Market Update for Week of February 14, 2011

Quote of the week... "I've been blamed for just about everything that's wrong with this country."--Elvis Presley
We who work in the real estate and mortgage industries know exactly how Elvis felt. The same people who unfairly blamed us totally for the recession now look to us soley for signs the economic recovery is taking place. They might want to remember the health of the housing market is directly dependent on the health of the jobs market, which is not under our control. In any case, everyone felt better last week when January Housing Starts were UP a surprising 14.6%. Builders are more hopeful going forward. The boost came from multi-family units, though single-family starts were off a mere 1% for the month.

A lot of home buying activity is due to the affordability out there at this time. The National Association of Home Builders (NAHB) and a major bank reported their index shows home affordability in Q4 of 2010 at its highest level in 20 years. Their measure found that 73.9% of the new and existing homes sold in Q4 were affordable to families making the national median income of $64,400.

Business tip of the week... A big part of success is not giving up. Studies show that one trait shared by all very successful people is perseverance. They are persistent, determined, tenacious, pursuing a goal far beyond the point where the average person gets discouraged.

Review of Last Week

The bulls on Wall Street are definitely picking up steam. We had another weekly gain in the stock market as the three major indexes were up around 1% and the Dow and the S&P 500 hit new two-year highs. The Nasdaq reached a three-year high, just short of its 2007 peak. If the stock markets are a leading indicator of the overall economy, the recovery should continue as the year goes on.
There were worries over rising Chinese interest rates and disruptions in the Middle East, but these were dispelled by the economic reports. The consumer is key to the recovery, so it was good to see retail sales are now UP seven months in a row. Inflation was a little hotter than expected, as year-over-year, the Core Consumer Price Index is now up 1.0%. Core CPI, the Fed's key inflation reading, is still within their target range and observers feel deflation concerns are now put to rest.
In other news, the Empire State Index showed manufacturing continuing to expand. This is great, though the jobs recovery depends on the services sector, where over 85% of the workforce is employed. Fortunately, that sector is expanding at its fastest pace in five years. Let's hope the jobs follow.

For the week, the Dow ended UP 1.0%, at 12,391; the S&P 500 was also UP 1.0%, to 1,329; and the Nasdaq went UP 0.9%, ending at 2,834.

Even with the stock surge, bond prices held on. Inflation was a little hotter than expected, but still not wild. The FNMA 4.0% bond we watch ended up 18 basis points for the week, closing at $97.18. Mortgage rates, which had been inching up, fell back a bit. Freddie Mac's weekly survey of conforming mortgages showed national average fixed-rate mortgage rates remained near historic lows.

 This Week’s Forecast

JANUARY HOME SALES, CONSUMER MINDSET, Q4 GDP... Happy Presidents Day! The markets will be closed Monday but then we'll have some important economic reports. January Existing Homes Sales on Wednesday are expected to be a tad off December's pace. The same goes for January New Home Sales on Thursday.

The week begins and ends with readings on the consumer mindset. Tuesday's Consumer Confidence is forecast up for February while Friday's Michigan Consumer Sentiment should hold steady. January Durable Goods Orders are predicted to be growing again, a sign business is investing in capital equipment and, perhaps next, in jobs. Friday, we get the second estimate of Q4 GDP, expected to be up a bit from the original estimate.

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NOW is the Best Time to Buy Real Estate!

If you are bottom-fishing, now may be the time to start trolling for real estate. That's what Michael Corbett, author of "Before You Buy: The Homebuyer's Handbook for Today's Market. says"

He says that in five years from now, people are going to be saying, "I should have just bought in 2011,' " said Corbett, who is also host of the "Mansions & Millionaires" segment on the syndicated TV show "Extra."

"Prices are bumping along the bottom and interest rates are really low," he said. "When you have those two together, you have the perfect buying opportunity."
Housing prices may not have hit rock bottom, Corbett acknowledged. But he thinks that people who wait to find the market's bottom are likely to miss out on the current low interest rates.

And rates can be every bit as important to the cost of a deal as price.

He says "You might think you can snag a great deal by lying in wait — hoping that the owner of a $500,000 listing will get desperate enough to accept $450,000, for example. But if interest rates rise 1% during the time you wait, you'll end up shooting yourself in the foot."

Assuming you finance $400,000 of the purchase price of that home, the 1-percentage-point difference between a 5% mortgage and a 6% mortgage will cost you more than $90,000 over the life of a 30-year loan.

"It's hard to tell where the bottom of a market is, until prices start going up," said Diann Patton, a consumer real estate specialist with Coldwell Banker Real Estate. "But the stars are aligned for buyers right now."

What's the best strategy for bargain hunters?

• Be wary of short sales. Many buyers think they're going to get the best deals by rescuing underwater borrowers through a short sale, Corbett said. In a short sale, a home is sold for less than what's owed on the mortgage.

But in order for the short sale to go through, the lender holding the mortgage has to agree to the underwater price. Many are, understandably, reluctant to do so. Realtors say that getting the existing lender's approval adds another layer of complexity to an already complicated transaction. In some cases, such deals can take months to approve. I have literally seen this happen.

"There's just no standard because every bank is different," Patton said. "I've seen short sales take anywhere from 30 days to eight or nine months." They take a lot of patience on the Buyer's part.

Unless the existing lender has already said it's willing to accept a short-sale price that works for you, Corbett suggested you skip short sales entirely.

Foreclosures are another story, Patton said. Lenders who have seized a property are often more realistic about the value. In addition, they often fix up the homes before they list them, she said.

• Look for what the real estate industry calls "battered histories." That usually means one of three things: The home has been on the market for 90 days or more, the seller has cut the price numerous times or the home has had other offers that have fallen out of escrow.

Any of those factors could mean that the seller is getting anxious to get out and may be more willing to negotiate, Corbett said. That does not mean, however, that a low-ball offer is in order.

"The last thing you want to do when a homeowner already feels battered and beaten is insult them," he said. "If the house is appropriately priced, never make an offer that's more than 10% below the asking price. That's just insulting. The seller might not even counter back to you because they'd rather that somebody else got it."

• Get pre-qualified. If you're going to need a loan to buy, make sure you've already discussed your finances with a lender and are pre-qualified.

When there are multiple offers, the bidder who presents the most secure and attractive deal is the one who typically gets the home. If you're the one buyer whose offer isn't contingent on qualifying for a loan, you have a better chance.
http://www.callnancylamar.com/ for all your real estate needs.

Market Update for Week of February 7, 2011

Last Thursday the National Association of Realtors (NAR) came through with the encouraging report that sales of existing single-family homes and condominiums in Q4 of 2010 increased over Q3 in 49 out of 50 states -- a 15.4% rise for the three-month period. However, sales were down 4.78% for the year, to an estimated 4.91 million, from their 5.16 million level the year before. Fueled by the homebuyer tax credit, that higher 2009 sales rate was deemed "unsustainable" in 2010 by the NAR. These are the national numbers. Here in the Western Upstate MLS, our volume was up +2.4% in homes sold, and +.9% in prices vs the previous year.

Home prices, on the other hand, appear to be stabilizing. The NAR revealed that the national median existing single-family home price in Q4 of 2010 stayed essentially flat versus Q4 a year ago, coming in at $170,600. Here's a good sign that prices are beginning to climb off the bottom: median prices in Q4 of 2010 rose in 78 of 152 metro areas compared to Q4 a year ago. The NAR's chief economist added the pleasant thought, "An improving housing market and job growth will go hand in hand. The housing recovery will mean faster job growth." Let's hope he's right!

 Review of Last Week

 The Wall Street bulls sent stocks higher for another week. The Dow-Jones Industrial Average stayed above the 12,000 threshold it crossed the prior week, the broadly-based S&P 500 shot up 1.4% and the tech-heavy Nasdaq saw a 3.1% gain, which would be impressive in any economic environment. Investors are feeling better about the economy, even though last week included some things which certainly would cause economic worry in more bearish settings.
We can start with Egypt, which was all over the news media, but had little visibility to the investment community. Before the market closed Friday, President Mubarek stepped down, as stocks tapered off with a 44-point gain on the day. We also had China increasing its lending rates to slow down inflation and its economy. Here on our shores tech giant Cisco surprised analysts with a disappointing outlook. Their downside guidance came because they see pressure on their profit margins in the coming year.

For the week, the Dow ended UP 1.5%, at 12,273; the S&P 500 was UP 1.4%, to 1,329; and the Nasdaq shot UP 3.1%, ending at 2,809.

Bond prices suffered  as stocks continued to soar, all thanks to the positive economic news. Yields were up on most bonds as prices dipped though not too severely. The FNMA 4.0% bond we watch ended down just 22 basis points for the week, closing at $97.00. Mortgage rates did increase, with Freddie Mac's weekly survey of conforming mortgages showing national average fixed-rate mortgage rates up a bit but still in attractive territory, about the level they were at a year ago.

This Week’s Forecast

RETAIL, MANUFACTURING, HOME BUILDING, INFLATION... Happy Valentine's Day! Whatever parts of the economy you love, this week will have something to say about it. Tuesday's January Retail Sales are expected to continue their slow but steady growth, evidence the consumer is showing up to help out. February manufacturing should be up in both the New York Empire State Index and the Philadelphia Fed Manufacturing Index. January Industrial Production and factory Capacity Utilization are also projected to grow.

Home building is forecast to stay close to its present annual rate when we see Wednesday's Housing Starts and Building Permits reports for January.

http://www.callnancylamar.com/ for all your real estate needs.

Market Update for Week of January 31, 2011

Market Update 

There's good news in the latest housing market forecast for 2011 from the National Association of Realtors (NAR). After dipping 4.8% last year, existing homes sales are predicted to grow 7.9%  this year, to 5.3 million on a national level. The increase for 2012 is forecasted to be a little less, up 4.5%, to 5.53 million. The existing home median price went up 0.3% in 2010, a nice recovery from the 12.9% price drop of 2009. For 2011, the NAR sees it rising 0.5%, to $173,000, then another 2.4%, to $177,900, in 2012.

New home sales are forecast to come back more briskly, up 17.7% in 2011, following their 15.5% drop in 2010. The 2012 projection is for a strong 51.1% sales gain, to 565,000 homes. The median price for new homes, which gained 2.2% last year, should go up another 1.8% in 2011, to $224,700, then 1.9% in 2012, to $229,000. The NAR's chief economist says this rebound in home sales does depend on an improvement in the jobs market. Affordability also matters and in Q4 of 2010 housing was the most affordable on record, according to NAR numbers going back to 1971. The NAR feels the current situation of low home prices along with low interest rates should continue.

 

http://www.callnancylamar.com/ for all your real estate needs.

5K Race in Downtown Anderson, SC to Benefit Cancer Research

Anderson University is presenting “Race for the Gold” in Downtown on Saturday, March 26, 2011 at 9:00AM.

The 5K race will benefit the Anderson University Undergraduate Cancer Research Center .

Anderson will also host various physicians, researchers, and prevention specialists who will be in town discussing cancer-related topics that weekend.

http://www.callnancylamar.com/ for all your real estate needs.