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
Friday, May 13, 2011
Friday, May 6, 2011
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
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
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