CNBC's Jim Cramer recently interviewed Toll Brothers CEO Robert Toll and his take on the national housing market got a lot of play. The homebuilder said he see signs of a rebound in "80% of the country." He backs this up by reporting that "expressions of interest" ($1,000 refundable deposits) are up over last year.
Countering this positive news was another negative S&P/Case-Shiller home price index. Case-Shiller has been heavily criticized lately from experts who doubt whether limiting the data to 20 selected metro areas gives an accurate picture of price changes across the country. Many of these areas have been heavily affected by foreclosure sales. At least the latest Case-Shiller did NOT set a new record low – for the first time in 16 months!
Last Thursday it was reported the rate for 30-year fixed-rate conforming mortgages averaged 4.78% with an average 0.7 point. It's down over 1.6% from the peak in October, which adds up to a savings of around $212 per month on a $200,000 loan. It should be noted these rates and fees are for borrowers with 20% down payments and good credit ratings. Other loans carry higher rates and points.
>> Review of Last Week
BACK ON TRACK… The major stock market indexes went up again last week, as they did for six straight weeks until some minor slippage the week before. This was encouraging because there were a few fairly negative pieces of news, although positive indicators prevailed as the week wore on. The negatives started with Sunday's concerns over a swine flu outbreak, which stayed in the headlines throughout the week. Thankfully, there were only 331 worldwide cases confirmed by Friday.
Other off-putting news included Wednesday's advanced Q1 GDP reading of –6.1%, worse than expected. Thursday, Chrysler declared bankruptcy to ease its debt burden, though it seems poised for recovery with a deal that gives Fiat a big stake in the company. We also had reports that Bank of America and Citigroup may have to rai se more capital based on their stress tests. Friday, the government said it would postpone publishing full stress test results until this Thursday.
The week's good news? April's ISM Manufacturing index surpassed expectations for the fourth month in a row! Some economists say this shows the contraction in manufacturing is quickly slowing and the overall economy is on the verge of recovery. This view was bolstered by a better than expected reading on manufacturing from the Chicago PMI. Consumer Confidence was well above estimates and the University of Michigan's consumer sentiment index also had a big boost for April. Some experts feel this shows Q1's increase in consumer spending will continue.
The Dow ended the week UP 1.7%, to 8212.41; the S&P 500 was UP 1.3%, to 877.52; and the NASDAQ went UP 1.5%, to 1719.20.
Inflation concerns and the stock market's resurgence all slowed demand in the bond market and drove prices down. So the benchmark 10-year Treasury's yield, which runs counter to price, inched up again, to 3.176%. In spite of this rise, mortgage rates on average are still at historically low levels. This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225 San Diego real estate
It seems clear that housing values are headed downward at least another 15 to 25% and I am a bit stunned that anyone besides home builders, Realtors & homeowners trying to sell would assert “now is the time to buy.”
San Diego real estate agents
Home prices do not double in price on average every ten years. There is no evidence to support such a statement. S&P case shriller home index which goes back to 1890 found that SFR prices went up at the rate of inflation over time. If they do double in any short period it’s called a asset bubble and values return to medium as the bubble implodes. OFHEO also shows long term prices run with inflation and return to normal price levels rather than continuing to rise. In order for RE to double every 10 years average income would also need to rise with it, which if you haven’t noticed doesn’t happen and when it does as during the 70’s yield on bonds jump into the teen’s and the FED pushes up interest rates causing home prices to decline.
San Diego California real estate blog
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.
Hoodia Diets