Archive for the 'Weekly Market Updates' Category
January 23rd, 2008 Categories: Livermore Real Estate, Market Update, Weekly Market Updates
We are starting the new year with some great homes available at prices that can only be labeled as bargain buys. Many of these homes are priced $100,000-$150,000 below prices from 18 months ago. I will be putting up a list weekly of what I consider some of the best buys from the local MLS-IDX of the MAXMLS system. We will start with under $500,000 (some are even under $400,000) and put up various price ranges so check back and see what the bargains are.
Bargain Buys in Livermore under $500,000
Search Homes for Sale
Written by John Kurtzer |
October 4th, 2007 Categories: Livermore News, Livermore Real Estate, Pleasanton Real Estate, Weekly Market Updates
I received an email from Dr. Bill Fisher, a real estate writer with right Side Marketing that had some interesting things to say-
"Some of you are doubtless tiring of the incessant parade of bad housing market news in the financial media. It’s worth noticing that the source of much or most of the negative press is Wall Street economists who tend to look upon an investment in a personal residence precisely as they would look on an investment in a few hundred shares of stock. They forget, perhaps understandably but much to everyone’s detriment, that a home is far more than a piece of paper with a fluctuating value. It has more usefulness than nearly anything else in our lives. To say, for example, that the real estate market is in a free fall, for example, is terribly misleading. Real estate may be losing value in many cases, but it has automatic governors on how much value it can lose. The house still exists, as do its occupants and their lives."
I find that it is easy for the economists to present statistics in a negative way. Read this article from Southern California and you will see a different twist on market statistics.
Written by John Kurtzer |
August 15th, 2007 Categories: Dublin Real Estate, Livermore Real Estate, Market Update, Pleasanton Real Estate, Weekly Market Updates
Weekly Update
Confusion, uncertainty, panic. These three forces are shaking the markets—from the level of individual home sales to the level of massive coporate buy-outs—like a bucking bronco…intent, it seems, on bringing them all to the ground.
“In the past month, the market has been behaving in ways even seasoned players have been at a loss to explain,” several reporters write in The Wall Street Journal. And this is precisely the point. Hundreds of billions of dollars have been invested in exotic hedge funds that few people can pretend to fully understand and that have been responding to the market in unexpected ways. Investors don’t even have an accurate idea of the value of those funds and related investments.
And the great bugaboo, of course, is the subprime mortgage—though subprimes are certainly not the only cause of market woes. Yes, vast numbers of defaults may be in the offing; yes, we may see the number of foreclosures rise. But the real problem today is that no one knows where the next problem will show up. Ailing loans have been stripped and tranched (split into differently-valued pieces) so that they are no longer identifiable. An investor in Shanghai may discover that he owns slices of mortgages for homes in Azusa that are in foreclosure, threatening the viability of his hedge fund.
What is clear is that nothing is clear, nothing is certain. And until we achieve some degree of certainty, the markets will remain absurdly volatile, with occasional stock market jolts that dramatically over-express the actual possible losses at hand.
We have, in short, a time of panic in which it’s impossible to predict the future direction of any stock market—indeed, of any stock. And since dicey mortgages are the demon du jour, we have lenders who’ve grown very uneasy about writing the mortgages they had no problem with a few months ago, and the organizations that bought those mortgages (though Fannie and Freddie are doing what they can to help) are no longer interested in what currently looks to them like throwing good money after bad.
We will, I believe, look back at this time with amazement and even humor. And it won’t be very long from now. The problem is that so many assumptions about how our markets work—notable among them the assumptions that we now have computers that can find the right investment under any market conditions and that it’s a great idea to invest with borrowed money—have been shaken profoundly.
In the meantime there are good lenders making loans. If you are looking at needing a Home loan for a purchase or refinance I am compiling a list of Lenders you can count on. Stay Tuned.
Written by John Kurtzer |
August 12th, 2007 Categories: Dublin Real Estate, Livermore Real Estate, Market Update, Pleasanton Real Estate, Weekly Market Updates
Weekly Update
If anything, worries are multiplying among economic analysts that the number of defaults and, eventually, foreclosures from unraveling existing mortgages will continue to rise. What is perhaps most startling at this point, though, is that worries extend way beyond the somewhat limited world of mortgages to the entire world of credit, debt, borrowing, lending. Further, the overall economy isn’t being viewed with as much optimism as was recently the case.
Patrick Schmid of Moody’s Economy.com puts it this way: “There is no doubt that an international credit tightening is under way. It began with the U.S. housing downturn, which resulted in declining real estate prices. As adjustable-rate mortgages set higher, payments became more difficult for many homeowners—especially those whose credit rating was subprime to begin with. Many subprime lenders, whose business models were based on continually rising house prices, faced losses as defaults and foreclosures increased. Politicians became melodramatic over the housing dilemma, putting pressure on regulators, who in turn called for tighter lending standards. The next step was a spike in financial volatility, and some likely market overreaction,”
“All told,” Schmid concludes, “today’s market shows some elements of a credit crunch—but not enough to warrant pinning the label on with certainty.”
Whether or not we want to call it a “crunch,” however, has little bearing on the fact that the markets are clearly full of concern and, in some cases, incipient panic. Things get very confusing when fears start to roil the market: We see the 10-year T-bill rate fall heavily at the same time that mortgage rates edge north, for example. There is no explaining it. It will take time for the markets to sort out their emotions (or, more specifically, their reading of our economy’s future).
Until then, we would be wisest, one suspects, to take most of the conclusions put forward by economic analysts with a massive grain of salt. We’re in not-make-sense territory, watching with justifiable concern to see if defaults and foreclosures rise to worrisome heights…if lenders show even more reticence about making the kinds of loans they were making all day long just a few months ago (especially the huge loans made for corporate buy-outs and restructurings)…and if the real estate market can weather the storms and do what it does best, which is simply to focus on the buying and selling of personal residences. There is still reason to put a great deal of faith in real estate, as we’ll likely see in months to come.
Written by John Kurtzer |
July 25th, 2007 Categories: Dublin Real Estate, Livermore Real Estate, Market Update, Pleasanton Real Estate, Weekly Market Updates
Weekly Update
“The housing market has yet to hit bottom,” says Moody’s Economy.com repeatedly. Sadly we are inclined to agree, though we all need to remind ourselves that life does go on—as do real estate sales and purchases and refinancings.
And we’re not just being glib here. The Mortgage Applications Index (below left) continues to hold at strong levels, this week spotlighting the work being done to refinance troubled homeowners into workable mortgage loans. Refi applications were up a solid 4.9% after weeks of declines. News is out today, too, that several eastern states are offering money to help troubled borrowers do the refinancing they need to do.
At the same time, though, the 7.5% decline in the number of permits taken out for new construction does suggest that home-building hasn’t yet reached a bottom, and that is doubtless the result of builders thinking the market for homes hasn’t yet scratched the bottom of the barrel.
The weakness is underscored by the financial markets: We hear today that two of the Bear Stearns hedge funds made up largely of securitized subprime loans are considered nearly worthless at this point. Investor money just doesn’t want to go there—and we can conclude that there is further to fall before a recovery can begin for such investments…and such mortgages.
Later today, we’ll see the report on June’s existing home sales, followed in a couple of days by the report on new home sales in June. Sadly, these will likely reinforce the negative view of the real estate market, which will serve to slow sales even further.
Careful observers of the nation’s economy are easily finding reasons for concern, though the stock market indices seem intent on walking ever higher on the yellow brick road. The long-inverted yield curve, in which short-term interest rates remain slightly higher than longer-term rates, refuses to revert to what most of us consider “normal.” The financial markets are walking a high wire, carefully avoiding the fall that could result from a loss of confidence in hedge funds and debt instruments. And the dollar is lower against foreign currencies than it has been in thirty years. There may be silver linings here (like the possibility that the weaker dollar will help erase long-term international trade imbalances, easing our current account deficit), but it is difficult not to suspect that we’re finding medicinal uses for poison ivy if we assert that this financial poison is good for us. We will indeed get through all of this, but it is all rather unnerving, to say the least.
Written by John Kurtzer |
July 11th, 2007 Categories: Dublin Real Estate, Livermore Real Estate, Market Update, Pleasanton Real Estate, Weekly Market Updates
Weekly Commentary
We can sense a trend now. Mortgage rates are gradually rising. The number of new applications for purchase money mortgages remains relatively strong, though the multiple applications from most prospective homebuyers inflates the number of expected sales. New home sales continue to fare better, generally, than do sales of existing homes.
Let’s look at a couple of these aspects of the market a little more closely.
It is actually somewhat amazing to this observer that the Fed has remained so concerned about the possibility that inflation would rise—but it has (at least, in its public pronouncements). There is a general belief that the economy will continue to grow at an adequately rapid pace, despite the slowing of the real estate market. So far, this seems to be true. It is difficult, though, to be confident of this unless the real estate market remains fairly warm.
In the context of this belief, however, it makes sense for interest rates to climb gradually out of the deep lows they recently experienced…back to more “normal” levels. (This is all a matter of perception, of course. Bill Gross, the bond market guru, seems to be certain that the Fed will lower the fed funds rate within the coming six months, as the subprime mortgage problems continue to erode both the real estate market and overall credit quality.)
What we have to the left, in any case, are the average interest rates on mortgage loans currently being originated. It is worth reminding you that these are almost always higher than the best available rates, which are published by bankrate.com and other sources. The average rates, published by HSH Assoc., tend to be a better initial guide to the current market for potential borrowers, because they may be able to do better, whereas with the best available rates, they are very likely to face higher rates for their own loans.
As for the better sales performance from new homes than from existing homes, the fact is that builders tend to have better promotional techniques at hand for a market like this. They can offer to pay the buyer’s points, to help the buyer sell his or her own home, to throw in landscaping or carpeting for free. Notice, though, that private homesellers can do many of these things, including interest rate buydowns for their buyers. Perhaps the existing homes market would improve somewhat if private sellers studied what is working fairly well for new home builders.
Written by John Kurtzer |
June 14th, 2007 Categories: Livermore Real Estate, Weekly Market Updates
Weekly Commentary
Mortgage interest rates firmed noticeably this past week, but they will probably edge back down a bit. Still, the outlook is for generally positive overall economic growth, with continuing concerns about the potential for higher inflation.
As HSH Associates explained, “Mortgage rates took quite a hit this week, but this was due largely to the Treasury selloff caused by a surprise rate hike by New Zealand’s Reserve Bank; this spurred fears that other countries’ central banks might follow suit. Even without this scare, the general runup in rates over the past few weeks isn’t wholly unexpected given the reports of stronger economic data and a revival of economic growth from a truly anemic 0.6% in the first quarter of this year. Investors have given up on a rate cut by the Fed this year.”
There was also a quarter-point rate hike in England, but these hikes don’t seem harbingers of significantly higher interest rates. Still, our own rates are unlikely to head south any time soon. This flies in the face of a guess several weeks ago that interest rates might decline largely because of lower employment, as construction workers lost their jobs in large numbers. Job losses in construction haven’t been as great as predicted and, more important, job gains in other sectors have been much stronger than anticipated. Therefore, the jobs data have become among the most important indicators for near- to mid-term interest rate movements.
Also important is the evidence that labor costs are rising and that consumers are paying attention to the size of their credit card debt. The latest data, published in concert with the first quarter GDP figures, show that unit labor costs rose by an upwardly revised 1.8% (surprisingly higher than the first estimate of 0.6%). This is, in part, a natural result of lower productivity figures (1% growth, as against the initial estimate of 1.7% growth). If the per-worker output declines, the per-worker labor cost rises as a mathematical result. But there may be more to this than simple math, and economists—notably at the Federal Reserve—are concerned about the inflationary effects of higher labor costs.
At the same time, revolving credit actually declined in April (by 0.5%), meaning that consumers paid off more of their credit card debt than they increased it. This rather unusual situation suggests a sobered mood among consumers. Whether it will translate into lower retail purchase levels—as indeed it may—remains to be seen. In the meantime, it is difficult not to find some solace in reduced credit card use among our nation’s intensely indebted consumers, even if it may suggest a slightly growing reluctance to finance large purchases, like autos and homes.
KEY INDICATORS
Gold $653.40/ounce [down]
Crude Oil (Brent) $68.63/barrel
[down]
U.S. Dollar to…
Euro .7505 [up]
Japanese Yen 121.77 [up
very slightly]
6-mo Treasury Bill Yield 4.94%
10-yr Treasury Note Yield 5.21%
[little change at short end,
bigger jumps at long end]
30-yr Fixed-rate Mortgage 6.79%
15-yr Fixed-rate Mortgage 6.49%
1-yr ARM 6.10%
[HSH average rates: 30-yr up 22 bps, 15-yr up 17; ARM down 7 bps]
Mortgage Bankers Association Mortgage Applications Index
week ending 6/1
Overall
625.3 (down 1.7%; down 7.3%
the week prior)
Purchase Money Loans
433.6 (up 1.5%; down 2.5%
the week prior)
Refinancing Loans
1757.1 (down 6.3%; down 13%
the week prior)
Weekly Jobless Claims 6/2
309,000 first computation –
310,000 prior week (with no revision)
Productivity first quarter 2007
Revised from 1.7% to 1% growth
Unit labor costs revised up from
0.6% to 1.8% rise
Consumer Credit April
Up a moderate 1.3% - revolving down 0.5%, non-revolving up 2.4%
Written by John Kurtzer |
June 1st, 2007 Categories: Weekly Market Updates
Weekly Commentary
Though there was little movement among the key indicators this past week, we do need to pay some attention to the amazing disparity between new home and existing home sales figures. Even with a close examination, the distance between them is difficult to explain.
First, we should remember that the new home sales data, collected from new contracts by the Census Bureau, have a habit of needing repeated revisions as more data is collected in the future. Frankly, these figures are not tremendously reliable, though we can never write them off entirely.
The existing home figures, collected by the National Association of Realtors® from completed sales—and thus more backward-looking than the new homes sales figures—tend to move in a more conservative fashion. They tell us about the fairly recent past, the sales first written up 30 to 90 days ago.
So these sets of data are, to a degree, apples and oranges. But that doesn’t explain why sales of new homes would have increased by 16.2%, while sales of existing homes would have fallen by 2.6%. Obviously, there’s more to the story here.
Here are a few suppositions:
(1) The new homes figures have indeed been known occasionally to swing in as volatile a fashion as this, and we could be witnessing what Moody’s Economy.com termed an “economic artifact,” a bit of economic data that makes little sense.
(2) There probably is a notable difference in sales volume between new homes, whose builders are intent on reducing inventory, and existing homes, whose owners still want to get the best possible price for the property. New home prices, after all, declined by a dramatic 10%. Existing home prices are down only 0.8%.
(3) Further, the stress on reducing inventory shows up very clearly in the month’s-supply-on-market figures. For new homes, the figure has declined dramatically from 8.1 months’ worth of inventory in March to 6.5 months’ worth. For existing homes, the figure rose from 7.4 months’ worth to 8.4 months’ worth. (These figures, as you doubtless know, represent the number of months it would take to sell off current inventory at today’s pace of sales.)
Much is explained, therefore, by the different emphases in these two housing sectors. But much remains unexplained. Is the upward spike in new home sales a fluke, or does it suggest the approach of a stronger real estate market? Time will tell.
KEY INDICATORS
Gold $662.70/ounce [up]
Crude Oil (Brent) $68.74/barrel
[down slightly]
U.S. Dollar to…
Euro .7421 [down slightly]
Japanese Yen 121.65 [up
slightly]
6-mo Treasury Bill Yield 4.96%
10-yr Treasury Note Yield 4.88%
[little change]
30-yr Fixed-rate Mortgage 6.41%
15-yr Fixed-rate Mortgage 6.06%
1-yr ARM 5.81%
[HSH average rates: fixeds both down slightly; ARM down]
Mortgage Bankers Association Mortgage Applications Index
week ending 5/18
Overall
686.2 (up 1.6%; down 0.8%
the week prior)
Purchase Money Loans
438.1 (up 1.3%; down 1.4%
the week prior)
Refinancing Loans
2154.7 (up 1.9%; up 0%
the week prior)
Weekly Jobless Claims 5/19
311,000 first computation –
293,000 prior week (with no revision)
New Home Sales April
Up 16.2% - prices down 10%
Existing Home Sales April
Down 2.6% - prices down 0.8%
Conference Board Consumer Confidence May
Up from 106.3 to 108
Written by John Kurtzer |
May 23rd, 2007 Categories: Weekly Market Updates
.
Weekly Commentary
Everyone seems to be in agreement about the real estate market. It’s in a free fall, they say. But some few of us remain a bit confused.
There’s still money to be made in real estate, after all, when the right property is purchased at the right moment and sold in a similar fashion, and when one locality or sector of the market outperforms others, as downtown Los Angeles is currently outperforming the suburbs. Further, the data on mortgage applications still points in powerfully positive directions, with the purchase money loans index well above 400 and showing no signs of going into the kind of “free fall” that so many analysts say the real estate market has entered.
A recent editorial in San Diego’s North County News helped to clarify the perceptions that so many analysts have been wailing about. “We’ve heard much in recent months about the record number of foreclosures in the county. But those numbers must be put in perspective. Earlier this month we reported that foreclosure filings on properties in San Diego County had climbed by 49 percent from February to March to 2,551. That figure represents one in every 408 households.
”Scary as they seem at first glance, those numbers don’t look so bad upon closer inspection. Of those 2,551 foreclosure filings, 1,998 were in default and 415 had been notified that their property would be sold for repayment. That leaves only 138 properties that were actually foreclosed on that month — or a little less than 0.025 percent of San Diego County’s 600,000 single-family homes, condos and duplexes.”
The Mortgage Bankers Association adds these clarifications: “At the end of last year, delinquencies of subprime mortgages amounted to 13% of outstanding loans. That means that 87% of subprime borrowers were making their payments on time. The delinquency rate remains below its recent high of 14.9 % in the second quarter of 2002, though it might exceed that figure before the end of this year. Foreclosures of subprime mortgages amount to 4-1/2% of outstandings, but have been higher than that as recently as 2002. They were twice that high in early 2002, but received little comment in the press at that time.”
The market, without question, has slowed—very dramatically in some areas. And defaults and foreclosures, in some areas, are coming in at levels normally associated with recessions. But, as was said at the outset, the market is neither dead nor in a free fall. A sober look at the actual numbers should make that clear.
May 23, 2007
KEY INDICATORS
Gold $658.70/ounce [down]
Crude Oil (Brent) $69.52/barrel
[up]
U.S. Dollar to…
Euro .7435 [up]
Japanese Yen 121.57 [up]
6-mo Treasury Bill Yield 4.98%
10-yr Treasury Note Yield 4.83%
[both up, margin narrowing]
30-yr Fixed-rate Mortgage 6.47%
15-yr Fixed-rate Mortgage 6.20%
1-yr ARM 6.04%
[HSH average rates: fixeds both up slightly more than 10 bps; ARM down 4 bps]
Mortgage Bankers Association Mortgage Applications Index
week ending 5/11
Overall
675.5 (down 0.8%; up 3.6%
the week prior)
Purchase Money Loans
432.3 (down 1.4%; up 2.6%
the week prior)
Refinancing Loans
2115.5 (up 0%; up 4.9%
the week prior)
Weekly Jobless Claims 5/12
293,000 first computation –
298,000 prior week (with 1,000 upward revision)
Housing Starts April
Up 2.5% - housing permits down
8.9%
Conference Board Leading Indicators Index April
Down 0.5%
Industrial Production April
Up 0.7% - cap. utilization 81.6%
Written by John Kurtzer |
April 6th, 2007 Categories: Weekly Market Updates
Weekly Commentary
The Pending Home Sales Index, issued by the National Association of Realtors®, pumped a bit of optimism into the marketplace. But the common buzz today sounds very negative. As always, though, there is much reason to be skeptical of the forecasts of doom.
Even the author of the study for First American CoreLogic predicted that foreclosures “will not break the national economy or the mortgage lending industry as a whole.” This after telling us he expects 1.4 million of the “teaser-rate” ARMs now in existence to go into foreclosure by 2010—nearly a third of them—and 7% of those written at market rate, and 12.2% of the subprime loans written with rates above 6%.
These are astonishing numbers, of course, and they imply that we will all be scrambling to repair the ailments being suffered by many thousands of borrowers. (The first step—especially to make certain they don’t fall prey to the scams floating around today, disguised as programs to protect people from foreclosure and loss—is to make sure the public knows that lenders DO NOT profit from foreclosures; they DO want to negotiate repayment schedules that will work for ailing borrowers; they DO want to help, most of them.)
The danger to the world’s financial markets inherent in any kind of crash among collateralized mortgage obligations—the dollar amount of these securities now in the markets exceeds that of our nation’s Treasury securities—is extremely sobering, and the Fed will do all it can to keep the markets calm. Lenders, too, are likely to do all they can to assist borrowers in making their debt service workable. The major brokerage houses that provided most of the funds for high-rate (subprime) lending, sadly, seem to simply be abandoning ship. It is a time when we need long-term vision, not just concern about next month’s profits analysis.
Meantime, there is much work to be done in the real estate industry, and the industry is anything but dead.
KEY INDICATORS
Gold $672.60/ounce [down slightly]
Crude Oil (Brent) $67.42/barrel
[up]
U.S. Dollar to…
Euro .7484 [down a smidge]
Japanese Yen 118.83 [up]
6-mo Treasury Bill Yield 5.07%
10-yr Treasury Note Yield 4.66%
[both up very slightly]
30-yr Fixed-rate Mortgage 6.29%
15-yr Fixed-rate Mortgage 6.01%
1-yr ARM 5.89%
[HSH average rates: FRMs barely moved, ARM down more significantly]
Mortgage Bankers Association Mortgage Applications Index
week ending 3/23
Overall
671.0 (down 0.2%; down 2.7%
the week prior)
Purchase Money Loans
411.1 (up 0.1%; down 0.9%
the week prior)
Refinancing Loans
2197.7 (down 0.5%; down 4.5%
the week prior)
Weekly Jobless Claims 3/24
308,000 first computation – 318,000 prior week (with 2,000 upward revision)
Gross Domestic Product (GDP) fourth quarter 2006 (revision)
Up 2.5% (up from 2.2%)
Personal Income Feb
Up 0.6% - personal spending up 0.6% - savings rate up slightly to negative 1.2%
Construction Spending Feb
Up 0.3% - residential construction down 1%
ISM Index Mar (manufacturing sector)
Down from 52.3 to 50.9 (relatively neutral)
NAR Pending Sales Index Feb
Up 0.7% - 8.5% lower than last year, but an improvement on this year’s figures
Written by John Kurtzer |
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