The Incline Village Real Estate market continues to be robust. With the sale of 851 College.  One of Incline Village's bank owned properties, this shows the depth of the market that these properties can be absorbed.  New Incline  listings continue to hit the market at a seasonal uptick.  Read on for economic updates.  Tim Lampe

The big news that this update doesn't really touch on is that interest rates continue to fall.  This is huge news for Incline Village Buyers.  Some analysts have suggested we may see 4.5% FRMs before this cycle is through. The problem, I think, is just how unpredictable the markets are right now. It seems a very good time for those who want or need financing, especially for the purchase of a home, to act--not to wait hoping for still-lower rates.

The market is treating us to extremes these days. It makes for good drama, but it also occasionally makes for big heartburn. Hang in there. Unless Europe unravels, our real estate market appears to be moving--still very gradually--toward greater strength.

Have a great Memorial Day weekend. For us, it's the beginning of summer, a time of hope, celebration, sipping cool wine on warm afternoons, and giving ourselves rewards for all the work we've done.

KEY INDICATORS [5/25/10] 

Gold $1198.00/ounce [down]

Crude Oil(Brent) $70.61/brl [down]

U.S. Dollar to…

    Euro .8081 [down]

    Japanese Yen 90.31 [down]

6-mo Treasury Bill Yield 0.22%

10-yr Treasury Note Yield 3.16%

[6-month down 1 bps, 10-yr down 23 bps]

11th Dist Cost of Funds 1.859%[+]

30-yr Fixed-rate Mortgage 5.15%

15-yr Fixed-rate Mortgage 4.59%

1-yr ARM 4.37%

[HSH averages rates: 30-yr

down 2 bps;15-yr up 1 bps; 1-yr ARM up 23 bps]

 Mortgage Bankers Association Mortgage Applications Index

week ending 5/14

  Overall

    569.2 (down 1.5%; up 3.9%

the week prior)

  Purchase Money Loans

    192.1 (down 27.1%; down 9.5%

            the week prior)

  Refinancing Loans

    2783.0 (up 14.5%; up 14.8%

the week prior)

 Jobless Claims 5/15

    471,000 – prior week 444,000 – continuing claims at 4.625 m

 Consumer Price Index (CPI) Apr

    Down 0.1% - with food & energy prices removed, core level is unchanged

 Conference Board Index of Leading Indicators Apr

    Down 0.1% - first decline in more than a year

 

Weekly Commentary

 Let’s look at a few questions raised by this past week’s indicators.

 

1. The Existing Home Sales report contained an announcement that completed sales had increased in April by 7.6% month-over-month—23% above last year’s reading for April. One thing is obvious: This increase was fueled by homebuyers’ wish to take advantage of the $8,000 and $6,500 tax credit available to those who signed purchase documents by April 30 (and who close their transactions by June 30). One thing was not at all obvious: According to National Association of RealtorsÒ figures, sales varied greatly in different regions of the nation. Existing home sales (month-to-month) rose by a striking 21.1% in the Northeast, by 9.9% in the Midwest, by 8.6% in the South—but fell by 6.2% in the West.

 

All that can be said about this at the moment is that sales began to pick up in the West far ahead of the rest of the nation, especially sales of distress properties. Further, sales of distress properties have started to drop off in the West earlier than in the rest of the nation. And it is possible that the West is in an advanced stage of recovery, in which sales move to higher price levels and the market begins to look perhaps more “normal” than in the rest of the nation. None of this adequately explains why homebuyers didn’t rush out in large numbers to take advantage of the tax credit, however. Doubtless, we will all continue to seek an answer to this puzzle.

 

2. The Mortgage Applications Index surprised no one by running precisely counter to the Existing Home Sales Report. It was expected that the week in which purchase agreements had to be signed would also be the week in which loan applications would begin to fall off.

 

However, the 27.1% decline in the number of purchase money loans (with which homebuyers finance the purchase of their homes) was unsettling. The index figure of 192.1 is the lowest the index has reached during the whole recession. But if you look at how the index responded last fall to the assumed conclusion of the initial $8,000 tax credit program, you will find a great similarity between the moves of the index then and the moves of the index now. The shouting about a deep decline in real estate sales is overdone.

 

3. The week also brought us small disappointments. The number of claims for unemployment insurance rose, reversing a steady decline that had lasted for the past several weeks. And the Conference Board Index of Leading Indicators, which has been an enthusiastic indication of the recovery’s strength for months, fell for the first time in a year. Yes, it was only a 0.1% decline, but it seems to signal a slight slowing to the progress of the recovery. Moody’s Economy.com has been predicting this for some time—that the economy would slow, but continue to advance. If they prove to be correct (and they probably will), the slowing isn’t a big thing.