Category Archives: Economic Update

September 30, 2016

Economic update for the week ending September 30, 2016

Stocks have huge swings, yet end the week up slightly, and end the the month down slightly – Despite large daily swings stocks were pretty stable this month.  The last two days were indicative of what we have seen with stocks down sharplyThursday only to be up sharply Friday. Higher oil prices helped stocks this week, and falling health and banking stocks hurt markets.  The Dow Jones Industrial Average closed the week at 18,308.15 up from 18,261.45 last Friday. The Dow was down from 18,400.88 on August 31. The S&P 500 closed the week at  2,168.27, up  from 2,164.69 last week. It was unchanged from 2,170.95 on August 31.  The NASDAQ closed the week at 5,312.00, up from last week’s close of 5,305.75. The NASDAQ closed the month up from 5,213.22 on August 31

U.S. Treasury Bond yields flat this week and just slightly higher for the month  – The 10 year U.S. Treasury Bond yield closed the week at 1.60%, down from 1.62%  last Friday.  It was 1.58% on August 31The 30-year U.S. Treasury Bond closed at 2.32%, down from 2.34% last week. It was 2.23% on August 31 Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates unchanged this week – The Freddie Mac Primary Mortgage Survey released on September 29, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.43%.  The 15-year fixed average rate was 2.72%.  The 5/1 ARM average rate was 2.81%. 

California Association of Realtors releases 2017 housing forecast – The California Association of Realtors released their 2017 housing forecast.  Key points in there report were: Prices would continue to increase, but at a more tempered rate. They feel prices will rise 4.3% in 2017, compared to a 6.2% increase in 2016. The median price will rise to $525,600 in 2017, up from $503,900 in 2016.   The number of sales would be flat, up just 1.4% in 2017.  That would equate to 413,000 units, up from 407,300 units forecasted in 2016. The 30 year fixed would rise slightly to 4% in 2017, up from an average of 3.6% in 2016.

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September 17, 2016

Economic update for the week ending September 17, 2016

Stocks up for the week despite volatile daily swings – Stocks had a volatile week. There were large daily losses and gains as Fed members, and other analysts spoke about the possibility of a rate hike by the Federal Reserve at its policy meeting coming up this Wednesday and Thursday. As data rolled in, speculation of what the fed would do varied depending if the data was positive or negative.  News that median family income rose last year  at its fastest pace than any year in the last 30 years, last months inflation spike, and the low unemployment rate raised speculation that a hike was coming. Falling oil prices and lower import costs fueled speculation that the fed could hold off. Nobody knows for sure, until Thursday! The Dow Jones Industrial Average closed the week at 18,123.80, up from 18,085.46 last Friday. The S&P 500 closed the week at  2,139.16, up  from 2,127.81 last week. The NASDAQ closed the week at 5,244.57, up from last week’s close of 5,121.91.

Bond yields inch up again this week on Fed rate hike speculation – The 10 year U.S. Treasury Bond yield closed the week at 1.70%, up from 1.67% last Friday.  The 30-year U.S. Treasury Bond closed at 2.44%, up from 2.39% last week.  Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates slightly higher this week – The Freddie Mac Primary Mortgage Survey released on September 15, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.50%. The 15-year fixed average rate was 2.77%.  The 5/1 ARM average rate was 2.82%. 

California employers add 63,100 new jobs in August –  The Employment Development Department reported Friday that the state added 63,100 net new jobs. This was much higher than experts had forecasted.  Considering that the nation added 151,000 new jobs in August this number would suggest that California accounted for 42% of all jobs added nationwide last month.  The state’s unemployment rate held steady at 5.2%, as more workers entered the workforce.

Consumer prices show signs of inflation as health care and housing prices spike in August The Labor Department reported that consumer prices rose 0.2% in August after being unchanged in July. The 12 month increase in The Consumer Price Index (CPI) in August was 1.1%. That was well above July’s last 12 month increase of 0.8%.  Experts had expected a 0.1% increase for the month.  The Core CPI which does not include food or energy was up 0.3% in August.  It’s up 2.3% for the 12 months ending August.  It’s much higher than the CPI because of lower energy costs which are stripped out of the Core number. Healthcare costs, which are included in the Core number had the biggest monthly increase in 32 years.  That’s something I’m sure we will hear a lot of talk about! Rents also pushed up housing costs as they maintained their steady increase.

Median family income shows biggest one year gain in over 30 years – The Census Bureau issued its annual report on incomes and poverty in America. Analysts were shocked by the 5.2% gain in median household income after inflation.  It was the largest one year gain in over 30 years.  Incomes were up in every category measured. It also showed that more workers had been able to move from part time to full time as more jobs were available.   It was not pointed out in the reporting, but income growth has been very stagnant since the recession, so averaged since 2007 it’s not as stellar as it looks.

California’s number of existing homes sold up in August, but lower that last August – The California Association of Realtors reported that the number of existing homes sold totaled 420,360 on an annualized seasonally adjusted basis.  That was up 1.1% from the number of homes sold in July, but down 2.2% from the number of homes sold last August on an adjusted basis. Existing single family homes include homes, condos, town-homes, and co-ops.

Existing home prices continue to increase – The California Association of Realtors also reported that the median price of an existing detached home in California increased 1.7% to $526,580 in August from July’s $517,650. Year over year the median price was up 5.8% from $497,520 last August. 

Home inventory levels still near record lows – The California Association of Realtors also reported that their unsold inventory index dropped to a 3.4 month supply in August. It was at 3.6 months in July.  A normal market would have a 6 to 7 month supply.  Low inventory pushes prices higher.

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September 10, 2016

Economic update for the week ending September 10, 2016

Stocks sold off on Friday to end the week down sharply – U.S. stocks fell sharply as investors were unnerved by  comments from Federal Reserve officials that pointed towards an interest rate hike.  Positive comments about the economy from Fed Bank of Boston President, Eric Rosengren, who said, ” a case could be made for the central bank to raise its key interest rate sooner rather than later”,  seemed to support experts opinions that the era of historical ultra low interest rates may ending, as the economy has made up the job and economic loss from the recession.   Oil prices were down over 2% Friday which did not help.  In corporate news, Wells Fargo must pay a $185 million penalty over illegal practices by bank employees who opened millions of unauthorized bank accounts in order to meet aggressive sales goals. 5,300 employees were fired in connection with the widespread banking scam. For stocksFriday was the worst day since February. The Dow Jones Industrial Average fell 406 points, or 2.2%, for the week. The Dow Jones Industrial Average closed the week at 18,085.46, down from 18,491.96 last Friday. The S&P 500 closed the week at  2,127.81, down from 2,179.98 last week. The NASDAQ closed the week at 5,125.91, down from last week’s close of 5,249.90.

Bond yields up on Fed rate hike speculation – The 10 year U.S. Treasury Bond yield closed the week at 1.67%, up from 1.60% last Friday.  The 30-year U.S. Treasury Bond closed at 2.39%, up from 2.29% last week.  Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates unchanged at time of survey, but were higher Friday – The Freddie Mac Primary Mortgage Survey released on September 8, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.44%. The 15-year fixed average rate was 2.76%. The 5/1 ARM average rate was 2.81%. 

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September 2, 2016

Economic update for the month ending August 31 2016 and week ending September 2, 2016

U.S. Employers add 151,000 new employees in August – The Bureau of Labor Statistics reported that employers added 151,000 new non-farm jobs in August, which was below the 180,000 new jobs analysts expected. The unemployment rate held steady at 4.9%. Wage growth grew on an annual rate of just 2.4% which was also disappointing after showing larger increases in the previous few months. This report which was released on September 2 actually caused stocks to rally, because it came at a crucial time when experts had expected an interest rate hike at the Fed’s September 20-21 meeting. Experts now believe the Fed may wait to make sure the job market is not slowing before they make a rate increase. The Federal Funds Rate and Discount Rate which are overnight rates are just around 1/2%. The Fed began dropping rates during the recession to stimulate the economy. In 2009 they had dropped rates so many times that their overnight rate was 0%. The lowest in history. Last year they raised them 1/2% and announced that there would be several more rate increases this year. As the economy showed signs of weakness they have held off. This month they announced that a rate increase was coming as they were moving from a stimulus stance to a more neutral stance. This jobs report may cause them to hold steady a little longer.

Stock markets stable in August. Markets were mostly unchanged in August. The Dow Jones Industrial Average closed the month on August 31 at 18,400.88 down slightly from 18,432.24 at the end of July. The S&P 500 closed the month at 2,170.95 just below July’s close of 2,173.60. The NASDAQ closed on August 31 at 5,213.22, up from July’s close of 5,162.13.

Stocks finish week higher – Stocks rallied Friday following a jobs report which was below expectations. Investors feel that a softening of new jobs created could cause the Federal Reserve to hold off on an expected upcoming interest rate rise. The Dow Jones Industrial Average closed the week at 18,491.96, up from 18,395.40 last Friday. The S&P 500 closed the week at 2,179.98, up from 2,169.04 last week. The NASDAQ closed the week at 5,249.90, up from last week’s close of 5,218.92.

Bond yields rise in August – Statements released from the Federal Reserve Open Market Committee meeting, and statements from Fed officials were designed to let investors and analysts know that interest rate hikes were likely soon. While The Fed left itself a little wiggle room they made it clear that historically low rates designed to stimulate the economy would soon rise to more “market neutral” rates. The 10 year U.S. Treasury Bond close on August 31 at 1.58%, up from 1.46% at the end of July. The 30 Year U.S. Treasure Bond yield close at 2.23% on August 31, up from 2.18% at the end of July.

Bond yields unchanged from last week – The 10 year U.S. Treasury Bond yield closed the week at 1.60%, almost unchanged from 1.62% last Friday. The 30-year U.S. Treasury Bond closed at 2.28%, unchanged from 2.29% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates unchanged – still near record lows – The Freddie Mac Primary Mortgage Survey released on September 1, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.46%. The 15-year fixed average rate was 2.77%. The 5/1 ARM average rate was 2.83%.

Retail sales unchanged – The Commerce Department reported that retail sales in July showed no increase over June’s figure which increased 0.8% from May. Still retail sales rose 2.3% from a year ago, but economists had expected sales to rise 0.4% in July. After two months of very strong job growth experts were not expecting spending to weaken.

Producer Price Index takes unexpected drop – The Labor Department reported that the producer price index, a key measure of inflation dropped 0.4% last month. Year over year the index shows that producer prices have slipped 0.2% since last July. Fed officials have repeatedly expressed concern about low inflation, as a strong dollar and low oil prices have muted prices.

California employers add 36,400 new jobs in July – The Employment Development Department reported that California’s employers added 36,400 new jobs in July. Although this was considered solid job gains by experts, the unemployment rate actually rose from 5.4% in June to 5.5% in July, as more workers entered the job search.

Number of existing homes sold in California in July drops as tight inventory puts a squeeze on sales – The California Association of Realtors reported that the number of existing homes sold in California declined 4.1% from June’s sales pace and 5.1% from last July’s annualized rate as historically low inventory levels dragged down sales. The statewide median price in July was $509,830 which was down 1.8% from June and up 3.9% from July 2016. The unsold inventory index edged up from a 3.2 month supply in June to a 3.6 month supply in July.

Pending home sales in California rise in July – The California Association of Realtors announced that statewide pending home sales increased 3.5% in July over last July’s seasonally adjusted annualized rate. Month over month, July’s pending home sales were up 3% from June’s figures. After June and July’s increased rate of new signed real estate purchase contracts it is expected that closed existing sales will increase in the coming months as those homes close escrow. July’s closed sales were disappointing as low inventories caused closed sales to decline after hitting multi year high closed existing sales numbers in June.

Nationwide existing home sales slowed by low inventory levels – The National Association of Realtors reported that existing home sales slowed in July after hitting the highest levels in many years in June. July’s slowdown was attributed to extremely low inventories of single family existing homes, which include single family homes, town homes, condominiums, co-ops. Sales fell 3.2% from June’s figures and year over year close sales declined 1.6% from last July. Only the western states region had an increase in closed sales. While unsold inventory inched up 0.9% from June the number of existing homes for sale nationwide are still 5.8% below last July’s number. 32% of all sales were purchased by first time buyers, up from 28% one year ago. All-cash transactions accounted for 21% of all sales, down from 23% one year ago.

New home sales hit highest pace in nearly a decade – The Commerce Departmentreported that sales of new homes surged in July to the highest level since October 2007. July’s new home sales were up 12.4% from June and 31.3% from last July.That’s a number that stunned experts; however, the number of new homes being completed have risen significantly as home-builders are full production.

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August 27, 2016

Economic update for the week ending August 27, 2016

Stocks lower as investors grow cautious of higher rates – Hints of future interest rate increases by Federal Reserve committee members throughout the week, and an official statement Friday by Fed Chairperson, Janet Yellen that conditions have improved opening a path to higher rates investors were more cautious. Some late earnings reported this week by retailers, like The Gap were below expectations. This followed mostly positive corporate earnings reported earlier in the month. Oil prices also dropped this week after rising last week, and healthcare stocks slipped. Markets are still just below all-time highs. The Dow Jones Industrial Average closed the week at 18,395.40 down from 18,552.57 last Friday. The S&P 500 closed the week at 2,169.04, down from 2,183.87 last week. The NASDAQ closed the week at 5,218.92, down from last week’s close of 5,238.38.

Bond yields slightly higher – The 10 year U.S. Treasury bond yield closed the week at 1.62%, up from 1.58% last Friday. The 30-year U.S. Treasury bond closed at 2.29%, unchanged from 2.29% last week. Mortgage rates follow bond yields so we watch bond yields closely.

Mortgage rates unchanged – still near record lows – The Freddie Mac Primary Mortgage Survey released on August 25, 2016 showed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 3.43%. The 15-year fixed average rate was 2.74%. The 5/1 ARM average rate was 2.75%.

Pending home sales rise in July – The California Association of Realtors announced that statewide pending home sales increased 3.5% in July over last July’s seasonally adjusted annualized rate. Month over month, July’s pending home sales were up 3% from June’s figures. After June and July’s increased rate of new signed real estate purchase contracts it is expected that closed existing sales will increase in the coming months as those homes close escrow. July’s closed sales were disappointing as low inventories caused closed sales to decline after hitting multi year high closed existing sales numbers in June.

Nationwide existing home sales slowed by low inventory levels – The National Association of Realtors reported that existing home sales slowed in July after hitting the highest levels in many years in June. July’s slowdown was attributed to extremely low inventories of single family existing homes, which include single family homes, town homes, condominiums, co-ops. Sales fell 3.2% from June’s figures and year over year close sales declined 1.6% from last July. Only the western states region had an increase in closed sales. While unsold inventory inched up 0.9% from June the number of existing homes for sale nationwide are still 5.8% below last July’s number. 32% of all sales were purchased by first time buyers, up from 28% one year ago. All-cash transactions accounted for 21% of all sales, down from 23% one year ago.

New home sales hit highest pace in nearly a decade – The Commerce Department reported that sales of new homes surged in July to the highest level since October 2007. July’s new home sales were up 12.4% from June and 31.3% from last July. That’s a number that stunned experts; however, the number of new homes being completed have risen significantly as home-builders are full production.

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February 5, 2016

Week ending February 5, 2016 economic update

U.S. Employers add 151,000 jobs in January – Unemployment rate drops to 4.9% – The Labor Department reported Friday that employers added 151,000 non-farm jobs in January. This was well below the 190,000 expected, which could signal slowing overseas has finally affected employer confidence. A robust 4th quarter of job growth in 2015 showed that employers’s confidence had not been affected by slowing overseas. Perhaps that is about to change is the feeling of some analysts. Others were encouraged by stronger growth in the manufacturing sector than expected and shrugged off the lower number as offsetting stronger than expected job growth over the last few months, and offsetting some temporary holiday seasonal jobs lost. We will see which analysts are right in the coming months. Hourly wages rose showing a 2.5% annual increase in January. This was the most positive part of the report. The unemployment rate also fell from 5% in December to 4.9% in January, its lowest level in 8 years.

Stocks sell off following U.S. jobs report – Stocks sold off on Friday following the announcement of a disappointing jobs report. The dollar also strengthened after falling earlier in the week. The strong dollar is a concern for companies that sell products overseas. Oil prices also dropped which had risen over the past two weeks. All in all not great news for investors, yet the drop over the past week was not very much. The Dow Jones Industrial Average closed Friday at 16,204.97, down from 16,466.30 last week. TheS&P 500 closed the week at 1,880.05, down from 1,940.24 last week. The NASDAQ closed Friday at 4,363.14, down from 4,613.95 last week.

Bond yields drop – The 10 year U.S. Treasury bond yield closed Friday at 1.84%, significantly lower than 1.94% last week. The 30 year U.S. Treasury bond yield closed Friday at 2.67%, down from 2.75% last week.

Mortgage rates at lowest levels in 2 years – Uncertainty has caused investors to move money into lower returning safer investments like U.S. treasury bonds and mortgage securities. At the same time central banks around the world have dropped rates. Our bond and mortgage security rates, while historically low, offer a decent return comparatively. This has continued to push rates lower. The 30 year fixed rates below loan amounts of 419,000 are around 3.625%. 30 year rates for loans above 419,000 are about 3.875%. The 15 year fixed was around 3.10%. The 5 year was around 2.625%.

The real estate market seems to be in full swing! I’m seeing more listings come out, but they are selling so quickly, if priced right, that our historically low inventory levels seem to be here to stay. That is driving prices up, yet not at the levels seen a couple of years ago. I’d expect most of the years price appreciation to occur in the next few months, and prices should level off in late summer as they did last year. Interest rates are at the lowest levels in a couple of years, which are close the lowest rates in decades. If you are buying, buy now! If you are not buying, you should! If you are going to move up, I’d do it now! If you haven’t been thinking of moving up, you should!

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September 19, 2015

Economic update for the week ending September 19, 2015

Stocks drop after Fed leaves rates unchanged – Stocks were up this week until the Federal Reserve left rates unchanged. Many investors feared a rate increase because higher rates increase borrowing costs which cut into profits. It has been widely felt that the Federal Reserve would have begun rising rates because the economy was on solid footing. Stocks had dropped over the past couple of months partially on fears on a rate increase; however, stocks dropped further when the Fed announced they were not going to increase rates! The Fed’s statement made investors feel the economy was weaker than the data indicates, fearing that future growth may not materialize as expected. The Dow Jones Industrial Average closed the week at 16,384.79, down from last week’s close of 16,433.09 The S&P 500 closed the week at 1,958.03, almost unchanged from last Friday’s close of 1,961.05. The NASDAQ closed the week at 4,827.23, also just about the same as last week’s close of 4,822.34.

Federal Reserve leaves rates unchanged – The Fed chose to leave rates unchanged. In one sense this was good news for investors that had expected the first rate increase since 2006. However, this decision, and their statement spooked investors. The Fed’s statement included that The U.S. was currently the worlds strongest economy, but the risk to future growth in the economy is very high due to weakness throughout the world. It further ran through a bunch of data that showed why they are concerned. Some included: a drop in exports, inflation well below the 2% target range, a stabilizing housing market, and stagnant wages. Strong employment growth was cited as a positive. They left room to raise rates as soon as the next meeting, but added that with inflation so low that even if they did begin to raise rates they would keep rates lower than “normal levels” for a prolonged period of time due to low inflation which they said could persist for as long as a decade. Many experts took these statements to mean that the economy was not as strong as they thought. Stocks sold off on Thursday and Friday after the report was digested on fears that The Fed fears the economy may weaken. This would affect sales which would affect future corporate profits. All in all, the one thing that investors agreed upon is that the Fed’s decision not to raise rates, which have been at near zero since 2008 to stimulate the economy, creates an environment of uncertainty. Markets fear uncertainty.

Mortgage just under 4% – The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000. The 15 year fixed rate loans are about 3.25% for loans up to $417,000, and around 3.375% for loans over $417,000. The 5 Year-ARM rate is around 2.75% and 1 Year-ARM mortgages are about 2.50%.

Treasury Bond yields slightly lower this week – The 10 year Treasury bond yield closed week at 2.13%, down from 2.20% last Friday. The 30 year treasury bond yield closed Friday at 2.93%, almost unchanged from last week’s close of 2.95%. Mortgage rates follow bond yields so these are closely watched.

California employers add 36,200 non-farm jobs – The state’s unemployment rate dropped to 6.1% in August from 6.2% in July. Unemployment is at its lowest level since January 2008 in California according to the Bureau of Labor Statistics. Since August of 2014 the state has gained 470,000 jobs. That represents an annual growth rate of 3% which has outpaced the national average of 2.1% for the 50 states.

California existing home sales and prices beginning to level – The California Association of Realtors reported that the number of homes sold in August dropped 3.8% on an annualized level from the number of homes sold in July. Sales were still up 9.3% from the annualized number of homes sold last August. This year the number of sales have been much higher than last year which was the lowest number of sales in decades, but those increases did moderate in August. Prices are beginning to level as well, according to The California Association of Realtors. The statewide median price in August was up 1% from July, and up only 2.5% from August 2014. That marks the lowest year over year price increase in 3 1/2 years. Unsold inventory ticked up to a 3.6 month supply from a 3.3 month supply in July. This is still a very low number. A normal market has a 6-7 month supply. It’s unusual to see prices stabilize with such a low number of homes on the market. The assumption is that prices have risen to a level that buyers have pulled back on their home purchases. Either inventory can rise quickly or prices can begin to rise more quickly in this environment. Unfortunately, we won’t know for sure until one or the other happens!

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Economic update for the week ending August, 15, 2015

Stocks slightly above last week’s levels – Stocks dropped early in the week as China allowed its currency to devalue. This was done to spur the Chinese economy which has stalled. This move of making its currency worth less makes it’s goods cheaper which they hope will spur exports, and lead to an increase in manufacturing. Unfortunately, this makes U.S. goods more expensive in China. That hurt stocks of U.S. Companies that sell to China, such as Apple. Chinese consumers purchase 20% of all Apple products sold. It also hurt U.S. fast food chains, construction, airline, and other companies that sell to Chinese companies and consumers. Those companies saw their stocks fall. At the same time oil continued to fall, at one point hitting $42 per barrel, a price not seen since the depths of the financial crisis 2008. On Friday stocks recovered as reports of better than expected retail sales were released, as well as second quarter earnings of some retailers that beat expectations.
The Dow Jones Industrial Average closed the week at 17,477.40, up from last week’s close of 17,373.38. The S&P 500 closed the week at 2,091.54, up from last Friday’s close of 2,077.57. The NASDAQ closed the week at 5,048.23, unchanged from last week’s close of 5,043.54.

30 year fixed mortgage rates still below 4% – The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000. The 15 year fixed rate loans are about 3.125% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. The 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are around 2.50%.

Treasury Bond yields stable this week – The 10 year Treasury bond yield closed week at 2.20%, it was 2.18% last Friday. The 30 year treasury bond yield closed Friday at 2.84%, unchanged from last week’s close of 2.83%.

U.S retail sales rise 0.6% in July – The Commerce Department reported that U.S. Retail sales rose 0.6% in July after being flat in June. This beat experts forecast. The report showed that sales rebounded in July as households boosted purchases of automobiles, clothing, and a range of other goods. Experts feel that this suggests solid momentum in the economy early in the third quarter. Unfortunately, this upbeat report strengthened expectations that the Federal Reserve would begin to raise interest rates as early as next month. This did move bonds and mortgage rates off their lows of the week.
Mortgage payments more affordable than rents – According to Zillow’s affordability report for the second quarter of 2015, rents are at an all time high for single family homes, but monthly payments are more affordable than they were before the housing bust. Zillow found that renters nationwide can expect to spend 30.2% of their monthly income on rent and 40% in Los Angeles, San Jose, and San Francisco. They found that homebuyers nationwide can expect to spend 15.1% of their income on a mortgage payment. In the years immediately prior to the housing crisis in 2008 Zillow says that homebuyers could expect to spend 21.3% of their monthly income on a house payment.
Next week we will get housing price and sales data for July. I’d think it will show prices continuing to rise and robust sales based on what we are seeing.

Have a great weekend!

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Economic update for the week ending August, 8, 2015

Stocks have losing week – Stock markets dropped in every session this week marking 7 straight days of losses. Key reasons for stocks dropping this week were: Oil prices dropped further hitting as low as $44 per barrel, a 6 year low. One year ago oil prices were over $100 per barrel. This hit energy sector stocks hard. The dollar continued to gain strength against other currencies making American goods more expensive overseas. The strength of the dollar is broadly recognized as a force weighing on U.S. growth. On Friday, the jobs report came out for July showing 215,000 net new jobs added. This was in line with expectations. The report also showed wages rose in July about 0.2% after falling in June. With strong job gains, and the unemployment rate down to 5.3% investors are convinced that the Fed will raise interest rates in September. It will be the first interest rate rise since 2006. This also is weighing on the markets.
The Dow Jones Industrial Average closed the week at 17,373.38, down from last week’s close of 17,689.96. The S&P 500 closed the week at 2,077.57, down from last Friday’s close of 2,103.84. The NASDAQ closed the week at 5,043.54, down from last week’s close of 5,128.28.

30 year fixed mortgage rates below 4% for second week – The 30 year fixed rates ended the week around 3.875% for loans up to $417,000, and around 4.00% for loans over $417,000. The 15 year fixed rate loans are about 3.125% for loans up to $417,000, higher loan amounts have rates that are around 3.375%. The 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are around 2.50%.

Treasury Bond yields stable this week – The 10 year Treasury bond yield closed week at 2.18%, the same as it was last Friday. The 30 year treasury bond yield closed Friday at 2.83%, down from last week’s close of 2.91%. It is widely felt that with low inflation a Fed rate hike won’t heavily affect the longer term bond rates, especially with such a strong dollar.

U.S. Employers add 215,000 jobs in July – unemployment rate remains at 5.3% – The Labor Department reported that US employers added 215,000 net non-farm new jobs in July. Every sector showed modest job growth gains with the exception of the energy sector which lost 4,000 jobs in July. The energy sector has lost 75,000 jobs so far in 2015 due to falling oil prices. Average hourly wages were up 5 cents an hour to $25.99. This was good news after a 1 cent per hour drop in June. Weak wage growth has been a drag on the economy. Last week The Labor Department reported that wage growth in the second quarter of 2015 was the slowest pace of wage growth in a quarter since 1982. Fortunately, the third quarter appears to be starting off with a better pace.

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Economic update for the week ending July 18, 2015

Stocks rise after Greek default ends in a deal and second quarter U.S. corporate profits are released – Nasdaq at record high – A deal was reached which will keep Greece in the Euro Zone. Greece agreed to raise taxes and the retirement age in exchange for more loans from the European Union, ending the crisis for now. Second quarter profits from U.S. Companies were released, showing that profits were higher than expected. This was just another sign that the economy is continuing to grow. The Dow Jones Industrial Average closed the week at 18,086.45, well above last week’s close of 17,760.41. The S&P 500 closed the week at 2,126.64, up from last week’s close of 2,076.62. The Nasdaq closed Friday at 5,210.14, an all-time high, up from last week’s close of 4,997.70.

Treasury Bond yields drop a little this week – Fed Chairperson, Jennet Yellen testified in front of congress this week. Her remarks included that, while she was going to raise the benchmark Discount Rate from the near 0% it has been since 2008 later this year, that any rise would be slight, and that further raises would be very moderate. Canada also lowered their benchmark rate as the country has slipped into a recession. Yellen’s testimony and Canada’s move seemed to calm investors’ fears of the first fed rate hike since 2006, which caused bond rates to drop. The 10 year Treasury bond yield closed the week at 2.34%, down from last week’s 2.42%. The 30 year treasury bond yield closed Friday at 3.08%, down from 3.20% last week.

Mortgage rates unchanged this week – The 30 year fixed rates ended the week around 4.10% for loans up to $417,000, and around 4.25% for loans over $417,000. The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.50%. 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are around 2.75%.

California adds 22,900 jobs in June – The Employment Development Department reported that employers added 22,900 non-farm jobs in June. California’s unemployment rate dropped to 6.3% in June from 6.4% in May. The unemployment rate was 7.5% last June. Although the state’s unemployment rate was 4.8% before the recession in 2006, California, the world’s eighth largest economy’s job growth has expanded 13.5% since the recession ended. U.S. job growth rose 9.4% since the end of the recession. The national unemployment rate is currently 5.3%. Unfortunately, California lost a higher percentage of jobs than the nation during the recession, but the state is on the right track adding jobs at a higher rate than the nation as a whole.

Housing starts continue to rise – The Commerce Department reported that housing starts in June rose 9.8%. they also reported a surge in multifamily construction which was up 28.6 %. This accounted for the majority of the 9.8% overall rise in housing starts.

Home prices continue to rise – Core Logic reported that the median price of a single family home in California rose 3% in June to $417,000. This represents a 7% rise in the median price from last June. The median price is the point at which ½ the homes sell for more and ½ the homes sell for less. It’s really not an indication of any particular home or neighborhood, but it is the only official measure of home price comparisons. It is a good indication of trends. We have seen the higher priced markets have stronger price gains, so our markets have prices rising at a greater rate than markets at the price level of the median price. The California Association of Realtors reported that ( average price, a measurement that is not commonly used) home values were up 2.2% in June from May and 10.1% from June 2014. The average price in California was $634,190, according to the CAR.

The number of existing home sales continue to gain strength – Core Logic reported that same month, year over year home sales rose in June for the 4th straight month. Statewide an estimated 46,095 resale homes changed hands which represents an increase of 10.8% from the number of homes sold in May and a 16.8% increase from June 2014. This rise in sales was despite a tight supply of inventory. The California Association of Realtors reported that home inventory levels had dropped to a 3.7 month supply in June from a 4 month supply in May. A 7 month supply is considered a normal market. Homes are hitting the market in higher numbers than a year ago, but many are selling quickly, which has not allowed the unsold numbers to increase.

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Economic update for the week ending July 11, 2015

Stocks had a wild week – Stocks dropped early In the week as fears of Greek’s failed debt talks, and the results of a vote to turn down the reforms proposed by creditors were announced. Thursday and Friday it appeared that a deal was in sight. No deal by next week could cause Greece to leave the Euro. This could cause slowing throughout Europe, experts say. A new deal that has been approved by the Greek Prime Minister and Parliament which would include a new 3 year loan is now with the European Union for approval. After a two week shut down of Greek banks, Greece has now agreed to many of the reforms that they would not do just a couple of weeks ago. It’s not all the reforms that the European Union were looking for, but it is a good compromise, which experts may will end the crisis. Chinese Stocks have dropped over 30% this year. Their markets recovered a little at week’s end. All this caused stocks to fall early in the week, and rise Thursday and Friday. The Dow Jones Industrial Average closed the week at 17,760.41, slightly higher than last week’s close of 17,730.11. The S&P 500 closed the week at 2,076.62, unchanged from last week’s close of 2,076.68. The Nasdaq closed Friday at 4,997.70, down slightly from last week’s close of 5,009.21.

Treasury Bond yields end volatile week unchanged from last week – Several factors caused rates of fluctuate this week. Greece looked like a deal to keep them from leaving the Euro would not happen early in the week, but progress was made Thursday and Friday. China’s stock markets, which are down about 30% for the year improved on Thursday and Friday. Janet Yellen said Friday that a rate hike by the Fed this year is still expected. Interest rates dropped early in the week. The 10 year treasury closed Wednesday at 2.22%, its lowest level in several weeks, before jumping back almost 1/4% Thursday and Friday. The 10 year Treasury bond yield closed the week at 2.42%, just above last week’s close of 2.40%. The 30 year treasury bond yield closed Friday at 3.20%, almost unchanged from 3.19% last week.

Mortgage Rates end week the same as last Friday – After dropping almost a quarter of a percent by Wednesday, rates rose nearly a quarter percent on Thursday and Friday to end the week back were they were last week. The 30 year fixed rates ended the month around 4.10% for loans up to $417,000, and around 4.375% for loans over $417,000. The 15 year fixed rate loans are about 3.375% for loans up to $417,000, higher loan amounts have rates that are around 3.50%. 5 Year-ARM rate is around 3.00% and 1 Year-ARM mortgages are around 2.75%.

Federal Reserve gives mixed messages – Minutes released Wednesday from the Fed’s June meeting showed that just one of the ten voting members were in favor of raising interest rates. With strong job gains and unemployment at a 7 year low it is widely felt a rise is coming. The report indicated that the Fed wanted to wait and see what effect a Greece default, slowing in Europe, a significant drop in the Chinese stock market, and a strong dollar would have on growth here at home. Earlier in the year there were more voting members in favor of a rate hike than there were in the June meeting. Rates dropped on bonds and mortgages after the report was released. Friday Fed Chairperson, Janet Yellen in a speech in Cleveland said, ” it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy.” This statement caused bond and mortgage rates to rise. The Federal Funds Rate has been near zero for 7 years in an attempt to stimulate the economy. The last time the Fed rose rates was 2006.

June’s price and sales date will be released in the next couple of weeks. From what I am seeing I would not be surprised to see the unsold inventory rise from the 3.5 month supply last month. It seems that while the real estate market is still quite strong in the highest price ranges we are seeing some sluggishness in many areas. Even new homes, which we have seen selling at record prices, have begun to sit when priced too high. I’d expect to see the month over price gains begin to moderate. Year over year they will still show strong gains because of a nice run up the first half of 2015.

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Economic update for the week ending June 27, 2015

Stocks were fairly stable this week- Stocks had an up and down week mostly tied to talks to extend Greece’s debt crises. On days where progress was made on a bailout deal stocks rose. On days were talks ended with no success, stocks dropped. Greece is on the verge of bankruptcy and leaving the Euro. They owe a debt payment of $1.8 billion on Tuesday to the International Monetary Fund. They cannot make the payment, so no deal puts them into default and on a path of leaving the Euro. China’s stocks dropped 7% on fears that their markets are overvalued. U.S. investors were again fearing higher interest rates as bond rates rose. The Dow Jones Industrial Average closed the week at 17,890.36, down from 18,015.95 last week. The Nasdaq closed at 5,112.19, almost unchanged from 5,117.00 last Friday. The S&P 500 closed at 2,102.31, also pretty much unchanged from 2,109.99 last Friday.

Bond yields rise sharply – More solid economic news at home caused investors to sell U.S. Treasury Bonds on fears of higher interest rates. It is widely felt that the Federal Reserve will begin raising its key interest rates at their September meeting. This will be the first interest rate hike from the Fed since 2006. Interest rates paid on U.S. Treasury Bonds increased sharply this week to the highest rates in over a year. The 10 year U.S. Treasury Bond closed the week at a 2.49% yield, up from 2.26% last week. The 30 year U.S. Treasury Bond closed Friday yielding 3.25% , up sharply from 3.05% last Friday. Mortgage rates follow treasury rates, so this was not a good week for borrowers.

Mortgage Rates higher than last week– The 30 year fixed rate ended the week around 4.30% for loans up to $417,000, around 4.50% for loans between $417,000 and $625,500. The 30 year fixed rates on jumbo loans, loans over $625,500, are about 4.625%. The 15 year fixed rate loans are about 3.375% for loans up to $417,000, around 3.50% for loans between $417,000 and $625,500, and around 3.675% for loans over $625,500. The 5 Year-ARM rates are around 3.25% 1 Year-ARM mortgages are around 2.75%.

U.S. Consumer Confidence Rises – The University of Michigan reported that their consumer sentiment index rose from 90.7 in May to 96.1 in June. This was the highest level since January when the rating of 98.1 shocked experts. That was the highest rating in more than a decade. Last June the index was 82.5. For the first 6 months of 2015 consumer sentiment has improved at the highest pace since 2004. This increase is important because it suggest that consumer spending, which accounts for a majority of the economy, will continue to increase.

New home sales hit 7 year high – The Commerce Department reported that new home sales in May jumped 2.2% from April to a seasonally adjusted annual rate of 546,000 units. This marked the highest level of new home sales in 7 years. New home builders said that fears of higher interest rates contributed to buyer demand, as buyers rushed to lock in rates before they increase further later in the year.

U.S. home resales jump 5.1% – Prices continue to rise – The National Association of Realtors reported that sales of previously owned homes jumped 5.1% in May from April figures. This was a strong number which beat analysts’ expectations. One comment that was made by Lawrence Yun, the chief economist at NAR, was, “ Strong job growth for young adults and low down-payment programs are helping more young buyers enter the marketplace. The return of first time buyers in May is an encouraging sign.” The median price also showed strength rising 7.9% from one year ago for the nation as a whole. The median price in the west grew 10.2% from a year earlier and 4.3% from April.

Next Friday the Labor Department will release the June employment report. A high number will show that the economy is continuing to improve. An improving economy puts pressure on the Federal Reserve to raise its benchmark rate which has been near zero since 2008 in an effort to lift the nation out of recession. There has not been an interest rate hike since 2006. Expect mortgage rates to rise with a high number and to fall with a low number of jobs created.

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Economic update for the week ending June 18, 2015

Stocks have good week with Nasdaq breaking into all time highs- Stocks soared after the Federal Reserve announced that they were not going to raise their benchmark rate this session. They further states that even though we were nearing “full employment” there were some signs of slowing in the economy, and that the economy is growing modestly. If the last sentence makes no sense, welcome to FedSpeak! More failed talks to extend Greece’s debt crises. Greece on the verge of bankruptcy and leaving the Euro. Friday the European Central Bank provided emergency funding to cover a run on Greek Banks. This weighed on stocks. The Dow Jones Industrial Average closed the week at 18,015.95, up from 17,898.84 last week. The Nasdaq closed at 5,117.00, up from 5,051.10 last Friday. The Nasdaq hit highs of 5137 this week, finally surpassing the previous record of 5132 set in 2000 during the .Com bubble. The S&P 500 closed at 2,109.99, up slightly from 2,094.11 last Friday.

Bond yields drop following Fed announcement – After weeks of rising rates it was nice to see a second week of rates settling. While they are still about 1/4% higher than 6 weeks ago they are about 1/4% lower than the highs for the year set just a couple weeks ago. The 10 year U.S. Treasury Bond closed the week at a 2.26% yield, down from 2.39% last week. The 30 year U.S. Treasury Bond closed Friday yielding 3.05%, down from 3.10% last Friday.

Mortgage Rates slightly lower than last week– The 30 year fixed rate ended the week around 4.125% for loans up to $417,000, around 4.325% for loans between $417,000 and $625,500, and 4.375% for loans over over $625,500. The 15 year fixed rate loans are about 3.25% for loans up to $417,000, around 3.375% for loans between $417,000 and $625,500, and around 3.50% for loans over $625,500. The 5 Year-ARM rates are around 3.10% 1 Year-ARM mortgages are around 2.60%.

Resale home sale pace continues to exceed last year – The California Association of Realtors reported that statewide home sales of existing single-family homes totaled 423,360 in May on a seasonally adjusted annualized rate. That was down 1.1% from April, but up 8.9% from May 2014. It was the second straight month that statewide sales were above the 400,000 annualized mark. Last year we saw sales below the 400,000 sales mark, which was about 14% below the rate of an average year since 1988. This year we are still below average sales rates, but much closer than last year. Low inventory is one factor that is keeping sales numbers down. CAR reported that there is just a 3.5 month supply of homes on the market. A 6 to 7 month supply is a normal market.

Home prices continue to rise – The California Association of Realtors reported that the median price paid for a resale home in California increased 0.8% from April and 4.4% from May 2014. While price gains are moderating from double digit gains seen in 2012, 2013, and the beginning of 2014, they are still increasing. CAR also released more local statics. Los Angeles County had prices up 1.3% from April and 5.1% from last May. Ventura County had prices up 3.7% from April and 8.2% from last May. Orange County had prices up 1.8% from April and just 2.8% from last May.

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Economic update for the week ending June 13, 2015

Stocks mostly unchanged from last week’s close – It was a turbulent week on Wall Street! Most of the ups and downs revolved around Greece, which faces a debt default at the end of June. It is feared that they will default on their debt and leave the Euro. There was not much economic news this week, but the few reports were mostly positive. Positive economic news included: a surge in consumer confidence, a sharp rise in retail sales, firming oil prices, and rising producer prices. The Dow Jones Industrial Average closed the week at 17,898.84, almost unchanged from 17,849.46 last week. The Nasdaq closed at 5,051.10 down slightly from 5,068.46 last Friday. The S&P 500 closed at 2,094.11, also about the same as last Friday’s close of 2,092.83.

Bond yields settled a little this week – After weeks of rising rates it was nice to see a stable week. The 10 year U.S. Treasury Bond closed the week at a 2.39% yield, slightly better than 2.41% last week. The 30 year U.S. Treasury Bond closed Friday yielding 3.10%, also about the same as 3.11% last Friday.

Mortgage Rates unchanged from last week– The 30 year fixed rate ended the week around 4.25% for loans up to $417,000, and around 4.38% for loans between $417,000 and $625,500 and 4.50% for loans over over $625,500. The 15 year fixed rate loans are about 3.38% for loans up to $417,000, and around 3.50% for loans between $417,000 and $625,500, and around 3.625% for loans over $625,500. The 5 Year-ARM rates are around 3.10% 1 Year-ARM mortgages are around 2.60%.

Consumer confidence jumps – The University of Michigan consumer sentiment index rose to 94.4 in early June from 90.7 in May. They reported that U.S. consumer confidence surged in early June on expectations that a tightening labor market would spur wage gains, which could further stimulate spending and overall growth later this year. They found that consumers were the most favorable about their personal financial prospects since 2007, with households expecting the largest wage gains since 2008. This rise in consumer sentiment came despite a rise in gas prices, which contributed to the largest rise in producer prices in 2 1/2 years. Strong consumer confidence, together with a tightening labor market, bullish retail sales and firming inflation pressures caped off a week of strong economic data.

U.S. Producer prices record their biggest increase in 2 1/2 years – The Labor Department said its producer price index for final demand increased 0.5% in May, the largest gain since September 2012. Much of the gain was due to rising gas and food products.

Retail sales jump – The Commerce Department reported Thursday that retail sales jumped 1.2% in May. This was encouraging news which beat expectations and showed that Americans sharply stepped up their spending despite harsh weather.

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Economic update for the week ending June 6, 2015

U.S. employer’s add 280,000 jobs in May – The Labor Department reported that 280,000 net new jobs were created in May. This number shocked the markets, as experts were expecting around 200,000 new jobs. The unemployment rate rose from 5.4% in April to 5.5% in May as more workers entered the labor force. This is both due to new college graduates, and heightened confidence in the job market. The unemployment rate was 6.3% in May 2014. Wages showed growth increasing 2.3% from last May. All sectors showed strong growth except oil and mining which lost another 18,000 jobs. Low oil prices have caused the loss of 63,000 of these energy related jobs so far this year. The strength of this report caused experts to worry that it will put pressure on The Federal Reserve to raise interest rates.

Bond yields soar this week – Europe announced that their inflation rate was rising. Germany increased its key interest rate. Friday’s jobs report caused investors to expect the Fed to raise interest rates, as it showed the economy is still strengthening. The 10 year U.S. Treasury Bond closed the week at a 2.41% yield, up sharply from 2.12% last week. The 30 year U.S. Treasury Bond closed Friday yielding 3.11%, also up from 2.88% last Friday.

Mortgage Rates increase at least 1/4% this week – The 30 year fixed rate ended the week around 4.25% for loans up to $417,000, and around 4.25% for loans between $417,000 and $625,500 and 4.625% for loans over over $625,500. The 15 year fixed rate loans are about 3.50% for loans up to $417,000, and around 3.50% for loans between $417,000 and $625,500, and around 3.625% for loans over $625,500. The 5 Year-ARM rates are around 3.20%. 1 Year-ARM mortgages are around 2.70%.

Consumer debt surges in April – The Federal Reserve reported that consumer borrowing expanded by $20.5 billion in April, up 6.6% from last April. Strong gains over the last few months pushed consumer debt to a new record, $3.38 trillion. Credit card debt rose $8.6 billion, the largest gain in 12 months. Economists expect that consumers, who have seen strong job gains, will keep borrowing and spending in the coming months, which will help boost economic growth.

Fed says economy growing at a moderate rate – The Federal Reserve released its Beige Book Survey which includes business conditions throughout the country. They said the economy is growing at a moderate pace. They reported that : Consumers have ramped up spending at retailers and auto dealers. Manufacturing activity has held steady or increased in all regions with the exception of the energy industry. Tourism has picked up in much of the country.

Strong economic news causes stocks drop on fears of higher interest rates – Fears of rising interest rates rattled the markets this week. Early in the week it was reported that inflation had picked up in Europe. Germany raised its benchmark rate. U.S. Exports were stronger than expected in April. An upbeat outlook was released by The Fed which showed the economy gaining steam, after a disappointing winter. All this “good news” led to higher bond yields, as experts expect a rate rise by The Fed coming. Friday’s jobs report caused bond yields and mortgage rates to rise further. Higher rates cut into corporate profits, as corporate debt becomes more expensive. The Dow Jones Industrial Average closed the week at 17,849.46, down from 18,010.68 last week. The Nasdaq closed at 5,068.46, down slightly from 5,070.03 last Friday. The S&P 500 closed at 2,092.83, also down from last Friday’s close of 2,107.03.

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Economic update for the week ending May 30, 2015

Stocks had a volatile week – Markets were closed Monday for Memorial Day. Tuesday the stock market had its largest drop in three weeks as investors worried about a surging dollar and a default on Greek debt. The DOW fell 190 points. Wednesday markets recouped most of Tuesday’s losses after Greek debt talks showed progress. Thursday stocks fell again after a sell off in the Chinese market and fears again of the approaching Greek debt payment. And Friday a disappointing U.S. GDP report dragged markets down further. The Dow Jones Industrial Average closed the week at 18,010.68, down from 18,232.02 last week. The Nasdaq closed at 5,070.03, down slightly from 5,089.39 last Friday. The S&P 500 closed at 2,107.03 also down from last Friday’s close of 2,126.06.

Bond yields drop this week – Disappointing economic news and a strong dollar caused bond yields to drop this week. The 10 year U.S. Treasury Bond closed the week at a 2.12% yield, down from 2.21% last week. The 30 year U.S. Treasury Bond closed Friday yielding 2.88%, down from 2.99% last Friday. Mortgage rates usually follow treasury bond rate trends, so if this trend continues expect mortgage rates to drop slightly.

Mortgage Rates – The 30 year fixed rate ended the week around 4.00% for loans up to $417,000, and around 4.25% for loans over $417,000. The 15 year fixed rate loans are about 3.25% for loans up to $417,000, and around 3.50% for loans over $417,000. The 5 Year-ARM rates are around 3.00%. 1 Year-ARM mortgages are around 2.50%. Last week’s Freddie Mac Primary Mortgage Survey showed rates as follows: 30 year fixed rates at 3.87%, 15 year fixed at 3.11%, 5/1 YR ARM at 2.90%and 1 YR ARM at 2.50%.

First quarter GDP drops at a 0.7% annual rate – The Commerce Department said Friday that the economy shrank in the first quarter. Total economic output, known as gross domestic product (GDP) decreased at annual rate of 0.7% for the first quarter of 2015. This was greater than the initial estimate of a 0.2% drop released last month. This final number spooked the market as it was so much worse than the estimate, which was already below analysts expectations of a slight increase. Bad weather played a part in the drop, that’s for sure. However; experts felt that the economy was much stronger this year than last year and that the economy would not contract, even with an extreme winter, they were wrong. It is believed that the economy will rebound in the second quarter, but experts do not expect it to rebound as strongly as it did last year in the second quarter. This is due to the strength of the dollar which makes our goods more expensive overseas, and hurts tourism into the U.S. among other factors, including low oil prices which has caused a loss of 70,000 oil, drilling and energy sector jobs this year.

Consumer confidence drops to 6 month low – The University of Michigan reported Friday that its index of consumer sentiment dropped in May to its lowest level since November. Consumers of all income levels felt less confident about the economy both current and future. It should be noted that although confidence is dropping from multi year highs the 2015 average for the first 5 months is the highest since the first 5 months of 2004. It is widely believed that the economy and consumer confidence will improve as the weather improves after a very harsh winter in the Northeast.

Factory orders fall 0.5% in April – The Commerce Department reported Tuesday that orders for durable goods fell 0.5% in April. Durable goods are long lasting manufactured goods from U.S. Factories. This could be a sign of effects of the strong dollar making out goods more expensive overseas.

Pending home sales at 9 year high – The National Association of Realtors said Thursday that its index of pending home sales climbed in April to the highest level in 9 years. April marked the fourth straight month of increases of homes under contract. With such low inventory it was feared that the number of homes sold would begin to cool. That has not materialized. Homes are selling at a pace in which unsold homes on the market is still decreasing. The number of homes coming on the market has increased. They also forecasted that prices would rise 8% (annualized) in the second quarter after an annualized 6.2% rise in the first quarter. They also expect prices to stabilize in the third and fourth quarters, ending the year up 6% year over year.

U.S. new home sales climb 6.8% – The Commerce Department said Tuesday that new home sales increased at an annualized rate of 6.8% in April. The annual pace of new housing starts (construction permits) also jumped 20.2% from March. This was in line with a similar trend in California reported last week.

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Economic update for the week ending May 16, 2015

Stocks slightly higher for the week – Fears of higher interest rates were tempered after a disappointing retail sales report on Wednesday and a disappointing consumer confidence survey which was released on Friday. Early in the week stocks had suffered and bond interest rate yields had reached the highest levels in over a year before they began to drop after the reports showed that the economy was not bouncing back from a slow first quarter. Last year the economy bounced back very quickly in the second quarter after a harsh winter led to a poor first quarter. Experts had hoped that this year the economy would bounce back strongly as it did last year. That has not happened. Usually signs of slowing would cause the markets to drop, but right now interest rates are dominating investors’ concerns. It is widely felt that the Federal Reserve, who has already stated they would began to rise rates this year because growth has been so strong, may leave rates unchanged for a longer period of time because the economy is beginning to show signs of slowing. The Dow Jones Industrial Average closed the week at 18,272.56, up from 18,191.11 last week. The Nasdaq closed at 5,048.29, also up from 5,003.55 last Friday. The S&P 500 closed at 2,122.73, slightly higher than last Friday’s close of 2,116.10..

Bond yields were volatile this week – The 10 year U.S. Treasury Bond, which got as high as 2.30% early in the week closed the week at a 2.14% yield, almost unchanged from 2.16% last week. The 30 year U.S. Treasury Bond closed Friday yielding 2.93%, also unchanged from 2.90% last Friday. The 30 year treasury yield reached 3.10% on Wednesday. Yields dropped considerably on Friday following a weak consumer confidence report.

Mortgage Rates – The 30 year fixed rate ended the week around 4.00% for loans up to $417,000, and around 4.25% for loans over $417,000. The 15 year fixed rate loans are about 3.25% for loans up to $417,000, and around 3.50% for loans over $417,000. The 5 Year-ARM rates are around 3.00%. 1 Year-ARM mortgages are around 2.50%. Last week’s Freddie Mac Primary Mortgage Survey showed rates as follows: 30 year fixed rates at 3.85%. 15 year fixed at 3.07%. 5/1 YR ARM at 2.89% and 1 YR ARM at 2.48%.

Consumer confidence drops in May – The University of Michigan Surveys of Consumers Confidence reported that confidence fell in early May as consumers became increasingly convinced that there would be no quick and robust rebound following the disappointing 1st quarter growth rate. Consumer confidence is followed by experts because so much of the economy is dependent on consumer spending. Lower confidence results in consumers pulling back and spending less.

Retail sales in April fall short of expectations – Retail sales in April excluding autos and gas rose just 0.2%, falling well below the 0.6% rise expected by analysts. Economists expected consumers to be bouncing back after a slow winter as weather improved. That did not happen. They also expected consumers to take the money they saved on lower gas prices early in the year and spend it, which also did not materialize.

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Economic Update For Week Ending May 9, 2015

U.S. Economy adds 233,000 jobs in April – The Labor Department released the April jobs report that showed 233,000 non farm jobs were added to the economy in April. This was a sign of relief after a disappointing March, which was revised downward to just 85,000 jobs. March’s disappointing number has been blamed on weather and it is expected that job growth will continue at healthy levels. The unemployment rate fell slightly to 5.4%, it’s lowest level since May 2008. Wage growth, finally showing signs of picking up, was up 2.2% on an annual basis which was a little better than expected. Hiring was strong in many industries with the exception of energy. About 15,000 energy jobs were lost in April, which included oil drilling and coal mining. That brings energy related job losses to over 45,000 year to date as a result of low oil prices. Fortunately, other sectors did quite well. Business services added 62,000 jobs. Constriction and health care each added 45,000 jobs in April.

DOW rallies Friday after April Jobs Report – A jobs report that showed job gains bounced back after a disappointing March figure sparked the markets. The Dow jumped 279.46 on Friday after the report was released. The Dow Jones Industrial Average closed the week at 18,191.11, up from last week’s close of 18,024.06. The Nasdaq closed at 5,003.55, almost unchanged from 5,005.39 last Friday. The S&P 500 closed at 2,116.10, slightly higher than last Friday’s close of 2,108.29.

Bond yields stabilize this week after a sharp rise in April – The 10 year U.S. Treasury Bond closed the week at a 2.16% yield, up from 2.12% last week. The 30 year U.S. Treasury Bond closed Friday yielding 2.90%, up slightly from 2.82% last Friday.

Mortgage Rates – The 30 year fixed rates ended the week around 4% for loans up to $417,000, and around 4.25% for loans over $417,000. The 15 year fixed rate loans are about 3.25% for loans up to $417,000, higher loan amounts have rates that are around 3.5%. 5 Year-ARM rates are around 3% and 1 Year-ARM mortgages are around 2.5%. Last week’s Freddie Mac Primary Mortgage Survey showed 30 year fixed rates at 3.8%. 15 year fixed at 3.2%. 5/1 YR ARM at 2.9% and 1 YR ARM at 2.46%. This survey is done early in the week and reflects mostly the prior weeks rates.

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Economic update for the week ending March 28, 2015

Stocks drop sharply this week  – Recent volatility caused investors to leave equity markets and flock to cash. Funds that invest in stocks have seen $44 billion in outflows, or redemptions, year to date experts say. The week began with a sell off in tech stocks on fears that the huge run up may be a “bubble” as investors cashed in to take profits. Aircraft and airline stocks dropped following the crash of a Germainwings Airbus plane. They recovered slightly after it was revealed that it was an intentional act by the copilot, not a mechanical problem with the plane. Fed chairman, Janet Yellen, spooked the markets with a statement that a gradual return to a normal federal funds rate was likely and she expects conditions to warrant an increase sometime this year. This caused investors to once again fear higher rates.  Her comments the week before made them feel increases were further away than they feared. This reversed the huge increase in stock prices we saw the previous week. Markets lost just about all of their gains from the huge rally the previous week. The Dow Jones Industrial Average closed the week at 17,712.66. It was down sharply from 18,127.65 last Friday. The S&P 500 closed at 2,061.02, down from 2,108.10 last week. The NASDAQ closed at 4,891.22, down sharply from last week’s close of 5,026.42.

 

Treasury Bond yields fall sharply following Fed Statement – The 10 year Treasury bond closed the week at 1.95%. It was 1.93%last week. The 30 year treasury yield ended the week at 2.53%. It was 2.50% last Friday.

 

Mortgage Rates remain stable this week –  The 30 year fixed rates are around 3.75% for loans up to $417,000 and about 4.0% for loans over $417,000.  15 year fixed loans are about 3% for loans up to $417,000 and about 3.25% for higher loan amounts. The Freddie Mac Primary Mortgage Survey which comes out early in the week reported that the 30 year fixed mortgage rate average for the week was 3.69%, down from  3.78% last week. The 15 year fixed was 2.97, down from last week’s 3.06%. The 5 year ARM was 2.92% and the 1 year ARM was 2.46%.

 

 

New construction sales hits 7 year high – The Commerce Department reported that new home sales in February jumped 7.8% from January’s level, and were 24.8% higher than last February. For the month, new homes sold at a seasonally adjusted annual rate of 539,000, the highest level in 7 years. 

 

 

Consumer prices rise slightly in February – The consumer price index rose 0.2% in February after dropping 0.7% in January. Much of the increase was attributed to higher gasoline costs in February. Gasoline prices surged following a February 18 explosion at an Exxon Mobil refinery in Torrance California, and after Tesoro idled processing at its refinery in Martinez California.

 

 

Pending home sales Jump in February – The California Association of Realtors reported that pending home sales rose in February to record a 24.8% month over month increase from January’s Pending Home Sales Index reading. Year over year pending home sales were up 15.6% from the February 2014 reading. The yearly increase was the largest since April 2009′s reading, and the first double digit year over year gain since April 2012. In Southern California pending sales were up 25% from January and and 15.2% from Last February. This is a good sign for Home sales which have been down in number of sales for several years. Home sales are measured by closed sales not pending transactions, but this increase in pending transactions should equate to an increase in closed sales in the coming months.

 

 

Distressed sales continue to drop in number – The California Association of Realtors reported that combined distressed sales,  Foreclosures and short sales, made up 10.9% of all sales in February, down from 11.9% of sales in January. Last February distressed sales accounted for 15% of the total sales. This demonstrates the health of the Real estate market.

 

 

Home prices outpacing wages – Real Trac reported that home price appreciation is outpacing wage growth in 76% of the U.S. housing markets in the last 2 years. According to Real Trac the median national wage grew 1.3% from the second quarter of 2012 to the second quarter of 2014.  meanwhile, home prices increased 17% nationally during that same period. That is a 13:1 ratio. It should be noted that they also stated that housing prices nationally found a floor in the second quarter of 2012. 

 

Nationally home prices are below the peak in 2007, interest rates are lower and incomes are higher than 2007. The home affordability index shows homes are more affordable than in 2007. Many of our local markets have home prices much higher than they were at the peak in 2007, especially our higher priced areas. Our markets which include homes closer to the median price still have home prices below the 2007 levels, but they have moved up sharply since hitting bottom a few years ago. I’d think prices will continue to rise for at least another couple of years.

 

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Economic update for the week ending March 7, 2015

Stock markets end week with an across the board sell off on Friday, due to interest rate fears – A robust, better than expected jobs report had the opposite effect that one would expect. Once the report was announced the markets began a step sell off. The Dow lost 278.94 for the day. At one point it was down over 300 points! The report caused fear that the Federal Reserve would soon begin to raise short term interest rates. Currently the Federal Funds and Discount Rate set by the Fed are near 0% and have been there since 2009. To combat the financial crisis of 2008 former Fed Chairman, Ben Bernanke, lowered the rate 14 times in 10 months. With the Federal Funds Rate at or near 0% for so long investors fear what rate hikes will do to corporate profits, as these hikes will drive up short term interest rates, which will make corporate debt more expensive. Long term rates also rose which will affect mortgages as well. It is always fearful when The Federal Reserve changes their stance on monetary policy. Everyone knows rate increases are coming, but nobody knows how soon and how quickly the Fed will raise rates. The last rate hike was in 2006. With inflation so tame it is widely believed that rates will not rise too much or too quickly, but nobody really knows for sure. The Dow Jones Industrial Average closed the week at 17,856.78 down from 18,132.70 last Friday.. The S&P 500 closed at 2.071.26 this week, also down. It was 2,104.50 last Friday. The NASDAQ also fell, it closed at 4,927.37 which was just shy of last week’s 4,963.53. It was up over 5,000 for the first time since the tech bubble in 2000 at one point this week.

Treasury Bond yields are up sharply again this week – The 10 year Treasury bond closed the week at 2.25%, up .25% in one week from last week’s 2.00%. The 10 year was 1.68% on January 30. The 30 year treasury yield ended the week at 2.84% which was also up sharply from 2.50% last Friday. Rates soared after the release of the employment report on fears of a June rate hike by the Federal Reserve. Friday was the largest one day hike in rates since 2013 when the Fed announced that they were pulling back on the now ended bond and mortgage buying program known as Quantitative Easing 2 designed to bring down long term rates.

Mortgage Rates rose .25% yesterday – The 30 year fixed rates rose to 4% for loans up to $417,000 and well over 4.25% for loams over $417,000. It was the largest one day rise I can remember. The 15 year fixed rates also rose about ¼% yesterday. They are about 3.3% for loans up to $417,000 and about 3.5% for higher loan amounts. The Freddie Mac Primary Mortgage Survey which comes out early in the week reported that the 30 year fixed mortgage rate average for the week was 3.75% below last week’s 3.80%. The 15 year fixed was 3.03% about the same as last week’s 3.07%. Next week’s rates will be significantly higher due to yesterday’s rise.

U.S. employers added 295,000 jobs in February- Unemployment Rate drops to a post- Great Recession low of 5.5%. – the Labor Department released the February Jobs Report Friday which showed that employers added 295,000 jobs. February marked the 12th straight month of job gains above 200,000. Hourly wages were up just 3 cents an hour after jumping 13 cents in January. Year over year hourly wages were up only 2% which tempered the report. The number of jobs were expected to be in the 230,000 range. Immediately after the report was released stocks plunged, and interest rates rose sharply as fears of a rate hike by the Federal Reserve rocked the investment world. The Federal Reserve has kept short term rates at or near 0% in order to improve the job market. 12 months of job gains above 200,000 is the longest job growth streak since 1994-1995. The unemployment rate dropped from 5.7% to 5.5%, its lowest level since May 2008.

California Employers added 421,200 new workers last year – Numbers released yesterday by the state show that the number of new jobs gained last year was 47% higher than the 320,300 new jobs that were previously reported. The revision boosted California’s job growth to 3.2% last year, well above the nation’s 2.3% for 2014. The report released on Friday also showed that California employers added 67,300 jobs in January. The state’s unemployment rate in January dropped to 6.9% in January from 7.1% the previous month.

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Economic update for the month ending February 27, 2015

Stock markets post largest monthly gains since October 2011 in February – The Dow Jones Industrial Average closed the month at 18,132.70, up 5.6% from the 17,164.95 close on January 30. The S&P 500 closed the month at 2,104.50, up 5.5% from January’s close of 1,994.99. The NASDAQ closed up 7.1% for the month. It closed the month at 4,963.53, up from 4,635.24 on January 30.

Treasury Bond yields are up sharply for the month – The 10 year Treasury bond closed the month at 2.00% up sharply from 1.68% on January 30. The 30 year treasury yield was 2.50% which was also up from 2.25% on January 30. Rates dropped about 1/8% from the previous week after a downward revision in the GDP and a CPI report showing signs of deflation.

Mortgage Rates rise for the month, yet still below rates of one year ago – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.80%, up from 3.66% the last week of January. The 15 year fixed was 3.07%, also higher than 2.98% the last week of January. The 5 year ARM was 2.99%, up from 2.86% at the end of January. The 1 year ARM was 2.44%, also higher than 2.38% at the end of January. These rates were for loans up to $417,000. Higher loan amounts, also called jumbo loans, have rates about 1/4% higher. Most of our loans in our markets are jumbo sized loans which are running just above 4% on 30 year fixed loans, and around 3.375% on 15 year loans. Rates were higher last week, so at least they ended the month trending lower.

Consumer confidence falls slightly in February from an 11 year high in January, yet still at healthy level – The Thomson Reuters/ University of Michigan Survey reported that consumer sentiment measured 95.4 which was down from 98.1 in January, yet still better than 93.6 in December. This report is an important gage because it is a way to forecast consumer spending, an important driver of the economy.

Fourth quarter GDP growth is revised downward – Fourth quarter gross domestic product, the broadest measure of goods and services produced across the U.S., was revised to a 2.2% annual rate from 2.6%.

257,000 Non-farm jobs created in January in U.S. – January marked the 11th straight month of job gains above 200,000. This was the longest streak since 1994. In the past 3 months over 1 million jobs have been created, the most in 3 months since 1997. The unemployment rate increased 1% to 5.7% as 703,000 previously discouraged workers entered the workplace. Hourly wages were up 12 cents an hour which was a welcome relief after wages fell 5 cents an hour in December. Year over year hourly wages were up 2.2% which was better than inflation, but not the wage growth the Fed would like to see, or that we would see in a healthy recovery. The February Jobs data will be released next Friday.

U.S. pending home sales shows that home sales rose in January – The National Association of Realtors reported that its home sales index showed a sales increase of 1.7% in January from December. The index was up 8.4% from one year ago. It should be noted that closed sales were down 0.2% in January.

California home prices up, but number of sales down – Data quick reported that the January 2015 number of homes and condominiums sold in California were down 30.6% from the number of single family homes sold (closed) in December. The median price was up 6.5% compared to last January marking the 35th consecutive month of year over year price increases. The Southern California region had the median sales price up by 7.6% year over year. Foreclosure and short sales accounted for just about 6% of sales each. Foreclosure sales reached a peak of 56.7% of sales in February 2009. Cash sales accounted for 24.5% of all sales.

The California Association of Realtors also reported that the number of sales were down 3.9% in January from December, and down 2.7% from last January. The median price was $426,790, up 3.4% from last year. The Los Angeles region January median price was $441,600, up 4.3% from one year ago, and the number of sales dropped 4.3% from last January. These figures are from sales reported to MLS systems, while DataQuick data is from recorded sales.

Inflation tame in January – The Consumer Price Index showed a decrease of 0.7% in consumer prices in January. The year over year index showed prices down 0.1% for the past 12 month period. It was the first 12 month decline in the price index since October 2009. While deflation is a major risk to the economy, the Federal Reserve stated after the report was released that since the drop represented mostly energy costs which are down sharply. Without energy price increases were still well below the 2% inflation target they stated. After this report was released interest rates dropped. They had been about 1/8% higher last week. This report and the downgrade of the GDP fourth quarter report made investors feel that rate increases were not imminent.

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Economic update for the week ending February 21, 2015

Stocks hit record highs on positive worldwide economic news – The DOW Jones Industrial Average closed at a record high, the first of the year. The S&P 500 closed at its 3rd record high for the year, and the Nasdaq closed at a 15 year high. A Greek debt deal and rising oil prices, as well as more positive news both at home and abroad led stocks to rise. The Dow Jones Industrial Average closed the week at 18,140.44, a record high, up from 18,018.35 last week and up about 1,000 points from 17,164.95 three weeks ago. The S&P 500 closed the week at 2,110.30 well above last week’s close of 2,069.99. It was 1,994.99 three weeks ago. The Nasdaq closed at 4,955.97 also higher than 4,893.84 last Friday. The Nasdaq was 4,635.24 three weeks ago. It’s been an incredible month for stocks.
Treasury Bond yields continue to rise – The 10 year Treasury bond closed the week at 2.13%, up from last week’s close of 2.05%, and up from 1.68% three weeks ago. The 30 year treasury yield was 2.73%, up from last week’s 2.63% and up from 2.25% three weeks ago. Yields up 1/2% in 3 weeks is a significant rise. Unfortunately, as stocks rise so do interest rates.

Mortgage Rates continue to rise, up 1/2% this month – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.76% up from 3.69%, last week. The 15 year fixed was 3.05%, up from 2.99% last week. The 5 year ARM was 2.97%. The 1 year ARM was also up at 2.45%. The survey runs about a week behind. Rates rose as bond yields rose throughout the week. All rates rose this week. Conforming rates are close to 4% for 30 year terms and 3.25% for 15 year mortgages. Next week’s survey should reflect these higher rates. Jumbo size loans are about .25% higher than conforming. Rates have risen .5% this month so far!

Home prices up but number of sales down – Data quick reported that the January 2015 number of homes and condominiums sold in California were down 30.6% from the number of single family homes sold (closed) in December. The median price was up 6.5% compared to last January marking the 35th consecutive month of year over year price increases. The Southern California region had the median sales price up by 7.6% year over year. Foreclosure and short sales accounted for just about 6% of sales each. Foreclosure sales reached a peak of 56.7% of sales in February 2009. Cash sales accounted for 24.5% of all sales.

Normal operations set to resume at West Coast Ports – Dockworkers reached a tentative contract after a prolonged labor dispute stalled international trade at west coast seaports. Normal operations are to resume tonight, but it is unclear how long it will take to clear the backlog at the ports. The 5 year deal involves 29 ports from Seattle to San Diego. These ports cover about 1/4 of all U.S. International trade. Mostly from Asia.

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Economic update for the week ending February 13, 2015

Stock markets rebound and make up all loses for the year in the last two weeks and more! – The S&P closed at a record high. The DOW broke 18,000 for the first time since December and is approaching all time highs. The Nasdaq closed at a 15 year high. News this week focused on improving conditions in Europe, and rebounding oil prices. The week began with markets rising on a Greek debt deal. A cease fire in Ukraine which should help the Russian and European economies caused markets to rise sharply when announced. A better than expected German economic growth report caped the week. Rising oil prices also led oil stocks to rise, and was welcome relief to oil producing states here at home. The Dow Jones Industrial Average closed the week at 18,018.35, higher than last Friday’s close of 17,824.29, and significantly up from 17,164.95 two weeks ago. The S&P 500 closed the week at 2,069.99, a record high, which was up from 2,055.47 last week and up from 1,994.99 two weeks ago. The NASDAQ closed at 4,893.84, a 15 year high, and up from 4,744.40 last week and up from 4,635.24 two weeks ago. These are significant increases in just a two week period.

Treasury Bond yields continue to rise – The 10 year Treasury bond closed the week at 2.05%, up from last week’s close of 1.95%, and up from 1.68% two weeks ago. The 30 year treasury yield was 2.63% which was up from last week’s close of 2.51% and 2.25% two weeks ago. A .38% increase in two weeks is a significant rise. It seems that the drop in stocks and interest rates in January was an overreaction to a couple of financial data reports that were below expectations. One specifically was a poor fourth quarter GDP report, that shocked the markets. New positive data has now caused the markets to correct. Rates and stocks are back to December levels.
Mortgage Rates continue to rise- The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.69%, up from last week’s 3.59%. The 15 year fixed was 2.99%, up from 2.92% last week. The 5 year ARM was 2.97%, up from last week’s 2.82%. The 1 year ARM was also up at 2.42% from 2.39% last week. The survey runs about a week behind. Rates rose as bond yields rose throughout the week. All rates rose this week. The survey will be closer to 3.8% next week for a 30 year fixed. While still under 4% conforming and just slightly over 4% for jumbo sized 30 year mortgages rates are still great, but about 0.375% higher than near all times lows couple of weeks ago.

California Association of Realtors’ report home affordability up slightly in fourth quarter – The California Association of Realtors released it’s housing affordability index on Thursday. It showed that affordability improved in the fourth quarter of 2014 over the third quarter, but declined from the 4th quarter of 2013. The percentage of buyer’s that could afford to purchase a median priced home edged up to 31% in the fourth quarter of 2014 from 30% in the third quarter. It was 32% in the fourth quarter of 2013. Home buyers needed an income of $91,550 to qualify for a purchase of a $452,140 state-wide median priced home. As rates and prices rise I’d expect to see a decline in the first quarter 2015 affordability which won’t be released until May.

The real estate market has entered a very heated pace. Many homes that had been sitting at the end of last year and at the very beginning of this year have sold. Some listings have had an increased amount of multiple offers. We are seeing a period of dramatic price increases over sales prices late last year in all markets. The San Fernando and Canejo Valley’s have not seen the price increases that the Westside and City have seen. While up sharply, the Valley areas are just approaching the 2007 highs, while much of the Westside and City have neighborhoods that are 30% above the highs of 2007. I’d expect the valley areas to continue to catch up. For many reasons those areas, closer to the median price, dropped more and began to rise later than the higher priced areas. I hope we will see more homes listed as sellers begin to feel enticed by what homes are selling for. The only way to slow price increases is to have more homes on the market. In December there was only a 3.3 month supply of homes on the market. That’s near a record low. A 6 to 7 month supply is considered normal. We won’t see the market normalize until we see more inventory.

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Economic update for the week ending January 30, 2015

Stock markets end week down sharply. – The Federal Reserve Open Market Committee statement was more cautious than expected Thursday. This caused investors to wonder if the Fed was worried that economic weakness abroad was beginning to weaken our economy at home. It was widely felt that the Fed would begin soon to raise short term interest rates which have been near 0% since 2008. They had already ended a stimulus program of purchasing mortgage securities and treasury bonds which was designed to bring down long term rates. In Thursday’s statement they not only hinted that they would not be raising short term rates so quickly, they stated that they would continue to reinvest their bond and mortgage holdings as they matured. This caused investors to wonder about the strength of the economic expansion which drove stocks down and bond yields lower. The week also was mixed with many companies reporting profits above expectations and many below expectations. The Q4 GDP report released on Friday was also below expectations which contributed to a 251 point drop in the Dow on Friday. The Dow Jones Industrial Average closed the week at 17,164.95 which was down from last Friday’s close of 17,672.60. The S&P 500 closed the week at 1,994.99 down from 2,051.82 last Friday. The NASDAQ closed at 4,635.24 also down from 4,757.88 last week.

Treasury Bond yields remain at historic low levels – The 10 year Treasury bond closed the week at 1.68% which was down very slightly from 1.81% last week. The 30 year treasury yield was 2.25% which was down from last week’s close of 2.38%. The cautious Fed statement, and the lower than expected GDP report caused investors to leave sell stocks and purchase bonds which drove rates down.

Mortgage Rates remain near historic lows – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.66% about the same as last week’s 3.63%. The 15 year fixed was 2.98%, which was down from 2.93% last week. The 5 year ARM was 2.86% The 1 year ARM was 2.38%. Rates dropped with stocks on Friday. Jumbo size loans have rates slightly higher yet still under 4% for a 30 year fixed, and about 3.25% on a 15 year fixed.

Consumer confidence reaches highest level in the past decade. The Thomson Reuters/ University of Michigan Survey reported that consumer optimism reached the highest level in the past decade in the January 2015 survey. Consumer sentiment measured 98.1, up from 93.6 in December. It was up 20.8% from the 81.1 measured last January 2014. January 2015 marked the highest consumer sentiment reading since it was 103.8 in January 2004. Consumers judged prospects for the national economy as the best in a decade, and half of all consumers expect that the economic expansion would continue for another 5 years, according to the survey. This report is an important gage because it is a way to forecast consumer spending, an important driver of the economy.

Fourth quarter GDP growth disappoints investors – Fourth quarter gross domestic product, the broadest measure of goods and services produced across the U.S., showed a growth rate of 2.6%. This was less than experts forecasted and roughly ½ of the third quarter’s robust pace of 5%. The total growth for the year in 2014 was 2.4%. Following a holiday season that saw the strongest consumer spending in years this figure pointed out the lack of strength in the current expansion after it looked as if the expansion was gaining serious momentum.

The California seasonally adjusted unemployment rate drops to 7% in December from 7.2% in November.- The state unemployment rate was 8.3% one year ago in December 2013. Although the California unemployment rate is well over the National rate, California was among the states with the fastest job growth in 2014.

This week did not yield the amount of new listings I would hope for at the end of January. Usually we see more listings as many people hold off moving during the holidays. The shockingly, historically low 3.3 month supply of homes on the market has created a situation where we are seeing a spike in prices. It’s unfortunate to not have enough homes on the market for buyers to buy. The amount of multiple offers have increased dramatically. Virtually every sale has multiple offers. Buyers don’t know how high to go and sellers don’t know whose offers to take. Make sure your buyers know that if they want to make sure a home will comp out they are not going to be able to buy. No home that sells in this market comps out! The sales that look too high now will look like good deals in 60 to 90 days, I would think. Hopefully we will see more sellers begin to put their homes on the market and prices won’t shoot up too quickly. It looked like this was happening last August, but that trend reversed in the third quarter. I wish I had better advice than if a buyer sees a home they like they need to jump on it and offer as high as they possibly can. Unfortunately, many buyers that don’t go high enough and lose homes would go higher for after it is too late. Sometimes there is just no way to know how high to go.

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Economic update for the week ending January 23, 2015

Stock markets up this week, yet still down for the month. – Markets dropped sharply Friday, with the Dow dropping 141 points after several companies reported lower than expected corporate earnings. This snapped a 4 day rise which included a triple digit gain on Thursday after the European Central Bank announced a stimulus program similar to The U. S. Federal Reserve’s bond buying program, which has now ended. It is feared that a slowing economy abroad may slow the economy here, so an European stimulus program was a welcome announcement. At one time on Thursday stocks, which have been down for 3 straight weeks, had made up all loses for the year, before dropping sharply Friday. Although, stocks ended a 3 week skid and had their first week of gains in 2015, they are still down for the year. The Dow Jones Industrial Average closed the week at 17,672.60 which was down from last Friday’s close of 17,511.57 The S&P 500 closed the week at 2,051.82 down from 2,019.42 last Friday. The NASDAQ closed at 4,757.88 also down from 4,634.38 last week.

Treasury Bond yields remain at historic low levels – The 10 year Treasury bond closed the week at 1.81% which was down very slightly from 1.83% last week. The 30 year treasury yield was 2.38% which was down from last week’s close of 2.44% Lower inflation news, and a flight to safety from stocks caused this drop.

Mortgage Rates remain near historic lows – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.63% about the same as last week’s 3.66%. The 15 year fixed was 2.93%, which was down from 2.98% last week. The 5 year ARM was 2.83% The 1 year ARM was 2.37%. Rates dropped with stocks on Friday. They were higher on Wednesday and Thursday. Jumbo rates are a little higher at just under 4% for a 30 year fixed, and about 3.25% on a 15 year fixed.

California home sales down sharply in 2014- The California Association of Realtors released it’s December home sales statistics. Statewide home sales were at an annualized rate of 366,000 units, down 2.9% from November’s annualized rate of 376,890. In 2014 there were 383,000 reported homes and condos sold which was down 7.6% from the 414,900 in 2013. So, even though the economy was better in 2014 than 2013, there were fewer sales. This is a distressing figure. With low numbers of homes on the market, and record numbers of multiple offers, nobody has an answer as to why more people are not putting their homes up for sale. As inventory levels continue to slide, they dropped from a 4.4 month supply in November to a 3.3 month supply in December. Prices are again beginning to rise. The median price of December was $452,570. December, usually not a month where we see a rise in prices, had an increase in the median price of 1.7% from November’s $444,830.
Los Angeles saw even better results with home sales numbers up sharply. There were 19.5% more homes sold than in November! This followed a drop of about 20% fewer sales in November than October, reversing a troubling trend. Sales in the Los Angeles region were down 0.8% for the year, so while still lower than 2013 the drop in sales were better than the state as a whole. The median price was up 7% in December to $464,650 from $434,070 in November. One year ago the L.A. Median price was $439,800, so prices were up 5.6% for 2014, after being down in November for the first monthly year over year decrease in a couple of years. It appears that November’s figures were just an abnormality. Perhaps escrows that were to close in November held over to December.

The number of homes on the market is distressing. Being down to a 3.3 month supply is a record low. A 6 to 7 month supply is considered a normal, healthy market. We were approaching a 6 month supply in August, but that reversed later in the year. This drives prices up, and lowers the number of sales, as their are just not enough homes available to meet buyer demand.

Nobody knows why more people are not putting their home on the market. Some reasons may be:
1. Not enough equity to sell and have a down payment to buy another. As prices rise this will cause an increase in sales. However, prices were higher in 2014 than 2013, yet there were fewer sales.
2. Sellers can no longer qualify, or feel they can not qualify for a home purchase. They feel they can not buy, so they will not sell. Qualifying standards are becoming easier so this should cause an increase. One thing that will limit this increase is the restrictions in the Dodd, Frank Financial Reform law which requires lenders to verify borrower’s incomes using tax returns or W2’s. This makes stated income loans difficult to get. Many self employed people write off so much that they are not able to show enough income to qualify. Many of them feel stuck in their homes and can not move because they got their loans when stated income loans were common, and now could no longer qualify for a home loan. They can’t buy or refinance to a lower rate. They have accepted staying in the home they bought when these loans were available.
4. In higher end markets people who have owned their homes for a long time have such high gains that they are not willing to sell because they would owe so much in taxes. They also feel stuck in their homes, and often decide not to move when they learn how much taxes they would owe. Prior to 1995 people could sell their personal residence and purchase another of equal or greater value and defer the gain, paying no taxes. This allowed homeowners to defer gains until they eventually sold and did not repurchase or died and the value stepped up. Back then the amount excluded from taxes was only $125,000 and only one time, but the repurchase deferment made no tax due when they sold because they bought another. When the law changed to the $250,000 per individual taxpayers and $500,000 per married joint filers the deferment was eliminated. It did not matter whether you bought another or not. People with larger gains must pay federal capital gains tax, the healthcare tax, and state income tax on the gain that exceeds the $250,000 or $500,000. It works out to at least one third of the taxable gain. This law really penalizes someone that has been a home a long time. People should consider selling once they have been in a home for 2 years and have made more than the $250,000 or $500,000 as any further gain will be taxable. Staying too long could cause people to become stuck in their home!
5. Hedge funds and institutional investors have bought up a lot of housing. Many homes were purchased by these investors and rented when prices were lower, especially foreclosures. These homes don’t look like they will be sold anytime soon.

I would expect, and the experts have predicted more sales in 2015 than 2014, but not a large increase. We are about 14% below the average amount of sales since this data began being collected in 1988. Considering the amount of new housing and the growing population that just does not make sense. With such low inventory levels and low interest rates we will see a surge in prices. There simply is not enough homes for sale to meet buyer demand. I’d buy now as waiting will price you out of where you are looking and you will have to move to a less expensive area.

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Economic update for the week ending January 17, 2015

Stock markets down for third straight week – Stocks had another volatile week with large daily swings. Retail holiday sales were up, yet below expectations. The World Bank forecasted global economic weakness for 2015. The Producer Price Index showed a second monthly drop, and oil continued to slide. Fortunately, stocks closed up on Friday to make up some of the week’s losses. The Dow Jones Industrial Average closed the week at 17,511.57 which was down from last Friday’s close of 17,737.36. The S&P 500 closed the week at 2,019.42 down from 2,044.81 last Friday. The NASDAQ closed at 4,634.38 also down from 4,704.07 last week.

Treasury Bond yields continue to drop – The 10 year Treasury bond closed the week at 1.83% which was down from 1.98% last week. The 30 year treasury yield was 2.44% which was down from last week’s close of 2.55%. Lower inflation news, and a flight to safety from stocks caused this drop.

Mortgage Rates drop again – near historic lows – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was down to 3.66% from last week’s 3.73%. The 15 year fixed was 2.98%, which was down from 3.05% last week. The 5 year ARM was 2.9% The 1 year ARM was 2.37%. Rates rose with stocks on Friday so today’s rates are about 1/8% higher than the survey rates. Jumbo rates are a little higher at just under 4% for a 30 year fixed, and about 3.25% for a 15 year fixed.

DataQuick shows prices and the number of sales up in California – DataQuick reported that 36,468 new and resale houses and condos closed in California in December. This number was up 23.8% from the 29,459 recorded in November. It was also up from 34,949 last December. This reverses a trend of fewer sales which included November’s shockingly low numbers. December’s sales were still 15% below the average number of December sales recorded in California since DataQuick began recording this data in 1988.
Foreclosed property sales accounted for 4.7% of the sales. That was down from 6.9% one year ago. Foreclosed home sales peaked at 58% of the homes sold in February 2009.
Short sales accounted for 6.3% of the sales. They were down from 10.3% of all sales in December 2013.
Cash purchases accounted for 23.8% of all sales. The monthly average for cash purchases dating back to 1988 is 16.7%.

DataQuick reports that the median price rose in December for its 34th consecutive month over same month yearly increase! – The median price paid for a home in California in December was $383,000. This was up 1.8% from November’s $381,000, and up 6.3% from last December’s $365,000 median price. In Los Angeles County the median price was $460,000 which was 7% higher than last December’s median price of $430,000. Our markets have prices well above the median price levels, but this data does show trends and comes from an official source who uses recorded sales.

The Producer Price Index shows prices fall .3% in December. – Inflation continues to tame as The Producer Price Index shows a decline in prices of .3% in December which was the largest drop since October 2011. December’s drop also followed a drop of .2% in November. For 2014 Producer Prices rose just 1.1%. The 12 month rise ending November 2014 was 1.4%. This shows that the inflation rate is continuing to drop. Much if this drop is due to falling gas prices. A broader measure of inflation which excludes food, energy, and trade services showed inflation up a very slight 0.1% in December after being flat in November. Experts expect that with retail sales prices and hourly earnings falling in December, both key inflationary measures, low inflation should keep the Federal Reserve from rising short term interest rates longer than previously expected. The Federal Funds Rate and Discount Rate set by the Fed have been near zero since December 2008. It was widely thought that short term interest rate increases would begin this summer.

Holiday sales post biggest increase since 2011, yet below expectations. – The National Association of Retailers reported that retail holiday sales for November and December rose 4.1% from last year. That makes 2014 holiday sales it’s largest increase in 3 years. They were expecting an increase closer to 5%. In another more optimistic report by Shopper Trak holiday sales were up by 4.6%, which was the largest yearly increase since 2005.

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Economic update January 2, 2015

Stock markets down from last week, but post 6th consecutive year of gains! Longest streak since the mid 1990’s – The Dow Jones Industrial Average closed the week at 17,832.99, down from 18,053.71 last week, but up from 16441.35 on January 2, 2014! The DOW Jones Industrial Average was up 7.5% for the year in 2014! The S&P 500 closed the week at 2058.20, down from last week’s close of 2088.77, but up from last January 2, 2014’s close of 1831.98. The S&P 500 was up 11.4% for the year for 2014. The NASDAQ closed at 4726.81, below last week’s close of 2088.77, and above last January 2, 2014’s close of 4,143.07. The Nasdaq gained 13.4% in 2014!
Treasury Bond yields drop in 2014! – The 10 year Treasury bond closed the week at 2.12% down from last week’s close of 2.25%. The 10 year treasury yield was 3% on January 2, 2014! The 30 year treasury yield was 2.69% down from last week’s close of 2.81%. The 30 year treasury yield was 3.92% last January 2, 2014! Mortgage rates follow bond rates.
Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.87% almost unchanged from last week’s 3.83%. The 30 year fixed survey average was 4.53% on January 2, 2014! This represents a drop of almost 3/4%! The 15 year fixed was 3.15%, slightly up from last week’s 3.10%. It was 3.55% last January 2! That’s a drop of almost 1/2%. The 5 year ARM was 3.01%, it was 3.05 last January 2. The 1 year ARM was 2.40%, and 2.56% last January 2. Rates dropped later in the week so next week’s survey should show slightly lower 30 and 15 year rates.
Gas prices end year down over $1.00 per gallon. – Oil closed at $52.81per barrel on January 2 2015 down from $95.76 January 2, 2014. Many parts of the country have gas prices under $2.00 per gallon. We are about $2.60 per gallon, due mostly to higher taxes, and also more expensive cleaner burning blends.

Low inflation causes other commodities to drop – The last consumer price index reading showed inflation in check at an annual increase of 1.2%. That has caused commodities which are used as a hedge against inflation to drop. For example gold closed Friday at $1189 an ounce down from January 2, 2014 when it was $1226, down about 4%. Silver closed Friday at $15.78 an ounce, also down sharply from $20.02 on January 2, 2014. A drop of over 20% for the year!

I will be doing a more complete year end report when final numbers are in for December. Employment reports for the U.S. will be out at the end of next week. The California jobs report will be available around the middle of the month. DataQuick will report home price and sale statistics in the second week of January, and the California Association of Realtors will release their market data the third week. Retail sales will be out in about 10 days. Inflation data will be out by the third week of January, as well consumer confidence readings. We will get a good year over year comparison when we have all the data.

I wish you a Happy, Healthy and Prosperous 2015!

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Economic update December 27, 2014

Stock markets reach record highs! DOW over 18,000! – The US stock markets closed at record highs! This was another great week of economic news. Highlighted by the best holiday sales in years, the highest consumer confidence rating in nearly 8 years, lower gas prices, an upgrade in the 3rd quarter GDP, and employment gains stocks reached record highs. The Dow Jones Industrial Average closed the week at 18,053.71up from last week’s close of 17,804.8. The S&P 500 closed Friday at 2088.77 up from last week’s close of 2,070.65. The NASDAQ closed at 4806.86 also above last week’s close of 4,765.38.

3rd Quarter GDP revised upward to a 5% increase! – The Commerce Department revised the July to September GDP figure up from 3.9% to 5%. This marked the best quarterly result since 2003.

Consumer confidence highest since January 2007! – The Thomas Reuters / University of Michigan Consumer Sentiment Index was 93.6 up from 88.8 in October. It was the highest reading since January 2007. The report cited better job and wage prospects, and lower gas prices as factors for optimism.

Holiday sales up sharply. Results beat expectations! – Master Card reported that holiday sales from the day after Thanksgiving to Christmas Eve were 5.5% higher than the same period last year. The National Association of Retailers project that sales for November and December will increase 4.1% from last year.

Treasury Bond yields rose – The 10 year Treasury bond closed the week at 2.25% up from 2.17% last week. The 30 year treasury yield was 2.81%, also up from 2.77% last week. It’s impressive that rates are holding so steady. Usually when the stock market moves up so sharply rates rise, as money is moved from bonds to stocks which drive yields up.

Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.83%, about the same as last week’s 3.8%. The 15 year fixed was 3.10%. It was 3.09% last week. The 5 year ARM was 3.01%. The 1 year ARM was 2.39%. Rates rose with stocks later in the week so next week’s rates will be closer to 4% for the 30 year and 3.25% for a 15 year fixed.

California Association of Realtors show prices stable but number of sales drop drastically. – The California Association of Realtors reported that the price paid for the median price home in California was $445,280 down 1.1% from October’s $450,270. This was up 5.8% from $423,090 in November 2013. The number of homes and condos sold was down 5.3% from October and down 3.4%% from November 2013.
The LA metro median price was $417,270 up 1.2% from $412,190 in October and up 5.2% from $396,790 in November 2013. The number of sales were down 21.2% from October and down 6.8% from November 2013. This is a disastrous figure and the only poor economic news reported this week. I think December and January’s sales numbers will improve as activity has picked up in the last couple of months after dropping off sharply in August and September. These figures are for closed escrows which reflect sales made about 30 to 60 days earlier.

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Economic update December 19, 2014

Stock markets post their biggest weekly increase in nearly two years to gain back last week’s largest decline in two years and more! – The US stock markets posted its largest weekly gain in over two years. The rally was attributed by investors to a statement by the Federal Reserve that they would be patient on raising interest rates, following a two day policy meeting. It was widely viewed that after so much positive economic news the Fed would be raising rates soon. Also higher than expected holiday sales, lower jobless claims, low inflation, and better than expected corporate earnings impacted the market. The Dow Jones Industrial Average closed the week at 17,804.8 up sharply from 17,280.83 last week. The S&P 500 closed Friday at 2,070.65 well above its close of 2,002.33 last Friday. The NASDAQ closed at 4,765.38 also sharply higher than last weeks close of 4,653.60.

Treasury Bond Rates were slightly higher– The 10 year Treasury bond closed the week at 2.17% which was higher than the 2.10% close last week. The 30 year treasury yield was 2.77% about the same as 2.75% last week. As The treasury yield is considered a benchmark rate as mortgages rates follow treasury trends.

Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.8% down from 3.93% last week. The 15 year fixed was 3.09% down from 3.20% last week. Rates rose with stock later in the week so next week’s rates will be closer to 4% for the 30 year and 3.25% for 15 year loans.

Consumer Prices drop in November- The Labor Department reported that the cost of living fell 0.3% in November. It marked the largest monthly drop since December 2008. The annual gain in consumer prices rose 1.3% in the last 12 months. This was well below the Federal Reserve’s inflation target rate. Much of this drop was attributed to the lowest gasoline prices since 2009.
California adds 90,000 jobs in November! – The state added 90,000 jobs in November. This was 3 times the monthly average over the last two years. California’s unemployment rate dipped to 7.2% in November. It was 8.4% one year ago. Every sector showed job gains for the month. The state has added 344,000 jobs in the past year.

DataQuick shows prices up but number of sales drop drastically. – DataQuick reported that 29,459 new and resale houses and condos closed in California in November. This number was down 20% from the 36,830 recorded in October, and down 11.9% from the 33,429 recorded in November 2013. Southern California had 15,643 recordings, down 18.8% from October. The southern California median price was up .5% to $412,000 from $410,000 in October. California as a whole showed a median price of $381,000, down .3% from October, but up 5.8% from last year. It was the 33rd consecutive month of year over year monthly increases. Obviously, we do not have many homes in our market at the median price level, but another report showed that the higher end markets are experiencing larger increases than those at the median price range levels. That is obvious in our higher end markets!

US Jobless Claims- The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that the labor market is continuing to gain strength. Initial claims dropped 6,000 to a seasonally adjusted 289,000 for the week ending December 13, according to the labor department.

It is still very busy out there! Let’s keep working. It is a unique holiday season and it looks like buyers are going to be looking throughout the month. It’s unlike any December I can ever remember!

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Economic update December 13, 2014

Stock markets post their biggest weekly decline in two years! – The US stock markets posted its largest weekly loss in two years ending seven straight weeks of gains. The International Energy Committee announced that oil demand is far below what was earlier estimated leading experts to believe that while the U.S. Economy appears strong the world wide economy may be weaker that expected. China reported that factory output fell which was another sign that worldwide demand for goods were stalling. US oil companies led with the largest losses as lower prices have cut into profits. The Dow Jones Industrial Average closed the week at 17,280.83 down sharply from last week’s close of 17,958.79. The S&P500 closed Friday at 2002.33 down from 2075.37 last Friday.The Nasdaq closed at 4653.60 also down sharply from last week’s 4780.76.
Oil prices – Crude oil dropped further this week following the International Energy Committee report of lower than expected worldwide demand for oil. Oil dropped below $60 per barrel for the first time since 2009. Oil prices have dropped 47% since June when the price was $107 per barrel.
Wholesale Prices drop – The Producer Price Index showed that wholesale prices dropped .2% in November. This was the second monthly decline in wholesale prices in the last 3 months. This information is gathered from The Labor Department who reported that wholesale inflation rate is up 1.4% year over year.
Treasury Bond Rates drop! – The 10 year treasury bond closed the week at 2.10% down from 2.31% last week. The 30 year treasury yield was 2.75% down from 2.97% last week. As investors pulled money from stocks, those funds were invested into bonds which drove yields down. The producer price index also showed a drop in wholesale prices. This was another reminder that inflation is tame which also pushes rates down. The treasury yield is considered a benchmark rate as mortgages rates follow treasury trends.
Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.93% up from 3.89% last week. The 15 year fixed was 3.20% up form 3.10% last week. The 5 year ARM was 2.94% and the 1 year ARM was 2.41%. These rates are the weekly average compiled and published in the middle of the week. Rates dropped with stocks dropping later in the week so next week’s numbers should be lower.
FNMA and Freddie Mac have dropped down payment requirements to 3%- They are now offering financing with loan to values as high as 97%. They have also eased up on credit scores, and reserve requirements in order to make home lending more available.
Retail Sales beat expectations- The November retail sales report showed that retail sales had increased .7% . Without falling gas prices the number would have even been much higher. The breakdown for major sectors were: Motor vehicles and parts + 1.7%. Building materials and supplies + 1.4%. Clothing and accessories + 1.2%. Electronics and appliances + .7%. Food services a d drinking establishments + .5%. Furniture and furnishings + .5%. General merchandise + .5%. Sporting goods, hobby, books, and music +.3%. Grocery stores +.3%. Gasoline stations -.8%.
Real estate sales are still holding up well. We have not seen the seasonal drop off in activity we would normally see in December. Inventory levels are down quite a bit from just 90 days ago and rates are down.

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December 6, 2014 week end economic update

Jobs – US economy adds 321,000 non farm jobs in November. The Highest single month of job gains since January 2012. The national unemployment rate remained unchanged at 5.8% from October as more workers entered the workforce. The unemployment rate was 7.2% one year ago. Year to date the economy has 2.6 million jobs which is the highest rate since 1999. There are still 9 million people unemployed which is down significantly from a record high of 15 million in 2009, yet still at a historically high level. Hourly wages were up 2.21% from one year ago at $24.66 per hour. Although not enough wages are up slightly above the inflation rate of just under 2%.
Among the jobs added the following sectors had the largest gains: Retail sales added 50,000 jobs. Healthcare added 29,000 jobs, up 261,000 year to date. Food services added 27,000 jobs, up 321,000 year to date. Construction added 20,000 jobs, up 213,000 year to date. Transportation added 17,000 jobs, up 143,000 year to date. Financial services added 20,000 jobs, up 114,000 year to date. Manufacturing added 28,000 jobs, up 171,000 year to date.
Another record breaking week for US stock indexes – The US stock markets posted their seventh straight week of gains with new highs. Job gains and Falling oil prices fueled another great week for investors. The Dow Jones Industrial Average closed the week at 17,958.79, above last weeks close of 17,828.24, The S&P 500 closed Friday at 2075.37, above last Friday’s close of 2057.56. The Nasdaq closed at 4780.76, below last weeks close of 4791.63.
Treasury Bond Rates – The 10 year treasury bond closed the week at 2.31%, up from 2.18% last week. The 30 year treasury yield was 2.97%, up from 2.89% last week.
Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.89% down from 3.97% last week. The 15 year fixed was 3.10%, down from 3.17% last week. The 5 year ARM was 2.94% and the 1 year ARM was 2.41%. These rates are the weekly average compiled and published in the middle of the week. Unfortunately, rates rose late in the week. The 30 year rate is close to 4% while the 15 year fixed is in the 3.3% range today.
November and December are usually months in which sales slow down. That’s not the case so far this year. Our sales have actually increased! For example, at the Sunset Strip office meeting where Peter Schwartz, the branch manager, announced that the office posted 12 sales during Thanksgiving week! Some of the escrow officers yesterday reported that openings were strong. This is a great sign. Sales have been running 14% below the 28 year monthly average over the past year. Maybe we will see that trend reverse in 2015. If you think the Real Estate Market was good this year wait until next year! It’s going to be significantly better!

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November 2014 Month End Economic Update

Another record breaking month for US stocks – The US stock markets posted their sixth straight week of gains with new highs. Dropping oil prices were the source of big news this week, and month. Lower energy prices are causing low inflation. Many experts predict that inflation will remain extremely tame for a long period of time partly as a result of OPEC’s decision to keep oil production at its current high level. The Dow Jones Industrial Average closed the week at 17,828.24 above last weeks close of 17,810.06 , and up from the October 31 close of 17,390.52. The S&P 500 closed Friday at 2057.56 below last Friday’s close of 2063.50, and up from October 31’s close of 2018.05. The Nasdaq closed at 4791.63 above last weeks close of 4712.97, and above last month’s close of 4630.74.

Consumer Price Index- The Bureau of Labor Statics reported that prices remained flat in October. The year over year CPI increase showed the inflation rate at 1.7%, well below the Federal Reserve’s target rate for a healthy economy. The Fed released its minutes on November 19 from its October meeting. In the minutes it cautioned of “evidence of a possible downward shift in long term inflation expectations.”

Treasury Bond Rates – The 10 year treasury bond closed the week at 2.18% below last week’s 2.31%. it began the month at 2.36%. The 30 year treasury yield was 2.89% Friday, down from last week’s 3.02% and well below 3.07% at the start of November.

Low Inflation – The US Consumer Price Index showed the year over year inflation rate at just 1.7%, well below the Federal Reserve’s target rate. Europe and Asia are also experiencing very low inflation. This is causing worldwide rates to drop. Our rates are well below comparable time period securities of other countries, holding rates low and causing treasuries with longer terms to drop in rate. These directly affect mortgage rates. Much of this low inflation is due to dropping energy costs as oil prices have plummeted.

Oil prices- In the past few months the price of a barrel of oil has dropped from over $100 per barrel to under $70 per barrel. The cost at the pump has dropped on average 88 cents a gallon since July to a US average of $2.82. California prices are a little higher. This brings gas prices to the lowest levels since 2009.

Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.97% . The 15 year fixed was 3.17% .

US jobs – In October employers added 214,000 jobs and the unemployment rate was 5.8%. The November figures will be released at the end of next week.

California jobs – California gained 41,500 non-farm jobs in October. The California unemployment rate remained unchanged at 7.3% . November figures will be released in the 3rd week of December.

California Association of Realtors – The LA region had a median price of $477,000, down 1.6% below September’s $486,030 and up 6.8% from the $447,130 one year ago. There was a 3.3 month supply in October 2013. It must be noted that CAR figures do not include sales that were not reported to a MLS system. CAR figures for November will be out around the 3rd week of December.

Pending home sales were up in October – CAR reported their Pending Home Sale Index last week. Pending home sales in October were up 2% from September. This was the second straight month of rising pending sales which is an indicator that the November sales figures will show an increase as these transactions close.

Consumer Confidence – Consumer confidence rose to a 7 year high according to the Thomson Reuters/University of Michigan index. This was fueled by dropping gas prices, increases in employment, and rising stock prices. It also led to increases in projections in the holiday retail sales expectations.

New home sales rise- The Commerce Department reported that US new home sales in October rose 0.7% from September.

I have seen a good pickup in activity. It seems that the real estate market has picked up at a time of year that it usually slows down. Inventory levels have dropped after increasing throughout the year. This is causing more multiple offers. We are also seeing homes that sat for a while beginning to sell. Some with multiple offers after not seeing an offer for several weeks! I would not be surprised to see prices surge in the near future! I am sure that lower interest rates are having an impact. It now looks like rates may remain low for longer than expected. Every expert had expected them to rise. Now that gas prices have plummeted and inflation has been so tame the expectations are for rates to remain low!

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Economic update for the week ending November 22, 2014

Another record breaking week for US stocks – The US stock markets posted their fifth straight week of gains with new highs, buoyed by positive economic news from Europe and China, and positive job gains at home. The Dow Jones Industrial Average closed the week at 17,810.06 , up from last weeks close of 17,634.74. The S&P 500 closed Friday at 2063.50, up from last Friday’s close of 2039.82. The Nasdaq closed at 4712.97, above last weeks close of 4688.54. The People’s Bank of China made a surprise interest rate cut on Friday, its first cut in 2 years. Mario Draghi, the president of the European Central bank said that the central bank is prepared to step up efforts to give the Eurozone a much needed boost. Both of these announcement led to gains in worldwide markets.

Consumer Price Index- The Bureau of Labor Statics reported that prices remained flat in October. The year over year CPI increase showed the inflation rate at 1.7%, well below the Federal Reserve’s target rate for a healthy economy. The Fed released its minutes on November 19 from its October meeting. In the minutes it cautioned of “evidence of a possible downward shift in long term inflation expectations.”

Treasury Bond Rates – Yield Curve Flattens to a 2 year low – The 10 year treasury bond closed the week at 2.31% almost unchanged from last Friday’s close of 2.32%. The 30 year treasury yield (rate) was 3.02%, down slightly from last week’s 3.04%. The yield curve between the 2 year treasury and the 30 year treasury, which is the difference between the rates (spread), reached a 2 year low with a spread of 2.51%. it was 3.639% on November 20, 2013. This is due to inflation being below the Federal Reserve’s target rate. Expectations of inflation push up long term rates, low inflation pulls them down. US bond yields are lower than many foreign countries making them very enticing to foreign investors. For example our 10 bond year yields 1.54% more than German 10 year bonds.

Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 3.99% down from 4.01% last week. The 15 year fixed was also down at 3.17% from 3.2% last week.

California gains 41,500 non-farm jobs – The California Employment Development Department reported that non-farm payrolls increased in October by 41,500 jobs. This figure eclipsed the September gain of 14,200 jobs and was way above expectations, yet the California unemployment rate remained unchanged at 7.3% . California recorded the highest monthly job gains in the country in October. The total job gains, according to the EDD, since the recovery began in February 2010 has been 1,446,600. The year over year increase was 319,500 jobs, a 2.1% increase. Of that increase Professional and business services posted the largest numerical increase adding 106,000 jobs, up 4.5%. Construction posted the largest percentage increase of 5.3% for the year, adding 34,000 jobs. Financial activities was the only sector to lose jobs and showed 4,700 fewer jobs than one year ago, a 0.6% decrease.

California Association of Realtors – CAR released its October sales figures last week. They stated that despite the lowest mortgage rates in 18 months sales in October remained unchanged from September. October sales were down 1.9% from the number of sales in October 2013 marking one full year in which the number of sales were below 400,000 units. The Median price decreased by 2.3% in October to $450,620 from September’s $461,370. The median price is the point in which half the homes sell for more and half the homes sell for less. They also reported that the higher priced markets remained stronger than other markets. Inventory levels slipped to a 3.8 month supply from a 4.2 month supply in September. There was a 3.3 month supply in October 2013. It must be noted that CAR figures do not include sales that were not reported to a MLS system.

Lower rates have led to more buyer demand. It seems like the number of multiple offer situations have increased. I would not be surprised to see month over month prices to show an increase after being flat the past few months. It takes a while for escrows to close so I am looking for this increase to be reported in the December and January closings. We will wait and see!

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ECONOMIC UPDATE FOR THE WEEK ENDING NOVEMBER 14, 2014

Stock Market – Stocks again hit all-time highs this week rising on higher than expected retail sales data, lower gas prices, employment gains, higher consumer confidence readings, and better than expected third quarter numbers in Europe. The Dow Jones Industrial Average closed the week at 17634.74, up from last weeks close of 17,573.93. The S&P 500 closed at 2039.82 up from last Friday’s close of 2031.92. The Nasdaq closed at 4688.54, well above last weeks close of 4632.53. The Dow and S&P continued to hit all-time highs several times this week while the Nasdaq is at a 14 ½ year high!

Treasury Bond Rates – The 10 year treasury bond closed the week at 2.32% unchanged from last Friday’s close. The 10 year treasury was higher during the week, rising to as high as 2.4%, but dropped back on Thursday and Friday. Long term home mortgage rates follow bond rates, so this 10 year rate is considered a benchmark rate.

Mortgage Rates – The Freddy Mac Primary Mortgage Survey reported that the 30 year fixed mortgage rate average for the week was 4.01% just about unchanged from last week which was 4.02%. The 15 year fixed was also level at 3.2% from 3.21% last week.

Home Sales – DataQuick reported that the number of statewide home sales were up 1.4% in October from September, and up 1% from October 2013. Although slight, it marked the second consequent month of year over year increases. The October number of sales were down 14.1% below the average October dating back to DataQuick’s figures beginning in 1988. Investors accounted for 23.6% of all sales, the lowest rate since 2010. Short Sales accounted for 6.1% of sales, just above the 6.0% last month and down from 10.3% last October. The Southern California region saw monthly home sales drop 0.4% from September and 4.4% from last October to a 3 year low. The Southern California region showed the number sales in October 17.7% below the average October dating back to 1988. Most of the reduction in sales was accounted for in areas at or below the median price level like Riverside and San Bernardino County not Los Angeles. Unlike The California Association Of Realtors figures which are based on Realtor member’s reported sales , DataQuick uses recorded sales from county recorders.

Prices – DataQuick reported that the California Median price paid for a home was $382,000, down 1.8% from $389,000 September, yet up 7% from October 2013 when the median price was $357,000. This was the 32nd consecutive month of year over year increases. The Southern California median price dropped 0.7% from September’s median price to $410,000. That was up 6.8% from October 2013. The median price is the point in which half the homes sell for more, half the homes sell for less. It is a good economic indicator, but does not represented of any particular home or area.

Retail Sales – The Commerce Department reported that US retail sales increased .3% in September beating analysts’ expectations of a .2% rise. The commerce Department added that “ falling gas prices, increased employment, consumer optimism caused sales to beat estimates”. Experts expect retail sales this holiday season to increase by 4.2% from last year. Retailers make as much as 40% of their revenue in the last few months of the year.

Consumer Confidence – The Thomas Reuters / University of Michigan final October reading on consumer sentiment was 86.9, up from 84.6 in September. It was the highest reading since July 2007. This is a good indicator on consumer spending in the near future. It is certainly a good sign for home sales.

Fannie Mae – reported that confidence in home selling environment hit a 7 year high. Doug Duncan, the Vice president and chief economist for Fannie Mae said “consumers are growing more optimistic about the housing market in the face of broader improvement in consumer sentiment”. He further stated that he expects more sales and an even healthier housing market in 2015.

While I agree the Real Estate market is very good, we are 14% below the average number of sales monthly from data collected over the past 26 years. If anything we should be over those numbers as there is so many more single family attached and detached homes and a growing population. At some point sales are going to increase significantly. Fannie Mae spoke about this briefly, as indicated above. They are expecting to see an increase in sales in 2105. Forecasts from other experts should be out soon. The bottom line is: if you think it’s good now, just think how much better it could be if sales were at levels that are considered normal?

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ECONOMIC UPDATE FOR THE WEEK ENDING November 8, 2014

Jobs – On Friday November 7, the Labor Department released the October Jobs Report. The National Unemployment Rate dropped to 5.8% from 5.9% in September. It was the lowest unemployment level since July 2008. It showed that U.S. Employers added 214,000 jobs in October. That marked the 49th straight month of job gains. If you exclude public sector jobs the number of months of private sector job gains is 56 months. Thomas Parez, the Secretary of Labor reported that the private sector has created 10.6 million private sector jobs in the last 56 months. Among the job gains in October: food services added 42,000, retail added 27,000, manufacturing added 15,000, and construction added 12,000. Wage growth was a little better than September raising 3 cents an hour after being flat in September. Overall wages were up 2% from October of 2013, which is just above the 1.7% inflation rate for the same period. This is not nearly enough to make up ground lost during the great recession. The 214,000 job gain number was lower than the upward revised number of 256,000 September gain number and below expectations, but still considered solid. There have been over 200,000 jobs gained for 9 straight months which is the second best period in history, ranking only behind the 19 month streak from 1993 to 1995.

The Fed – Fed chairperson, Janet Yellen weighed in after the jobs report and said that “the Fed is striving to clearly communicate its intentions on interest rates in order to minimize surprises that could disrupt the financial markets.” She said that she “expects the Fed’s first increase of interest rates to be in mid-2015, as the US is finally emerging from the shadows of the great rescission.” Obviously, this is intended to give a timetable on rate increases.

Stock Market – Stocks again closed at all-time highs rising on higher than expected corporate profits, solid job gains, and election results, which are thought to be more business friendly. (this is not my opinion of election results. I have no opinion either way!) The Dow Jones Industrial Average closed the week at 17,573.93, up from last weeks close of 17,390.52! The S&P 500 closed at 2031.92 up from last Friday’s close of 2018.05 and the Nasdaq closed at 4632.53, just over last weeks close of 4630.74. The Dow and S&P are at all-time highs while the Nasdaq is at a 14 ½ year high!

Treasury Bond Rates – The 10 year treasury bond closed the week at 2.32% down very slightly from last weeks close of 2.35%. Long term home mortgage rates follow bond rates, so this 10 year rate is considered a benchmark rate.

Mortgage Rates – Freddy Mac reported that the 30 year fixed mortgage rate average for the week was up slightly from 3.98% last week to 4.02% this week. The 15 year fixed was also up to 3.21% from 3.13 % last week.

Freddie Mac and Fannie Mae Profits – Mortgage giants Fannie and Freddy announced that they would be paying a 3rd quarter profit dividend to the US Treasury of $6.8 billion. This brings the total paid to $225.5 billion since the US take over in 2008, which resulted in $188 billion in aid to keep the companies afloat. In the 2012 election there was much talk about how to sell off Fannie and Freddie or get the Treasury out of the mortgage business. This was when the treasury was close to breaking even. Now that they have made a huge profit, expect this to be a topic of conversation, as former stockholders are suing the government feeling they got taken advantage of.

Housing Affordability Holds Steady – The California Association of Realtors reported yesterday that lower rates and more moderate home price gains helped keep affordability in check in the 3rd quarter. Home buyers needed a minimum annual combined income of $94,960 to qualify for a purchase of the statewide median priced single family home of $467,700. This was up only slightly from the $93,560 needed for the $457,140 median priced single family home in the 2nd quarter.

Santa Monica voters voted down a proposal to raise the Santa Monica City documentary transfer tax on home sales over $1,000,000 from $3 per $1,000 to $9 per $1,000 for the portion of the sale exceeding the $1,000,000. I am glad to see this was overwhelmingly rejected by voters. There is talk in the LA City Council of putting a similar measure on the ballot in LA.

Just a reminder, Veteran’s Day will be celebrated on Tuesday next week, not Monday. Banks, title, escrow , and the county recorder will be closed. Make sure your clients plan their close and move accordingly.

We are seeing an uptick in open escrows over the last couple of weeks. At the same time I am hearing that showings on homes that are even slightly overpriced have slowed down. It’s odd to have homes priced right receiving multiple offers, while homes just slightly high are not being shown. Pricing which was not as critical in the past few years seems more critical now than ever! I don’t really have a good read on this, as it has not been long enough to determine a pattern. One thing for sure, if you want low interest rates the next few months may be your last opportunity to buy or refinance. The Fed has told us this. When it finally begins sinking in I would not be surprised to see a flurry of activity!

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Economic Update October 31, 2014

October turned out to be a fantastic month! We kicked off the month on a somewhat rocky start as Ebola fears struck our country and rattled the markets. As the month progressed, we had positive jobs news as initial jobless claims have fallen to pre-recession levels and the 248,000 gain in payrolls followed an 180,000 increase in August that was bigger than previously estimated. The pickup in hiring this month also showed employers are gaining confidence. Retail Sales reported higher than expected. Corporate profits for the third quarter also came in above expectations. All in all it was a great month!

The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite are all significantly higher this week. The forty-fourth trading week of 2014 comes to a close with the S&P 500, NASDAQ composite and Dow Jones all higher.
The S&P 500 is now up about 9% for the year. No, that’s not the 30% gain we saw in 2013, but it’s still very solid. The Nasdaq is up nearly 11% for the year, and the Dow is 4.5% higher. This October rebound has been so sweet that the Dow hit a new intraday record Friday morning, and the Nasdaq topped its September high (its best level since the 2000 Dot-Com boom).
U.S. stocks hit new highs, erase big October losses. The Dow Jones industrial average ended up 195.10 points, 1.1%, to 17,390.52 — its highest close since Aug. 19, when it finished at 17,279.74. It was up 585.52 from its close of 16,805 last Friday. The Standard & Poor’s 500 added 23.40 points, 1.2%, to close at 2018.05 — its highest close since Aug. 18, when it finished at 2011.36. It was up 53.47 from last Friday’s close of 1865.58. The Nasdaq composite index ended at a 14 1/2-year high, gaining 64.60 points, 1.4%, to close at 4630.74! It was up 200.49 from last Friday’s close of 4483.72.
U.S. 10 year Treasury Bonds yields slightly edged up this week. The 10 year treasury bond yield closed up Friday at 2.35%, from 2.29% last Friday.

Real gross domestic product increased at an annual rate of 3.5 percent in the third quarter of 2014. In the second quarter, real GDP increased 4.6 percent. Combined with the strong 4.6 percent showing in Q2, the six-month average of 4.05 percent is the best half-year performance of the recovery. Even including the 2.1 percent annual rate of decrease for Q1, growth over the past full year was better than the average since the recession bottomed out in mid-2009. Net exports were one of the biggest contributors to growth in the quarter. Net exports, which had been a negative factor in the otherwise strong second quarter, accounted for 1.32 percentage points of growth—more than a third of overall GDP growth for Q3.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.3 percent in the third quarter, compared with an increase of 2.0 percent in the second quarter. Personal income increased $22.7 billion, or 0.2 percent, and disposable personal income increased $15.7 billion, or 0.1 percent, in September, according to the Bureau of Economic Analysis. The third-quarter increase in wages and salaries is a welcome sign for the labor market. U.S. consumer spending did fall for the first time in eight months in September, but a rise in consumer sentiment to more than a seven-year high this month indicated economic growth would remain on solid ground.

A price index for consumer spending increased 0.1 percent after slipping 0.1 percent in August. In the 12 months through September, the personal consumption expenditures (PCE) price index rose 1.4 percent for a second straight month. Excluding food and energy, prices rose 0.1 percent for a third consecutive month. The so-called core PCE price index increased 1.5 percent in the 12 months through September.
Fed Ends ‘Quantitative Easing’ due to an Improving Labor Market. In conclusion of the Fed meeting this week, the Fed has concluded its asset-purchasing program due to an improving labor market. Here’s what QE3 has meant to investors and the economy. After spending trillions of dollars on bond purchases since the end of the Great Recession — to keep interest rates low to boost spending, lending, and investments — the Federal Reserve ended its stimulus program known as quantitative easing. The central bank’s decision to stop buying billions of dollars of Treasury and mortgage-related bonds each month comes as the U.S. economy has shown signs of recent improvement. U.S. gross domestic product grew an impressive 4.6% last quarter. And while growth dropped at the start of this year, thanks to an unusually bad winter, the economy expanded at annual pace of 4.5% and 3.5% in the second half of 2013. Meanwhile, employers have added an average of 227,000 jobs this year and the unemployment rate rests at a post-recession low of 5.9%. It was at 7.8% in September 2012, when this round of quantitative easing, known as QE3, began.
Even with QE over, the Fed is unlikely to start raising short-term interest rates until next year, at the earliest. In part due to the strengthening dollar and weakening foreign economies, inflation has failed to pick up despite the Fed’s unprecedented easy monetary policy. And there remains a decent bit of slack in the labor market. For instance, there are still a large number of Americans who’ve been unemployed for 27 weeks or longer (almost 3 million), and the labor-force participation rate has continued its decade long decline. Even the participation rate of those between 25 to 54 is lower than it was pre-recession.
Case-Shriller: Housing Price Gains Slow For 8th Straight Month. In 2013 and early 2014, the market experienced a seven-month streak of double-digit annual price increases. But price gains have been steadily slowing since December. The Standard & Poor’s/Case-Shiller 20-City Index of home prices rose 5.6% from August 2013, S&P said. That’s down from a 6.7% gain in July and well below the double-digit annual increases seen in most of 2013 and earlier this year. While prices are still climbing on a year-over-year basis — up 6.8% in Los Angeles — the numbers reflect a market that is plateauing as credit remains tight, home buyers back away from new higher price points and sellers begin to lower their expectations.
Home prices, especially in coastal California markets, have returned to levels that are unaffordable for most households, and a slowdown in prices, coupled with stronger job and income growth, could give more would-be buyers time to catch up. Still, prices here remain 18% below their peak in 2006, leaving some homeowners holding little or no equity in their homes.
The slowdown in price growth is beginning to have an impact on the market. The number of homes sold in the six-county Southland grew in September for the first time in a year.
Average 30-year mortgage rate just shy of 4%. The 30-Year Fixed Mortgage Rate is at 3.98% compared to 3.92% last week and 4.19% last year. Since April, the 30-year fixed rate has plummeted nearly 50 basis points. The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point. The 15-year fixed-rate average ticked up slightly to 3.13%. It was 3.08% a week ago and 3.24 percent a year ago. The 15-year fixed rate has declined almost 40 basis points the past six months. Hybrid adjustable rate mortgages were up as well. The five-year ARM average 2.94% up from last week at 2.91%. The fee was steady at 0.5 point. For a one-year ARM, the average rate edged up to 2.43% from to 2.41% last week. The fee held at 0.4 point.

Applications for “re-fi’s” jumped 23% in the week ended Oct. 17 — reaching their highest level since November 2013, according to the Mortgage Bankers Association. But refinance applications fell 7% in the latest week, ended Oct. 24.

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Economic Update for Week Ending 10/24/14

US stocks have best week in nearly 2 years!! After the turbulence in the market last week, U.S. stocks had their best week in nearly two years. Markets were helped by strong quarterly earnings from Microsoft and other big U.S. companies and positive housing data. The Dow Jones industrial average closed the week at 16,805.41, up 425 points from last Friday’s close of 16,380.41. The Standard & Poor’s 500 index closed Friday at 1,964.58, up 77.82 points from last Friday’s close of 1,886.76. The Nasdaq composite rose 30.92 points today or 0.7 percent, to 4,483.72, but was still down 74.42 points from last Friday’s close 4,558.14. The S&P 500 rose 4.1 percent for the week, its biggest gain since January 2013. But volatility can go both ways. Just as the market jumped sharply this week, it plunged just as sharply last week. The index is still down 0.4 percent for October. Profits for companies in the Standard & Poor’s 500-stock index are up 5.6 percent from a year ago this earnings season, according to FactSet. That growth is better than the 4.6 percent increase the market was expecting.
U.S. 10 year Treasury Bonds yields slightly edged up this week. The 10 year treasury bond yield closed up Friday at 2.29%, from 2.22% last Friday.

Mortgage giant Freddy Mac’s weekly Mortgage rate survey showed slightly lower rates. The 30 Year Fixed Mortgage Rate was at 3.92% compared to 3.97% last week and 4.19% last year. Since April, the 30-year fixed rate has plummeted nearly 50 basis points. The 15-year fixed-rate average dropped to 3.1%. It was 3.18% a week ago and 3.24 percent a year ago. The 15-year fixed rate has declined almost 40 basis points the past six months. Hybrid adjustable rate mortgages were mixed. The five-year ARM average edged down to 2.91%. It was 2.92% a week ago and 3% a year ago. The one-year ARM average rose to 2.41%. It was 2.38% a week ago. The 30 year loan rate rose a little today and yesterday. The 30 year fixed is just over 4% and the 15 year fixed if around 3.25%. Both rates are at near their lowest levels of 2014 and are just slightly above early in the week which was the best in 72 weeks.
Freddie Mac October U.S. Economic and Housing Market Outlook. Freddie Mac released this week its U.S. Economic and Housing Market Outlook for October, showing the four key ingredients labor, income, fixed investment and trust required to lift the economy toward robust sustainable growth are still lacking the necessary thrust.
As interest rates have dipped lower, demand for home loans has surged. Mortgage applications jumped nearly 12% in the week ended Oct. 17 compared with a week prior, according to the Mortgage Bankers Association, a lenders trade group. The increase is driven by homeowners seeking to refinance existing mortgages. Refinancing applications shot up 23% in the week through Oct. 17—the largest weekly leap since January 2012after a 5.6 percent advance the week before —though they remain 44% lower than in June 2013 while the purchase applications measure dropped 4.6 percent. The refinancing gauge jumped 23.3 percent. For borrowers hoping to pull the trigger on a refinance, this spate of the lowest mortgage rates since June 2013 is a pretty good opportunity. Homeowners now have more equity as well due to rising prices. Many who could not refinance in the last few years are able now that they can meet the equity requirements.
FED MEETING Next Week: Investors will increasingly turn their focus to next week’s Federal Reserve policy meeting for confirmation that the U.S. central bank is ending its bond-buying program. That policy has kept interest rates extremely low to support an economic recovery. It has also helped drive gains in stock prices as investors sought higher returns. Recent mixed signals about the strength of the U.S. recovery have prompted speculation that the Fed might let the program continue for longer than previously anticipated. On Oct. 29 the Federal Reserve is expected to wrap up what was once an $85-billion monthly bond-buying initiative – the third installment of quantitative easing, or QE3. The effort was part of an unprecedented two-pronged global central bank blitz that flooded financial markets with trillions of newly minted dollars and brought interest rates to near zero in an effort to keep the financial system from freezing up.
Home Remodeling Index in U.S. at Record High. According to the NAHB, the National Association of Home Builders’ Remodeling Market Index (RMI) reclaimed the high-water mark of 57 in the third quarter of 2014. This is the sixth consecutive quarter for an RMI reading above 50. An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling
CAR (California Association of Realtors) Data Released September Report this week showed that California home sales remained steady in September. Closed escrow sales of existing, single-family homes in California totaled a seasonally adjusted annualized rate of 396,440 units in September. Sales in September inched up 0.4 percent from a revised 394,700 in August and were down 4.2 percent from 413,850 in September 2013. September marked the 11th straight month that sales were below the 400,000 level and the 14th straight month that sales have declined on a year-over-year basis. The median price of an existing, single-family detached California home fell 4 percent from August’s median price of $480,280 to $460,940 in September but was up 7.6 percent from the revised $428,290 recorded in September 2013. The statewide median home price has been higher on a year-over-year basis for more than two years.
CPI Data Released. The Labor Department said on Wednesday that its Consumer Price Index edged up 0.1 percent in September as a rise in food and shelter costs offset a broad decline in energy prices. The index dropped 0.2 percent in August, and economists had expected a flat reading for September. In the 12 months through September, the index rose 1.7 percent after a similar gain in August. The Fed targets 2 percent inflation and tracks the index. Inflation has waned in recent months after increasing in the second quarter. This is due in part to slower economic growth in Asia, and Europe, as well as a strengthening dollar, which reduces import price pressures.
It is strange how quickly the outlook in the economy can change! Last week a panic was setting in about the economy, and this week everything looked “rosy”. Let’s see what that translates to in home sales. I am optimistic!

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Economic Update for 10/18/14

DataQuick reported that the number of home sales in California rose for the first time in a year in September, as cooling prices and a strong economy encouraged buyers. The median sales price for new and existing houses and condominiums was $389,000 last month, down 1% from $393,000 in August but up 9.6% from $355,000 last September. It was the 31st straight month of annual increases but only the third straight month that percentage gains were not double-digit. There were 36,316 homes sold in the state, up 0.8 percent from 36,027 sales a year earlier. It was the first annual number of sales increase since September 2013 and the strongest September in five years.

U.S. Producer Prices unexpectedly Edge Down 0.1% in September. Reflecting lower prices for food and energy, the Labor Department released a report on Wednesday showing an unexpected drop in U.S. producer prices in the month of September. The Labor Department said its producer price index for final demand edged down by 0.1% in September after coming in unchanged in August. The modest drop by the index came as a surprise to economists, who had expected prices to inch up by 0.1%. The unexpected drop in producer prices was partly due to a continued decline in energy prices, which fell by 0.7% in September after tumbling by 1.5 percent in August. Food prices also showed another notable decrease, sliding by 0.7% after falling by 0.5% in the previous month. Excluding the drops in food and energy prices, core producer prices came in unchanged in September after inching up by 0.1 percent in August. Core prices had been expected to tick up by another 0.1 percent. Retail sales down for first time this year. Sales at clothing retailers decreased 1.2%. Producer prices rose 1.6% in September from a year earlier. Prices rose 1.8% for the 12-month period through August and 1.7% in July. Energy prices at the producer level fell a seasonally adjusted 0.7% in September. Gasoline prices dropped 2.6%, the largest decline in 18 months. Food prices at the producer level decreased 0.7%, matching the largest decline in a year. Prices of meat fell 4.5%, the largest monthly drop in more than four years. The producer-price index for personal consumption, which most closely matches the consumer-price index, edged down 0.2% in September and was up 1.9% from one year earlier. The Labor Department is set to report on the consumer-price index for September next Wednesday. This created fears of deflation, which is very dangerous to the economy. We saw what dropping home prices did. Just imagine prices dropping on everything. It was thought that years of Fed stimulus would cause inflation, this has not materialized.

Bonds yields continued to drop this week with the 10 year treasury bond yield closed Friday at 2.22% it was 2.31% last Friday. It was a wild week in the bond market as the rate on a 10 Year Treasury plunged Wednesday morning to 1.86% — its lowest level since May 2013. This was after the Producer Price Report was released, and fears of deflation caused a wide stock sell off and a flight to bonds.. The yield moved back above 2% later on during the day and rose sharply Friday when 3rd quarter corporate profits began to come in better than expected which caused a rally in stocks, and pulled money from the bonds. The 10 year Treasury Bond was at an all-time low of 1.39% from July 2012

Freddie Mac reported that rates dropped this week in its survey released on Thursday October 16. At that time the average rate for a 30 year fixed was 3.97%, down from 4.12% a week earlier. The 15 year was 3.15% down from 3.30% last week. The 5 year ARM was 2.92% down from 3.05% last week, and the 1 year ARM was 2.42%, down from 2.63% last week. We got many loans locked in on Thursday at 3.75% before the stock market rallied on Friday and rates climbed to end the week just over 4%. Unfortunately rates across the board rose on Friday, yet are still slightly lower than last Friday after being dramatically lower Wednesday and Thursday. Rarely do you see a ¼% fluctuation in rates in a day! FNMA and Freddie Mac also announced that they will lower down payment minimums to 3%, offering 97% loan to value loans beginning next week to enable more buyers to buy. These will be on loans up to 625,500.

Meanwhile, mortgage applications soared last week, according to the latest data from the Mortgage Bankers Association. The drop in interest rates has corresponded with an increase in mortgage loan application volume. MBA’s Refinance Index rose 5% from the previous week. It was the first increase in three weeks, MBA said. It might be time to look at refinancing. Many who could not refinance before because they did not have enough equity can refinance now that prices have increased. Look into this, it may save you money for as long as you own your home!

The stock market capped a turbulent week with a big gain Friday, after 6 straight days of loses. Friday higher than expected third quarter corporate profits began to be released. The Dow closed up 263.17, or 1.6% for the day to close the week at 16,380.41. It was 16,544 last Friday. The Nasdaq closed up 41.05, up 1% to 4558.14. it was 4267.24 last Friday. The S&P 500 closed up 24, up 1.3% to 1886.76. It was 1906.13 last Friday. Corporate profits across the board were higher than expected. This renewed investor confidence after days of gloomy economic news, which included: Ebola – Health care workers in Texas had been the first 2 to ever contact Ebola in the United States. One traveled by plane with a fever after she called the CDC who told her it would be all right. The same hospital that sent the first Ebola victim to die in the US home and later admitted and attempted treating him is where these health care workers worked. It was learned that they did not have adequate protection. Sadly, rain gear from Big 5 would have provided more protection. This sparked off a widespread fear, as this worker came into contact with many people in many states. Federal Reserve Chairwoman Janet Yellen gave a speech in Boston in which she stated that she was concerned about income inequality in America. One quote she made was, “The past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority,” She did not say what if anything should be done about it, but investors found it a strange topic for the Fed. It should be noted that investors are among those with the significant income and wealth gains. Deep loses in markets in Europe and Asia on poor economic news, despite their central banks efforts to stimulate their economies. Producer Price Index drop which sparked fears of deflation, after poor retail sales were reported last week. The question was what more can the Fed do? One example of the last few weeks is the S&P 500 which is now 6% below its high on September 18, and it was down over 7% on Thursday.

United States unemployment claims declined to its lowest level since April 2000. The U.S. Department of Labor reported on Thursday that jobless claims dropped 23,000 to a seasonally adjusted 264,000. The drop was in contrary to the consensus estimate of a rise to 293,000.

California unemployment dipped to 7.3% in September. This was unusual because the state actually lost 9,800 jobs from the previous month. It is thought that it cannot be all baby boomers retiring and leaving the work force. Let’s see what the unemployment figure comes in at for October.

Industrial production rose 1% in September from August levels and is now up 4.3% year-over-year. The jump was the biggest increase in three years. Capacity utilization rose to 79.3% in the month. Economists had expected a production to rise 0.4%.

We are seeing the real estate market heat up again after stalling a little in August. Our closings have been down the last few weeks, yet our openings have really picked up. I expect closings which run about a month or two behind to pick up in the coming weeks. I would not be surprised to see a month over month price increase and a year over year price increase back up to the 10% level in November when these homes begin to close! I’d also expect to see the number of sales to continue to climb!

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Economic Update for Week Ending October 11, 2014

Mortgage Rates were down for the 3rd straight week. The average rate for a 30-year fixed-rate mortgage fell to 4.12% in the week that ended Oct. 9, hitting the lowest rate in a month and close to the lowest level in 2014, from the prior week’s reading of 4.19%, according to Thursdays report. Fixed mortgage rates were down on a week filled with bleak forward projections from the Federal Reserve and concern over growth in Europe. A year ago, the 30-year rate was at 4.23%. Rates have fallen even though the Federal Reserve has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end next month. Yet Fed officials have indicated that they will continue to hold shorter-term rates at near-zero levels until there are signs of rising inflation.

Friday we say the 30-year fixed-rate mortgage breach the psychologically-important rate of 4%, falling to 3.96%, down 12 basis points from a week earlier.

The average rate for the 15-year fixed-rate mortgage fell to 3.30% in the latest week from 3.36% in the prior week. Bond yields around the world fell on Thursday, with the US 10-year Treasury bond falling to 2.28%, its lowest level since June 2013. Meanwhile, the rate for a 5-year Treasury-indexed hybrid adjustable-rate mortgage also declined to 3.05% from 3.06%. The rate for a 1-year Treasury-indexed ARM remained at 2.42%.

The benchmark US 10 year Treasury Bond yields dropped this week closing Friday at 2.31% . It was 2.45% last Friday. Home mortgage rates follow bond yields.

Internationally, yields also fell as investors are now getting negative yields from German bonds out to three years, while the Swiss 10-year bond fell to within about 4 basis points, or 0.04%, of its all-time record low of 0.36% touched back in 2012.

Earlier this year economic leaders such as Federal Reserve Chairwoman Janet Yellen and Robert Shiller said they expected low rates (the average rate for a 30-year fixed-rate mortgage in 2014 has been far less than a 20-year mean of more than 6%), to serve as a stimulus to home buying. But 2014’s home sales have been hit by poor weather, a low number of homes available for sale and tight credit.

The major stock market indexes saw their worst week since May 2012. The Dow dropped 465.96 points ending the week down 2.7% closing Friday at 16544.10. The S&P500 closed Friday at 1906.13 down 61.77 points which was a 3.1% drop. The Nasdaq dropped 4.5% this week to 4267.24, off 199.39 points.

Stocks dropped again on Friday after markets had a rough day on Thursday, with the Dow falling more than 300 points Thursday and each of major stock indexes giving up all of their gains from Wednesday’s huge rally while bond yields fell around the world as the US 10-year Treasury bond fell to its lowest level in 15 months.
Fears of the world wide economy sparked this sell off. Thursday, Germany, which has been a bright spot in the European economy reported its largest monthly drop in exports in 5 years. The International Monetary Fund downgraded its forecast for global growth as well on Thursday. Also on Thursday the US had its first death of an Ebola victim and a police officer that had come into contact with him had checked into a Texas hospital with Ebola like symptoms. Later in the evening it was determined that he did not have Ebola.

The price of crude oil also fell further, moving below $86 a barrel for the first time since 2012, as the broader commodity sector continues to get crushed. Precious metals including gold and silver rallied on Thursday, with both gaining more than 1.5%.
The sector that came under serious pressure on Thursday was energy stocks, particularly coal stocks, with a number of companies in that sector falling more than 6%. Leading losses for coal stocks was Walter Energy, which lost more than 11%, as that company has seen its market cap fall from more than $1 billion at the beginning of the year to about $100 million now, a more than 90% decline.
Initial Jobless Claims Fall To Lowest Level Since February 2006. The weekly report on initial jobless claims beat expectations. Expectations were for claims to rise slightly to 295,000, up from last week’s 287,000. Last week’s report was revised up slightly to 288,000. The 4-week moving average of claims fell to 287,750, down 7,250 from last week, the lowest 4-week moving average since February 4, 2006. ” The downward trend continues; expect strong payrolls in Q4,” said Ian Shepherdson at Pantheon Macro following the report. “With the pace of firings exceptionally low, and surveys signaling robust hiring, we have to expect very strong payroll growth in Q4, at least.” Claims are unlikely to fall much further, but equally we see no reason to expect a near-term rebound.

C.A.R. Releases Its 2015 California Housing Market Forecast. The 2015 California Housing Market Forecast by the CAR said to expect an increase in existing home salesof 5.8 percent next year to reach 402,500 units, up from the projected 2014 sales figure of 380,500 homes sold, according to a statement from the association.
Sales in 2014 will be down 8.2 percent from the 414,300 existing single-family homes sold in 2013. “We are transitioning into a slower price appreciation environment,” said Appleton-Young. The real estate scene going forward may seem dull, but is characteristic of a market that hit a tipping point after the rocket ride of 2013. Median home prices rose 27.5 percent. Investors swooped in, scooping up foreclosure stock. Inventory was crimped. Cash was king.
That dynamic has significantly impacted housing affordability in California and forced some buyers to delay their home purchase, association president Kevin Brown said. Any slow-down in price gains will help would-be buyers get into the market. “I don’t think it’s out of the question that within two years from now we could see some declines or retreats in terms of prices,” Appleton-Young said.
California’s housing market will see fewer investors and a return to traditional home buyers as home sales rise modestly and prices flatten out in 2015. The average for 30-year fixed mortgage interest rates will rise only slightly to 4.5 percent but will still remain at historically low levels. The California median home price is forecast to increase 5.2 percentto $478,700 in 2015, following a projected 11.8 percent increase in 2014 to $455,000. This is the slowest rate of price appreciation in four years.

“With the U.S. economy expected to grow more robustly than it has in the past five years and housing inventory continuing to improve, California housing sales and prices will see a modest upward trend in 2015,” said CAR VP and Chief Economist Leslie Appleton-Young. “While the Fed will likely end its quantitative easing program by the end of this year, it has had minimal impact on interest rates, which should only inch up slightly and remain low throughout 2015. This should help moderate the decline in housing affordability we saw occur over the past two years.”

C.A.R.’s forecast projects growth in the U.S. Gross Domestic Product of 3 percent in 2015, after a projected gain of 2.2 percent in 2014. With nonfarm job growth of 2.2 percent in California, the state’s unemployment rate should decrease to 5.8 percent in 2015 from 6.2 percent in 2014 and 7.4 percent in 2013.

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Economic Update for Week Ending October 4, 2014

Hiring Surge Pushes U.S. Jobless Rate to Six-Year Low. We kicked off October with great jobs news, initial jobless claims that have fallen to pre-recession levels. The September Job report was released today, a powerful surge in hiring pushed unemployment to a six-year low of 5.9 percent in September as the U.S. labor market showed renewed vigor. The unemployment rate fell to 5.9% from 6.1%, lowest since July 2008, the Labor Department said Friday.

The 248,000 gain in payrolls followed an 180,000 increase in August that was bigger than previously estimated, the Labor Department reported in Washington. Revisions boosted the job count by 69,000 over the previous two months. The jobless rate fell from 6.1 percent to the lowest level since July 2008. Private employers added 213,000 jobs in September, payroll processor ADP released. Economists had estimated that ADP would report 207,000 private-sector job additions. They predicted the Labor Department’s report Friday would show 215,000 payroll gains by businesses and governments, this month’s numbers surpassed predictions for the second month in a row. Trade, transportation and utilities led the job gains, with 38,000. Manufacturers added 35,000, and professional and business services, 29,000.

The pickup in hiring shows employers are gaining confidence the expansion in the world’s biggest economy will be sustained, surviving slowdowns in Europe and Asia that have hurt global stock markets. Stagnant wage growth kept the report from being universally upbeat, giving Federal Reserve policy maker’s reason to be patient in removing monetary stimulus.

The report today showed the U.S. trade deficit shrank in August to the lowest level in seven months as exports edged up to a record. The gap decreased 0.5 percent to $40.1 billion, the smallest since January, from $40.3 billion in July, the Commerce Department reported.

The narrowing deficit prompted economists at Barclays PLC in New York to boost their tracking estimate of third-quarter gross domestic product to a 3.3 percent gain at an annualized rate from 2.7 percent.

The stock market had a rocky start this week with fears that Ebola could impact US economy. U.S. equities had fallen sharply into negative territory Wednesday as investors fret over mixed economic data, unrest in Hong Kong and the first diagnosed Ebola case in the U.S. Among the most notable losers are the airlines: United Airlines, Delta Airlines and American Airlines were all down 2.7% or more on fears that the first diagnosed Ebola case in the U.S. will lead to fewer consumers wanting to travel.

Toward the end of the week, stocks quickly ticked up as fears settled and with the positive unemployment data released Friday. The stock market staged a strong rally Friday — with the Dow up more than 200 points back above the 17,000 level — after the government’s monthly employment report showed a rebounding jobs market.

U.S. stocks surged on Friday, with the Dow industrials jumping 200-plus points, after a better-than-projected payrolls report bolstered a positive view of the U.S. economy.

The Dow Jones industrial average added 208.64 points, 1.2%, to end at 17,009.69. The Standard & Poor’s 500 index gained 21.73 points, 1.1%, to finish at 1967.90. The tech-laden Nasdaq composite index rose 45.43 points, 1%, to close at 4475.62.

The rally extended an impressive turnaround that started midday Thursday, when the Dow went from a 130-point loss to end the day down just 4 points as concerns eased about the global economy and protests in Hong Kong.

Stocks surged at the opening bell following news the labor market rebounded sharply in September as employers added 248,000 jobs, the second-largest gain for any month this year.

Average US 30-Year Mortgage Rate at 4.19 Percent. Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year loan slipped to 4.19 percent from 4.20 percent last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, was unchanged at 3.36 percent.

The 30-year rate is down from 4.53 percent at the start of the year. Rates have fallen even though the Federal Reserve has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end next month.

Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.41 percent at midday Thursday, down sharply from 2.57 percent a week earlier. The decline in the 30-year rate comes after sales of existing homes fell in August. Investors retreated from real estate and first-time buyers remained scarce, according to a report last week from NAR. And fewer Americans signed contracts to buy homes in August, suggesting that sluggish sales could continue. The NAR said Monday, that its seasonally adjusted pending home sales index fell 1 percent.

The average rate on a five-year adjustable-rate mortgage fell to 3.06 percent from 3.08 percent. The fee rose to 0.5 point from 0.4 point a week ago. For a one-year ARM, theaverage rate dipped to 2.42 percent from 2.43 percent. The fee held at 0.4 point.

The 10 year treasury bond yield ended the week at 2.45% down from 2.54% last week.

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Economic update for the week ending 9/27/2014

Average US rate on 30-year mortgage eases to 4.20 percent; 15-year loan at 3.36 percent.
Average long-term U.S. mortgage rates declined slightly this week, after marking their largest one-week gain of the year the previous week. Mortgage company Freddie Mac said Thursday that the nationwide average for a 30-year loan eased to 4.20 percent from 4.23 percent last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, slipped to 3.36 percent from 3.37 percent. At 4.20 percent, the rate on a 30-year mortgage is down from 4.53 percent at the start of the year. Rates have fallen even though the Federal Reserve has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end next month.

Fewer Americans bought homes in August, as investors retreated from real estate and first-time buyers remained scarce, data released Monday by the National Association of Realtors showed. The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point.

The average rate on a five-year adjustable-rate mortgage rose to 3.08 percent from 3.06 percent. The fee declined to 0.4 point from 0.5 point. For a one-year ARM, the average rate was unchanged at 2.43 percent. The fee held at 0.4 point.

California unemployment rate holds steady in August at 7.4 percent; state adds 44,200 nonfarm jobs.  California’s unemployment rate was unchanged for a third month, holding at 7.4 percent in August. The state added 44,200 nonfarm jobs during the month, bringing the total to 15.5 million, the California Employment Development Department reported.

 

Last month’s gains mean the state has added slightly more than 1.4 million jobs since February 2010, when the jobless number hit a peak of 12.4 percent. The national unemployment rate dropped to 6.1 percent.

In California, the construction sector posted the largest increase month over the month, adding 13,600 jobs. Manufacturing, financial activities, business services, education, health, leisure and government also added jobs in August. Trade, transportation and utilities, along with information, posted losses totaling 8,300 jobs for the month.

The state also reported that new and continuing unemployment claims are down. There were 411,005 people receiving unemployment checks last month, compared to 426,224 in July. Unemployment rates continue to vary greatly by region. Marin County has a statewide low jobless rate of 4.2 percent, while Imperial County has the highest unemployment rate at 25. 1 percent.

Overall, the number of unemployed Californians rose by 1,000 over the month to nearly 1.4 million. The total is 287,000 less than in August 2013.

Jobless claims rise but stay near pre-recession levels. The number of Americans filing new claims for unemployment benefits rose less than expected last week, suggesting an acceleration in job growth in September.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 293,000 for the week ended Sept. 20, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had forecast claims rising to 300,000 last week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,250 to 293,500.

Claims are hovering near their pre-recession levels, an indication that labor market conditions are tightening despite August’s sharp slowdown in job growth. The jobless claims report showed the number of people still receiving benefits after an initial week of aid edged up 7,000 to 2.44 million in the week ended Sept. 13.

The data for the so-called continuing claims covered the household survey week from which the unemployment rate for September will be calculated. Continuing claims fell 89,000 between the August and September survey weeks, suggesting some improvement in the unemployment rate. The jobless rate was at 6.1 percent in August.

Freddie Mac today released its newly updated Multi-Indicator Market Index showing the U.S. housing market struggling to keep stable momentum as housing prices continue to moderate and purchase applications fall. The slight decline in the national MiMi value this month appears to be broad-based, and not concentrated in a handful of state or metro markets.

 

They didn’t notice a large decline in any one market this month, but more of softening across the board. Even the MiMi top ranked state and metro markets all saw a slight decline except for Austin. But the real drag on the most market’s housing recovery continues to be the lack of purchase application activity. Even the hot housing markets in the northwest which are back in their stable range of housing activity are seeing their purchase application activity slow.

The one area where momentum hasn’t slowed is among the hardest hit markets. Places like Las Vegas, Miami, Chicago and Riverside, among others, are still showing double-digit yearly improvements, but that’s largely a reflection of significant gains in the local employment picture as well as a real improvement in borrowers making timely mortgage payments.

The stock market on Thursday posted its steepest drop in nearly two months, extending a volatile trading stretch on worries over Russian political tensions and the troubled launch of Apple’s latest iPhones.

 

Stocks fall this week across the board. The Dow closed this week at 17,113.15 down from last Friday’s close of  17,279.74.  The S&P closed lower this week at  1,982.85  down from last Friday’s close of 2,010.40. The Nasdaq finishes down this week as well closing at 4,512.19  down from last Friday’s close of 4,579.79. We saw a large drop on Thursday followed by a rebound Friday. Thursday’s drop was blamed on global tensions. Apple contributed to the drop, as they announced problems with their operating system, bending of their new phone, and that their cloud system was hacked.

 

Data Quick real estate news: In August there were 37,228 homes and condos sold in California according to public records . That was down 6% from 39,608 in July and down 12.5% from last August. The state wide median price was $393,000, up 3% from $392,000 in July and up 8.9% from last August. August marked the 30th consecutive month of month over month price increases.

Foreclosures made up 5.4% of all sales in August. That was down from 5.6% of all homes sold in July and down from 7.8% of homes sold  last August. Foreclosure sales peaked at 58.8% of all sales in February 2009.

Short sales accounted for 6% of all homes sold compared to 7.8% one year ago.

We are seeing a pick-up in our market place after some slowing in July and August.  I would not be surprised to see October’s numbers show a substantial increase on both the number of homes closed and the median price year over year increase from what we saw in August, as these homes begin to close.  Perhaps we won’t see an increase in the year over year number of sales, but we should see a much smaller year over year drop than we saw in August. The ultra-high end is “out of control”! We have seen sales 20% higher than just one year ago on some homes that have recently sold! There is no end in sight. 

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Economic Update for the Week Ending September 20, 2014

Average long-term U.S. mortgage rates rose this week, marking their largest one-week gain this year. Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year loan jumped to 4.23% from 4.12% last week. The average for a 15-year mortgage, a popular choice for people who are refinancing, rose to 3.37% from 3.26%.
At 4.23%, the rate on a 30-year mortgage is at its highest level since the week ended May 1, though it is still at a historically low level. Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note closed the week at 2.59% , up from 2.54% a week earlier.

The increase in the yield on the benchmark Treasury bond was stoked by speculation in financial markets that the Federal Reserve might abandon its nearly 6-year-old policy of keeping short-term rates at record lows. But at their meeting this week that ended Wednesday, Fed policymakers decided to keep the low rates, at least for a few more months.
Stocks jump up this week across the board. The Dow closed this week at 17,279.74 up from last Friday’s close of 16,987.51. The S&P closed higher this week at 2,010.40 up from last Friday’s close of 1,985.54. The Nasdaq finishes higher this week as well closing at 4,579.79 up from last Friday’s close of 4,567.60. This rise was due to higher than expected profits, good economic news, lower gas prices, a jump in consumer confidence and a stronger dollar. Unfortunately, when the stock market surges money comes out of safer investments like bonds and mortgage securities which forces interest rates higher. Stock market indexes are at or near record highs!

The Real Trends Housing Market Report for August 2014 data shows that housing sales decreased 5.2 percent from the same month a year ago. The annual rate of new and existing home sales for August 2014 was 6.002 million units from rate of 6.334 million in August 2013. Housing prices rose an average of 4.1 percent from August 2013, a slight decrease from the previous month. Price increases have now settled to a mid-single digit growth rate for the past four months.

Housing unit sales for August 2014 decreased 1.4 percent in the South, the best performance in all regions. Midwest unit sales were off 4.4 percent, the Western region saw sales decrease 5.6 percent and the Northeast saw sales units decrease by 13.8 percent.

The average price of homes sold in August 2014 in the Midwest region increased by 6.6 percent the best result in the nation. The Western region saw average prices increase 5.8 percent, average prices in the South were up 5.3 percent and the Northeast had an average price increase of 2.4 percent. The August housing data show that sluggishness in the general economy with lower than expected job growth, stagnant household income and tight credit conditions are taking the expected toll on housing sales,” said Steve Murray, editor of the REAL Trends Housing Market Report.

Rising prices have driven many investors from the market, and while foreign purchases remain strong, first time home buyers are still absent from the market. In fact, in many jurisdictions the percent of first time home buyers as a percent of all buyers remains significantly below the rate for prior years. Unless and until this is remedied, housing sales will likely remain flat to negative.

The California Employment Department reported Friday that The California Unemployment Rate stayed at 7.4% in August, unchanged from July despite the state adding 44,200 nonfarm jobs in August. The state has added 1.4 million Jobs since February 2010 when the jobless rate peaked at 12.4%

The California Association of Realtors Reported that the median price for a home increased 3.3% in August to $486,280 from $464,750 in July. They also reported that 394,280 housing units closed escrow in August down 9.3% from August 2013 when 434,910 housing units closed escrow. This marked the 13th straight month with a year over year decrease in the number of housing units closed. It also marked the 10th straight month that sales were under 400,000 units. Inventory levels of single family residences were up slightly to 4 month supply in August from a 3.8 month supply in July. A six month supply is considered normal.

We are seeing our market heat up again after slowing a little in August. Many of the homes that were sitting have sold. Our open escrows have increased in number. I would not be surprised to see the California Association of Realtors’ October closing numbers increase over the August numbers. Lets wait and see! Perhaps, we will top that 400,000 monthly unit barrier in October!

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Economic Update 9/12/14

U.S. retail sales move higher; consumer spirits rise. U.S. retail sales rose broadly in August and consumer sentiment hit a 14-month high in September, supporting expectations for sturdy economic growth in the third quarter. The data on Friday helped ease concerns about soft consumer spending, which had lagged other fairly upbeat economic data covering manufacturing, services and housing. Several big Wall Street firms bumped up their GDP growth forecasts on the news. The Commerce Department said retail sales, which account for a third of consumer spending, increased 0.6 percent last month after an upwardly revised 0.3 percent gain in July, as Americans stepped up purchases of automobiles and a range of other goods. The only decline was at gasoline stations, but that reflected declining prices at the pump that should free up income to support spending in the months ahead. In a sign of underlying strength, so-called core sales increased 0.4 percent in August. Core retail sales exclude purchases of automobiles, gasoline, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product.U.S. Treasury debt prices fell, while the dollar held near a six-year high against the yen on the data. U.S. stocks were trading lower as a new round of U.S. sanctions against Russia hit energy shares. August’s increase in core retail sales followed an upwardly revised 0.4 percent gain in July that helped put them 4.1 percent above their year-ago level. While that remains below a pre-recession pace of about 5.5 percent, it nevertheless bodes well for economic growth.
Economists said it was not clear whether the recent raft of positive data would prompt the Federal Reserve next week to signal it was moving a bit closer to raising interest rates. The Fed, which meets on Tuesday and Wednesday, has said it would likely wait a “considerable time” after ending a bond-buying program in October before hiking rates from near zero. “Retail sales were still somewhat weaker in the third quarter and recent labor market indicators have been somewhat less encouraging in August and September,” said Scott Anderson, chief economist at Bank of the West in San Francisco.

Average Mortgage Rates Rise Slightly this week, still near year lows. Average U.S. mortgage rates rose slightly this week but still remained near their lows for the year. Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year loan edged up to 4.12% from 4.10% last week, where it had stayed for three straight weeks. The average for a 15-year mortgage, a popular choice for people who are refinancing, rose to 3.26% from 3.24%.At 4.12%, the rate on a 30-year mortgage is down from 4.53% at the start of the year. Rates have fallen even though the Federal Reserve has been trimming its monthly mortgage and bond purchases, which are intended to keep long-term borrowing rates low.
The average rate for a standard 30-year fixed loan with a 20% down payment has not been above 4.15% since mid-June. Mortgage professionals said solid borrowers who are willing to pay 1% of the loan amount in upfront discount points can lock in 30-year fixed rates for less than 4%. The low rates and higher home prices have made it easier for some homeowners who missed the sub-4% rates in 2012 and early 2013 to refinance their home loans now. Of the new applications for mortgages last week, 57% were for refinance loans — the highest level since March, according to the Mortgage Bankers Assn. Today’s rates are about 4.25% as rates have risen this week.

The benchmark 10 year treasury bond yield closed the week at 2.62% up from 2.48% last Friday and 2.35% two weeks ago on August 29, 2014. It’s the highest level in 2 months.The recent rise in bond yields was bolstered Friday by a report showing that U.S. retail sales rose faster last month than economists forecast. That reinforced expectations that the Federal Reserve may start hiking interest rates sooner than expected. The central bank has nearly finished winding down its stimulus program and policy makers start a two-day meeting on Tuesday. The yield on the 10-year Treasury note has now climbed for seven straight days.

Stocks decline amid interest rate worries. Higher interest rates mean higher cost on debt which lowers profits.The Dow fell 61.49 points today and closed this week at 16,987.51, down from last Friday’s close of 17,137.36. The S&P closed lower this week at 1,985.54, down from last Friday’s close of 2,007.71. The Nasdaq closed down 24.21 points today. It closed the week at 4,567.60 slightly down from last Friday’s close of 4,582.90.

Banks Sweeten Jumbo Terms to Woo Borrowers. Instead of selling mortgages on the secondary market, large lenders are keeping them on their books and reaping the profits. That may lead to better terms for borrowers. The secondary market for jumbo mortgages—in which banks bundle and sell their mortgages as consolidated debt to investors—is doing worse than a year ago. But that may be good for borrowers, at least for now.
Only 2.3% of all jumbo mortgages originated in the first half of 2014 have been securitized, according to Inside Mortgage Finance, an industry newsletter. That’s a drop in the bucket compared with the peak of 49.3% in 2005. Now, instead of selling mortgages on the secondary market, large lenders are keeping them on their books and reaping the profits themselves. What’s more, lenders that don’t want to hold on to their mortgages are finding national and regional banks are eager to buy them, says Mathew Carson, a broker with First Capital Group in San Francisco.
A healthy secondary market will be necessary to sustain jumbo lending in the long run, especially as interest rates go up, the housing market fully recovers and the mortgage market grows to more normal dollar volume. The jumbo market right now is much smaller than pre-recession. Jumbo mortgage dollar volume was just $103 billion in the first six months of 2014, compared with $332 billion in the first six months of 2003, the biggest mortgage lending year on record, according to Inside Mortgage Finance.
Foreclosure Filings Rise Monthly, But Fall Annually. The number of foreclosure filings in the nation has increased month-over-month but declined year-over-year, according to RealtyTrac’s monthly U.S. Foreclosure Market Report for August 2014 released today.The RealtyTrac data showed that one in every 1,126 houses in the nation (a total of 116,193 properties) had a foreclosure filing during August. This number represented an increase of 7 percent from July but a decrease of 9 percent from August 2013. Foreclosure filings include default notices, scheduled auctions, and bank repossessions.
The number of foreclosure auctions scheduled in August increased by 1 percent year-over-year after 44 consecutive months of annual declines, according to RealtyTrac. Month-over-month, scheduled auctions declined by 1 percent in August. In judicial states, where the foreclosure process must pass through the courts, scheduled auctions increased by 5 percent year-over-year. In all, 51,192 foreclosure auctions were scheduled nationwide in August.

For the second consecutive month, foreclosure starts increased month-over-month, making a 12 percent jump from July to August, according to RealtyTrac. The number stayed flat year-over-year, however. The foreclosure process started on more than 55,000 properties in August nationwide. REO activity fell by 33 percent annually in August, marking the 21st consecutive month with a year-over-year decline in nationwide REO activity, according toRealtyTrac. REO activity did inch upward by 2 percent from July to August, however. In all, foreclosure led to the repossession of 26,343 properties by lenders in August.

GLOBAL MARKETS-Dollar heads for best run of gains in 17 years. The U.S. dollar headed for its ninth straight week of gains on Friday, some measure of how the economic fortunes of the United States and its major economic peers are diverging after six years of financial turmoil. A broad rise for the greenback was the main bet of most major investment houses this year but it has taken a very long run of relatively good U.S. numbers and a surge in concern over European and Japanese growth for the currency to deliver. Investors are convinced a Federal Reserve meeting next Wednesday will rubber-stamp a shift towards higher interest rates in 2015, as suggested by research from the U.S. central bank this week. That drove benchmark 10-year U.S. Treasury yields to their highest in over a month on Friday, while European stocks shrugged off weakness in Asia to inch higher. A 2 percent rise on the week took the U.S. currency to a six-year high of 107.39 yen. Against the euro it gained 0.2 percent on the week and was broadly flat on the day at 1.2921.

We are seeing an increase of activity. We have heard from many Rodeo agents that homes that were not selling got offers and sold in the last week. Interest rates have begun to rise and are now about 1/8% above their lows just a couple of weeks ago. This will probably start a new round of articles about higher rates and rates increasing further. This could motivate some people to buy before rates go up!

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Economic Update week ending 8/29/14

S&P 500 edges up to set new record; best month since February. U.S. stocks closed out a strong month on a quiet note on today, with the S&P 500 posting a modest gain to close at a new record as the latest positive data helped extend a rally that had been briefly threatened by overseas concerns.Since falling to a near three-month low on Aug. 7, the S&P 500 has risen in 12 of the past 16 sessions. It is also closed out its fourth straight weekly advance and sixth positive month of the past seven. Friday’s gains pushed the index to its latest record close of 2,003.37, its third finish above 2,000 this week.

The Dow closed higher the week at 17,098.45, up 97.23 points from last Friday’s close of 17,001.22. The S&P closed at 2,003.37, 14.97 points up from last Friday’s close of 1988.40. The Nasdaqfinishes strong this week closing at 4,580.27, up 41.72 points from last Friday’s close of 4,538.55.

Mortgage rates hold steady this week. Data released Thursday by Freddie Mac, the 30-year fixed-rate average was unchanged at 4.1 percent with an average 0.5 point. It was 4.51 percent a year ago. Since late June, the 30-year fixed rate hasn’t been above 4.14 percent or below 4.1 percent.
The 15-year fixed-rate average inched up to 3.25 percent with an average 0.6 point. It was 3.23 percent a week ago and 3.54 percent a year ago. The 15-year fixed rate has drifted between 3.27 and 3.22 since late June.
Hybrid adjustable rate mortgages were up slightly. The five-year ARM average ticked up to 2.97 percent with an average 0.5 point. It was 2.95 percent a week ago and 3.24 percent a year ago.The one-year ARM average edged up to 2.39 percent with an average 0.5 point. It was 2.38 percent a week ago.
Reports showed, existing home sales rose for the fourth consecutive month to an annualized pace of 5.15 million, the highest of the year. On the other hand, new home sales fell for the third consecutive month to an annualized rate of 412,000 units. Also, Case-Shiller confirmed the slowing in national house-price appreciation that has occurred in other metrics, with the seasonally-adjusted national index down 0.1 percent in June but on a year-over-year basis up a solid 6.2 percent.

Meanwhile, mortgage applications showed an uptick, according to the latest data from the Mortgage Bankers Association. The market composite index increased 2.8 percent. The refinance index rose 3 percent, while the purchase index grew 3 percent. The refinance share of mortgage activity accounted for 56 percent of all applications, its highest level since March.
The Treasury Department sold $93 billion in notes this week: $29 billion in two-year securities, $35 billion in five-year debt and $29 billion in seven-years. The amounts are unchanged from the July auctions of the maturities. The Treasury also sold $13 billion in two-year floating-rate notes at an Aug. 27 auction.

The Treasury Department’s $35 billion sale of five-year notes may draw a yield of 1.645 percent, according to the average forecast in a Bloomberg News survey of six of the Federal Reserve’s 22 primary dealers. The securities, which mature in August 2019, yielded 1.645 percent in pre-auction trading. Bids are due by 1 p.m. New York time. Last month’s sale of the notes yielded 1.72 percent, the most since April. The size of the offering is the same as at the past 47 auctions of five-year notes after peaking at $42 billion from November 2009 through April 2010. The July 20 offering’s bid-to-cover ratio, which gauges demand by comparing the amount bid with the amount offered, was 2.81, versus an average of 2.73 at the past 10 auctions.
The benchmark 10 year treasury bond yield fell this week to 2.35% from its close of 2.40% last Friday. It was 2.89% August 30, 2013 and rose to 3.05% when the market opened on September 3, 2013. Bond rates are at a 14 month low.
At Fed meeting, Federal Reserve Chairwoman, Yellen, said the Fed is in no hurry to raise interest rates even as the labor market is improving. Market participants are watching for hints as to when the Fed will reverse an easy-money stance that has fueled stocks’ rally to record levels. The timing of a Fed rate increase remains unclear. While the unemployment rate has steadily declined, other gauges of the job market are harder to assess and may reflect continued weakness. These include high levels of people who have been unemployed for more than six months, many people working part time who would like full-time jobs, and weak pay growth. Record-low short-term rates will likely remain appropriate for a “considerable time” after the Fed stops buying bonds to keep long-term rates down. The Fed’s bond buying is set to end this fall.

Jobless claims drop again near post-recession lows. Initial claims for unemployment benefits fell by 1,000 to a seasonally adjusted 298,000 in the week ended Aug. 23, the Labor Department said Thursday. That was just below forecasts by economists surveyed by The Wall Street Journal. Claims for the previous week were revised up slightly. Weekly applications for claims have been running around 300,000 in recent weeks, and have fallen below that level four times over the last six weeks. The last time first-time claims were regularly at this level was in early 2006, at the height of the last economic expansion. These are the latest sign of improvement for the labor market

California gains 27,700 jobs in July. California’s unemployment rate was unchanged at 7.4 percent in July, and nonfarm payroll jobs increased by 27,700 during the month for a total gain of 1,371,500 jobs since the recovery began in February 2010, according to data released by the California Employment Development Department. But, California has made steady progress in the introduction of renewable energy, such as wind and solar power and these progresses have created jobs for unemployed California citizens.

More locally, Los Angeles County lost jobs in July, according to the report. Many of those losses, however, were in the realm of education-related positions generally unfilled during the summer months. Los Angeles County’s biggest July decline was in government, which shed 38,700 jobs. Some 33,900 jobs disappeared in local government educational services, which accounted for 88 percent of the decline.

While it seemed quiet last week in some of the offices with a lot of people out of town to end the summer, somehow our escrow openings were up! It will be interesting to see what September brings. It looks like we could see a surge in activity as fewer people will be on vacation. Lower interest rates, more inventory, and better loan programs, have begun to spur more interest!

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Economic Update week ending 8/22/14

The annual Fed conference in Jackson Hole, Wyoming, took place this week. Federal Reserve Chairwoman, Yellen, said the Fed is in no hurry to raise interest rates even as the labor market is improving. Market participants are watching for hints as to when the Fed will reverse an easy-money stance that has fueled stocks’ rally to record levels. The timing of a Fed rate increase remains unclear. While the unemployment rate has steadily declined, other gauges of the job market are harder to assess and may reflect continued weakness. These include high levels of people who have been unemployed for more than six months, many people working part time who would like full-time jobs, and weak pay growth. Record-low short-term rates will likely remain appropriate for a “considerable time” after the Fed stops buying bonds to keep long-term rates down. The Fed’s bond buying is set to end this fall.

30-YEAR MORTGAGE RATES FALL TO 2014 LOW. At 4.1%, today’s 30-year fixed rate mortgage fell from 4.12% last week . It’s less than half of the 30-year loan’s historical average, and the number of discount points required to get a 30-year loan are few fewer than it was even last decade. For the fifth time in six weeks, 30-year mortgage rates have dropped across all loan types including FHA loans, USDA loans, VA loans, and conventional loans backed by Fannie Mae and Freddie Mac. Mortgage rates have moved to a 14-month low; and 15-year fixed and adjustable-rate mortgage rates are down, too.
The average for a 15-year mortgage slipped to 3.23% from 3.24% last week and 3.27% three weeks ago. Mortgage rates have fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term borrowing rates low. Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.43% Wednesday, close to its low for the year of 2.41%.
10 year US Treasury bonds, the benchmark interest rate has declined to 2.41% from 2.45% this week, but still up from last weeks 2.34%. Treasury bonds have outperformed practically all major asset classes in 2014. The Treasury’s auction of $27 billion of three-year notes Tuesday produced the lowest yield since April, as speculation that turmoil in Ukraine and Iraq may worsen fueled investor demand for safety. Economic reports out of Europe, and Asia were disappointing. The United Kingdom reported that although there has been gains in employment wages had fallen. Japan reported negative growth and a shrinking economy. Spain, Portugal, Italy also saw an unexpected stalling in their economies beyond what was expected. Japan saw a larger than expected decline, as did China. Russia showed that they had some slowing, but not as much as expected with the economic sanctions. All in all it was a poor week for the rest of the world as US economic reports were pretty good with the exception of Macy’s reporting that sales had fallen, leaving investors to wonder what retail reports are yet to come. The 10-year Treasury yield, which falls as prices rise, was down 2 basis points at 2.41%. The 5-year fell 2 basis points to1.61%, but still up from last week’s 1.567%. The 30-year yield dropped 3 basis points to3.19% after a successful sale of $16 billion in bonds at the lowest yield in a year.

The Treasury Department announced it will sell $93 billion in notes next week: $29 billion in two-year securities, $35 billion in five-year debt and $29 billion in seven-years. The amounts are unchanged from the July auctions of the maturities. The Treasury will also sell $13 billion in two-year floating-rate notes at an Aug. 27 auction.

U.S. existing home sales jump to highest level in 10 months. Purchases of previously owned U.S. homes unexpectedly rose in July to a 10-month high as low borrowing costs and an increase in inventory drew buyers. Existing home sales climbed 2.4 percent to a 5.15 million annual pace, the most since September, from a revised 5.03 million pace in June, the National Association of Realtors reported Thursday. The median forecast of 74 economists in a Bloomberg survey called for 5.02 million. The number of homes for sale were the highest in almost two years. The increase, the smallest annual gain in two years, comes after double-digit growth in 2013. The market is moving from being somewhat heated to a balanced market and we are returning to more moderate middle ground. The median price of an existing home rose 4.9 percent to $222,900 in July from $212,400 a year earlier, Thursday’s report showed. The number of existing properties for sale climbed to 2.37 million, the most since August 2012. At the current pace, it would take 5.5 months to sell those houses, matching the May and June reading. Inventory was up from 2.24 million a year earlier. Distressed property sales, including foreclosures, accounted for 9 percent of the total last month, the least since records began in 2008, the group said.

Data Quick-Southern California home sales fall, median price drops. Southern California home sales hit a three-year low for the month of July and the region’s median home price dipped to $413,000, DataQuick reported Wednesday. Hampered by rising prices, a limited inventory and a decrease in investor activity, sales of new and existing homes and condos in Los Angeles, San Bernardino, Riverside, Ventura, Orange and San Diego counties totaled 20,369 last month. That was down 1.4 percent from June and down 12.4 percent from the 23,253 homes sold a year earlier. The region’s median home price dipped 0.5 percent in July to $413,000, although it was up 7.3 percent from the year-ago price of $385,000.The June 2014 median price of $415,000 for the six-county region was the highest since January 2008 when it also stood at $415,000.
New home sales up 15.7 %. New-home construction in the U.S. surged to an eight-month high in July, lifting the stock market and prospects for a broader economic recovery. Housing starts jumped 15.7% from June to a seasonally adjusted annual rate of 1,093,000, the Commerce Department said Tuesday. Investors cheered the rise, which ended two months of declines and soared past expectations of a 965,000 rate. Builders’ optimism is picking up. If it continues, the uptick in construction could have sustained, broad effects on the economy.

Employment growth, rising property values and a decline in consumer debt are giving would-be buyers the confidence to take the plunge into real estate. Builders are also showing signs of life after a construction lull at the start of the year, a sign that the market’s momentum is sustainable. Fewer Americans than forecast applied for unemployment benefits last week, a sign the job market is making progress, another report today showed.Jobless claims fell by 14,000 to 298,000 in the week ended Aug. 16, according to Labor Department figures.

California gains 27,700 jobs in July. California’s unemployment rate was unchanged at 7.4 percent in July, and nonfarm payroll jobs increased by 27,700 during the month for a total gain of 1,371,500 jobs since the recovery began in February 2010, according to data released today by the California Employment Development Department (EDD) from two separate surveys. In July 2013, the unemployment rate was 9.0 percent. The unemployment rate is derived from a federal survey of 5,500 California households
U.S. Stocks Edge Lower due to Fed Meeting and Ukraine Tensions. The Dow closed down the week at 17,001.22, but up 339 points from last Friday’s close of 16,662. The S&P closed at 1988.40 down .20 for the day, but up from last Friday’s close 1955.06 The Nasdaqis up this week closing at 4,538.55, up 6.45 Friday and up 73.62 points from last weeks close of 4464.93..

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Economic Update for the week ending August 8, 2014

Mortgage rates continue to hover near yearly lows. Mortgage rates showed little movement once again this week, continuing to hover near yearly lows, according to the latest data released Thursday by Freddie Mac. The 30-year fixed-rate average bumped up to 4.14 percent with an average 0.7 point. It hit its yearly low of 4.12 percent a week ago and was 4.4 percent a year ago. For nearly two months now, the 30-year fixed-rate average has floated around 4.13 percent, ticking up or down a basis point or two but never straying far. The 15-year fixed-rate average climbed to 3.27 percent with an average 0.6 point, its highest level since June 19. It was 3.23 percent a week ago and 3.43 percent a year ago. Hybrid adjustable rate mortgages wandered downward. The five-year ARM average slid to 2.98 percent with an average 0.5 point. It was 3.01 a week ago and 3.19 percent a year ago. After jumping above 3 percent last week, the five-year ARM returned below that level for the six time in the past seven weeks. The one-year ARM averagedropped to 2.35 percent with an average 0.5 point. It was 2.38 percent a week ago. Mortgage rates were little changed amid a week of light economic reports. We are seeing 30 year fixed jumbo rates at 4.25%.

Rates on 10 year treasury bonds fell this week to 2.44% . They were 2.52% last Friday. The 10 year rate is considered a benchmark rate. Mortgage rates generally follow the trend of the 10 year.
Fannie Mae and Freddie Mac posted profits and pay dividends to Government for the April-June period as the housing market continued to recover. Gains in recent years have enabled them to fully repay their government aid after being rescued during the financial crisis in 2008. Fannie Mae reported Thursday that it earned $3.7 billion in the second quarter; it will pay a dividend of $3.7 billion to the Treasury next month. Freddie Mac posted net income of $1.4 billion for the latest quarter and will pay a dividend of $1.9 billion. Together the companies received taxpayer aid totaling $187 billion. The gradual recovery of the housing market has made Fannie and Freddie profitable again. Their repayments of the government loans helped make last year’s federal budget deficit the smallest in five years. Fannie’s $3.7-billion profit was down 63% from $10.1 billion in the second quarter last year. Increases in home prices slowed sharply in the April-June period from a year earlier, reducing Fannie’s income, the company said Freddie’s $1.4-billion net income declined 72% from $5 billion in the second quarter of 2013. Freddie noted that itsearnings can fluctuate because of changes in the value of its holdings of derivatives, or investments used to hedge against swings in interest rates. That can create gaps in quarterly earnings that may not reflect the economics of its business. Much of this lower profits are because Fannie and Freddy are making less loans than they have over the past few years. As private investment for loans increases a much lower, more traditional percentage of GSE, government sponsored loans are being originated. This has also allowed for lower maximum loan amounts on these government sponsored mortgages.

Applications for U.S. home mortgages rose last week as refinancing applications increased, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 1.6 percent in the week ended Aug. 1. The MBA’s seasonally adjusted index of refinancing applications rose 3.8 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 1.3 percent. The refinance share of mortgage activity accounted for 55 percent of all applications.
The Mortgage Bankers Association is currently predicting that rates on a 30-year fixed rate mortgage will rise to 5.1% by mid-2015. If that happens, then mortgage rate lock will become a pronounced headwind for the housing market, reducing home sales by about 4 percent from current levels even after accounting for positive factors like modestly higher incomes and more households.
Prices will go up, but not as fast as in 2013. In 2013, the housing market clocked double-digit, year-over-year price gains each month. Now that pace is slowing. Prices across the 20 metro areas tracked by the S&P Case-Shiller Indices rose by 10.8% year-over-year in April, a significantly slower rate than the prior month, when prices rose 12.6% for the 10-City Composite and 12.4% for the 20-City Composite. Expect the slowdown to continue right through December. The median price of an existing home gained 11.5% in 2013, the highest annual gain since the median priced rose by 12% in 2005, according to the National Association of Realtors. It will be another three years before we hit the peak levels we last saw in 2007. Obviously, that is a national statistic. We are well beyond the highs of 2007 on the West Side and slightly below the 2007 highs in the Valley.

Supply will continue to increase. Throughout the recovery, the stock of available homes for sale has been well below the 6-month supply that economists consider the hallmark of a healthy market. In January, available, for-sale resale’s stood only at a 4.9-month supply, according to NAR. By June, inventory had increased to a 5.5-month level.

US Stocks climb, Global Stocks fall and S&P 500 hits above 1900. Stocks rebound from losses overnight. Stocks moved higher today as investors weighed productivity gains in the U.S. against escalating geopolitical troubles in Ukraine, Gaza and Iraq. However,emerging stocks headed for a second weekly loss on concern the worsening crisis in Iraq will hold off the global recovery. Yesterday, the S&P 500 fell 0.6 percent, coming within 60 points away from wiping out its gains for 2014. It closed below its average price for the past 100 days for the first time since April. The index has dropped 3.1 percent from a record on July 24. Today, U.S. stocks bounced back today amid speculation that recent declines have been excessive. Almost 80 percent of stocks in the S&P 500 are below their average price of the past 50 days, the most since 2012, according to Bloomberg. The U.S. 10-year yieldtouched 2.35 percent, the lowest since June 2013, before erasing losses to 2.41 percent.

Market Closed today with increases across the board, amidst an international crisis in Russia, Ukraine, Gaza and Iraq.
The Dow increased 1.13 percent (+185.66), 16,553.93. NASDAQ increased .83 percent (+35.93), 4,370.90 and S&P increased 1.15 percent (+22.02), 1,931.59. The markets are well below levels of just 2 weeks ago. Next week corporate profits of retail companies will be reported. That will move the market depending on how good they are. It’s been a rough couple of weeks for investors, as the market has dropped about 700 points from its all time highs! Fortunately, that money has moved to the safety of bonds and mortgages which has lowered rates over that period.
We are seeing an uptick in escrow openings for the second straight week! That is a good sign after the market seemed to slow a little in July. I would still caution that prices seem to have stalled. We are seeing homes below the high comps of just 60 days ago sit and not sell. Prices are getting reduced, and that is probably contributing to more sales. I have no doubt that prices will increase again next spring! Right now it may appear that prices have dropped, especially when you compare sales to higher ones just a couple of months ago. I would not be surprised to see CAR month over month drop in price in the coming months. The year over year will still be a healthy increase, as we had rapid price increases in the spring. Unfortunately, some of those sales may have been a little high due to some over excitement!

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Economic Update for the week ending August 1, 2014

Q2 GDP at 4%, beats estimate of 3% The Q2 GDP blew estimates out of the water, this is in result of a surge in Inventories and Fixed Investment spike, both of which added over 2.5%, while exports added another 1.23% to the GDP number. The economy also received a boost from business investment, government spending and investment in home building. Trade, however, was a drag for a second consecutive quarter as some of the increase in domestic demand was met by a surge in imports. Domestic demand rose at a 2.8 percent pace, the fastest since the third quarter of 2011. It increased at a 0.7 percent pace in the first quarter. Growth in the second quarter was driven mainly by consumer spending and a swing in business inventories. Consumer spending growth, which accounts for more than two-thirds of U.S. economic activity, accelerated at a 2.5 percent pace, as Americans bought long-lasting manufactured goods and spent a bit more on services. Consumer spending had braked to a 1.2 percent pace in the first quarter because of weak healthcare spending. Despite the pick-up in consumer spending, Americans saved more in the second quarter. The saving rate increased to 5.3 percent from 4.9 percent in the first quarter as incomes rose, which could mean more future spending. The “second” estimate for the second quarter, based on more complete data, will be released on August 28, 2014.

Fed Meeting Breakdown. The Federal Reserve meet this week and announced they will continue with the sixth reduction, phasing out QE3—again a $10 billion cut. QE3 purchases are now comprised of $15 billion in U.S. Treasuries and $10 billion in mortgage-backed bonds monthly, to begin in August. The taper loosens further the artificial cap that the Fed has placed on mortgage rates. As QE3 shrinks, mortgage rates are expected to rise. The moves did not surprise Wall Street. The Fed Funds Rate is expected to remain near zero percent deep into 2016; and the Federal Reserve has been vocal that QE3’s wind-down would be measured and steady, barring economic shock. The moves did not surprise Wall Street. The Fed Funds Rate is expected to remain near zero percent deep into 2016; and the Federal Reserve has been vocal that QE3’s wind-down would be measured and steady, barring economic shock.

The Fed signaled in its monetary-policy statement earlier this week that interest rates will remain low for an extended period. Policy makers took note of improvement in labor market, but they said a range of labor market indicators suggest that there remains significant underutilization of labor resources. With a strengthening labor market, Fed is expected to further reduce its purchases of Treasury bonds at a pace of $15 billion per month rather than $20 billion per month and mortgage-backed securities at a pace of $10 billion per month rather than $15 billion per month. The assertion that the labor market is still far from normal could dampen speculation that declining unemployment and rising inflation will force the Fed to start raising its benchmark short-term interest rates earlier than expected in 2015. The statement conceded that inflation “has moved somewhat closer” to the Fed’s 2% annual target. But it added that long-term inflation expectations remain stable.

Freddie Mac Mortgage rates hold steady; 30-year averaging 4.12% Freddie Mac’s weekly survey came out yesterday and showed the average rate for a 30-year fixed-rate home loan is 4.12%, practically unchanged from last week’s 4.13%. In the month before the latest surveys, Freddie reported the following averages for the 30-year loan, the most widely used home-financing option: 4.13%, 4.15%, 4.12% and 4.14%. The 15-year fixed rate mortgage edged lower to 3.23% from 3.26%. The 5-year Treasury-indexed hybrid adjustable rate mortgage averaged 3.01%, up from 2.99%, while the 1-year Treasury-indexed ARM averaged 2.38%, down from 2.39%.

U.S. Adds 209,000 Jobs in July, Unemployment Rate at 6.2%. As long as wages remain stagnant, putting pressure on consumer prices low and keeping inflation below the Fed’s target rate, analysts remain doubtful that the Fed will shift their timing for rate hikes ahead of the current projected timeline for liftoff of mid-2015. The steady growth in jobs is encouraging, but it’s not sufficient, for us or for the Fed. We need more jobs, and we need higher wages. Wage gains remained sluggish in July. Average hourly earnings rose 1 cent from June to $24.45 last month, up 2% from a year earlier. The labor market isn’t delivering, but it’s making progress. And one sign of progress is that more people are actively looking for that job they hope is out there.

Stock Market Ends July in Dive, but Analysts Are Upbeat. Thursday was noted as the worst day in months for financial markets. The stock market ended July with the sharpest decline in the Standard & Poor’s 500-stock index since April, while the Dow Jones industrial index fell more than 300 points, enough to eliminate all of its gains for the year. Energy stocks fell the most after Chevron reported weaker oil and gas production. Exxon Mobil had reported disappointing production figures the day before. The Dow industrial average lost 110 points to 16,454 as of noon Eastern time. The blue-chip index lost 317 points the day before, its biggest one-day drop since February. The S & P 500 index fell 12 points to 1,918 and the Nasdaq composite fell 39 points to 4,329. The S&P 500 index is down 3 percent for the week and is heading for its worst week of the year.

Market Closed today with across the board drops. Dow fell .42 percent (-69.93), 16,493.37. NASDAQ fell .39 percent (-17.13), 4,352.64 and S&P fell .29 percent (-5.52), 1,925.15.
Factors for the drop included weak corporate earnings from big companies such as Exxon Mobil, which also reported disappointing results this week. The S&P’s information technology sector is broadly lower, down 0.25% as investors sell tech stocks, with the notable exception of a few heavyweights like Apple, Facebook. Economic sanctions on Russia that have increased tensions with the West also played a role, as did Argentina’s debt default Wednesday. And there’s also the general worry by investors that stocks are overpriced. For the last two years, investors have typically stepped in to buy any major fall in the stock market. A sell-off would often be met the following day with modest buying. Traders said that Friday’s selling, on top of what happened the day before, is not a good sign.

US Government Bonds Rise after Jobs data. Treasury bonds rose today as the U.S. employment report for July soothed concerns that the Federal Reserve may raise interest rates sooner than investors expect. 10 year Treasury yield jumps to 3 week high. In recent trading, the benchmark 10-year note was 9/32 higher, yielding 2.523%. The 10-year note’s yield has fallen from 3% at the start of the year. Bond yields fall when their prices rise. The two-year note was 3/32 higher, yielding 0.492%. The five-year note was 10/32 higher, yielding 1.699%. Yields on short-dated notes are directly influenced by the Fed’s interest-rate policy, while long-dated bonds are more influenced by inflation which chips away the value of bonds over time.
Applications for U.S. home mortgages fall this week as refinancing applications drop. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.2 percent in the week ended July 25. The MBA’s seasonally adjusted index of refinancing applications fell 4.0 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 0.2 percent.

Have a great weekend!

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July 25, 2014 Economic Update

Home mortgage interest rates were unchanged this week at the lowest levels in over one year. Freddie Mac reported that the national average for a 30 year fixed rate was 4.13%, the same as last week. One year ago the rate was 3.31% and on January 1, 2014 it was 4.52%. The 15 year rate was 3.26%, about the same as last week’s 3.23%. It is down from 3.39% one year ago and 3.55% on January 1. The 5 year ARM was at 2.99%, down from 3.16% one year ago and 3.05 on January 1. The one year ARM was 2.39%, also down from 2.65% one year ago and 2.59% January 1. Jumbo rates are very similar with the 30 year rate around 4.25%

The Commerce Department reported that new home sales in the U.S. dropped 8.1%, to a seasonally adjusted annual rate of 406,000 units, in June after 2 month of solid gains. Western states saw the lowest decline of just 2%. Economists did expect to see a decline after a large jump in May, but not 8.1%. Low inventory levels were to blame. Another aspect of the report focused on new housing far from cities as land for development is often “poorly located” and buyers often choose an existing home in a better location, according to the report.

Weekly jobless claims plunged last week to 284,000, an 8 year low. According to the Labor department this is a fresh sign that the recent labor market is recovering. This big drop beat expectations. It marked the fewest claims since February 2006.

The National Association of Realtors reported that sales of previous owned homes hit their highest level since October. There were 5.05 million homes sold in the U.S. in June, on a seasonally adjusted, annual basis. It was the most since October, but 2.3% lower than last June. One difference was the number of foreclosed homes sold. If you take out the foreclosed home sales, sales were up.
Inventory levels are at their highest levels in over a year. The supply of homes has climbed 10% in the last year. There is currently a 5.5 month supply of homes on the market, just shy of a 6 month healthy target, according to NAR.

The Labor Department reported that the consumer price index rose just 0.3% in June, less than the seasonally adjusted increase of 0.4% in May. In the 12 months ending in June, prices were up 2.1% for the one year period. Gas prices jumped 3.3% in June as global tensions drove up prices. That increase accounted for 2/3 of the overall increase last month.

Zillow Inc. appears to be purchasing Trulia. These are the nation’s two largest real estate websites.

The Dow dropped 123.23 points on Friday to close the week at 16,960.57. It was down -0.816% from last weeks close of 17,100.18. The Nasdaq closed at 4449.56, up 0.39% from last weeks close of 4432.15. The S&P 500 closed at 1978.34, up 0.006% from last weeks close. The markets surged earlier in the week with the DOW closing at 17,113.54 Tuesday on higher than expected second quarter corporate profits. Investors got bad news on Friday about the American shopper when Amizon.com and Visa Inc. said that the second half of the year was not looking as robust as originally expected. Visa stock dropped 3.6% on Friday.

Applications for U.S. home mortgages rose last week as both purchase and refinancing applications picked up, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 2.4 percent in the week ended July 18. The MBA’s seasonally adjusted index of refinancing applications climbed 4.1 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 0.3 percent.

As inventory has begun to increase we are seeing more choices for buyers. This is a relief when showing property, and a relief for buyers. We are seeing more price reductions, which is difficult for sellers. The market is definitely changing to a more normal market. Many of you are complaining that prices are falling. I don’t believe that prices are actually falling. I think that some sellers just got lucky in the last few months and sold homes for more that they should have as buyers got caught up in the heat of the market. Home prices are still far higher than one year ago, yet less than the very highest sales two or three months ago. We are even seeing appraisals come in higher than the current sales prices. New homes and totally remodeled homes are still in short supply and we are still seeing those homes selling for record prices. If your home or your listing is not selling it is definitely time to reduce the price. I do believe that prices will rise again next spring, but at a much more moderate pace.

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Week End economic update July 19, 2014

Interest rates dropped slightly this week to the lowest levels in over one year as demand for mortgage securities increased. This demand comes from investors feeling that mortgage securities may not return a high yield, but are considered very safe. Mortgages initiated in the past few years have historically low default rates. Higher qualifying standards are credited for this, but I would credit a low default rate to rising prices. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30 year fixed rate fell slightly to 4.13% down from 4.15% last week and 4.48% one year ago. The 15 year fixed was 3.23%, one year ago it was 3.52%. We are seeing rates on all loan amounts in the 4.125% to 4.25% range for 30 year terms and around 3.375% for 15 year fixed.

The 10 year Treasury note yield ended the week at 2.50%, down from last week’s 2.53%. It was 2.56% one year ago.

The Dow closed at 17,100.18. It was up 0.92% from last weeks close of 16,943.81. The Nasdaqhad another strong week, closing at 4432.15, up 0.38% from last weeks close of 4415.49. TheS&P 500 closed at 1,978.22, up 0.54% from last weeks close. The markets began the week rising to record highs as corporate profits exceeded expectations. Thursday after it was reported that a Malaysia Airlines jet crashed the markets dropped sharply, especially Boing stock. The markets, and Boing stocks, recovered slightly later Thursday, and closed up Friday 123.37 when it was reported that the plane was actually shot down.

Citigroup settled their toxic mortgage securities case with the Justice Department for $7 billion. This agreement is the latest in the federal government’s effort to hold companies accountable that made subprime loans, pooled and packaged them into bonds, and sold those bonds to investors. These bonds, many of which were rated AAA (the highest rating for the safest investments) turned out to be worthless, or close to it. Thus earning the name toxic assets, as those who held them had such loses that many banks, investment companies, investors and even governments became insolvent. This led to the largest government bailout in history, as banks, investment firms and even companies were considered “too big to fail”.

Bank of America settled its case with AIG for $650 million this week. AIG had sued Bank of America for fraud on credit default swaps (insurance against losses on mortgage securities). Bank of America also offered $13 billion to settle with the Justice Department. The Justice Department’s latest demand is $17 billion. Both turned down each other’s offers. Bank of America reported legal expenses for the second quarter of $4 billion, drastically exceeding the estimated $471 million that was set aside. Their stock dropped as a result.

The Federal Reserve released its Beige Book report of anecdotal information on business activity collected from contacts across the nation. The fed reported that 5 of its 12 districts described the pace of growth as “moderate,” with the remaining districts viewing the expansion as “modest.” “Most districts were optimistic about the outlook for growth,” the Fed said. The report, compiled by the Federal Reserve Bank of Kansas City from data collected before July 7, fits in with employment, manufacturing and other data that have pointed to strong growth in the second quarter and buoyed the economy’s prospects for the remainder of this year. Output contracted sharply in the first three months of the year as the economy was slammed by bad weather, a slow pace of inventory accumulation and the end of long-term unemployment benefits. The Beige Book found that consumer spending had increased in recent weeks in most districts, with automobiles dominating sales growth. Manufacturing continued to improve in all districts, with growth occurring across many sub-sectors, according to the report.

The positive economic news, high earnings, and gains in employment have left economists wondering why the Fed has not risen short term interest rates and why they are continuing to purchase Treasury bonds and mortgage securities under the QE3 program. These economists fear that waiting too long could lead to high inflation. The Fed has reduced their purchases of Treasury bonds and mortgages each month and plan to no longer purchase Treasuries or mortgages after October 2014, but plan on leaving short term rates at or near 0% until mid-2015.

California’s unemployment rate fell in June to 7.4% down from 9% last June! The state added more than 24,000 jobs in June, and more than 356,000 jobs over the last year, according to the U.S Bureau of Labor Statistics. The unemployment rate in Los Angeles County in June fell to 8.2% from 10.3% last year.

DataQuick reported that California home sales slumped last month from a year earlier as buyers faced tight supply and prices continued to rise. There were 39,254 homes and condominiums sold in June. That was up 4 percent from May, a typical seasonal rise, but it was nearly 20 percent below the average for all Junes since 1988. In fact, DataQuick said sales haven’t topped the average for any particular month in more than eight years. The median price paid for a home in June was $393,000, up 1.8% from May and up 11.6% from June 2013. It was the highest median price for any month since December 2007, although well below the peak of $484,000 set in spring 2007, By comparison, the median price dipped to $221,000 in April 2009 after the housing crash. Low inventory has equated to lower sales. One reason for low inventory is low interest rates. With these historically low rates it has been much easier for people to buy new homes without selling their current homes. We have seen record numbers of people become landlords. One thing for sure, these people are going to create great wealth for themselves! I hope you are all out there investing in real estate for your future!
Have a great weekend!

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Economic Update July 11, 2014

Interest rates dropped this week as did stocks after economic indicators in Europe and Asia showed slowing in their economies.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate was 4.15%. The 15-year-fixed rate was 3.24%. A year ago the 30-year fixed was at 4.51% and the 15-year was at 3.53%. We are looking at rates on all loans in the 4 1/8% range for 30 year fixed and about 3 1/4% for 15 year loans.

There is little to no difference in rates between conforming loans and jumbo loans. That is quite surprising. Conforming rate loans carry government insurance to protect investors on a portion of loan losses, while non conforming (jumbo) loans have no insurance on loses to cover investors. This means that conforming rate loans carry less risk to investors which is why historically their rates have been about 1/2% lower than non conforming or jumbo loans.In 2008 and 2009 jumbo rates reached 2% higher than conforming as nobody wanted to invest in uninsured mortgages! If you recall the Federal Reserve after taking short term rates down to 0% made the unprecedented move of beginning a buying program of $80 billion a month of treasury bonds and mortgages to add liquidity to the mortgage market. Last year they began drawing back those purchases. The fear was that interest rates would rise quickly without their intervention. That has not happened. In fact, there is such a demand for investment in mortgages that the amount of liquidity has created lower rates in an attempt to do more loans. The last time so much money was available for mortgages they lowered qualifying standards to what is known as sub-prime to encourage people to borrow more. This time around new laws enacted do not allow qualifying standards to drop so dropping rates have been the tool used to entice borrowers to take out mortgages. It is unprecedented to have conforming and jumbo loans the same rate. The above explanation is the reason why I feel this is happening. It should also be noted that the reason for all this money being invested in mortgages and bonds is because of political turmoil and economic uncertainty throughout the world causing people to move money to the US markets. This is also one of the reasons we are seeing so much foreign investment in our real estate market!

The 10-year Treasury note yield rate ended the week at 2.53% down from last week’s close at 2.65%. It was 2.60% a year ago.

The Federal Reserve released its minutes from last months policy meeting on Wednesday. They increased the draw down of the mortgage and bond buying program by lowering purchases another $15 billion this month and issued a statement that the program would end October 31, 2014. They also were divided on how long to keep short term rates near zero percent. They all felt that the US economy was beginning to grow at an accelerated rate, but they were divided on the risk of inflation. About half of them felt that short term rates needed to rise by years end to lower the risk of inflation, while the other half felt that inflation was under control and short term rates did not need to be risen until mid 2015. They did issue caution that rising oil rates due to increased tensions in Iraq, and the Middle East, along with the Russia and Crimea situation could rise to a level that could impact the economy. This could cause them to delay rising short term rates. They also spoke about better than expected jobs reports lately and that they expect to see the second quarter GDP numbers much better than the surprisingly poor numbers from the first quarter.

The Dow closed at 16,943.81. It was down -0.73% from last week’s close of 17,068.26 . The Nasdaq had another strong week, closing at 4415.49 up 0.17% from last week’s close of 4408.18. The S&P 500 closed at 1,967.51, up 0.37% from last week’s 1,960.23.

After the DOW closed over 17,000 for the first time ever last week, it dropped this week after a wide sell off on fears that slowing in Europe, and Asia as well as a potential bank collapse in Portugal could cause slowing here in the US. US stocks have been risen to record numbers recently and there are also fears that profits which are due out may not meet the lofty expectations built into these high stock prices. The numbers have been doing so well that it is believed the economy has made a recovery from the harsh Winter of Q1. Although there has been improvement in the jobs market and economy, it doesn’t seem to have directly impacted consumer spending which is a big factor in corporate profits.

Experts predict that S&P 500 companies results when released are expected to grow in Q2. . Tech shares took a hit, Facebook and Netflix both dropped over 3%, and Tripadvisor fell 5.5%. Shares traded reached 6.18 billion in the US which is a big jump from the May average of 5.79 billion active shares traded.

The Bloomberg Consumer Comfort Index rose to 37.6 in the week that ended on Sunday. It was the third-strongest reading since the start of 2008, up from 36.4 in the previous period.

All in all things are looking very positive for us. As we have reported for the past few weeks, we are seeing prices flattening out, so if your listing is not selling it is time to pay more attention to pricing. We are no longer seeing every sale being the highest sale. Many homes are sitting or selling below the highest comp. These homes are still higher than sales a year ago, but many are lower than the very highest sales just 45 days ago. We are also seeing all cash investors pulling back which is creating more opportunity for owner occupied purchasers that are using financing to purchase. These buyers were losing out to cash purchasers a couple of months ago, but are having more success now.

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Economic Update for the week ending June 21, 2014

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate fell slightly, coming in at 4.17% down from 4.20% last week. The 15-year-fixed moved just a little, down to 3.30% from last week’s 3.31%. A year ago the 30-year fixed was at 3.93% and the 15-year was at 3.04%. After The release of the CPI report rates finished the week slightly higher. Rates are more like 4.25 for 30 year fixed conforming and about the same for jumbo. 15 year are around 3.375%.

The 10 year Treasury bond yield ended the week at 2.63%. It was 2.61% last Friday and 2.41% a year ago.
The best indicator of inflation the CPI Index for May was released earlier in the week. May’s rise in consumer prices showed 0.3 percent increase from April. This was double what was expected and the largest monthly increase since February 2013. With tensions escalating in Iraq, a major world oil producer, inflation is likely to push higher in the coming months. In the 12 months through May, consumer prices increased 2.1 percent, the biggest gain since October 2012. That followed a 2.0 percent rise in the period through April, marking the first back-to-back months in which the year-on-year CPI had risen at least 2 percent since early 2012. Stripping out food and energy prices, the so-called core CPI rose 0.3 percent, the largest increase since August 2011.

The Federal Open Market Committee met this week and the Fed announced that it plans to continue the taper of the bond-buying program, cutting back by another $10 billion. This program known as QE3 has been tapered down significantly and The Fed plans to end all Treasury Bond and Mortgage purchases by the end of the year. This program brought down long term interest rates. The Fed also announced that they plan to on keeping the federal fund rates near zero until mid 2015. This will keep down short term rates. Fed Chair Janet Yellen has indicated that interest rates will remain low even after the Fed completely winds down its stimulus program. In remarks this week, Yellen pointed out that unemployment is still high and many are underemployed. She also shrugged off the CPI index increase as “noise” due to tensions in Iraq causing a rise in energy costs. She stated that real inflation is still below the 2% objective rate.

All three major stock indexes had a great week with the Dow and S&P 500 hitting records and the Nasdaq reaching a 14-year high. The Dow closed at 16,947.08 up 1.02% from last week’s close of 16,775.74. The Nasdaq also finished strong, closing at 4,368.04 up 1.33% from last week’s close of 4,310.65. The S&P 500 closed at 1,962.87, up 1.38% from last week’s 1,936.16.
Homebuilder confidence appears to be gaining ground again. The latest numbers from the National Association of Home Builder/Wells Fargo builder sentiment index rose to 49 in June, the highest since January and up from 45 in May. Readings below 50 indicate that builders see sales conditions as poor rather than good but builder are now the most confident they have been since January as they see more potential buyers shopping for new homes. This time last year, the index rose above 50 for the first time since the beginning of the housing recession. For the West alone, the June reading is at53, indicating that builders see good sales conditions for new homes.

The latest report from the Census Bureau showed that housing starts were down in May from the previous month but were higher than the year before. Single-family housing starts were down -5.9% from April but were up 4.7% from a year ago. Single-family housing completions in May were at a rate of 618,000; this is 2.1% above the revised April rate of 605,000.

The California Association of Realtors® reported closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 391,030 units in May which was -0.6% below the revised 393,480 in April and down -9.5% from a revised 432,140 in May 2013. This was the tenth straight decline on a month-over-month basis.
May’s median price increased 3.7% from April’s median price of $449,360 to $465,960 and was up11.7 % from the revised $417,140 recorded in May 2013. The statewide median home price has increased year over year for the previous 27 months. Housing inventory was unchanged in May, with the available supply of existing, single-family detached homes for sale holding steady at 3.6 months. The index was 2.6 months in May 2013. The median number of days it took to sell a single-family home fell to 31.6 days in May, down from 33.8 days in April but up from 27.1 days in May 2013.
For Los Angeles County alone the median price rose to $411,640 up 1.2% from the previous month’s $406,750, and up 12.5% from May 2013’s $365,990. Sales were up 6.9% from April but down -12.2% from May 2013. In Los Angeles County, the amount of inventory was 3.6 months up from 3.5 months in April and 2.5 months in May 2013. The median time on market was 38.7 days, down from 39.5 days in April but up from 27.9 months last April.

We are beginning to see some flattening of prices in many areas after a large run up so far this year. It is not unusual to see prices begin to flatten this time of year. We usually see the largest price gains in the Spring and I’d expect to see large gains again beginning next February lasting through May or June. Nevertheless we are seeing some price pressure in many areas where some homes are just too high and are beginning to sit. Don’t get me wrong we are still seeing plenty of multiple offers on well priced homes! However, on homes that are priced above previous sales or at the price of the very highest sale we are seeing those homes sit!

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Economic update for the week ending June 14, 2014

Growing tensions in Iraq have already begun to impact oil prices. Crude oil prices have already hit 10-month highs and gas prices, which typically rise during summer months anyway, may go even higher. Oil is now up to $107 a barrel.

The retail sales report for May from the Commerce Department showed that retail sales rose 0.3%. This was below economists’ forecasts of 0.5%.April’s sales gains were revised up to 0.5% from a previously reported 0.1%. Excluding motor vehicles and parts, retail sales rose only 0.1% in May compared with a 0.4% increase in April from March.

The Thomson Reuters/University of Michigan’s preliminary June reading on the overall index on consumer sentiment dropped slightly to 81.2, down from 81.9 the month before but overall consumers remain cautiously optimistic about the economy.

Stocks rose a bit on Friday repairing some of the damage from earlier in the week. This was the worst week in two months for the U.S. stock market. The Dow closed at 16775.74 down -0.88% from last week’s close of 16,924.28. The Nasdaq was also down, closing at 4310.65 down -0.25% from last week’s close of 4,321.40. The S&P 500 closed at 1,936.16, down -0.68% from last week’s 1,949.44.
The 10 year Treasury bond yield ended the week at 2.61%. It was 2.60% last Friday and 2.19% a year ago.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate was is back on the rise, up to 4.20% from 4.13% last week. The 15-year-fixed was also up to 3.31% from last week’s 3.23%. A year ago the 30-year fixed was at 3.98% and the 15-year was at 3.10%. Jumbo rates are only slightly higher. There is almost no difference in rate between conforming and jumbo mortgages right now.

RealtyTrac® reported that foreclosure filings continued to drop in May. They were down -5% from the previous month and down -26% year over year to the lowest level since December 2006. Bank repossessions are at the lowest level since July 2007 but they are up in some states including California which had a year-over-year increase of 26%. Nationwide foreclosure auctions are also at their lowest level since December 2006. Foreclosure starts around the country have hit their lowest level since December 2005.

DataQuick’s latest numbers show that in May, 19,556 new and previously owned houses and condos sold in the six county Southland region, down -2% from April and down -15% from a year earlier. This number was -23% below the May average of 25,393 sales. Sales in L.A. County fell -16% from a year ago to 6,460 properties. This was the eighth month in a row that sales have fallen year over year according to DataQuick. Last month, the region’s median price rose 11% to $410,000 from $368,000 in May 2013. In Los Angeles County alone, the median price rose 10% to $450,000 from $410,000 a year earlier.

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Economic update for the week ending May 30, 2014

U.S. consumer confidence rose in May. The Conference Board reported that its index of consumer attitudes rose to 83 in May from 81.7 in April. This was the second highest level seen since 2008. However the University of Michigan’s consumer sentiment index fell more than analysts were expecting ending at 81.9 in May from 84.9 in April. Economists had expected 82.8.
The Commerce Department reported that U.S. consumer spending fell in April by a seasonally adjusted -0.1% from March, below the 0.1% growth expected by economists. March’s growth was revised up by 1% from the 0.9% previously reported. Personal income rose 0.3% in April, down from a 0.5% growth rate in March and wage growth slowed to 0.2%. Many are predicting wider economic gains in the second quarter.

The 10 year Treasury bond yield ended the week at 2.48%. It was 2.54% last Friday, 2.67% at the end of last month, and 2.13% a year ago.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate hit another new low for the year, falling to 4.12% from 4.14% last week. The 15-year-fixed fell to 3.21% from last week’s 3.25%. The 30-year-fixed rate was 4.33% at the end of last month and the 15-year-fixed was at 3.39%. A year ago the 30-year fixed was at 3.81% and the 15-year was at 2.98%. Rates on loans over $417,000 are running around 4.5% for 30 year fixed and 3.5% for 15 year terms. These are the lowest rates of the year and the lowest since last May! I really think rates are going up. I would lock in now!!
It was another strong week for the stock market. The Dow closed at 16,717.17 up 0.67% from last week’s close of 16,606.27. It was up 0.82% from last month’s close of 16,580.84. The Nasdaq also had another strong week, closing at 4,242.62 up 1.36% from last week’s close of 4,185.81. It was up 1.04% from last month’s close of 4,198.99. The S&P 500 ended the week by closing above the record-setting 1,900 mark for the second week in a row, closing at 1,923.57, up 1.21% from last week’s 1,900.53. It was up 2.1% from last month’s close of 1,883.95.

Realtor.com® released its monthly trend report which showed that the national median list price rose to $207,500, 6.5% higher than the previous year and 3.8% higher than the previous month. The median age of inventory was 86 days, 6.2% higher than the year before. The amount of inventory was up 14.2% compared with April 2013 and up 8.6% from March 2014, according to realtor.com® data. For the Los Angeles-Long Beach MSA, the median price was $472,000, up 8.5% from one year ago and up 2.6% from the previous month. The number of listings on the market was 22,652, up 38.2% from one year ago and up 7.5% from the previous month. The median age of inventory was 61 days, up 29.8% from the one year ago and up 3.4% from the previous month. Once again these are national figures. It hardly seems necessary to talk about medium prices in our market. Never the less we are seeing large price gains in our area!

According to the Southland Regional Association of Realtors®, the median price of a home in the San Fernando Valley rose 13% year over year in April to $519,000. This was only a 0.8% increase over March’s median. Sales rose strongly, up 32% from March but down -2.5% from one year ago. The number of properties on the market, rose 43% year over year to 1,599. However this is only a little more than a two-month supply meaning that housing inventory is very, very low.

The National Association of Realtors® saw its seasonally adjusted pending home sales index rise 0.4% to 97.8 last month. The index is -9.2% below the level it was a year ago. The index in the West declined -2.9% in April to 88.4 and is -15.0% below April 2013.
The S&P/Case-Shiller Home Price Index for March showed that home prices in 20 U.S. cities increased 12.4% from March 2013. Los Angeles alone saw a year-over-year change of 16.9% and a rise of 1.2% between February and March. The S&P/Case Shiller report also included quarterly figures showing that prices for all of the U.S. rose 10.3% in the first quarter compared to the same period in 2013 and rose 0.2% over the fourth quarter of 2013.

Redfin released a report showing that sales of the priciest 1% of homes have risen 21.1% so far this year, after a gain of 35.7% in 2013. In Los Angeles the 1% starts at $3.65 million and 43.9% of buyers in this market are all cash buyers. The top three most expensive neighborhoods were Beverly Glen ($11,856,000), Holmby Hills ($9,910,000) and Malibu Road ($9,513,000). Westlake Village was the most expensive neighborhood in Ventura with an average of $2,548,000 for a home in the 1%.

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April 25, 2014 week end update.

Employers in Los Angeles County added 18,900 jobs in March. The countywide total of jobs is 4.17 million, close to the all-time payroll peak of 4.2 million jobs set in 1990. Over the past 12 months, the county has added 87,500 jobs, a growth rate of 2.1%. The county unemployment rate remained unchanged from last month at 8.7%, down from 10.1% a year ago. The statewide rate for March was 8.1%. The city of Los Angeles reported a 9.7% unemployment rate.

Orders for durable goods rose 2.6% last month according to the Commerce Department. This followed a 2.1% increase in February and was higher than economist predictions of a 2.0% gain in March. The first-quarter gross domestic product growth is estimated around a 1.5% annual rate and forecasts for the April-June period are above a 3% pace.
The University of Michigan and Thomson Reuters gauge of consumer sentiment hit a final April reading of 84.1 — the highest reading since July — up from a final March level of 80. Economists had been predicting a final April level of 82.8.

Stocks were up for most of the week but fell Friday as tensions between Russia and Ukraine escalated and some international military observers were taken hostage. The market also reacted to disappointing earnings news from Ford, Amazon, and Visa which overshadowed positive news from Microsoft. The Dow closed lower this week finishing at 16,361.46 down -0.29% from last week’s close of 16,408.54. The Nasdaq closed at 4,075.56 down -0.49% from last week’s close of 4,095.52. The S&P 500 was slightly lower, ending the week at 1,863.40, -0.08% from last week’s 1,864.85.
The 10 year Treasury bond yield ended the week at 2.68%. It was 2.73% last Thursday (there was no report on Friday) and 1.74% a year ago.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate rose to 4.33%, the rate was 4.27% last week. The 15-year-fixed was up slightly to 3.39% from last week’s 3.38%. A year ago the 30-year fixed was at 3.40% and the 15-year was at 2.61%. Loans over $417,000 are just above 4.5% for 30 year terms and just above 3.5% for 15 year loans.
Inside Mortgage Finance released a report this week showing that about $235 billion in new home loans were made last quarter, down -23% from the fourth quarter’s estimated $305 billion and -58% lower than the first quarter of 2013. It was the lowest output since the first quarter of 2000.

The National Association of Realtors® reported that existing home sales were down -0.2% from February to March for a seasonally-adjusted rate of 4.59 million which represents a -7.5% drop from a year ago. Last month’s sales volume was the slowest since July 2012. Declining affordability, lingering winter, and inventory shortages were listed as contributing factors. The median home price was $198,500 which was up 7.9% from March 2013. Housing inventory rose 4.7% from February to March up to 1.99 million homes which is 3.1% higher than a year ago. The current rate is 5.2 months compared to five months in February and 4.7 months a year ago. The median time on market was 55 days in March, down from 62 days in February and 62 days in March 2013. In the West, existing home sales fell -3.7% to a pace of 1.03 million in March, which is down -13.4% from last March. The median price in the West was $289,300, 12.6% higher than a year ago. I really don’t know if it should even be using these statistics, as we have not seen prices like these in our markets since the 1970’s. Its hard to fathom national prices when you live in Southern California!

The Southland Regional Association of Realtors® found that there were 414 properties sold in March, up 29%from February’s 320 but down -17%from 498 properties a year ago. The median price increased 20% to $515,000 from $430,000 a year ago. Housing inventory is increasing in the area, up around 50%. In March there were 1,520 previously owned houses and condos for sale, up from 1,015 a year ago. There is a 2.8 month supply of homes at the current sales pace, up from last year’s 1.5 month supply but still far below normal inventory rates.

According to the Federal Housing Finance Agency (FHFA) home prices rose a seasonally adjusted 0.6% in February, and were up 6.9% from one year ago. The FHFA House Price Index is calculated using home sales prices from mortgages either sold to or guaranteed by Fannie Mae and Freddie Mac. In the Pacific region which includes California, prices rose14.3%.
Freddie Mac released its U.S. Economic and Housing Market Outlook for April. The agency is projecting new home construction to increase by 18% and house price appreciation moderating to an annual growth of 5% in 2014. It has lowered the home sales projection from 5.6 million to 5.5 million for 2014.

Next month’s data should be better for the real estate market. The pending home sales data from the California Association of Realtors® shows pending home sales rose 17.8% in March with the Pending Home Sales Index rising from 97.1 in February to 114.4 in March, the highest rate since July of last year but down -9.9% from the revised 126.9 index recorded in March 2013.

The California Association of Realtors® also reported that the share of equity sales increased to 87.6% in March, up from 85% in February. Equity sales were 71.8% of sales statewide in March 2013. In Los Angeles County alone distressed sales represented 13% of single-family home sales in March 2014, down from 14% in February and 35% in March 2013.

It seems like we are seeing an uptick in new listings. For some reason new listings were down significantly the first quarter of this year. We can not give any reason for this, but it is beginning to look like more homes are getting listed. With so many buyers out there searching for homes we need the listings now more than ever!

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Economic Update April 18, 2014

This week the Fed released its “beige book,” showing that in early March through mid-April, 10 of 12 Fed bank districts reported an expanding economy, up from eight regions reporting growth in the previous report. Consumer spending increased in most areas, as did manufacturing. Home sales were solid in many parts of the country with housing starts picking up in the Boston and San Francisco areas and modestly in the New York, Philadelphia and Atlanta regions. Loan demand was also up in most areas. The Fed says the labor market remains mixed overall.

The Labor Department reported that the consumer price index rose by a seasonally adjusted 0.2% in March from the prior month. It rose by 0.1% in February. Core prices, which strip out volatile food and energy costs, also rose 0.2%. Consumer price inflation for March is up 1.5% from 1.1% in February although still below the Fed’s 2% target for annual inflation. Retail sales are also up, rising by 1.1%, the biggest gain since September 2012. Another positive sign is that inflation-adjusted average weekly earnings rose 0.3% in March from the prior month; this means that consumers have a little additional spending power.

Stocks closed a day early this week but had a strong finish on Thursday as positive corporate earnings from Morgan Stanley, General Electric, and PepsiCo helped lift the markets. The Nasdaq continues to struggle over concerns that stocks are overvalued and that there is a new tech bubble. The Dow rose this week to 16,408.54 up 2.38% from last week’s close of 16,026.75. The Nasdaq was up 4,095.52 up 2.40% from last week’s close of 3,999.73. The S&P 500 also was lower, ending the week at 1,864.85, up 2.70% from last week’s 1,815.69.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate dropped to 4.27%, the rate was 4.34% last week. The 15-year-fixed also dropped to 3.38% from last week’s 3.47%. A year ago the 30-year fixed was at 3.41% and the 15-year was at 2.64%. A recent prediction from the Mortgage Bankers Association stated that this could be the lowest year for mortgage initiation in 14 years, down 39% from 2013 to $1.065 trillion in single-family loans. Unfortunately, rates rose Thursday and we are back to about 4.5% for 30 year loans at $417,000 and under. Higher loan amounts are closer to 4.75% for 30 years. 15 year fixed for 417,000 and lower loan amounts are about 3.5% and higher loan amounts are about 3.75%.

The 10 year Treasury bond yield ended the week at 2.73% (on Thursday, there was no report on Friday). It was 2.63% last Friday and 1.73% a year ago.
U.S homebuilder confidence rose in March. The National Association of Home Builders/Wells Fargo builder sentiment index rose to 47 in April from 46 in March. Readings below 50 still mean that builders view sales conditions as poor. This was the third straight month the reading was under 50; it was above 50 from June to January. The overall confidence index was below 50 in all four regions of the United States — 36 in the Northeast, 45 in the West and 48 in the Midwest and South. However the index measuring their confidence in home sales over the next six months rose to 57, the highest since January.

Housing starts rose 2.8% in March to an annualized pace of 946,000, units short of economists’ predictions of a rate of 970,000. February’s starts were revised to show a 1.9% increase rather than a –0.2% downturn. Groundbreaking for single-family homes in March was up 6.0% to a 635,000-unit pace. Permits to build homes fell -2.4% in March to a 990,000-unit pace with permits for single-family homes rising 0.5%.

The California Association of Realtors® saw sales for March totaling a seasonally adjusted annualized rate of 367,000 units, up 1.4% from February’s revised 361,790 but down -12.3% from March 2013’s rate of 413,810. This was the eighth straight decline on a year-over-year basis. The median price of $435,740 was 7.7% greater than February’s $404,250 median and 14.9% higher than March 2013’s $379,000. There have been over two years of year-over-year price increases. For Los Angeles County the median sold price was $395,780, up 1.7% from February’s $389,080and up 16.1% from March 2013’s $340,890. Sales were up 20.4% over February but down -17.1%from last March.

Housing inventory according to C.A.R. was 4 months, down from February’s 4.7 months but strongly up from March 2013’s 2.9 months. Time on market fell to 35 days in March from 40 days in February but up from 29.4 days in March 2013

DataQuick’s numbers for March showed that sales were near a six-year low while prices hit a six-year high. Sales were down -14% from a year ago in the six-county Southland region to 17,638 properties but this was up 25.7% from February’s 14,027. The February to March gain was still under the average 36% increase generally seen between these two months. Prices were up 15.8% to a median price of $400,000 from $345,500 in March 2013, and up 4.4% from $383,000 in February. This is still -20.8% below the peak seen in 2007. The number of homes that sold for $500,000 or more increased 2.9% from one year earlier, while $800,000-plus sales rose 5.4%. In March, 35.1% of all Southland home sales were for $500,000 or more, up from 33.5% the month before and up from 27.8% a year earlier. For Los Angeles County alone, sales fell -15% to 5,915 properties from 6,962 a year earlier while the median price rose 14.5% to $435,000 from $380,000 last year.

Realtor.com’s National Housing Trend Report for March showed that a median nationwide price of $199,900 which was 5.3% higher than last year. The number of properties for sale rose9.5% above March 2013 levels to 1,841,844 units. The median age of inventory increased 22.9%above the year-ago figures, to 102 days on the market. For the Los Angeles-Long Beach MSA, the median list price was $459,990 which was up 12.2% from last March and up 2.2% from February. The amount of total listings was 29,983, up 29.3% from last year and up 11.1% from last month. The average age of inventory was 59 days, up 25.5% from a year ago and up 9.3% from last month.

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Week end economic update, April 11, 2014

This week marked good news on the jobs front. The Labor Department reported that U.S. job openings in February reached their highest level in six years, increasing 299,000 to a seasonally adjusted 4.17 million. The report is one of the indicators being watched by the Fed as they continue to assess the health of the U.S. economy. Another indicator is that the number of people quitting their jobs also rose for the first time in months. This generally indicates confidence in the fact that jobs are more plentiful.

Early consumer sentiment indicators for April are strong. The consumer sentiment gauge from the University of Michigan and Thomson Reuters rose to a preliminary April reading of 82.6 — the highest reading since July — from a final March level of 80.

The Labor Department reported that U.S. wholesale prices rose a seasonally adjusted 0.5% in March. The price of wholesale services jumped 0.7% last month, while the cost of goods were flat. Personal consumption rose 0.6% in March.

It was a rough week in the stock market as numbers continued to fall and many of the once high-flying stocks such as Tesla and Facebook have taken big hits. These stocks, it should be noted, have seen tremendous run ups, and have been trading at outrageous price to earnings ratios. They are” sexy stocks” which often sell at numbers that don’t make financial sense. U.S. stock numbers have also led to a greater instability in markets overseas. The Wall Street Journal reported that hedge funds have also been cutting their overall exposure to stocks in recent weeks. The Dow fell this week to 16,026.75 down -2.54% from last week’s close of 16,412.71. The Nasdaq closed below 4,000. It dropped to 3,999.73 down -3.1% from last week’s close of 4,127.73 led by a plunge in biotech and high-growth stocks. This was the biggest weekly percentage drop in the Nasdaq since June 2012 and Thursday saw the biggest percentage point drop since August 2011. The S&P 500 also was lower, ending the week at 1,815.69, down -2.65% from last week’s 1,865.09.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate was back down again to 4.34%, the rate was 4.41% last week. High balance and jumbo 30 year loans are more like 4.625%. The 15-year-fixed also dropped to 3.38% from last week’s 3.47%. The jumbo 15 year is about 3.625%. This represents about a 1/8% drop in rate from last week. A year ago the 30-year fixed was at 3.43% and the 15-year was at 2.65%.

On a very positive note we are seeing an easing in qualifying standards by lenders. When the Qualified Residential Mortgage standards came into effect under the Dod Frank Financial Reform at the beginning of the year many people feared that loans would be harder to obtain. Today just 4 months later many lenders have made their guidelines more lenient than we have seen since the collapse of sub prime. Some examples are: More lenders offering stated income. Jumbo loans up to $4,000,000 with only 20% down! Some lenders are offering back end ratios of up to 49% on jumbo loans. People with short sales are able to obtain loans after 2 years with some lenders rater than 4 years.This is all good news after 6 years of very stringent lending standards!
The 10 year treasury bond yield ended the week at 2.63% responding to this week’s down stock market. It was 2.80% last Friday and 1.82% a year ago.

The latest National Housing Survey from Fannie Mae shows positive movement. The March survey showed that despite some recent volatility, consumers are feeling positive about the housing market. The share of the March survey respondents who say it is a good time to sell a home jumped four percentage points from February’s level to 38%, up from 26% in March 2013. Those who thought it was a good time to buy increased one point to 68, two points below responses one year earlier. Although most respondents (54%) felt mortgage rates would increase over the next year, those respondents (52%) felt they could easily get a mortgage. Those who expect prices to continue to increase over the next 12 months went from 52% in February to 48% while the amount of those expecting prices to stay the same increased by four points to 42%. Survey respondents generally seemed more positive about their financial situation. The amount of those who expect their financial situation to worse dropped to 12% from 21% a year ago and those who say their personal financial situation has improved over the past year is 40%, an all-time survey high. However 58% of respondents feel that the economy is on the wrong track, the same number that felt that way one year ago. Overall 68% of participants said they would buy if they were going to move.

An index from FNC forecasts a 3.7% rise in home prices between March and August for Los Angeles and Orange Counties this year. The home price index is based on non-distressed sales. The index in February was 17.4% higher than last year in Los Angeles and Orange Counties. FNC forecasts that the index will keep rising throughout the summer at roughly half the pace that it did last year. According to the director of research at FNC, this is a sign that the market is healthy but not overheating. Homes on average sold in March went for just a little below their list price and the average seller sold their house for 4.5% more than they paid for it.

The only drags on the economy this week were that property tax taxes were due yesterday, and income taxes are due Tuesday. Income tax rates are higher this year as the Bush Tax Cuts have expired for taxpayers with family incomes over $400,000. Special accelerated depreciation amounts have also expired from the Obama Stimulus Package, and the payroll tax “holiday” also expired this year. This has left everyone with higher tax rates. Fortunately, the economy is expanding. Consumer confidence is up, as are incomes!
All in all we are very fortunate to be in such a vibrant Real Estate Market! Financing is getting easier to obtain, prices are rising, buyers are motivated to buy, and the number of homes sold is increasing!

Call today to receive economic submarket reports regarding:

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Economic update for the week ending April 5, 2014

The March Bureau of Labor Statistics jobs report was released Friday. It showed that the economy added 192,000 non farm jobs. This was welcome news after 3 months of much lower than expected gains, which were attributed to poor weather by many. January and February numbers were revised upward as well. The gains were all in the private sector, as government jobs showed no increase. The sectors with biggest job gains were: Professional and Business services, 57,000. Health care, 19,000. And Construction, 19,000. Construction has added 151,000 jobs over the last year. The March national unemployment rate held steady at 6.7%, the same rate it was at in February, however it did show that job creation is continuing at a steady pace. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one rose to a six-month high of 63.2 % from 63%  in February. This signals more people looking for work that had taken themselves out of the work force, as they are more optimistic about finding jobs than in the past.

The Dow rose this week to 16,412.71 up 0.55% from last week’s close of 16,323.06. Earlier this week, the Dow closed out the month at 16,457.66 up 0.83% from last month’s close of 16,321.90. It fell -0.7% for the quarter.

The Nasdaq however continued to fall. It dropped to 4,127.73 down -0.67% from last week’s close of 4,155.76 led by a plunge in biotech and internet stocks. The Nasdaq has lost 20% on 300 key stocks since its high point in early March and is now in bear market territory.  The Nasdaq ended the month at 4,198.99 down  -2.53% from last month’s close of 4,308.12. It rose 0.5% for the quarter.

The S&P 500 also rose, boosted by the jobs numbers, ending the week at 1,865.09, up  0.40% from last week’s 1,857.62 close but off a record high of 1,890.90 hit Wednesday after an ADP report showed job growth and the Commerce Department reported that factory orders rose 1.6% in February. The S&P 500 ended the month at 1,872.34, up 0.69% from last month’s 1,859.45 close. It gained 1.3% in the first quarter of the year.

The 10 year treasury bond yield ended the week at 2.80%. It was 2.73% last Friday and 1.78% a year ago. This signals an upward trend for Mortgage interest rates which closely follow the treasury bond market. Rates actually fell in January have been very steady since. This was mostly due to the disappointing December and January job numbers. With February and March numbers back in line with expectations, expect rates to continue to rise as they have in the last week.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate rose  to 4.41%, the rate was 4.40% last week. The 15-year-fixed rose to 3.47% from last week’s 3.42%. They were more like 4.5% for 30 year and 3.5% for 15 year after the jobs report was digested yesterday.  A year ago the 30-year fixed was at 3.54% and the 15-year was at 2.74%. Loans over $417,000 are more like 4.75% for 30 year and 3.75% for 15 year fixed terms today.

U.S. construction spending showed a slight increase in February, up 0.1%  in February after a 0.2% drop in January. The Commerce Department reported that construction stands at a seasonally adjusted annual rate of $945.7 billion, 8.7% above the level of a year ago. Residential construction dropped 0.8%, the biggest setback since July. This is believed to be a temporary drop.

CoreLogic reported home prices rose 0.8% month over month from January and 12.2%compared to February 2013. This represents 24 months of consecutive year-over-year price increases. CoreLogic’s month-to-month prices aren’t adjusted for seasonal patterns. California was one of the five states with the highest home appreciation at 19.8%. CoreLogic predicts a10.5% year-over-year increase for March.

Zillow released a report this week showing that only around 43% of homes on the market in the Los Angeles area are affordable by  historic standards, meaning that a family could buy the home and  spend 35% or less of their household income. This is the number that was the average from 1985 through 2000 before the housing bubble. Today the average family would need to spend 39% of its income on a mortgage which is the highest rate of anywhere in the country.

All in all the Real Estate market seems to be in the mist of a spring pick up. Our closed escrows were up about 20% from February as the selling season has picked up steam. Some areas are beginning to see more listings, but most of our market suffers from very low inventory. We really need to see inventory levels increase before prices can level! With property and income tax due over the next two weeks it is possible we could see things cool off a little for a few weeks. It’s pretty common this time of year. If that should happen, don’t panic! It will roar back by the end of April!

Call today to receive economic submarket reports regarding:

  • Calabasas Homes For Sale
  • Sherman Oaks Homes For Sale
  • Hidden Hills Homes For Sale
  • Studio City Homes For Sale
  • Tarzana Homes For Sale
  • Luxury Condominiums and Townhomes

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Economic update March 28, 2014

L.A. County’s unemployment rate in February fell to 8.7% (from 8.9% in January) with employers adding 27,700 jobs to their payrolls (they lost 63,000 jobs in January). A year ago the rate was 10.2%. The statewide unemployment rate in February was 8%. Los Angeles and Long Beach both had 9.8% unemployment. Over the past 12 months, employers in L.A. County have added 86,000 jobs to their payrolls, for a growth rate of 2.1%.

It was a mostly down week in the markets. Friday saw a boost from the news that consumer spending rose in February at the fastest rate in several months, up 0.3% last month on a seasonally adjusted basis. Americans spent more money on health care and utilities but purchases of durable goods fell for the third month in a row. Also personal income rose 0.3% in March and the U.S. savings rate hit a four-month high of 4.3% from 4.2% in January. Inflation-adjusted disposable income was up 0.3%, the biggest advance in five months. The Dow rose this week to 16,323.06 up 0.13% from last week’s close of 16,302.70. The Nasdaq however dropped to 4,155.76 down -2.83% from last week’s close of 4,276.79 led by a plunge in biotech stocks. This was the worst week for the Nasdaq since October 2012. The S&P 500 also fell, ending the week at 1,857.62, down -0.47% from last week’s 1,866.40 close.

The ongoing effect of the Fed’s remarks last week continued to be felt on interest rates. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate rose to 4.40%, the rate was 4.32% last week. The 15-year-fixed rose to 3.42% from last week’s 3.32%. A year ago the 30-year fixed was at 3.57% and the 15-year was at 2.76%.

The 10 year treasury bond yield ended the week at 2.71%. It was 2.75% last Friday.

The Commerce Department reported that sales of new U.S. single-family homes fell -3.3% in February to a seasonally adjusted annual rate of 440,000 units which is the lowest level seen since last September. The rate was down -1.1% compared to February 2013. Sales fell -15.9% in the West. January’s sales were also revised downward to a 445,000-unit pace from a 468,000-unit pace. Some of the slowdown continues to be blamed on unusually cold weather but economists are predicting a rush on homes as household formation begins to accelerate again with the improving economy. Inventory is at a 5.2 month supply, the highest level since December 2010. The median price of a new home was down -1.2% from February 2013.

Consumer confidence rose to its highest level in more than six years. The Conference Board indexrose to 82.3 in March compared to 78.3 the previous month. Consumers expect the economy to continue to strengthen and are showing optimism that both business conditions and the labor market will improve over the next six months.

The composite 20-city S&P/Case-Shiller home price index was up 13.2% in January from a year earlier with all 20 cities showing year-over-year gains. Prices in the 20-city index were 0.1% lower than the prior month, but that is mostly due to the cold winter throughout much of the country, adjusted for seasonal variations, prices were 0.8% higher month-over-month. For the Los Angeles metro area, prices were up 18.5% year over year and down -0.3% month over month (but up 0.4% once seasonally adjusted).

The National Association of Realtors® reported that its seasonally adjusted pending home sales index was down -0.8% to 93.9., it was down -10.5% from February 2013. A combination of cold weather, higher mortgage rates, and limited inventory have cramped the market but most economists are expecting a spring rebound.

The California Association of Realtors® however saw that pending sales were up in February, jumping 14.2% from January but down -12% from last February. The index rose from 84.8 in January to 96.8 in February and was 110.1 in February 2013. Distressed sales continue to be a smaller part of the market. Equity sales were up statewide, increasing to 85% from January’s 84.4%. In Los Angeles, single-family distressed sales were 14% of the market compared to 16% in January and 32% one year ago.

Next week will be a big week for economic news. Perhaps the most telling report that could impact interest rates is the jobs report which will come out at the end of next week. Expect rates to rise on a good report, 180,000 new jobs or more. Expect rates to remain stable at 160,000 or so, and if the report comes in much lower rates could drop! Good news for the economy is bad news for interest rates ( they rise), and bad economic news is good news for rates ( they fall).

Locally we are seeing a spring surge in prices. we are not seeing as many new listings as we would usually see in March, we can expect many more in the next few months!

Economic update March 14, 2014

For the first time in nearly six years the Los Angeles County jobless rate is below 9%.The county unemployment rate for January was 8.9% the lowest level since November 2008 and a dip below December’s rate of 9.2%. The state Employment Development Department also reported that the county lost nearly 63,000 jobs between December and January mostly due to post-holiday layoffs in retail. An annual revision resulted in 200,000 more jobs showing up on employer payrolls in the county than previously estimated. In the past 12 months, the county added 91,000 jobs a growth rate of 2.3% with the biggest gains coming in professional and business services, which were up 27,000 jobs, and health care/social assistance, which were up 19,000 jobs. The statewide unemployment rate for January was 8.1% still above the national rate for January of 6.6%. On a national level this week, the number of Americans filing new claims for unemployment benefits unexpectedly fell hitting the lowest level since November.

Stock markets were lower this week as concerns over a slowdown in China and the tensions between Ukraine and Russia dominate the news. Russia continues to advance into the Crimea and has been threatening to enter other parts of Ukraine despite demands from the West to pull back. The Crimean Peninsula is holding a referendum this weekend on whether or not it should secede from Ukraine and join Russia. Also this week it was reported that U.S. wholesale prices fell for the first time in three months. Consumer sentiment as measured by the University of Michigan and Thomson Reuters index dropped to 79.9 this month down from a February final level of 81.6. Rising gas prices and larger geopolitical worries are believed to have played a major role. The Dow fell this week to 16,065.67 down -2.52% from last week’s close of 16,452.72. The Nasdaq was also down this week closing at 4,245.40 down-2.09% from last week’s close of 4,336.22. The S&P 500 ended the week at 1,841.13, down -1.96% from last week’s 1,878.04 close. Markets in Europe and Asia showed much larger drops, average drops were about 5% for the week.

The 10 year treasury note yield rate fell to 2.65% after closing at 2.80% last week. Most of this drop in yield took effect on Thursday and Friday. This has caused mortgage loan interest rates to drop in the last couple of days!

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate was back up to 4.37%, the rate it was two weeks ago. The rate was 4.28% last week. The 15-year-fixed rose to 3.38% from last week’s 3.32%. A year ago the 30-year fixed was at 3.63% and the 15-year was at 2.79%. Once again the survey is done in the beginning of the week. Rates are actually lower. We are seeing loans $417,000 and under at the 4,25% level for 30 year terms, and 3.375% for 15 year loans. Jumbo 30 year are closer to 4.5% and 15 year loans are about 3.625%

The February numbers from DataQuick show that sales for the six-county Southland area dropped to the lowest level for a February in six years however prices continue to rise in many mid-level and high-end areas. A total of 14,027 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month, down -3.1% from 14,471 in January, and down -12% from 15,945 sales in February 2013. Since 1988, when DataQuick’s statistics begin, February sales have ranged from a low of 10,777 in 2008 to a high of 26,587 in 2004.Last month’s Southland sales were -20.1% below the average number of sales – 17,560 – for February since 1988. The median price paid for all new and resale houses and condos sold in the six-county region last month was $383,000, up 0.8% from $380,000 in January and up 19.7% from $320,000 in February 2013. The median sale price has risen on a year-over-year basis for 23 consecutive months. In Los Angeles County alone, the sales volume of 4,595 was down -16.2% from last February’s 5,481. The median price rose 21.7% year over year up to $426,000 from $350,000.

DataQuick also reported that the number of homes sold in the mid and upper ranges continue to rise. The number of homes that sold from $300,000 through $799,999 rose 2.1% year-over-year, the number that sold for $500,000 or more increased 12.2% from one year earlier, while $800,000-plus sales rose 4.9%.In February, 32.6% of all Southland home sales were for $500,000 or more, up from a revised 32.2 % the month before and up from 24.4 % a year earlier. Foreclosure resales continue to be smaller part of the market, 6.8% of the Southland resale market in February compared with 16.2% a year ago. We continue to see an above-average amount of cash buyers, cash buyers were 30.9% of home sales in February which was down from a record 36.9% last year but still far above the monthly average of 16.4% of all sales.

What we need is more inventory. It seems like there is two types of inventory: drastically overpriced homes that are sitting and well priced homes that are selling quickly with multiple offers! Unfortunately, the number of drastically overpriced homes that have no chance of selling are making the inventory numbers appear to be higher than it is, but we, on the ground, know that the real inventory of properly priced homes are at very low levels. It’s odd. We have seen a good number of new listings in some areas and very few in others. There is no consistency yet. I would expect new listings to pick up drastically as we head into spring! With more inventory we will see more sales. It is low inventory that is causing lower sales numbers, and driving price up!

Economic update March 7, 2014

 

The Labor Department reported that the nation added 175,000 jobs last month, a pace that beat economists’ predictions of 149,000 jobs added. This number was down from the average of 189,000 over the last 12 months but much stronger than the last two months. The unemployment rate rose 0.1% to 6.7%. In December, the economy added 84,000 jobs, and in January it created 129,000 positions. This stronger number means that the Fed will continue with the taper of the bond and mortgage buying program and perhaps could taper quicker in the future, which will lead to higher interest rates.

The jobs numbers helped raise stock prices on Friday, however continued worries over the tensions in the Ukraine had investors selling off Monday, before recovering during the week. this could put stress on the markets in coming weeks.The Dow rose again this week to 16,452.72up 0.80% from last week’s close of 16,321.90. The Nasdaq closed at 4,336.22 up 0.65% from last week’s close of 4,308.12. The S&P 500 ended the week at 1,878.04, up 0.99% from last week’s 1,859.45 close.

The stock market was also bolstered when the Federal Reserve released its Beige Book Comments earlier in the week. This reflects an in-depth view of economic activity. There has been a lot of uncertainty over December and January employment numbers, which were dismal and far below expectations, as well as tapered down auto and retail sales. The Beige Book pointed out more in depth how unusually unseasonal weather played a significant role in these sectors, which clearly calmed investors. That and today’s jobs report allowed the stock market to end up for the week after dropping over 200 points Monday over the Ukraine crisis.

The 10 year treasury note yield rate rose to 2.80% after closing at 2.66% last week. This reflects growing optimism in the economy which means less stimulus, and possibly inflation in the future. It also directly impacts mortgage rated pushing them upward.

The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate was down to 4.28% from 4.37% last week. The 15-year-fixed was down to 3.32% from last week’s 3.39%. A year ago the 30-year fixed was at 3.52% and the 15-year was at 2.76%. This being said, the survey is conducted at the beginning of the week. Rates dropped at the end of last week and Monday after the Russia, Ukraine situation on fears of a slowdown in the economy due to sanctions, oil distribution and spillover into the European economy. There was also discussions of other action. The stock market dropped over 200 points Monday. By Tuesday the rhetoric began to “dial down” a little and the stock market recovered quickly throughout the week. When money moves out of stocks it moves to longer term more secure investments like bonds driving rates down. The survey rates reflect the beginning of the week better than the end of the week as rates ended the week about 1/8% higher than they were Monday and Tuesday. Loans at $417,000 and below are closer to 4.5% today for 30 year terms and 3.5% for 15 year loans. Higher balance and Jumbo loans are about another 1/4 % higher, 4.75% and 3.75%.

The Commerce Department reported that U.S. construction spending showed a small increase in January, edging up 0.1% which was much lower than the revised 1.5% gain in December. Homebuilding was up 1.1% in January with single-family construction up 2.3% and apartment building up 1%. Non-residential construction fell 0.2% and office building was flat. Bad weather was once again a contributing factor in these numbers.

CoreLogic reported that prices rose 0.9% in January after being down -0.1% in December. During the past 12 months homes are up 12%, the biggest year-over-year gain in more than eight years. California registered the second largest price gains year over year, 20.3% beaten out only by Nevada with 22.2%. The Los Angeles/Long Beach/Glendale MSA rose by 19.7%.

With the time change on Sunday we will begin to see longer days with longer home shopping hours! It’s a seasonal business with the most active time upon us. It’s going to be an incredible several months. Expect large price increases, and an big increase in the number of sales!

Call today to receive economic submarket reports regarding:

  • Calabasas Homes For Sale
  • Sherman Oaks Homes For Sale
  • Hidden Hills Homes For Sale
  • Studio City Homes For Sale
  • Tarzana Homes For Sale
  • Luxury Condominiums and Townhomes

Contact Aaron Today To Learn More 

  • Encino Homes For Sale
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February 28, 2014

Stocks were up overall for the month but the cold and snow blanketing much of the country may be part of what is keeping a lid on a stronger economic recovery. Stocks were strongly up over last month. The Dow closed out the month at 16,321.90 up 3.97% from last month’s close of 15,698.85 and up 1.36% from last week’s close of 16,103.30. The Nasdaq ended the month at 4,308.12 up4.98% from last month’s close of 4,103.88 and up 1.05% from last week’s 4,263.41 close. The S&P 500 ended the month at 1,859.45, up 4.31% from last month’s 1,782.59 close and up 1.13% from last week’s 1,838.63 close.

Federal Reserve Board Chairman Janet Yellen said this week that some of the recent soft economic data may have been due to the unusually harsh weather in recent months and that the Fed plans to continue the taper of QE3 with a plan to stop bond-buying purchases through the program sometime in the fall. In the past, the Fed has said it wouldn’t consider raising rates until the unemployment rate hit 6.5% and inflation remained below 2.5% but Yellen amended that stating that a 6.5% unemployment rate is not the definition of full employment and there needs to be a greater consideration of how the labor market is performing. This was good news for the markets, as the February unemployment rate was 6.7% and 6.5% could be sooner rather than later. The prospects of keeping short term rates at or near zero after the unemployment rate hits 6.5% was welcome news for the markets after thinking short term rates could be rising soon.

Interest rates were pretty steady this week and were up slightly for the month. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate was up to 4.37% from 4.33% last week. The 15-year-fixed was up to 3.39% from last week’s 3.35%. At the end of last month the 30-year fixed was 4.32% and the 15-year fixed was 3.40%. A year ago the 30-year fixed was at 3.51% and the 15-year was at 2.76%. Jumbo rates are only about 1/4%. It’s a very small spread between the conforming mad jumbo rates right now.

The 10 year treasury note yield rate closed the month at 2.66%, it started the month at 2.61% and was at 2.73% last week.

The Conference Board’s index showed that consumer confidence fell more than forecast in February. It decreased to 78.1 from a revised 79.4 in January. Economists had predicted the reading to be around 80 (the index was in the mid-50s during the recession). Fewer American believe business conditions will improve over the next six months with the measure of consumer expectations falling to 75.7 from 80.8 in the previous month. Also the amount of consumers who said they believed that jobs would become more plentiful fell to 13.3% from 15.1% last month.

According to the Standard & Poor’s/Case-Shiller 20-city home price index, prices fell -0.1% from December, partly due to the cold weather across the country. It was the second straight monthly drop. The number matched the previous month’s decline. For all of 2013 prices rose 13.4%, the largest gain in eight years. Los Angeles prices rose 20.3% from December 2012 to December 2013.

The Commerce Department reported that sales of new U.S. single family homes rose 9.6% in January to a seasonally-adjusted annual rate of 468,000 the highest level seen since July 2008. The number was far above the predicted 400,000 pace predicted by economists. Sales in the West along were up 11%. The overall rate was up 2.2% compared with January 2013. The median price of a new home rose 3.4% from January 2013. The amount of inventory of new homes is currently at 4.7 months, down from 5.2 months in December.

The Southland Regional Association of REALTORS® reported that San Fernando Valley home prices continued to rise in January. The median price gained more than 15% year over year and is now $485,000. The amount of properties on the market rose year over year by nearly 18% up to 1,297. Traditional buyers are now 84% of sales in the area compared to 65% a year ago. The inventory level is still very low representing only a 2.5 month supply. For the Santa Clarita Valley median home prices rose over 20% from last year to $432,900.
The California Association of REALTORS® reported that California pending home sales picked up steam in January and reversed a two-month decline. The Pending Home Sales Index rose 22.9% in January to reach 84.8, up from a revised index of 68.9 in December, based on signed contracts. Pending sales were down -17.5% from the revised 102.8 index recorded in January 2013. It was the seventh straight month that equity sales have been more than 80% of total sales. The share of equity sales in January dipped to 84.4%, down from 84.5% in December. Equity sales made up 64.2% of sales in January 2013. In Los Angeles County alone distressed home sales were at 16% in January, down from 17% in December 2013 and 35% one year ago.

The National Association of REALTORS® pending home sales index was up 0.1 last month to 95. The index has fallen -9% over the past year due to changes in mortgage rates, rising prices, and reduced inventory. The association projects that sales will total 5 million in 2014, down from 5.1 million in 2013.

We are finally coming to the most active time of the year. We are seeing an uptick in listings after several months with very few new listings. These listings, if priced right should sell quickly. Expect to see the number of sales increase significantly.

Call today to receive economic submarket reports regarding:

  • Calabasas Homes For Sale
  • Sherman Oaks Homes For Sale
  • Hidden Hills Homes For Sale
  • Studio City Homes For Sale
  • Tarzana Homes For Sale
  • Luxury Condominiums and Townhomes

Contact Aaron Today To Learn More 

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Economic Update February 21, 2014

Stocks were mixed this holiday-shortened week responding to a mixed bag of news. Inflation reports show inflation remains low. In January, overall prices rose 1.6% from a year ago. Prices of most commodities rose modestly while the shelter index was up at 2.6% compared to a year ago because rents are rising.

The Dow closed out the week at 16,103.30 down -0.32% from last week’s close of 16,154.39. The Nasdaq was up, ending the week at 4,263.41 up 0.45% from last week’s 4,244.03 close. The S&P 500 was down very slightly, closing the week at 1,838.63, down -0.13% from last week’s 1,838.63 close.

The 10-year Treasury note yield rate was down slightly to 2.73% after ending last week at 2.75%. It was 1.99% a year ago.

Mortgage Interest rates rose slightly this week. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate up to 4.33% from 4.28% last week. The 15-year-fixed inched up to 3.35% from last week’s 3.33%. A year ago the 30-year fixed was at 3.56% and the 15-year was at 2.77% interest rates on loans over $417,000 are around 4.625% for 30 year fixed and 3.625% on 15 year fixed.

Low inventory continues to have a constraining effect on California home sales. The California Association of Realtors® reported that closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 363,640 units in January, marking the third straight month that sales were below the 400,000 level and the sixth straight decline on a year-over-year basis. Sales in January were up 0.3% from a revised 362,430 in December but were down -13.8% from a revised 421,780 in January 2013. Inventory at the higher end of the market, priced $1 million and higher did increase 11.1% from last year. The statewide median price of an existing, single-family detached home fell -6.2% from December’s revised median price of $438,090 to $410,990 in January. January’s price was 22.1% higher than the revised $336,650 recorded in January 2013, marking 23 consecutive months of year-over-year price increases and the 19th straight month of double-digit annual increases. The available supply of existing, single-family detached homes for sale rose in January to 4.3 months, up from December’s Unsold Inventory Index of 3 months. The index was 3.5 months in January 2013. The median number of days it took to sell a single-family home also increased to 44.3 days in January, up from 40.2 days in December and from a revised 36.7 days in January 2013.

In Los Angeles County alone, the median sold price of existing homes was down -3.7% in January from December’s $439,830 to $423,570 which is up 21.1% from January 2013’s $349,720 median price. Total sales were down- 21.2% month over month and down -13.3% from January 2013.

Data from the National Association of Realtors® showed that existing-home sales fell by -5.1%from December to January to a seasonally adjusted annual rate of 4.62 million the lowest level since July 2012. Home sales were also down -5.1% year over year. The cold weather, low inventory, and rising mortgage rates are cited as potential reasons for the lower numbers. Inventory improved modestly, up 2.2% month over month to 1.9 million homes and up 7.3% from January 2013. The current inventory supply rate is now 4.9 months, up from 4.6 months in December and 4.4 months a year ago. The median existing home price for all housing types nationwide in January was $188,900, up 10.7% from January 2013. The median time on market for all homes was 67 days in January, down from 72 days in December and 31% of homes sold in January were on the market for less than a month. Existing-home sales in the West dropped -7.3% to a pace of 1.01 million in January, and are -13.7% below a year ago. The median price for the West was $273,500, up 14.6% from January 2013.

The latest foreclosure data from RealtyTrac shows that one in every 1,058 U.S. homes received a foreclosure filing in January. Foreclosure filings are down -18% from January 2013 but up 8% from December 2013. The rise in foreclosure activity was caused by a surge in starts, properties just entering foreclosure, as well as scheduled foreclosure auctions. The report did show that foreclosure starts in California actually rose 57% from a year ago after 17 consecutive months of annual decreases.

The extreme weather that has hammered much of the country seems to have also impacted homebuilder confidence. The National Association of Home Builders/Wells Fargo Builder Sentiment Index is now 46, down from January’s 56 reading and the lowest level since May. Economists had been predicting a number similar to the one they saw in January. Generally a reading below 50 indicates that more builders see sales conditions as poor rather than good. Builders’ prediction for sales over the next six months also fell by six points to 54.

U.S. housing starts saw their biggest drop in nearly three years last month. The U.S. Census Bureau and the Department of Housing and Urban Development reported that single-housing family starts were down -16% in January to a seasonally-adjusted annual rate of 880,000 units below economists’ predictions of 950,000. This was attributed to the unusually cold weather gripping much of the country and in fact in the hard-hit Midwest, starts were down a record -67.7%. Groundbreaking for single-family homes, the largest segment of the market, fell 15.9 percent to a 573,000-unit pace in January, the lowest level since August 2012. Permits to build homes were down by -5.4% in January, the largest drop in since June.

The National Housing Trend Report from realtor.com® showed that the median list price for January rose 8.3% compared to last year but only up 0.1% from the previous month. The number of properties for sale was up 3.1% for the year but down -3.3% from the previous month. The median age of inventory was essentially unchanged. For the Los Angeles-Long Beach MSA the median price was $449,000 up 25.1% from a year ago but down -0.20% from the previous month. The amount of total listings was 18,600 up 3.40% from the previous year and up 5.10% from the previous month. The median age of inventory was 74 days, down -5.1% from the previous year and down -1.3% from the previous month.

We are heading into the selling season which will be a welcome relief when it comes to real estate related data. Expect to see the month over month indicators pick up after March! Not only do they pick up at that time every year, we are beginning to see the pick up in the marketplace.

While inventory levels are still near record lows we are beginning to see many more homes listed in many of our markets. That alone should increase the number of sales as we still see stronger demand than inventory supply which is evident by the high number of multiple offers. Obviously, not all homes are getting multiple offers, there is a limit to how high a home can be priced. Homes that are not well priced are sitting on the market.

Call today to receive economic submarket reports regarding:

  • Calabasas Homes For Sale
  • Sherman Oaks Homes For Sale
  • Hidden Hills Homes For Sale
  • Studio City Homes For Sale
  • Tarzana Homes For Sale
  • Luxury Condominiums and Townhomes

Contact Aaron Today To Learn More 

  • Encino Homes For Sale
  • Walnut Acres Homes For Sale
  • Woodland Hills Homes For Sale
  • Bell Canyon Homes For Sale

Economic Update February 14, 2014

This week the stock market saw another week of positive territory with strong gains seen in all three indices as investors took into account bad weather as an excuse for some soft economic data. While U.S. export prices rose 0.2%  in January, the third straight monthly increase, factory production fell 0.8% in January, the biggest drop in more than 4-1/2 years. The Dow closed out the week at 16,154.39 up 2.28%  from last week’s close of 15,794.08. The Nasdaq was also up, ending the week at 4,244.03 up 2.86% from last week’s 4,125.86 close. The S&P 500 ended the week at 1,838.63, up 2.32% from last week’s 1,797.02 close.

The  10-year Treasury note yield rate rose slightly to 2.75% after ending last week at 2.71%. It was 2.00% a year ago.

Interest rates saw a slight rise this week after several lower weeks. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate up to 4.28% from 4.23% last week.  The 15-year-fixed stayed solid at 3.33% the same as last week’s 3.33%. A year ago the 30-year fixed was at 3.53% and the 15-year was at 2.77%. Jumbo 30 year rates are around 4.5% and jumbo 15 year are around 3,6%. Still very low rates!

The latest quarterly report from the National Association of Realtors® shows that the

median existing single-family home price increased in 73% of measured markets, with 119 out of 164 metropolitan statistical areas (MSAs) showing gains based on closings in the fourth quarter compared with the fourth quarter of 2012. Forty-two areas, 26 % had double-digit increases. The national median existing single-family home price was $196,900 in the fourth quarter, up 10.1%  from $178,900 in the fourth quarter of 2012. In the third quarter the median price rose 12.5% from a year earlier. In the West, existing-home sales dropped -12.7% in the fourth quarter, and are-8.1% below a year ago. Lack of inventory remains a concern. The median existing single-family home price in the West jumped 15.5% to $286,200 in the fourth quarter from the fourth quarter of 2012.

Credit reporting agency TransUnion released a report showing that the amount of late payments on home loans has hit the lowest level in more than 5 years. Nationwide, 3.85% of mortgage holders were at least two months behind on their payments in the October-December quarter, compared to 5.08% a year before. This is just another example of how rising home prices motivates people to make their payments. I’m sure many pele who lost their homes wished they waited. I guess it was hard to imagine that home prices would recover so quickly. Than again its the same thing that happened in the 90’s!

The California Association of Realtors® reported that the percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in the fourth quarter of 2013 was unchanged from the third quarter of 2013 at 32%, but was down from 48% in fourth-quarter 2012, according to C.A.R.’s Traditional Housing Affordability Index (HAI).  Home buyers needed to earn a minimum annual income of $89,240 to qualify for the purchase of a $431,510 statewide median-priced, existing single-family home in the fourth quarter of 2013.The median home price was $352,450 in fourth-quarter 2012, and an annual income of $66,860 was needed to purchase a home at that price. California housing affordability hit a record high of 56% in first quarter of 2012 but has steadily declined since then. In Los Angeles the affordability index in the fourth quarter of 2013 was 34%, down from the third quarter’s 35% and much reduced from the fourth quarter of 2012’s 50%.   

There was an article this week in the L.a. Times about home prices stalling. A broker was quoted in the Inland Empire. That is not what is happening here! I doubt it’s happening there either. We definitely need more homes on the market as we are seeing record sales prices! We all should have bought more Real Estate in the last few years. Lets not be saying the same thing at years end! 

Call today to receive economic submarket reports regarding:

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Economic Update February 7, 2014

Interest rates have dropped over the last couple of weeks. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate dropped to 4.23% from 4.32% last week.  The 15-year-fixed fell to 3.33% from last week’s 3.40%. A year ago the 30-year fixed was at 3.53% and the 15-year was at 2.77%. Obviously, most loans needed in our markets are over the conforming limit ($417,000). Those rates are about 1/2% higher.

The unemployment rate nationwide dropped from 6.7% to 6.6%, the lowest rate seen since October 2008. There were 113,000 jobs created in January which was an increase from December’s revised 75,000 number but lower than the 185,000 economists were predicting. Some speculate that continued extreme weather across the country is slowing the rate of job creation however there were strong gains in the construction sector which accounted for the highest numbers. It looks like the construction we are seeing all over town is reflected in the numbers! There were declines in retail, utilities, government, and education and health employment numbers. Unusually cold weather played a part in the number being lower than expected as much of the country faced record cold temperatures. The participation rate was up slightly to 63.0% from 62.8%. It is thought that more people are feeling that a jobs are becoming easier to find and are entering the workforce.

The Fed has a 6.5% threshold for considering short term rate increases in addition to the taper of the bond and mortgage buying program already underway.  It is anticipated that the Fed will wait until the taper is further along before considering rate increases especially if inflation remains In check.  In the past they have said that they will keep short term rates near 0% until 2015. The next Fed policy planning meeting is set for mid March. The new Chairman of the Federal Reserve, Janet Yellen, took over for Ben Bernanki this week. She is the first woman to chair the Fed and is expected to continue with low rates for now.

This week the stock market ended on a high note with a two-day rally that helped ease some of the market’s recent losses. Investors did not react negatively to the jobs report, focusing instead on the lowering of the overall unemployment rate and the slight rise in the participation rate.  The Dow closed out the week at 15,698.85  up 0.61%  from last week’s close of 15,698.85. The Nasdaq was also up, ending the week at 4,125.86 up 0.54% from last week’s 4,103.88 close. The S&P 500 ended the week at 1797.02, up 0.81% from last week’s 1,782.59 close.

The  10-year Treasury note yield rate rose slightly to 2.71% after ending last week at 2.67%. It was 1.99% a year ago.

The Commerce Department reported that U.S. construction spending increased 0.1% in December to a seasonally adjusted annual rate of $930.5 billion. This was down from a revised 0.8% increase in November. The December increase was driven by a 2.6% rise in private residential construction, which hit an annual pace of $352.6 billion, highest since June 2008. Spending on single-family homes was up 3.4% in December and up 21.6% from a year earlier. Construction of apartments and condominiums was up 0.5%  in December and up 27.3% from December 2012.

The December report from CoreLogic said that home prices slipped were down -0.1%  from November to December, the third straight month-to-month drop after eight straight months of rising prices. For all of 2013, prices rose 11% the highest rate of annual increase since 2005. CoreLogic’s price figures are not adjusted for seasonality.

We are seeing the Real Estate market coming into “high gear” after a seasonal year end slowing. Once again we are seeing major price increases in all areas and all price ranges in our marketplace. Low inventory, multiple offers, and rising prices has 2014 shaping up to be similar to 2013!

Call today to receive economic submarket reports regarding:

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  • Sherman Oaks Homes For Sale
  • Hidden Hills Homes For Sale
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  • Tarzana Homes For Sale
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Economic Update January 31, 2014


January 31, 2014 Economic Update

January saw some corrections in the stock market with the S&P 500 and the Dow posting their biggest monthly percentage decline since May 2012. This was the first January since 2010 with a decline.

The Dow closed out the month at 15,698.85 down -5.3% from last month’s close of 16,576.60 and down -1.14% from last week’s close of 15,879.11.

The Nasdaq fared a bit better, ended the month at 4,103.88 down -1.7% from last month’s close of 4,166.66 and down -0.59% from last week’s 4,128.17 close.

The S&P 500 ended the month at 1782.59, a drop of -3.56% from last month’s 1,848.36 close and down -0.43% from last week’s 1790.29 close.

Interest rates dropped during the month. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate dropped to 4.32% from 4.39% last week and 4.53% at the start of the month. The 15-year-fixed fell to 3.40% from last week’s 3.44% and 3.55% at the start of the month. A year ago the 30-year fixed was at 3.53% and the 15-year was at 2.81%.

Over the course of January 10-year Treasury note yield rate fell after starting the month at 3.0% It closed out the month at 2.67% after ending last week at 2.75%. It was 2.02% a year ago.

Los Angeles County’s unemployment rate fell to 9.2% in December down from 9.5% in November and 10.3% in December 2012. This is its lowest point in more than five years. The state rate is 8.3% and the national rate was 6.7% in December.

Consumer confidence has risen again. The Conference Board reported that the consumer confidence index increased to 80.7 this month from a downwardly revised 77.5 in December beating economists’ estimates of a 79 reading. The index is now higher than it was in September before the confidence-eroding government shutdown and is at its highest level since August. However the consumer sentiment gauge from the University of Michigan and Thomson Reuters registered a final reading of 81.2 in January, down from December’s 82.5. In December, consumer spending rose a seasonally adjusted 0.4% which was above analysts’ expectations of a 0.2% gain. Economists are predicting consumer spending will rise at least 2% over the course of the year.

The Commerce Department reported that sales of new U.S. homes decreased -7% to a 414,000 annualized pace in December, lower than was predicted by economists who predicted a 455,000 pace last month. For all of 2013, demand was up 16.4% to 428,000. The median sales price of a new home rose 4.6% from December 2012 to $270,200. New-housing demand has rebounded from a record-low 306,000 homes sold in 2011, the record peak was 1.28 million in 2005. I would attribute this to very low inventory which is also causing rapid price increases.

The latest S&P/Case-Shiller Home Price Index shows that the 20-city composite rose 13.7% year over year through November 2013 while declining -0.1% from the previous month. Nine out of 20 cities recorded positive monthly returns including Los Angeles which saw a 0.1% increase. It is predicted that while housing prices will continue to rise, the pace of the rise will be slower in 2014.

The National Association of Realtors reported that its Pending Home Sales Index dropped -8.7%last month to 92.4, the lowest level since October 2011. Contracts were down 8.8% from the December 2012 levels. It is believed that unusually harsh weather across the country caused the low numbers of potential buyers. The index in the West dropped 9.8% in December to 85.7, and is 16.0% below December 2012 and this is attributed to the lack of inventory in the market.

We are beginning to see another increase in prices and buyer demand. It appears that 2014 will be much like 2013. The question is: How high can prices go? That’s not a new question. Our compnay recently sold a home in Beverly Hills for $15 million that the buyer bought for $475,000 in 1976! A valley home that just sold for $630,000 was purchased for $98,000 in 1980. Now, the question: How high can prices go? The answer is: Who knows! Definitely they are going up. The question is how long. we can expect these gains to begin to level in a year or so. Anyone who doesn’t buy now will wish in 6 months that they did!

Call today to receive economic submarket reports regarding:

  • Calabasas Homes For Sale
  • Sherman Oaks Homes For Sale
  • Hidden Hills Homes For Sale
  • Studio City Homes For Sale
  • Tarzana Homes For Sale
  • Luxury Condominiums and Townhomes

Contact Aaron Today To Learn More 

  • Encino Homes For Sale
  • Walnut Acres Homes For Sale
  • Woodland Hills Homes For Sale
  • Bell Canyon Homes For Sale