More reports on the housing recovery keep coming!

More reports on the housing recovery keep coming!

Well the world didn’t end last week so I am back with my newsletter as always.  Do you remember the show Fantasy Island?  Remember the little man who would always say “the plane…the plane...the plane”.  It seems like the media is taking a page out of that TV show because every day on every major news network all you hear is “the cliff...the cliff…the cliff”.  In less than 4 days we will know for sure whether we are going over it or not.

Outside of the never ending fiscal cliff conversations and reports, the news leading the way in the markets is housing.  More reports on the housing recovery keep coming and there is no end in sight to the consistent improvement, unless of course the fiscal cliff derails the housing recovery.  (Sorry I just had to throw that in there)

On Wednesday morning this week the Case-Shiller Home Price Index indicated that home prices continue to benefit from low mortgage rates.  The report for its 20-city index gained 0.7 percent in October, following a 0.4 percent increase the prior month.  To add even more strength to the report, the index is up 4.3% from a year ago.

The bottom line is that the housing sector is slowing regaining health and homeowners are beginning to regain housing wealth lost over the past recession and early recovery months.

The new home market continues to bolster the sentiment that housing is improving in that November’s sales rose 4.4 percent.  New home sales, which started the year near rather slow, have been gradually building up momentum throughout the year.  Scarcity of supply of available properties is a big factor in the home sales market, which is currently at a 4.7 month sales rate.  Additionally when you compare where we are today from a year ago, the new home sale market is up 14.9 percent for the median price and 19.9 percent for the average price.

Friday at 10:00AM the report on pending home sales will be released.  The consensus from analysts is that the number will be quite strong.  Some experts believe that we may see an increase as high as 6% from the prior month however the average prediction seems to be in the area of 4.5%.  Last month we saw an increase of 5.2% so any number in that area will continue to bolster the discussion that housing is truly on the mend.

Mortgage rates continue to remain at historic low levels.  Last week we did experience a slight increase in rates due more in part that investors were beginning to believe that our elected officials will come to an agreement to avoid the fiscal cliff.  However this week is a different story.  Many investors now think that we will not have a budget deal in place by January 1^st which will ultimately hurt the economy, at least temporarily until Congress and the White House strike a deal.

JJ Mack
916-517-1800
jj.mack@apmortgage.com
www.apmcroseville.com

Housing continues its upward trajectory!

Housing continues its upward trajectory!

It is 5:30AM and I am completing my newsletter as early as possible as I have not heard the exact time the world is going to end today.  It may be a day long process so I just wanted to get a head start in case the world demise starts early this morning.  (In the event that the world does end today, my newsletter next week may be delayed)

Despite the impending doom that is expected today by some, the rest of us are going about our business all week as if nothing is going to change.  Speaking of nothing changing, our “do nothing government officials” continue their inability to come to an agreement on a new budget, which means that the likely hood of the country going over the fiscal cliff is very high.

Just when you thought the political posturing was going to stop because the election is over, our elected officials are at it once again.  The Republicans are sending a budget for vote to the Republican controlled House of Representatives which is 100% guaranteed never to make it into law.  The House will likely pass the bill, but the Democrat controlled Senate is almost a shoe-in to reject it.  Even if by some miracle it does pass the Senate as well, President Obama has guaranteed to Veto it.

I mentioned the word “posturing” in the previous paragraph.  This move to send the bill for a vote by the Republicans is designed to do one thing and one thing only….get the Democrats to reject the budget proposal so the Republicans can lay blame on the Democrats for the country going over the fiscal cliff.  (The next presidential election is not for 4 years yet the political nonsense is already starting? – Actually it never ended, it is just a continuation of the garbage that went on before the election)

Please understand I am not making a political statement for either party, I am just discussing what is happening and that even if the world does not end today, we can be rest assured that our elected idiots will make sure that financially we are going to feel an enormous amount of pain.

The housing market continues to buck the trend of almost every other area of the economy.  While most economic indicators and reports are showing the country heading in the wrong direction, housingcontinues its upward trajectory.

Home builders are reporting the best conditions in more than five years, based on the housing market index which keeps on improving.  This index is up now for eight months in a row.

An easing in the number of distressed properties on the market is also providing the housing market a boost with the latest existing home sales report showing a jump of 5.9 percent in November.  In addition, the number of distressed sales is down to 22 percent for the month which is 2 percentage points lower than in October.

 

JJ Mack

916-517-1800

jj.mack@apmortgage.com

www.apmcroseville.com

Inflation is down and retail sales are up!

Inflation is down and retail sales are up!

The whole world is watching and our elected officials are not looking very good.  The Fiscal Cliff is a real threat not only to the U.S. economy, but the world economy as well.  Markets around the world are moving up and down on every little whisper that comes out of Washington D.C. regarding the negotiations between Democrats and Republicans.  The bottom line is that real fear is beginning to take hold as it becomes more and more likely that a budget deal will not be reached by year’s end.

I understand the difference ideologies and I am not going to make any type of political statement here.  What does amaze me is that with so much at stake there appears to very little movement on both sides.  Our elected officials are playing “chicken” with each other but the vehicle they are driving is the world financial markets.  It’s disturbing how are government has reached a point that it just does not function.

The Federal Open Market Committee met this week and released not only their opinions, but also their forecast for the economic future.  Here are the highlights:

• The Fed has indicated that they will keep rates low well into 2015 (it used to be 2014)
• Rates will not be raised until unemployment drops to 6.5% or inflation increases to more than 2%.
• The Fed will continue to purchase long term interest rates and mortgage backed securities to keep mortgage rates artificially low.  (What is interesting is that as soon as the Fed announced this news, mortgage rates rose and have risen more than expected just this week)

By the way, if you weren’t sure what it means that the Fed is going to continue to buy MBS’s and long term debt, it simply means our country is going further and further into debt.  (Just though you should know)

First time jobless claims have been dropping steadily since Hurricane Sandy caused them to jump.  Last week’s claims plunged from 372,000 down to 343,000.  We have had a run in the not too distant past in which claims kept dropping and everyone is hopeful that the current declining pattern will continue.

Inflation is down and retail sales are up.  The producer price index showed that inflation is very much in check on the wholesale level with a reading of.1% which is actually indicating that wholesale prices are declining.  Retailsales jumped back this past month with an increase of .3% after last month’s decline of the same amount. Despite uncertainty about the fiscal cliff, it appears that retailers at this point are very optimistic about a very “green” Christmas as consumers appear to be purchasing more gifts than last year.

JJ Mack
916-517-1800
jj.mack@apmortgage.com
www.apmcroseville.com

Mortgage rates continue to hover around record low territory

Mortgage rates continue to hover around record low territory

It was just a month ago when every headline you could find would be about the employment situation.  Experts everywhere were touting how the national unemployment figures would define the election.  Today a month later, the unemployment figures are out and other than the main headline released this morning, you didn’t hear much about this report all week.  Did we stop caring about the unemployed now that the election is over?

In case you were wondering the unemployment rate for November dropped .2% down to 7.7% which is the lowest we have seen since December 2008.  The economy added a much greater than expected146,000 jobs in the month of November.  The unemployment rate was predicted by most experts to increase due to the devastation by Hurricane Sandy. 

Typically within the employment report there has been factors that have indicated that the employment picture is not as rosy as the headline number indicates.  However it seems in this report that most of the sub headlines about hiring and individual employment sector growth support the improved employment data which means that jobs picture continues to improve and move in the right direction.

Outside of the employment figures, this week was absent of any major economic reports that would move the markets.  The stock market has been trading in a relatively narrow margin and it appears that this will likely be the trend until one way or the other something happens or doesn’t happen with the fiscal cliff. Quick Question…Are you as sick of hearing about the fiscal cliff as I am?

About 3 years ago I wrote in a newsletter about how consumers had become numb to hearing about the recession and that the markets were not even reacting much to the day to day discussions about it the way they had in the earlier days of the recessions.

Investors and consumers are just sitting and waiting to see what is going to happen with the fiscal cliff and have become numb to the daily reports and commentary coming from every news outlet every single day.  We have accepted the fact that our elected officials are incapable of doing their jobs and we have passed through the anger phase that if any of us behaved the way members of Congress do, we would be fired from our jobs.  However our wonderful elected individuals (you know I want to use another word rather than “wonderful” right?) are guaranteed a 4 year job no matter how incompetent they are.

Mortgage rates continue to hover around record low territory.  The Mortgage Bankers Association reported that refinance applications jumped 6% where as purchase applications have remained virtually unchanged.

JJ Mack
916-517-1800
jj.mack@apmortgage.com
www.apmcroseville.com