Sunday, December 28, 2014

A Great Start to 2015

Get ready for blast off.  Many signs in the economy are pointing to a great start for 2015. 

  • Interest rates remain low and all indications are they will remain low for some time.
  • GDP for the 3rd quarter was revised sharply higher to plus 5.0 percent.
  • GDP for the 2nd quarter was revised up to a plus 4.6 percent.
  • Consumer sentiment has held steady at very high levels.
  • Consumer spending is way up on major purchases by 0.6 percent.
  • Gas prices are expected to remain down creating more disposable income for consumers.

With the Dow Jones Industrial Average rocketing through 18,000 on Wednesday, that only added more optimism about the start for 2015 being far better than anything we have experienced since the great recession.

Housing data has come in a little weaker than expected however many experts are predicting that with the cost for oil being as low as it is, this could bring life to the housing market.  Saudi Arabia announced this week that they have no plans curtail oil production, no matter the price of oil, so this creates pressure on virtually all other oil producing nations to do the same.  Although low oil prices are bad for American oil companies, consumers are not shedding any tears or worry about how profitable they will be.  All consumers care about is that it is costing a lot less to heat their homes and fill their car gas tanks.

Existing home sales, which had been showing signs of life, declined a larger than expected 6.1 percent for the month of November.  This report caught many industry professionals by surprise as the declining cost of fuel as well as the mild start to the winter in most parts of the country was expected to help housing.  The good news in the housing report is that even though sales have slowed, inventory has not increased which has kept stability in housing prices. 

A positive for the housing industry is that the Federal Housing Finance Agency reported that home prices increased unexpectedly in October.  With a no change in September, October’s increase of 0.6 percent was a pleasant surprise.  Additionally home prices are 4.5 percent higher than the same time last year.

The final piece to my optimism for the coming year in housing is that in speaking with many real estate professionals, quite a few of them have indicated that they have been having many conversations with potential home sellers.  A significant number of the current homeowners they have spoken with have indicated that they are likely to place their home on the market within the next 3-12 months.

With trading volume light with the holidays, and the lack of economic data being reported in the coming week, the markets are expected to remain quiet.

·        Tuesday December 30th – S&P Case-Shiller Home Value Index & Consumer Confidence
·        Wednesday December 31st - MBA Apps., First Time Jobless Claims & Pending Home Sales
·        Thursday January 1st - New Year’s Day –All Markets Closed
·        Friday January 2nd – ISM Manufacturing Index & Construction Spending

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Sunday, December 21, 2014

An Early Christmas Gift

It is the week before Christmas, and the Fed decided to give investors an early Christmas present.  On Thursday the stock market jumped 421 points primarily on news that the Fed has no plans to raise interest rate in the near future.  (As of Friday morning, the stock market is set to jump once again as the Dow futures are up significantly in pre-market trading.)

With the improving economy, investors were fearing that the Fed was going to start changing their plan to begin raising interest rates sooner than initially anticipated.  On Wednesday, the Fed statement indicated that despite the improving economy, they plan on “being patient in beginning to normalize the stance of monetary policy”.  Simply put…this means that they are not planning on increasing rates in the near future and rates are likely to remain low well into 2015.  Low rates is great for business which translates into the anticipation of stocks rising as the economy continues to improve.

Mortgage rates have hit the lowest point for 2014 however that did little to improve activity related to mortgage applications.  The Mortgage Bankers Association reported that purchase applications declined 7.0 percent.  Because of the time of year, the decline is not surprising as buyers tend to stop looking for homes between now and the end of the year.  The surprise was on the refinance applications as they remained flat despite the incredibly low rates.

Housing starts continue to remain flat.  Single family housing starts declined 5.4 percent for the month of November after gaining 8.0 percent in October.  There does not seem to be any real explanation for the decline as weather has not played a factor at all in any part of the country.  Housing permits also declined in October by 5.2 percent which once again seems to have no real explanation.

I am not too concerned about the latest housing starts report as it is only one report and certainly does not indicate any type of trend.  We have been seeing this number move back and forth from positive to negative territory throughout the year. With oil prices having dropped significantly it is believed that the housing sector, both new and existing home sales, will get a boost in the first quarter of 2015.

After rising first time jobless claims rose above 300,000 for a brief period in late November, initial jobless claims have been coming back down near their recovery lows. Initial claims fell for the 3rd straight week, down 6,000 to 289,000 in the week ending December 13th.

Just in time for the holidays, the consumer price index shows that inflation is very tame.  In fact, prices only increased 0.1% in the month of November.  When you add in the significant decline in energy prices, inflation dropped 0.3%.

Next week’s potential data market moving indicators are:

·        Monday December 22nd – Existing Home Sales
·        Tuesday December 23rd – Durable Goods Orders, GDP, and New Home Sales
·        Wednesday December 24th - MBA Mortgage Applications and First Time Jobless Claims
·        Thursday December 25th – Christmas Day –All Markets Closed

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Sunday, December 14, 2014

Another Great Testimonial!

We refinanced this year.  Our agent Karen was exceptional.  We both work long hours and she made it easy for us to coordinate all of the information.  Stacey was also great at anticipating what information would be required, in the end the approval process was easy and we closed in no time.  We are very happy and would rate Big Valley with the highest marks for their great people and customer service that truly went above and beyond. Laura C.

Thursday, December 11, 2014

Monday, December 8, 2014

Last Day For Toys For Tots Coming Up Wednesday!

Toys for Tots!
Join Big Valley Mortgage and our local military in collecting toys for children in the area!
Please collect new, unwrapped gifts for pick-up
 Wednesday December 10, 2014!
Any questions please call our office
(707) 455-7070

                  Thank you and Happy Holidays!

Friday, December 5, 2014

Markets Quieter Than Normal For This Time Of Year

Although there was definitely economic data to trade on this week, the markets were quieter than normal for this time of year.  It is not uncommon for trading volume to decline in the month of December, however it typically takes hold in the second week of the month as we move closer to the holidays.

The biggest potential market movers for the week were the employment figures.  On Wednesday ADP released their private payroll growth report which came in at 208,000.  This fell in the lower range of analyst’s expectations.  The stock market barely reacted to the report.  There was an initial drop in the stock market indices when the news was released however the market recovered quickly.

On Friday at 8:30AM the second employment report for the week was released by the Department of Labor.  These numbers came in far above expectations.  Payrolls jumped 321,000 which comes off a revised increase from October up to 243,000.  Additionally wages rose sharply during the month.  This is by far the strongest employment report since the recession.  The stock market opened slightly higher but surprisingly not with as much fanfare as one would expect given the great report.

For quite some time traders have had a few major national and international concerns to use as a catalyst to make trades.  For a while the Ebola scare along with the China and European economic slowdown were dominating headlines and having a major effect on trading behavior.  Since reports in these areas have virtually disappeared, investors have had little to get them excited to make investment moves in their portfolios.

The only real housing data released this week was the Mortgage Bankers Association mortgage application report.  Purchase applications rebounded with a 3.0 percent rise after the previous week’s decline of 10.0 percent.  Refinance applications dropped by a larger than expected 13.0 percent despite mortgage rates returning close to historic lows.

In other economic news from the week, the ISM Manufacturing Index remained extremely strong.  The index for November came in at 58.7 which is very close to post Great Recession highs.  New orders for manufacturing soared for the month along with the list for backorders.  These increases bode well for continued strength in production for the near future.

First time jobless claims dropped back below 300,000 down to 297,000 for the week ending November 29th.  This decline indicates that the prior week’s report which showed a jump in claims up to 314,000 was more of a fluke than a trend in the employment sector.  The markets reacted with little fanfare to this report as the focus for this week has been on the ADP and Department of Labor reports.

Next week’s potential data market moving indicators are:

·        Wednesday December 10th - MBA Mortgage Apps
·        Thursday December 11th – First Time Jobless Claims and Retail Sales
·        Friday December 12th – Producer Price Index and Consumer Sentiment

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Tuesday, December 2, 2014

Toys For Tots!

Toys for Tots!
Join Big Valley Mortgage and our local military in collecting toys for children in the area!
Please collect new, unwrapped gifts for pick-up
 Wednesday December 10, 2014!
Any questions please call our office
(707) 455-7070

                  Thank you and Happy Holidays!