This weeks economic summary is still mixed, but with slight upward pressure on a stablizing Incline Village Real Estate market and prices.  Can you believe super jumbo interest rates are still at 4%..  Some great market comments below, read on..

Tim Lampe

It is difficult to remember another real estate recovery being threatened by yet another wave of foreclosed homes coming to the market. This is new terrain, and it is difficult to know what the short-term future will look like. What is gratifying, though, is that we do continue to see signs of recovery--especially in the employment numbers.

Nonetheless, it is difficult to know how optimistic we can allow ourselves to be at this point. My own inclination is to expect more 2-steps-forward-one-back for quite some time, resulting in a slow and rather maddening gradual trek toward firmer recovery--unless jobs data takes an unexpectedly strong jump in a good direction. And it may.

In any case, I'm betting on a continuing recovery, with slightly higher interest rates but also gratifyingly higher numbers of sales (though we may have to move through another decline as soon as the homebuyer tax credit fades away).

 Interest rates remain low:  Conforming 30 year fixed rates are currently 4.875% with no points (for borrowers with high fico scores, owner occupied, and 25% down for condos or 20% for homes).

 Jumbo rates for primary residences with 25% down (SFD) up to $850,000 are 4% with no points.

 Steve Peterson

 

March 17, 2010

 KEY INDICATORS [3/16/10 close]

 Gold $1128.10/ounce [up]

Crude Oil (Brent) $80.26/brl

[nearly unchanged]

U.S. Dollar to…

    Euro .7272 [down]

    Japanese Yen 90.52 [up]

6-mo Treasury Bill Yield 0.23%

10-yr Treasury Note Yield 3.68%

[6-mo up 3 bps, 10-yr down 2 bps]

11th Dist Cost of Funds 1.786%[-]

30-yr Fixed-rate Mortgage 5.34%

15-yr Fixed-rate Mortgage 4.81%

1-yr ARM 4.78%

[HSH averages rates: 30-yr

up 4 bps,15-yr up 9 bps; 1-yr ARM up 21 bps]

 

Mortgage Bankers Association Mortgage Applications Index

week ending 3/5

  Overall

    633.1 (up 0.5%; up 14.6%

the week prior)

  Purchase Money Loans

    226.8 (up 5.7%; up 9%

            the week prior)

  Refinancing Loans

    3007.2 (down 1.5%; up 17.2%

the week prior)

 

Jobless Claims 3/6

    462,000 – prior week 469,000 – continuing claims rose to 4.558 m

 

Retail Sales Feb

    Up 0.3%

 

NAHB Housing Mkt Index Feb

    Down 2 points to 15

 

Housing Starts Feb

    Down 5.9% - single-family starts

 Weekly Commentary

 “…[We] expect home sales to continue trending upward over the remainder of the year. Very high affordability, ongoing federal support, and a stabilizing job market are fostering interest among homebuyers. As house prices stabilize over the remainder of the year, more and more potential homebuyers should step off the sidelines.” [Michael Zoller, Moody’s Economy.com]

 Homebuyers will need signed purchase applications by April 30, of course, to qualify for the tax credit, and the 5.7% increase in the number of purchase money mortgage applications in the week ending March 5 very likely forecasts an increasing number of sales in the coming months. But, because of the slightly negative data released recently, along with concerns about another wave of foreclosures hitting the real estate market, it takes a broad view of the economy to hold on to one’s optimism about the real estate recovery.

 

The rather surprising 2-point decline for the National Association of Home Builders Housing Market Index (to the left), for example, suggests that new-home builders continue to worry about achieving a sustainable level of higher sales volume. Since newly-constructed homes compete specifically with low-priced foreclosure properties, it is likely that builders are expecting greater numbers of foreclosures on the market slowing new-home sales, at the same time perhaps forcing many builders to cut the prices of the homes in their inventory.

 

The housing starts figures, also to the left, send another negative signal, though a close reading shows that it is primarily multi-family homes that builders have cut back on. At the same time, though, analysts looked at the data and were very positive about the fact that fewer starts would, quite obviously, result in less inventory for sale. Builders increased the pace of construction to have homes ready for the final months in which the home-buyer tax credit remained available. (New-home completions increased in February by 5.4% as a result.)

 

Permits for new construction were down by 1.6%, suggesting that new-home building would taper off slightly, but not heavily, for the time being. One looks forward to a real estate market that is no longer as dependent on government-supported tax credits for a strong, though unsustainable, sales volume. There is very little likelihood of a further extension of the tax credit, so we will at last probably see the market begin a process of self-repair in the coming months, supported in large part by gradually improving jobs data.