Not only are homes selling quickly, but prices are rising!

Not only are homes selling quickly, but prices are rising!

Without much to go on, the stock market has traded within a fairly narrow range this week.  Corporate earnings which are being released daily are coming out with few surprises.  Friday the market may take a jump because the latest government report on GDP.  It was reported at 8:30am Friday that GDP grew 2.5% for the first quarter of 2013.  This increase was more than most experts predicted.  More importantly it shows that the country is continuing to get back to consistent economic growth.

When it comes to the real estate market, we have a growing divide between the “haves” and “don’t haves”.  Existing homes sales unexpectedly declined .6% in March.  The number of existing homes coming on the market for sale has been somewhat stagnant.  This stagnation bodes well for the homeowners who do place their homes for sale.  Not only are homes selling quickly, but prices are rising rapidly in many parts of the country.  The median home price jumped 6.2% from February which is one of the largest increases we have seen since 2005.

The Federal Housing Finance Agency (FHFA) which relies on data provided from Fannie Mae and Freddie Mac on single family homes reported that home prices increased .7% in March.  This follows a .6% rise in February.  Home prices are up 7.1% from the same time last year.

The housing sector is moving forward right now but not very quickly or very much. New home sales rose 1.5 percent in March which follows an unusually weak month in February.  The challenge of low housing supply is partially due to tight credit available for builders in residential construction to launch new projects.

Mortgage rates have been declining in recent weeks on account of most of the economic data coming out has been without surprise.  In fact some reports have been weaker than expected which has been making investors jittery about making big bets in the stock market.  Many investors have been pulling back on their trading activity and placing money in the safety of government bonds which drives down mortgage rates.  This week the 15 year fixed hit an all time new record low.  Despite very low rates purchase and refinance loan applications only increased by .3% in the prior week as reported by the Mortgage Bankers Association.

The employment sector seems to once again be on the path to improvement.  After a few weeks of first time jobless claims rising and even coming close the 400,000 level, last week’s claims dropped down to 339,000. This is the lowest level since early March and the trend seems to be continuing to improve as of late.  Next week Friday May 3^rd the national unemployment rate will be released.

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

Real estate market reports continue to indicate housing is improving!

Real estate market reports continue to indicate housing is improving

Once again terror has gripped the nation with the unforeseen and unprecedented bombing attack at the Boston Marathon.  The victims and their families remain in my thoughts and prayers as I am sure they do yours as well.  As a word of caution, if you plan on donating to any type of charity or support group for the victims, make sure it is a reputable one.  Unfortunately before all of the victims had been treated or hospitalized, unscrupulous individuals (that is the nicest word I will use to describe them but we all know what words I want to use) launched fake charity donation websites to collect money for victims.

The stock market on Monday plunged 266 points in response to the terror attack as well as the slowing financial growth taking place in China.  It was reported that the Chinese economy grew only 7.7% in the first quarter when analysts were expecting 8%.  The report and the market reaction demonstrate a clear difference between the Chinese market and the U.S.  In the United States we would be happy with growth of just 3%, however in China less than 8% is considered poor.

Real estate market reports continue to indicate housing is improving.  Housing starts in March jumped 7.0% after the previous month’s 7.3% jump.  There is a difference in the report this month in that the increase came from multifamily construction which jumped 31.1%.  The demand for apartments throughout the country continues to rise and builders are doing what they can to meet the demand.  Single family starts declined 4.8% after rising 5.5% in February.  I personally am not too concerned about the one month drop in single family housing as it is not uncommon to see these reports move back and forth between single and multifamily construction month to month.

Inflation in the U.S. is becoming dangerously low.  The Consumer Price Index showed a decline of .2% indicating that consumers are still very frugal in their purchasing habits.  Even some of the Fed members are now beginning to express concern that inflation may be too low and that if it does not increase we could start seeing deflation take place in the U.S.  (Deflation is a pre-curser to heading back into a recession)  However, most economic experts believe that slow growth will continue in the United States and that the likely hood of going back into a recession is extremely low especially since housing continues to improve.

Mortgage rates have once again been dropping to near record lows and the positive results are showing up in the Mortgage Bankers Association weekly application report.  The MBA reported that purchase applications jumped 4% and refinances increased 5% in the prior week.

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

Mortgage rates have stimulated more refinances!

Mortgage rates have stimulated more refinances!

The stock market this week has continued its recent consistent pattern of hitting new record highs. The pattern has lasted since last week and had been gaining momentum almost daily however on Friday it is possible the rising pattern may take a breather.

The stock market futures as of Friday morning are in negative territory primarily based upon news that Cyprus, (yes that little known country that created market chaos last month) has indicated that they will need more money for the bailout. I personally do not understand why the markets would be concerned over this news for two simple reasons, and I am not being sarcastic.

First history has taught us that bailouts always require more money than additionally requested. Second, they will get the money because the banking system will not be allowed to fail in Cyprus. These types of events have become normal operating procedure for every country that has faced a financial crisis in the last 3 years.

On Wednesday the FOMC minutes were released and gave additional support for the stock market rally. Most members of the FOMC feel that the QE3 stimulus program is working and indicated that they are not ready to pull back on it.

Mortgage rates had been declining for about a week, and although they are not back to historic levels, they certainly have stimulated more refinances. The Mortgage Bankers Association reported that refinances for the prior week jumped 6%. Purchase applications unfortunately continue to remain stagnant. Most experts believe that the cause is not so much related to interest rates, but more so impacted by so many markets around the country having a shortage of inventory for sale.

The good news relating to the housing market is that in the last week the main stream media has significantly increased their reports on the improving housing market. Like with everything else the media impacts, the media can create movement in the housing market because the more they report on positive events and data, the more consumers will respond to take advantage of the rising home prices.

For those of you in the mortgage profession, real estate profession, or homeowner thinking of selling, it is my opinion that you should get ready for the market to start heating up. We have many positive things happening simultaneously. Housing reports are showing significant improvement in property values, the media is helping fuel housing demand, and we are entering the Spring selling season. All of these factors together stand to push housing to higher levels as it is more and more likely that sellers that have been waiting will now start to place their homes for sale on the market.

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

Mortgage Premium increases appear to have driven demand for government loans and gave a boost to applications.

Mortgage Premium increases appear to have driven demand for government loans and gave a boost to applications.

It appears that the stock market rally that we have been experiencing over the last month has lost some of its momentum.  For the week the market has remained in a fairly narrow range of plus or minus 100 points.  The media loves to sensationalize events so you will hear on some days that the market has hit new record highs.  However, when you look at the numbers you will see that the records being achieved are coming from minimal gains in the markets.

This week there has not been many economic reports released that have had a significant impact on the markets however the few that were released were:

• U.S. Manufacturing – This sector continues to grow however the pace of the growth has slowed down.  The index has grown for four straight months and this past month has increase was only 1.6% from the prior month.

• The scheduled FHA Mortgage Insurance Premium increase on April 1 appears to have driven demand for government loans and gave a boost to purchase applications in the March 29 week, according to the Mortgage Bankers Association. The increase in demand for these loans however only lifted total purchase applications by 1.0 following the prior week's 7.0 percent gain. Purchase applications are up about 4 percent from a year ago which reinforces the upward trend for home sales. Refinance applications are down 6 percent despite mortgage rates declining over the last 2 weeks.

• The steady improvement in the labor market may be slowing as ADP reported that private payrolls only increased 158,000 which is significantly below February’s upward revised figure of 237,000.  This newsletter is coming out prior to the U.S. national unemployment figures due to be released at 8:30AM on Friday.  The expectations for the report are that unemployment will remain the same at 7.7%.

• Another indicator in the weakening job market is that first time jobless claims have been rising again.  Last week the report was 357,000 and this week the number of claims jumped to 385,000.  Once again we appear to be approaching the 400,000 mark which if hit will undoubtedly stir up more feelings that the economy is heading in the wrong direction.

Happenings throughout the world keep reminding us of just how fragile the market is.  Europe continues to be very volatile and unstable keeping many U.S. investors and employers on edge.  North Korea’s recent threat of a nuclear attack against the U.S. is making headlines further enhancing emotional instability in the U.S. consumer base as well as stock markets.

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