Category → Home Values
Thursday Trivia
Yesterday the US Federal District Court denied the request for an injunction and restriaining order on the implementation on the Loan Offcier Compensation rule. This is not just a mortgage industry issue as who is to say another industry will not be targeted in the future and our government will take a stab at legislating that industry out of business? Housing led us into the economic crisis and housing will be the catalyst for a true recovery. All of our governments “well intentioned” actions have done nothing but to further bog down the mortgage industry, increase costs, confuse the consumer, and slow down a very slow moving recovery. Thank you Washington DC. To read the courts opinion you can follow this LINK.
Treasuries and mortgages doing better early this morning. At 8:30 weekly jobless claims saw a decline of 6K filings from last week, however last week’s claims were revised from 282K to 394K. Continuing claims were down 51K to 3.714 mil but as with the claims continuing claims were revised from 3.721 mil last week to 4.22 mil in the revision. The 4 wk average also increased to 394,250 frm 391.000 based on the revisions. The claims report today is data collected after the BLS gathered the data for tomorrow’s monthly employment report.
Next up this morning, the March Chicago purchasing managers index, expected at 70.0 frm 71.2 in Feb, was 70.6. The new orders component at 74.5 frm 75.9, the employment index at 65.6 frm 59.8 the highest read since Dec 1983 and the prices pd for materials at 83.4 frm 81.2, the highest since July 2008. Employment and prices are more evidence that the economy is improving along with inflation concerns. However, there was little reaction to the report, treasuries and mortgages held steady with small price gains and the stock market unchanged.
Finally today, Feb factory orders were expected to be up 0.4%, were down 0.1% and Jan revised to +3.3% frm 3.1%.
In Europe inflation data was stronger than expected; in the 17-nation euro region inflation increased to 2.6% in March from 2.4% in February, European Union estimates showed today. That’s the fastest pace since October 2008, and exceeds the ECB’s 2.0% limit for a fourth month. Economists had forecast inflation to hold steady. Next week the ECB will meet to discuss increasing its base lending rate, the inflation data today further increases the chance ECB will increase rates. Following moves in China, Brazil, Russia and India base lending rates are moving higher. In the US so far, the Fed still holds that inflation is not an immediate problem and plans to continue the easing move of buying $600B of treasuries. Whether or not inflation is about to click in, the bond market will face a huge hill to climb keeping long term rates including mortgages at or below the present levels. Fed officials are increasingly more divided on ending QE 2 sooner and less buying than originally intended; Bernanke however appears to be holding with completing the entire $600B buying that will conclude at the end of June.
After all the data this morning the rate markets holding better than we would have thought given the strong Chicago PM index and inflation increase out of Europe. The stock market holding unchanged. Technically the 10 yr held 3.50% on Tuesday giving traders a little opportunity but overall the bond market still holds a bearish outlook for rates. The rest of the session will be setting up for tomorrow’s employment report with estimates still for an increase of 200K jobs and the unemployment rate unchanged at 8.9%. If floating stay close today; normally we do not like having a market position into employment as it is too volatile.
One Perspective on the Future of the Housing Market
There is a lot of speculation in the market as to the future of housing prices for the balance of 2010. As with any issue, you can find arguments on both sides of the equation, or in this instance, on all 3 aspects of the argument:
- Housing prices will experience another round of declines
- Housing prices will stabilize
- Housing prices will start to rise
Pick your poison! The reality is that we have had a decent housing market over the last 6 to 10 months largely due to government incentives and intervention. This has been in the form of tax credits, relaxed guidelines by HUD, and the recently ended Fed MBS purchase program. The question that remains is without the stimulus and as we transition to a traditional mortgage market, where will rates go and what will happen with home prices? The other “elephant in the room” is the potential surge in inventory as lenders work through the “shadow inventory” we hear about in the form of forclosed upon homes not yet onm the market. Coupled with the expectation of a higher fopreclosure rate in 2010, it woudl seem there are a lot of factors that woudl tend to push home prices lower.
For an interesting perspective on this issue, CLICK HERE, for a full report.
Thanks and have a great day!
CNNMoney.com Predicts The Best And Worst Real Estate Markets For 2010
CNNMoney.com recently published its 2010 forecast and projections for home prices in the country’s largest metro markets.
Listed as “Top 25″ and also comprehensively by state, CNNMoney.com’s home price forecasts puts Santa Rosa, California at the top of 2010′s home appreciation list and Hanford, California at its bottom.
The 10 cities projected for highest home appreciation in 2010 are:
- Santa Rosa, CA : +6.0%
- Cheyenne, WY : +4.7%
- Kennewick, WA : +4.6%
- Merced, CA : +4.4%
- Bremerton, WA : +4.2%
- Fairbanks, AK : +4.2%
- Corvallis, OR : +4.1%
- Tacoma, WA : +3.9%
- Anchorage, AK : +3.8%
- Bend, OR : +3.3%
The Pacific Northwest is the region most heavily-represented among price gainers. The Southeast and Middle Atlantic are most represented on the under-perform list.
However, just because a city’s homes are expected to appreciate (or depreciate) in 2010, that doesn’t mean that every home within its limits will follow suit. Real estate cannot be grouped on a city level like CNNMoney.com tries to. There will always be areas in demand within city limits in which prices rise, just as there will be out-of-demand areas in which prices fall.
Real estate data can’t be grouped by city or even by ZIP code, really.
Real estate is more local than that.
When we say “real estate is local”, it means that every street in every town has a distinct set of traits that drives its home values. Homes that are one block closer to the train; or, homes that are facing north; or, homes that are made of brick. Each of these characteristics can affect a home’s desirability which, in turn, can affects its sales price.
National surveys can’t capture “essence” like this. They only report on the aggregate.
For local real estate data, look to established, publicly available websites and to active, local real estate agents. Both will have data and insight that can help you. National surveys often make for good headlines, but do little to help homebuyers find good value.