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.
Friday, December 30, 2011
Friday, December 23, 2011
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.
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.
Friday, December 16, 2011
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.
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.
Friday, December 9, 2011
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.
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.
Friday, December 2, 2011
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
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
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