renters are starting to realize that for a few dollars more per month, they can own a home instead of paying someone else's mortgage by renting.
The Mortgage Bankers Association reported a 13.6% decline in purchase applications for the prior week. Although this decline may seem significant, it is important to remember that the recent increases in mortgage purchase applications was mainly driven by home buyers trying to apply for their loan prior to the increase in FHA Insurance Premiums which took effect on April 18th. Now that the premiums have taken effect, we should see mortgage applications numbers moderate.
Mortgage rates have been declining again as concerns about significant inflation have subsided. The FOMC reiterated that the concern about inflation has decreased somewhat in their recent meeting as the FOMC continues to use "extended period" in their language in regard to keeping rates low. In fact for the first time in many months, the entire committee was in agreement about their assessment that the economy will continue to grow at a moderate pace.
Once again the American public is showing its resolve in that consumer spending habits have not been changing as radically as expected due to rising gas prices. Like anything else, if you experience it enough, you get used to it and accept it. (By the way Exxon reported an 11 billion dollar first quarter profit but yet they said that they don't make much money on gasoline. Please wish me a happy birthday because obviously Exxon thinks I was born yesterday.)
Reports due out next week are:
• Monday May 2nd - ISM Manufacturing Index & Construction Spending
• Tuesday May 3rd - Factory Orders
• Wednesday May 4th - MBA Mortgage Applications & ADP Employment Report
• Thursday May 5thth - First Time Jobless Claims
• Friday May 6th - National Unemployment

Your Mortgage Consultant,

JJ Mack
916-517-1800

Mortgage Market Update - 4/22/2011

Housing week came and went without much fanfare. As promised this was real estate reports week, and just like so many months past, the reports were very mixed.
The Housing Market Index, which measures the present and future anticipated health of new construction, showed that the state of new construction is moderate at best. Existing sales are slow and future sales appear to be slow as well. The bright spot in the report is buyer traffic has increased in recent weeks and that has builders hopeful about the future.
Housing Starts showed that although sales have not been where builders would like them to be, it is appears they believe things will improve. The increase in starts of 7.2% for the month of March was a drastic reversal of direction from February's decline of 18.5%. Overall the numbers remain at very low levels however any breath of optimism by builders will gladly be accepted.
The Mortgage Bankers Association reported that purchase applications jumped 10% in the week of April 15th and refinance applications increased 2.7%. The jump in purchase applications is believed to be related to both the recent drop in mortgage rates along with buyers rushing to apply for their home loan before the FHA Insurance Premiums take effect.
The National Association of Realtors reported that Existing Home Sales increased 3.7% from the prior month. Additional good news is that the average home price increased 2.2%. Home prices are still 5.9% lower than the same time last year however the gap in home prices between 2011 and 2010 seems to be closing. 35% of all purchases last month were "all cash sales". Additionally, 40% of all existing home sales were distressed properties.
First Time Jobless Claims are once again sitting back around the 400,000 per week. Last week there were 416,000 first time filers and this week it dropped 13,000 to 403,000. It seems that the gradual reduction of claims we had seen over the 1st quarter of 2011 has stopped. We are not experiencing significant increases in claims either which leads to a feeling that maybe the job market is stabilized.
The stock market has recovered nicely since last week as it has risen over 300 points for the week. The markets will be closed for Good Friday. As mentioned in last week's report, corporate profits were being released this week. The profit reports have been mixed.
Lastly, President Obama announced this morning that the overall health of the economy is improving however real estate continues to be a major drag on the economy. (I guess our President has not had to gas up his car recently to realize that skyrocketing gas prices are having a major impact on consumer spending habits)
Despite gas prices and housing, the economy continues to chug along growing little by little. Companies are hiring, raises are starting to come back into the picture, and overall company profits are improving. Even college graduates are starting to find jobs.
Reports due out next week are:
• Monday April 25th - New Home Sales
• Tuesday April 26th - Consumer Confidence
• Wednesday April 27th - MBA Mortgage Applications, Durable Goods Orders, FOMC Announcement
• Thursday April 28th - GDP, First Time Jobless Claims and Pending Home Sales

Your Mortgage Consultant,

JJ Mack
916-517-1800 x300

Mortgage Market Update - 4/8/2011

I think I have decided that I am going to be an economic analyst or so called expert. The reason being is that they are like Weather Forecasters. Regardless of whether they are right or wrong, they are still going to get paid.
Does anyone really know which direction the economy is headed? Of course we can all look at headlines and see that economic indicators are improving. However despite this trend, this week we learned that the Fed can't even agree on the stability and growth of the economy.
The FOMC report released this week showed that in the last Fed meeting that the members were more divided in their sentiment about the economy than we have seen in a long time. Some of the members believe that sooner than later the Fed will have to start pulling back on the stimulus plan (commonly referred to as QE2) and begin raising interest rates.
Meanwhile other members believe that the economy still needs all the help it can get. Some committee members believe that stimulus will be needed well into 2012 and that any attempt to raise rates will hurt the fragile economy.
In the meantime the stock market has seemed to hit a wall. Last week I had mentioned that there are things happening all around the world that can impact the markets. Although in the U.S. we seem to be stabilizing (except the potential government shut down), unrest in North Africa, Thursday's 7.1 earthquake in Japan, and rising oil prices have many concerned that the recovery may come to a halt.
In recent weeks many economic reports have verified that the pace of the recovery is slowing. The good news is that there is still a recovery happening however slow it may be.
Mortgage rates have been rising and are up about .25% from a week ago. Purchase applications for mortgages increased 6.1% despite rising rates. The Mortgage Bankers Association believes that the main driving force for the increase is that FHA Insurance Premiums increased on April 1st and that mortgage companies were advising buyers to apply before the increase went into effect. Refinance applications dropped 6.2% which is a reflection of the rising mortgage rates and also evidence that the pool of borrowers that can still take advantage of refinances continues to get smaller and smaller.
Jobless claims continue to drop in small steps. Last week we saw that national unemployment dropped to .1% down to 8.8%. In addition, first time jobless claims are dropping little by little as well. The most promising indicator about employment is that on-going jobless claims have been steadily decreasing for many weeks now. Some believe that this is because employers are hiring people back into the work force. The "naysayers" will tell you that it is because people have given up trying to find work. I believe it is a combination of both but more so that employers are beginning to undue their hiring freezes and are once again increasing staffing.
Lastly, next week starts the corporate profit reporting season for the 1st quarter of 2011. That could play a major role in driving stocks up or down. Stay tuned...
Reports due out next week are:
• Wednesday April 13th - MBA Mortgage Applications, Retail Sales & 10 YR Note Auction
• Thursday April 14th - First Time Jobless Claims and Producer Price Index
• Friday April 15th - Consumer Price Index, Industrial Production and Consumer Sentiment

Your Mortgage Consultant,

JJ Mack
916-517-1800

Mortgage Market Update - 3/18/2011

Before I even begin to write about the economy, let us not forget about the people who are suffering and struggling in Japan. My heartfelt wishes for their safety goes out from my heart daily.
The economy which has been on a roll for the last few months now once again seems to be in limbo as the focus on how Japan's nuclear emergency may take a toll on the world economies. Since Japan is not only the 3rd largest country in the world, they also produce many items for many countries. As you may know, production of these products whether it is automobiles, parts, electronics, or accessories has come to a virtual standstill.
Despite many areas of the economy that improve, housing continues to be that one area that just won't wake up. Housing Starts last month dropped 22.5% to the lowest point on record since 1959. Mortgage applications for housing purchases also dropped despite the fact that mortgage rates have dropped significantly over the last 2 weeks. Additionally there continues to be much speculation that home prices may continue to drop which will contribute to even more people waiting on the sidelines so they can secure an even better deal on purchasing a home.
A very misleading report was released stating that in many parts of the country the cost of owning a home could be less than what you pay in rent. The issue with the report is that when they compare mortgage payments to rent payments, they left out 2 critical items - the real estate taxes and homeowners insurance. (Since the report did not include taxes and insurance, does that mean I don't have to pay mine anymore?)
Inflation appears to be increasing rapidly when you read the headlines. However when you take out the volatile food and energy prices from the report, inflation on the wholesale and retail level seems to be increasing at very slow pace and remain very much under control.
The Fed announced this week that they intend on keeping interest rates low for, as they put it, "the extended future". Additionally the Fed went on to state that they see the speed of the recovery increasing slightly.
Overall when you look at all the reports as of late, with the exception of housing, we have seen a nice improvement in the markets. (Well up until this week anyway)
The stock market which had been rising rapidly gave back virtually all the gains this year in just a few trading days this week. Investors are very concerned about the potential impact the disaster in Japan can have on the world economies.
Lastly, my idiot report of the week goes to "Bloomberg.com". Bloomberg.com reported that First Time Jobless Claims came in at 385,000 this past week. The unnamed person who wrote the commentary indicated that this number shows a "continuing improvement" in the employment picture. (I'm sorry but 385,000 people losing their jobs and that being about the same number of people that lost their jobs about 2 months ago does indicate and improving trend).
Reports due out next week are: • Monday March 21st – Existing Home Sales• Tuesday March 22nd – Federal Housing Finance Agency House Price Index• Wednesday March 23rd - MBA Mortgage Applications and New home Sales• Thursday March 24th - First Time Jobless Claims• Friday March 25th – GDP and Consumer Sentiment

Have a good weekend!

JJ Mack
916-517-1800