Incline Village Real Estate continues a moderate march towards firming.  This, following the "A" markets in the Bay Area and Coastal California.  There are still sellers that NEED to sell and buyers continue to look, look, and look.  There were 20 plus price reductions in 2 days in the Incline Village MLS.  Listings continue to look better, and the buying environment is never been better.

Now the national economic summary:

Amazingly, a very weak employment report only resulted in minor damage to the Dow Jones Industrial Average, though it sent interest rates scooting lower. While there is more talk of a slowdown, a second leg of the recession or a season of deflation... there is little consensus on such a forecast. Uncertainty rules at the moment.

There are, nonetheless , continuing signs that the recovery is edging forward, and they are worthy of attention. The forecast that Moody's Economy.com has been publishing for months - that the economy will slow down in the coming months and regain its forward momentum at the end of the year - seems as credible as any.

With interest rates this low, though, our complaints about this economy should be muted a bit. There are many who can and should take advantage of today's rates, though there are far too many who - because their homes are underwater - simply can't do anything with the opportunity presented by record low rates. Time will improve this. And possible new programs like an equity share refi that lowers the borrower's principal and provides the lender an equity position in exchange...these ideas are worth looking at.

 

Tim Lampe, Incline Village Realtor.  Your Realtor by Choice for 28 Years.

 

KEY INDICATORS 8/15/2010

 

Gold $1199.10/ounce [up]

Crude Oil(Brent) $79.57/brl [down]

U.S. Dollar to…

    Euro .7528 [down]

    Japanese Yen 85.81 [down] 

6-mo Treasury Bill Yield 0.18%

10-yr Treasury Note Yield 2.83%

[6-month down 1 bp, 10-yr down 8 bps]

11th Dist Cost of Funds 1.797%[+]

30-yr Fixed-rate Mortgage 4.87%

15-yr Fixed-rate Mortgage 4.34%

1-yr ARM 3.85%

[HSH averages rates: 30-yr

down 5 bps;15-yr down 6 bps; 1-yr ARM down 4 bps]

 

Mortgage Bankers Association Mortgage Applications Index

week ending 7/30

  Overall

    730.2 (up 1.3%; down 4.4%

the week prior)

  Purchase Money Loans

    174.9 (up 1.5%; up 2%

            the week prior)

  Refinancing Loans

    3969.0 (up 1.3%; down 5.9%

the week prior)

 

Jobless Claims 7/31

    479,000 – prior week 457,000 – continuing claims at 4.537 m

 

ISM Non-Mfg Index July

    Up to 54.3 from 53.8

 

Employment Report July

    131,000 net payroll jobs lost – unemployment still at 9.5%

 

Productivity 2nd Quarter

    Down 0.9% - unit labor costs up 0.2%

 

Weekly Commentary

 

The employment report seemed to confirm the negative short-term forecasts for the economy. Not only were the financial news pages full of declarations that we are falling into the second leg of the recession, which is still a very doubtful belief, but the dreaded word, “deflation,” was very much in the air.

 

The latter is to be taken somewhat seriously. The famed bond guru Bill Gross of PIMCO announced that his firm’s policy had turned around rather sharply. Only a few months ago, Gross was assuring us that interest rates were on the rise and would remain that way for a long time to come. As a result, PIMCO stopped buying many Treasury securities. Now, they’re buyers again. And Mr. Gross suggested that deflation is already upon us.

 

To verify this assertion, the economy will need to start showing deflation in the consumer and producer price indices and economic growth gauges, and though we are not far from that of late, we are not there yet.

 

This means most of us are sifting busily among the day’s supply of tea leaves. For example, we can say that the sharp post-tax-credit decline in mortgage applications seems to have stalled, at the least, if not turned around—though the number of loans being applied for remains very low.

 

We can also shine a bright light on the ISM (Institute for Supply Management) Non-Manufacturing Index. It rose by an admittedly small half a point to 54.3 in July, but this was in contrast with the decline in the ISM Manufacturing Index and also with June’s Factory Orders, which were down 1.3%. It would seem that the nation’s service sector is taking up where the manufacturing sector is leaving off. If true, this could be good news and verify the view that this is a rolling recovery, showing up consecutively in various sectors of the economy—and also showing up in the real estate sales in various geographical regions of the nation.

 

Meantime, the importance of the higher Non-Manufacturing Index number was underscored by the fact that the ISM Non-Manufacturing Employment Index rose to the highest level it has reached in its current upswing. This is precisely what is needed from an improving non-manufacturing sector, and it will continue to be watched closely.

 

Lastly, the Productivity report attached to the second quarter Gross Domestic Product data showed a decline of 0.9%, with a resulting rise of 0.2% for labor costs. This doesn’t seem to be particularly good news, but weaker productivity may increase the need to hire new workers in many industries, and that would be very good news.

 

Obviously, we need more tea leaves, but these do provide evidence that the recovery is continuing to move forward, though very slowly.