Archive for the 'Uncategorized' Category
January 24th, 2008 Categories: Livermore Real Estate, Market Update, Uncategorized
The results are in as as expected and 2007 was a rather disappointing year in comparison to recent years. No surprise that total sales in 2007 for Livermore was down 26% from 2006. What is surprising is the strong downward movement in the median sales price from $660,000 in July 2007 to $545,000 in December 2007. Inventory levels are down considerably from the fall which is normal for this time of year. Good news is the absorbsion rate (pending sales under contract compared to active inventory) is down to 9 months from 14 months in September 2007. The next 4 weeks will give us a good clue on how these numbers will point the direction of the market this coming new year. Keep watch for future updates.
A little dated from October 2007 is the California Association of Realtors forecast for 2008 (pdf file of 114 pages) which does offer some fabulous statistical information on the Real Estate market during the 1980’s and 1990’s with comparisons of inventory levels (18 months in 1992) and median sales price (under $200,000 in 1997) through 2006. It does give a great perspective on where the market has been in the past and what we may expect in the future. We will digest some of this information in future updates. The good news for now is that this is a great time to buy your first home or move up to that dream home and that even with these lower price levels Sellers have come a long way in the last 10 years.
Livermore December 2007 Statistics
California Association of Realtors 2008 Forecast
Written by John Kurtzer |
July 16th, 2007 Categories: Dublin Real Estate, Home Buyer Tips, Livermore Real Estate, Pleasanton Real Estate, Uncategorized
It is important to review and complete a buyer’s checklist prior to shopping for your home. Narrowing down the number of homes that meet your specific criteria can go a long way towards streamlining your home search.
Developing the parameters for your home search will also allow your professional real estate agent to gather information on the homes that fit your home search criteria and eliminate those homes that would waste your valuable time.
When you discuss the buyer’s checklist with your real estate agent, you will want to be prepared to review your “wants” versus your “needs”. For example; a need would be a minimum amount of square footage for living comfortably, and a want would be the color of carpet in the home. Think of the “needs” as necessary and the “wants” as items that possibly could change or be added later.
Written by John Kurtzer |
July 11th, 2006 Categories: Uncategorized
07/05/2006
Weekly Commentary
Thumbnail Sketch: Another quiet week here in Lake Woebegone, Hometown, USA. Interest rates were fairly stable, though they continue their rising trend; mortgage applications continued to decline (now into numbers that indicate a genuine slowing); housing construction figures for May were lower; and we saw yet another quarter-percent hike to the fed funds rate.
It is notable that most economists agreed a couple of months ago that the Fed would stop its fed funds rate hikes at 5%. By the time of the late-June FOMC (Federal Open Market Committee) meeting, most of those same economists were unanimous that the Fed would instead raise the rate to 5.25%. At this point, the jury is out, but there is a growing consensus around the likelihood that the Fed will take the rate to 5.5% on August 8.
What changed? Inflation has become far more credible in the eyes of the economic community. As Dr. Irwin Kellner recently lamented: “Prices at all levels are rising rapidly as demand has outstripped supply of a variety of goods and services. Higher energy costs are being passed along in the form of surcharges, which are meeting less resistance nowadays than they used to thanks to high employment rates.” The higher cost of fuels has caught up with the economy, forcing a broad array of prices higher, and the burgeoning national debt and weakening dollar are pressuring interest rates higher, further inflating costs of production.
Note that these are not particularly cheery developments. They have all the hallmarks of inflation but come packaged with none of the potential fun. There are few indications that the economy is currently expanding at a feverish pace, despite the GDP figures for the first quarter (which will almost certainly fall significantly in the quarter just ended.) Dr. Kellner hangs black crepe on the proceedings as follows: “Along with energy, higher health care costs are draining consumers of buying power forcing them to reduce their outlays. Higher interest rates are making it tougher for people to use their homes as a piggy bank. Indeed, most consumers have been dipping into their savings for more than a year. The last time the national savings rate was negative for this long a period of time was in 1933 — the bottom of the Great Depression.”
Did he say “Depression”? Yes, he did. We have a negative yield curve, a prime rate that is totally out of synch with conventional mortgage rates, a negative savings rate (meaning, in an oversimplified way, that we’re simply not ending the month with any remaining income, having spent it all and having borrowed to spend some more), and…and yet, the real estate market, though slowing, continues to move toward sustainable numbers in a rather gracious, even an elegant, fashion (given the carnage many analysts predicted).
The right to own property was a key principle for most of the Founding Fathers. Good idea then, good idea now!
KEY INDICATORS
Gold $616.00/ounce [+]
Crude Oil $73.93/barrel [+]
U.S. Dollar to…
Euro .7808 [-]
Japanese Yen 114.60 [-]
30-yr Fixed-rate Mortgage 6.89%
15-yr Fixed-rate Mortgage 6.60%
1-yr ARM 6.38% [HSH average rates: all -]
Mortgage Bankers Association Mortgage Applications Index
Week ending 6/23
Overall
529.6 (down 6.7%; down 0.8%
the week prior)
Purchase Money Loans
389.0 (down 6.2%; no meaningful change the week prior
Refinancing Loans
1356.0 (down 7.5%; down 2.2%
the week prior)
Weekly Jobless Claims 6/24
313,000 first computation – 309,000 prior week (with 1,000 upward revision)
Gross Domestic Product (GDP) first quarter 2006 (revised)
Up 5.6% - revised from 5.3%
FOMC Meeting (fed funds rate)
Up to 5.25%
Prime rate followed to 8.25%
Personal Income May
Up 0.4%
Personal spending up 0.4%
Savings rate -1.7%
Construction Spending May
Down 0.4%
Written by John Kurtzer |
June 22nd, 2006 Categories: Uncategorized
6/21/2006
Weekly Commentary
Thumbnail Sketch: “While home sales may stabilize during the summer months, housing is likely to weaken further by year-end, as interest rates will again push higher.” That is the forecast from Moody’s Economy.com, as penned by Brian Carey this week. Gone, it seems, is the forecast for lower rates as we near the year’s end.
Carey also wrote the following regarding the NAHB Housing Market Index (to the left): “The downward trend in homebuilder optimism is the result of higher interest rates, affordability concerns, and subsiding demand from investors and speculators. After lagging the HMI for several months, housing starts and new home sales are now trending down as well. Consequently, residential construction has become a negative contributor to economic growth.”
Mortgage interest rates continue on an upward course, though we saw a recent dip (that may have inspired a surge in applications for refinancing loans). We report, below, the average rate available at a specific time. This is not the same as the best rate available and, for the most-qualified applicants, lower rates than those to the left can be found. Still—what we see here is a slow and gradual migration north among mortgage interest rates, with the average rate on the standard 30-year loan having risen above 6.75%.
Don’t downplay the strength of the current application numbers, though. When the purchase money index hovers around 400, the number of applications remains very strong. And the jump in refi applications suggests that there are substantial numbers of people who are ready, when the opportunity presents itself, to jump into—and, no doubt, lock in—a decent rate on a refi loan.
The big downer here, of course, is the NAHB Housing Market Index, which results from a monthly survey of the attitude of builders. Anything below 50 means that more than half of those surveyed feel rather negative—and we can read it as the rough equivalent of negative expectations regarding the near-term future of the construction market. It is well worth mentioning, though, that the index reading on overall optimism stood at 40 in the Northeast, plummeted to 25 in the Midwest, edged down to 49 in the South, and remained at 61 in the West…and 61, obviously, is a very positive reading.
Yes, the market is slowing, but a close look at the data seems consistently to validate the assertion of the National Association of Realtors® that the real estate market is easing back to a sustainable rate of sales and appreciation, not careening toward the edge of a proverbial cliff. This should, in fact, prove to be a strong summer for real estate in most regions of the nation.
KEY INDICATORS
Gold $572.70/ounce [slightly -]
Crude Oil $68.80/barrel [=]
U.S. Dollar to…
Euro .7934 [very slightly -]
Japanese Yen 114.76 [slightly -]
30-yr Fixed-rate Mortgage 6.83%
15-yr Fixed-rate Mortgage 6.54%
1-yr ARM 6.22% [HSH average rates: all +]
Mortgage Bankers Association Mortgage Applications Index
Week ending 6/9
Overall
571.9 (up 7%; down 1.4%
the week prior)
Purchase Money Loans
414.6 (up 4.8%; nearly unchanged the week prior)
Refinancing Loans
1499.4 (up 10.6%; down 3.8%
the week prior)
Weekly Jobless Claims 6/10
295,000 first computation – 303,000 prior week (with 1,000 upward revision)
Consumer Price Index (CPI) May
Up 0.4% - core (with food & energy prices removed) up 0.3% and up 2.4% annually
NAHB Housing Market Index June
Down 4 points to 42
Housing Starts May
Up 5% from the prior month, but down 3.8% from prior year
Written by John Kurtzer |
June 14th, 2006 Categories: Uncategorized
June 14, 2006
Weekly Commentary
Thumbnail Sketch: In spite of the fact that the real estate market has been slowing in a very gradual fashion—moving, as National Association of Realtors® chief economist David Lereah asserts, into a sustainable rate of growth—there are a few worrying signs that the real estate market could slow more dramatically than many now suggest it will.
Example #1: “Mortgage foreclosures in the United States are up 38 percent, higher than in any quarter of last year, reports property tracker RealtyTrac Inc. Experts say more home owners are defaulting on their mortgages for a number of factors, including job loss, health-care issues, sizable debt loads, rising utility and gasoline costs, and they stretched to qualify for a mortgage. Additionally, many lenders have offered home loans to borrowers who may not have been able to afford them. Some industry observers believe the situation may worsen.” [Realtor® Magazine Online]
Example #2: “The Pending Home Sales Index, based on contracts signed in April, fell 3.7 percent to a level of 111.8 from an index of 116.1 in March, and is 11.7 percent below April 2005. This marks the third consecutive monthly decline.” [National Association of Realtors®]
Sales of existing homes, therefore, should show a significant drop in NAR’s May report, which will be released June 27, and that weakness seems to be written into the data for the next few months.
Example #3: “The trend seems to be in place for a sharp slowing in housing sales over the next few months.” [Brian Carey, Moody’s Economy.com]
But if you follow the data collected on mortgage applications, you’ve noticed that the number of purchase money mortgages being applied for remains fairly constant. The index has been hovering near 400 for many weeks now and, though it is about 5% lower than where it stood four weeks ago, that is a very mild decline. The main decline, of late, has been in the applications for refinancing mortgages, which are down 43% from the extremely high levels of a year ago. (Purchase money mortgage applications are down only 18% from year-ago levels.)
It is easy to get overwrought about the slowing real estate market, therefore. A more sober view notices that, overall, the market continues to slow in a gradual, largely benevolent, fashion. As Celia Chen of Moody’s Economy.com recently wrote: “While conditions are softening and in some markets the deterioration feels too rapid for comfort, we still expect the downside of this housing cycle to proceed in a controlled manner.” Still, in her words, “The housing market has hit the tipping point,” and “mortgage bankers, builders, and Realtors® are bidding farewell to the halcyon days of easy growth and profitability.”
We might argue about how “easy” the profitability has been, but we will be wise to acknowledge that the signs of slowing are real and definite.
KEY INDICATORS
June 14, 2006
Gold $575.00/ounce [-!]
Crude Oil $68.85/barrel [-]
U.S. Dollar to…
Euro .7962 [+]
Japanese Yen 115.23 [+]
30-yr Fixed-rate Mortgage 6.70%
15-yr Fixed-rate Mortgage 6.39%
1-yr ARM 6.05% [HSH average rates: all nearly =]
Mortgage Bankers Association Mortgage Applications Index
Week ending 6/2
Overall
534.4 (down 1.4%; down 1.9% the week prior)
Purchase Money Loans
395.6 (nearly unchanged; down 0.2% the week prior)
Refinancing Loans
1356.0 (down 3.8%; down 4.8% the week prior)
Weekly Jobless Claims 6/3
302,000 first computation – 337,000 prior week (with 1,000 upward revision)
Consumer Credit April
Up 5.9%
Revolving up 4.6%
Non-revolving up 6.9%
Producer Price Index (PPI) May
Up 0.2%
Core (with food & energy prices removed) up 0.3%
Monthly Retail Sales May
Up 0.1%
Sales with auto sales removed up 0.5%
Written by John Kurtzer |
June 8th, 2006 Categories: Uncategorized
June 7, 2006
Weekly Commentary
Thumbnail Sketch: One of the most intriguing questions before us at this moment is whether the Fed will raise the fed funds rate by another quarter of a percent at the regularly-scheduled June 28-29 meeting of the Federal Open Market Committee.
Writes Zoltan Poszar in Moody’s Economy.com, “Indicators that point to a softening in growth, together with still-tame unit labor costs, leave the FOMC room to hold the fed funds rate steady at 5%…. However, with year-ago core PCE inflation [cost of personal expenditures] at 2.1%, slightly above the Fed’s inflation comfort ceiling of 2.0%, and the backdrop for inflation gradually eroding—a falling dollar, continued elevated prices for energy goods and other commodities, higher rents, firming homeowners’ housing costs as measured in the price indexes, accelerating hourly wage gains and perceptions of a developing labor shortage—chances are that any FOMC pause will be short, with the risks to our fed funds forecast for the second half of 2006 of 5.0% still tilted to the upside.”
Unsurprisingly, the chief economist of Moody’s Economy.com concurs: “After two years of steady interest rate hikes, which has lifted the federal funds rate target from 1% to 5%, the Federal Reserve should now pause.” And he agrees that, while 5% has long been pegged as the “neutral zone” which neither pushes economic growth higher nor lower, “the probability is high that even more tightening will be needed later this year.”
At this point, though, the bets are on a pause in hikes to the fed funds rate. As John M. Berry noted in Bloomberg.com, the minutes for the May FOMC meeting said, “It seemed most likely that, with modest further policy action, including a 25 basis point firming today, growth in activity would moderate gradually over coming quarters, pressures on resources would remain limited, and core inflation would stay close to levels experienced over the past year.” We’ll go with that—expecting no rate hike in June and looking for the markets to react with pleasure and a bit of a rise—but we’ll keep in mind that the forecast for mid- to long-term future is hopelessly dependent on international political developments…which simply can’t be predicted.
In the meantime, with the pressure off the fed funds rate—at least briefly—the yield curve may awaken again and indeed, regain its upward curve…and adjustable rate mortgages may regain some of their luster. The spread between rates on ARMs has fallen at this point to 57 basis points and will likely rise soon. ARMs currently make up only 31% of loan originations (though they account for 45% of the total mortgage loan dollar volume being originated, meaning they’re still being used widely for the financing of luxury home purchases).
The real estate market continues to slow very gradually, but there is no sign of an impending crash—indeed, the market seems simply to be shifting gears and moving forward at a more sustainable pace.
KEY INDICATORS
June 7, 2006
Gold $634.80/ounce [-]
Crude Oil $72.45/barrel [nearly =]
U.S. Dollar to…
Euro .7792 [slightly +]
Japanese Yen 113.30 [+]
30-yr Fixed-rate Mortgage 6.70%
15-yr Fixed-rate Mortgage 6.35%
1-yr ARM 6.02% [HSH average rates – all slightly up]
Mortgage Bankers Association Mortgage Applications Index
Week ending 5/26
Overall
541.9 (down 1.9%; down 6%
the week prior)
Purchase Money Loans
395.5 (down 0.2%; down 7.1%
the week prior)
Refinancing Loans
1409.0 (down 4.8%; down 4.3%
the week prior)
Weekly Jobless Claims 5/20
336,000 first computation – 329,000 prior week (with no revision)
New Home Sales April
Up 4.9%
Productivity First Quarter 2006
Revised upward from 3.2% to 3.7% - unit labor costs revised from 2.5% rise to 1.6%
Construction Spending April
Down 0.1%
Employment Report May
75,000 new payroll jobs
Unemployment rate down to 4.6%
Written by John Kurtzer |
