Skip to content

Archive for April 2009

8
Apr

Existing Home Sales Rise

Well, well, well – last week saw yet another encouraging indicator for the housing market. Pending sales of existing homes, based on contracts signed in February, rose 2.1% over January. Compared to February 2008, the pending home sales index is down a scant 1.4%! The National Association of Realtors expects the median price of existing homes to decline just 5.1% this year, with sales up 1% over 2008. Next year, they see the median price going up 4.1% and sales on a 5.8% climb. On top of that good news, the Federal Housing Finance Agency’s House Price index had US home prices RISING a seasonally adjusted 1.7% from December to January. This is for homes bought with mortgages that fall within Fannie Mae and Freddie Mac’s limits. This was interesting, as it followed the S&P/Case-Shiller Home Price Index which showed a 19% price drop in January compared to a year ago. What gives? Case-Shiller tracks only 20 metro areas, including several in the three or four states with the steepest price declines. In addition, critics point out that indexes like Case-Shiller, which rely on repeat sales, consistently overstate price declines because they include a higher percentage of distressed properties. Finally, we can report the California housing market is showing signs of recovery.
 
Low prices, combined with today’s historically low mortgage rates, have created a level of affordability that is attracting buyers in droves. 600,000 homes were sold this February – 80% more than in February 2007. Agents in some markets see investors returning and the strong sales have left existing home inventories at 6.5 months, a normal market level that’s now ahead of the rest of the country’s 9.7-month supply!
 
Review of Last Week UP AGAIN… The market boom continued last week as stocks gained for their fourth week in a row, reaching new seven-week highs, with the Nasdaq hitting its highest level in three months. Experts say the stock market recovers first, then the housing market, then the economy in general and finally the jobs market. Investors began the week unhappy with the government’s auto task force, which fired General Motor’s CEO Rick Wagoner, then gave GM 60 days to come up with a better restructuring plan and Chrysler 30 days to cut a deal with Fiat. The big negative news was Friday’s March employment report, which saw unemployment inch up to 8.5% with the loss of another 663,000 jobs. But these numbers were no worse than expected and investors know employment is a lagging indicator. Economic highs included durable goods orders up for the first time in six months and ISM Manufacturing also up. Add recent good news in housing, retail and factory orders, and many are saying the depth of the downturn is behind us. We aren’t turned around yet, but some experts feel we will go no lower. Let’s hope they’re right. The best news came Thursday when the Financial Accounting Standards Board (FASB) voted to relax mark-to-market accounting rules. Now banks can value securities using the cash flows they generate. This should reduce banks’ writedowns, freeing up their ability to lend, which should help housing, business and jobs.
 
The G-20 meeting in London was neither a big success nor a big disappointment. The group agreed to $1.1 trillion in loans to support developing countries and international trade. For the week, the Dow continued UP a nice 3.1%, to 8017.59; the S&P 500 was UP 3.3%, to 842.50; and the NASDAQ ended UP 5.0%, to 1621.87. Bonds ended the week with Treasury prices getting hammered a bit, but it wasn’t as bad as it might have been. The yield on the benchmark 10-year Treasury, which runs counter to price, creeped up to 2.891%. But with the Fed’s trillion dollar commitment to buy mortgage-backed securities to keep rates low, 30-year fixed rate conforming mortgages continue at historically low levels.
 
This Week’s Forecast SHORT, MAYBE SWEET… The coming holiday-shortened week holds little economic news, but does start another earnings reporting season with Alcoa getting things going on Tuesday. Thursday’s February Trade Balance report could be a focal point, as January showed a drop that could create concerns around our global economic growth. Bond markets close early Thursday and both stock and bond markets will be closed in observance of Good Friday.
 
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 Apr 06 – Apr 10 Date Time (ET) Release For Consensus Prior Impact W Apr 8 10:30 Crude Inventories 4/3 NA 2840K Moderate Th Apr 9 08:30 Initial Jobless Claims 4/4 NA 669K Moderate Th Apr 9 08:30 Trade Balance Feb –$36.5B –$36.0B Moderate Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months. Economists believe the Fed will keep the fed funds rate down for an extended period. Current Fed Funds Rate: 0%–0.25% After FOMC meeting on: Consensus Apr 29 0%–0.25% Jun 24 0%–0.25% Sept 23 0%–0.25% Odds of change from current policy: After FOMC meeting on: Consensus Apr 29 1% Jun 24 5% Sept 23 5%      This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225        San Diego real estate
6
Apr

Prime Mortgage Delinquencies Move Up

mortgage marketThe Office of the Comptroller of the Currency published 4th quarter data for loan delinquencies late last week.

From the report’s executive summary: “The biggest percentage jump was in prime mortgages, which is the lowest risk loan category and accounts for approximately two-thirds of all mortgages in the overall portfolio. The percentage of seriously delinquent prime mortgages increased from the very low starting rate at the end of the first quarter of 1.11 percent to 2.40 percent at the end of the fourth quarter—an increase of over 115 percent—with a significant rise from the third to the fourth quarter.”

Prime delinquencies always go up with unemployment. Add in the fact many are underwater or have little equity to protect and you have an additional reason to walk away from a loan. This is the second shoe to drop from the sub-prime/alt-a issue!                                                    San Diego real estate

 

 

3
Apr

Housing Turning Point?

housing marketThe National Association of Realtors said falling home prices and mortgage rates below 5 percent, is making home ownership is more affordable than it has been since 1970. Also, the National Association of Realtors said its index of signed sales contracts for previously occupied homes rose 2.1 percent to 82.1 in February from January's record low of 80.4.
 
In another positive sign, the Mortgage Bankers Association said its weekly application index climbed 3 percent last week to the highest level since mid-January.
 
Robert Freed, CEO of SummerHill Homes, a Palo Alto builder said: "We've definitely seen an uptick in buyer traffic and an increase in sales velocity that appears to be driven both by the tax credits as well as very favorable interest rates and very favorable new home pricing."
 
Is this a turning point for the housing market? Barclays Capital analyst Michelle Meyer said: "We do expect the pace of decline to start to moderate over the next several months."   San Diego housing market
 
Recent Related Posts:
2
Apr

Don’t Expect San Diego Housing to Bounce Back any Time Soon

San Diego real estateFirst you must acknowledge that the homeowners who are losing their homes to foreclosure are unable to return to the market and qualify for a mortgage for a minimum of 3 years since subprime lending is essentially gone. Assuming that the housing market will recover as soon as the job market recovers is naive.

By cutting interest rates we can keep the party going for a little while longer but not forever. Ultimately the lack of a productive, healthy manufacturing economy will drag the U.S. down. Look at what has happened to GM

The bottom line is that in addition to not making cars worth buying, GM caved to the absurd demands of the UAW. Now the UAW has killed their goose; people can bitch about Wall Street greed but for my money the American unions are cut from the same cloth as the so called "fat cat" executives.

In order for the job market to recover housing must begin to stabilize and that will not happen until the people who cannot afford their homes have lost them or their mortgages have been successfully modified. I expect to see housing stabilize in about 12-18 months followed by a recovery in jobs.

I also expect that new home construction recovery will be slow and that there will be significant differences in what is built. Smaller, more efficient homes will replace a significant portion of the McMansions. 

According to estimates by Zelman & Associates, single-family existing home sales will continue to decline next year by 9% and in 2011 by a further 3%. New home sales will bottom in 2010, but house prices, down 19% year-over-year in February according to the S&P/Case Shiller Index will continue to fall through 2009 to levels last seen in 2003. A ray of light means precious little when everything is factored in. I

Potential San Diego real estate investors are wise to watch any pseudo real estate sales rally from the sidelines.

All this to point out that: Don't expect San Diego housing to bounce back any time soon.        San Diego real estate

 

 Recent Related Posts:

Existing-Home Sales Up – Home Prices Fall

San Diego Housing – Darkest Before the Dawn

Condo Loans … More Difficult to Obtain

 

Newer Entries »