July 14, 2024

>> Home Base

INFO THAT HITS US WHERE WE LIVE  Among last week's interesting tidbits of information about housing, Radar Logic reported transaction-count increases in 14 of 25 metro areas tracked in December 2008, compared to December 2007. They put these gains to improvements in home affordability and low mortgage rates, but cautioned that their numbers don't necessarily reflect total transaction volume in each area.

Meanwhile, the Federal Housing Finance Agency reported the price of the average home sale in Q4 of last year was only 8.2% lower compared to the year before. The National Association of Realtors chimed in with data showing the average home sales price down 9.4% from a 2006 peak. We all know that parts of the country have experienced serious price drops. But the fact that these national averages aren't so severe, indicates price declines haven't been that bad for most of the country.

Conforming mortgage rates fell again last week, according to FreddieMac's weekly survey. The rate for 30-year fixed-rate mortgages is hovering just above January's all-time low. In fact, conforming mortga ge rates in the survey have only gone up and down about a quarter percent since the beginning of the year.

>> Review of Last Week

UP WE GO… After weeks of continual sliding, the market finally took off like a shot, posting its biggest weekly increase in months. This may not signal the start of a rebound for the market and the economy, but it could indicate a bottom, which is good. Bottoms show stabilization – that the contraction is slowing or has been stopped in some areas. Experts are saying things may go up and down on the way back up, but only time will tell if we're now at the bottom of this recession – and bear market.

Positive economic indicators for the week included a better-than-expected retail sales number for February. It was down just 0.1% overall, but taking out auto sales, retail was UP 0.7%, following a 1.7% GAIN in January. Consumer sentiment also came in a tick up for the month. Fear seems to be abating. On Friday, White House economic advisor Larry Summers said it was indeed encouraging to see signs of a rise in consumer spending.
 
Best of all was the encouraging financial news. Citigroup said it had a profit the first two months of the year a nd won't need more TARP money. JPMorgan was also profitable in January and February. Some economists see this as early evidence that monetary policy is having some traction. In Washington, Barney Frank, who chairs House Financial Services, said he thinks the SEC will soon reinstate the uptick rule, which would make it harder to short financial stocks.His committee also held its hearing on mark-to-market accounting and seems to favor temporarily suspending the rules. They gave SEC and FASB accountants three weeks to come back with a plan. This is positive news because many experts feel adjusting mark-to-market is vital to fixing the banking system. It should ease capital concerns at banks, giving them increased capacity to lend, which is central to the recovery.

The Dow zoomed UP for the week 9.0%, to 7223.98; the S&P 500 went UP 10.7%, to 756.55; and the NASDAQ almost matched it, going UP 10.6%, to 1431.50.

With stocks enjoying a great week, you'd expect bonds to get hammered, but things weren't so bad. In spite of China's reservations about Treasuries, the price of the benchmark 10-year Treasury dropped just a tad. So its yield, which runs counter to price, only inched up to 2.890%, still comfortably under the 3% threshold. This bodes well for mortgage rates continuing at attractive levels. 

>> This Week’s Forecast

THE FED MEETS AND MORE Tuesday and Wednesday, the Federal Open Market Committee meets and no change is expected to the Fed Funds Rate. But the policy statement coming out of the meeting will be closely analyzed for indications of how the Fed may further support the financial system.

Economic indicators we want to look at include Housing Starts and Building Permits on Tuesday, plus the Consumer Price Index on Wednesday for a further check on inflation. We'll also have earnings from FedEx, General Mills, Nike and Oracle.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Mar 16 – Mar 20

 Date

Time (ET)

Release

For

Consensus

Prior

Impact

M
Mar 16

10:30

NY Empire State Mfg Index

Mar

–32.0

–34.65

Moderate

M
Mar 16

09:15

Industrial Production

Feb

–1.2%

–1.8%

Moderate

M
Mar 16

09:15

Capacity Utilization

Feb

71.1%

72.0%

Moderate

Tu
Mar 17

08:30

Housing Starts

Feb

453K

466K

Moderate

Tu
Mar 17

08:30

Building Permits

Feb

510K

531K

Moderate

Tu
Mar 17

08:30

Producer Price Index (PPI)

Feb

0.4%

0.8%

Moderate

Tu
Mar 17

08:30

Core PPI

Feb

0.1%

0.4%

Moderate

W
Mar 18

08:30

Consumer Price Index (CPI)

Feb

0.3%

0.3%

HIGH

W
Mar 18

08:30

Core CPI

Feb

0.1%

0.2%

HIGH

W
Mar 18

10:30

Crude Inventories

3/13

NA

–749K

Moderate

W
Mar 18

14:15

FOMC Rate Decision

 

0.0-0.25%

0.0-0.25%

HIGH

Th
Mar 19

08:30

Initial Jobless Claims

3/14

NA

654K

Moderate

Th
Mar 19

10:00

Leading Economic Indicators (LEI) Index

Feb

–0.6%

0.4%

Moderate

Th
Mar 19

10:00

Philadelphia Fed

Mar

–40.0

–41.3

HIGH

 

>> Federal Reserve Watch    

Forecasting Federal Reserve policy changes in coming months. Basically, no one is expecting the Fed to tighten monetary policy for some time to come. So no changes in the Fed funds rate are expected to come out of next week's meeting. 

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on:

Consensus 

Mar 18

0%–0.25%

Apr 29

0%–0.25%

Aug 12

0%–0.25%

Odds of change from current policy:

 

After FOMC meeting on:

Consensus 

Mar 18

1%

Apr 29

5%

Aug 12

10%

 

This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225                                                                              San Diego homes for sale

 Recent Related Posts:

San Diego Real Estate …The Coming Up-tick

California Gives New Home Buyers $100 Million

Timeline of Our Financial and Housing Crisis

 

 

4 thoughts on “Housing Gains

  1. Homes will always be unaffordable to the average person in high priced CA as long as government subsidize home owners in the form of mortgage tax deductions, and Fannie Mae bailouts. Remove the interest tax deduction and watch the prices correct 50%. This place a bottom on home prices and increase home ownership than further government meddling. The issue is affordability, not unemployment. Prices are still too high due to government tax policies and bad lending practices.

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  2. Everyone likes to talk about the foreclosures as if it’s a bad thing when the reality is that it’s an incredibly good thing. All the bad loans inflated the market well beyond what it should have been. As these people default on their bad loans the price of housing corrects, as it should, and maybe the rest of us get to buy. This story is good news and it should be reported as such. Or, would we all be better off if the government steps in and inflates pricing again.

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