Sunday, August 30, 2015

Waiting, Watching And Guessing

After watching what has taken place this week with the stock market through Thursday, I don’t believe there is a single person outside of the Fed that really has any idea on what will happen with rates at the monetary policy meeting in September.

In the first half of this week almost everyone would have bet the house that the Fed would not do anything with rates on account of the stock market tanking.  Then comes Wednesday and Thursday and the market sets a two day record for the greatest rise.  At this point all investors can do is watch the economic data that comes out between now and the September Fed meeting and guess.

Quite a bit of data was released this week regarding the housing.  On Tuesday there were three reports starting with the FHFA House Price Index.  The FHFA HPI showed that home prices were beginning to soften.  The index rose only 0.2 percent which is continuing the trend of slowing home price growth.  The difference in prices between last year and this year is 5.6 percent which shows the spread is thinning.

The S&P Case-Shiller Home Price Index reiterated the story of softening home prices.  The Case-Shiller Index showed prices remained virtually flat with a 0.1 percent decline for the month of June.  Most analysts were expecting an increase of 0.1 percent.  The index also shows that home prices are 5.0 percent higher than the same time last year.  That is unchanged from May further indicating that home price appreciation has begun to stagnate.

A bright spot in the housing reports for the week came from the new homes sales data.  For the month of July new home sales jumped 5.4 percent to an annual pace of 507,000.  The strength in new homes sales is reducing inventory.  Prior to this report the supply was estimated at 5.3 months.  The latest data shows that available inventory is now down by 1/10th of 1 percent to 5.2 months.  The strongest part of the new home data is that sales are up 26 percent from the same time last year.

The final housing report for the week was released on Thursday morning.  Pending homes sales came in at the lower end of analyst’s expectations.  The pending sale data show an increase of 0.5 percent for the month of July.  Most experts were predicting an increase of 1.0 percent.  Surprisingly the Northeast led the way with an increase of 4.0 percent although this region is the smallest of the four regions.  The West dipped 1.4 percent while the Midwest remained unchanged and the South climbed 0.6 percent.

According to the Mortgage Bankers Association loan applications for purchase and refinances did not change much.  For the week ending August 21st, purchase apps increased 2.0 percent and refinance applications declined 1.0 percent.

There are a number of major housing reports due out next week:

·        Tuesday September 1st – ISM Manufacturing Index & Construction Spending
·        Wednesday September 2nd - MBA Applications & ADP Employment Report
·        Thursday September 3rd - First Time Jobless Claims
·        Friday September 4th – National Employment Situation

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.

Thursday, August 27, 2015

The Homeownership Picture: Dull Today, Brighter Tomorrow?

New data on current mortgage applications point to a state of stagnation, and a new study attempts to forecast where tomorrow’s potential homebuyers will be looking to make property purchases.
The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Aug. 21 found a desultory environment, with the Market Composite Index increasing a scant 0.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased one percent compared with the previous week.
Things were not much better with the Refinance Index, which decreased one percent from the previous week; the refinance share of mortgage activity decreased to 55.3 percent of total applications from 55.5 percent the previous week.
Read On HERE

Monday, August 24, 2015

The Fed Is Going To Raise Rates In September…No They Are Not…Yes They Are…

If you ever wondered if we live in a global economy, Thursday was all the proof you could ever need.  The Dow plummeted 358 points and it had very little to do with anything in the U.S.  For many months there has been talk about the Fed raising rates in September.  Then comes along China and other countries with their economic woes and now nobody knows what the Fed will do. 

The Fed is being seen as the world’s bank and monetary policy decision maker.  It is abundantly clear that whatever the Fed decides about rates will likely impact economies worldwide, not just here at home.

Thursday’s market plunge was driven by fear of a major economic slowdown in China.  The uncertainty in China about their economic growth combined with the devaluation of their currency last week has sent traders panicking not only in the U.S., but the United Kingdom as well. 

Because of China’s change in economic policy related to their currency, major companies from the United States and Europe will likely suffer significant losses in profit.  It is estimated that companies listed on the U.S. S&P 500 generate about 44 percent of their revenue from outside the country.  Devaluation of currency in any market they operate in can have a devastating impact on their profit margins.

Additional downward pressure on the stock market is coming from the fact that there is an oversupply of oil in the world.  Part of the reason for the excess oil is on account of China’s lower than expected consumption.  Add on top of that the increase in energy efficiency and the overall less need for oil worldwide, this is impacting major energy company’s ability to earn profits.

For many years after the great recession it was said that housing needs to recover in order for the economy to improve.  The existing homes sales report released this week shows that housing continues to improve.

Existing home sales jumped 2.0 percent for the month of July and they are 10.3 percent higher than the same time last year.  Demand continues to remain very strong with the desire for housing much higher than the available inventory.  Supply of homes fell from 5.1 months down to 4.8 months.  This is sharply lower than July 2014’s supply of 5.6 months.  Median home prices are up also by 5.6 percent. The upward pressure on housing is a strong sign for the real estate market.  It is important to realize that in order for the market to truly recover inventory needs to increase so there is more balance between supply and demand.
There are a number of major housing reports due out next week:

·        Tuesday August 25th – FHFA House Price, S&P Case-Shiller HPI & New Homes Sales
·        Wednesday August 26th - MBA Applications & Durable Goods Orders
·        Thursday August 27th - First Time Jobless Claims & GDP
·        Friday August 28th – 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.

Thursday, August 20, 2015

Another Post-Crisis Peak For Existing Home Sales

While first-time buyers fell back, existing home sales scored their third consecutive monthly gain in July.  The National Association of Realtors® (NAR) reports that completed sales of pre-owned single-family homes, townhomes, condominiums, and coops were up 2.0 percent from June to a seasonally adjusted annual rate of 5.59 million units.  June's sales figures were revised down from 5.49 million units to 5.48 million.  Stubbornly low inventory levels and rising prices were blamed in the existing home sales report for a share of first time buyers that was the lowest since January.

Read on HERE

Monday, August 17, 2015

Stock Market In A Turmoil

Although it was a week of little economic news in the United States, China’s move to devalue their currency placed the stock market in turmoil for a couple of days.  With the devaluation of the Yuan, that has the potential to significantly impact corporate profits for U.S. companies doing business in China.  Additionally, it makes it harder for the U.S. to compete against China prices therefore possibly creating an economic slowdown in the U.S.  Investor fears caused the Dow to decline over 200 points on Tuesday.  Wednesday the market started off down just shy of an additional 200 points however through the trading day the markets recovered to finish almost flat.

The greatest benefactor of the worry on Wall Street is borrowers for mortgage loans.  Given the fear in the markets many investors purchased bonds and treasuries as a hedge against the declining market.  Rates for mortgage loans declined approximately 1/8th of a percent.  Next week the Mortgage Bankers Association application data should reflect a likely increase in activity.  Applications for the week ending 8/7 showed purchase applications declined 4.0 percent while refinances increased 3.0 percent.

Ironically if you listen to some of the presidential candidates you will hear that they are criticizing the Department of Labor’s statistics on unemployment.  Whether their assertions on the inaccuracy of the numbers is correct, it is quite obvious that they are posturing for their presidential bid to garner votes.  The most recent data on first time jobless claims shows that the current pace remains at historically low levels.  For the week ending 8/8 claims remained well below the 300k benchmark down to 274k.

The retail sales report surprised many analysts by posting a 0.4 percent gain for the month of July.  Recent data has been pointing to consumers keeping their money in their wallets despite that they have been able to enjoy significant savings at the gas pumps.  There is high expectation that gas prices will continue to fall as the OPEC Nation’s continue to pump out as much oil as they possibly can flooding the market with more oil than is needed.

In the lack of economic news for the week, I would like to comment a moment on a story posted on  Since the end of the Vietnam War in 1975, the United States Military abandoned the use of Flamethrowers for use in battle.  Now 40 years later there are to companies that are building and selling flamethrowers for consumer use.

In reading about the products, the CEO’s of these companies talk about how farmer can use these devices to clear fields and fire departments can use them to create controlled fires.  I hate to be a pessimist but I am guessing that it is only a matter of time before an owner of a flamethrower torches their neighbor’s car for some dumb reason or disagreement.

Next week’s potential market moving reports are:

·        Monday August 17th – Housing Market Index
·        Tuesday August 18th – Housing Starts
·        Wednesday August 19th - MBA Applications, Consumer Price Index & FOMC Minutes
·        Thursday August 20th - First Time Jobless Claims & Existing Home Sales

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.

Thursday, August 13, 2015

The One Marketing Lesson Everyone Needs To Learn From Trump

"No matter how you feel about Donald Trump, he is attracting a lot of attention. This article explains one of the reasons why. It’s a very important part of business, to be authentic and honest. I would add, and caring." - Karen Seghetti
Love him or hate him - there's one lesson in marketing that every business owner and marketer needs to take from Donald Trump right now.

Today we're going to talk about Donald Trump.  Not the political hopeful.  But the marketer.  

To do this, I need you all to put your personal feelings about him aside.  

This isn't about Democrats vs. Republicans.

This isn't about the political arena. 

This is about niche marketing.  And there's a lesson in it for all of us, if we're willing to step back and see it.
The internet has giving us this incredible opportunity to reach more people than ever before.  And as a result, countless business owners and leaders are dumbing down their message and their identity.  They're walking on politically correct eggshells, desperate to win over everyone.

It's time we stopped the insanity.

So removing the politics surrounding Trump for a minute, I need you all to take a look at what he's doing.  Because it's powerful.
He's leveraging one of the most underutilized tricks in the book - authenticity.
The truth of it is this.  Trump doesn't need your money.  And win or lose, he's starting a hell of a lot of conversations.  He's being 100% authentic in his marketing.

Let's take that a step further.  His authenticity in marketing is accomplishing the most important thing you can possibly do in this digital age - niche marketing.

All of a sudden, he's got a group of Republicans supporting him...Democrats supporting him...and people who don't even know what the hell a Democrat or a Republican is.  He has a message and he knows that that message will resonate with not everyone - but with many.  He knows that being a bull in a China shop (no outsourcing pun intended), he'll set himself apart from his competition.
I'm not looking to get into the back and forth in the comments about politics.  But I DO want you to think about your own marketing.  Are you being 100% authentic in your marketing...or are you trying not to ruffle feathers?  Are you speaking to a highly targeted demographic...or are you trying to appeal to everyone?

Perhaps it's time we pull the Trump card when it comes to marketing yourself or your business.

Monday, August 10, 2015

Declining From Record Highs

The stock market as of late has been declining from its record highs.  It appears that the economy is once again slowing down.  The latest batch of corporate earnings has been disappointing and that has investors on edge as well.

From my perspective there is without questions some craziness relating to the perception of a company’s success relating to quarterly profits.  For example…Apple reported second quarter sales at 58 Billion (with a “B”) and a net profit of 13.8 Billion (again with a “B”).  Apple has over 200 Billion in cash (yes another “B”) however because Apple did not meet analyst’s expectations for quarterly profit, investors are concerned.  Really?????

On to more important matters than Apple’s profit and investor insanity.  The recent decline in mortgage rates boosted last week’s mortgage application numbers released by the Mortgage Bankers Association.  With the drop in rates applications for purchases increased 3.0 percent where refinance apps jumped 6.0 percent for the week ending July 31st.

Construction spending remained virtually unchanged for the month of June.  The surprise in the latest report is that single family construction spending declined 0.3 percent after the prior month’s gain of 0.5 percent.  Multi-family construction spending increased by 2.8 percent.  Overall spending remains 12.0 percent higher than the same time last year.

The most watched piece of news for the week were the two employment reports.  ADP reported on Wednesday that they expected the employment numbers from the labor department to be disappointing.  ADP estimated an increase in employment of only 185,000 after the prior month’s downward revised report of 229,000.  The department of labor released their national report on Friday morning at 8:30AM.

The labor department reported that for the month of July payrolls increased by 215,000 and the unemployment rate remained at 5.3 percent.  Both pieces of data are better than expected in the ADP report.  What this means is that national employment appears to be better than anticipated.  This could be just the news that the Fed has been waiting for to make a decision about what to do regarding interest rates in September at the next Fed meeting.   In pre-market trading the better than expected employment news has the markets down as investors believe that this latest report will likely have the Fed make the interest increase.

Next week has very few potential market moving reports.  It seems that international news or projecting about what the Fed will be doing with interest rates has the greatest potential to create movement in the markets.  Next week’s reports are:

·        Wednesday August 12th - MBA Applications
·        Thursday August 13th - First Time Jobless Claims & Retail Sales
·        Friday August 14th – Producer Price Index & Industrial Production

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.

Friday, August 7, 2015

To Almost Everyone's Surprise

To almost everyone’s surprise the Case-Shiller report released on Tuesday showed weakness in home prices.  The report indicated that there was a decline of 0.2 percent for the month of May.  The bright side is that home prices still remain 4.9 percent higher than the same time last year. 

After many months of home appreciation the reversal of prices is widespread with declines reported in 12 of 20 cities, including a second straight decline for Chicago which was down 0.9 percent for the month and the areas second straight monthly decline.  The Denver real estate market is leading the country in value growth with a 10.0 percent jump for the month.

There is however some confusion as the Case-Shiller report, which typically follows the FHFA house price report relatively closely, came in this month opposite of the FHFA report which shows home prices have continued to climb.

The pending home sales index which has been showing signs of strength as of late also turned negative for the month of June.  Pending home sales fell a sharp 1.8 percent which was much more than most analyst’s expectations which were forecast for a gain of 0.4 June.  The year-on-year rate which has been up in the double digits dropped back to a still respectable plus 8.2 percent.  This is still considered very healthy for the market however we must now watch the future reports to see if the declining trend is continuing or if this report is merely a hiccup in what has been a strong and growing housing sector.

The South and the Midwest areas showed the greatest weakness in the report where pending homes sales declined.  The good news is that despite the decline year over year sales are still up 7.8 percent and 5.0 percent respectively. Both the West and Northeast posted small monthly gains in June with year-on-year sales rates at plus 10.4 percent and with the Northeast, the smallest region for home sales, in the top spot at 12.0 percent.
As expected the Fed took no action on rates in the July FOMC meeting based on the opinion that the pace of the economic growth has not changed.  The term “moderate” has become the Fed’s go to word to describe the economy.  The labor market however is now being described with the word “solid”.

The bottom line is that is seems that the Fed will continue to wait and observe future economic data before making a definite decision on when to change the longstanding rate policy of keeping rates at virtually zero.

Next week’s potential market moving reports:

·        Friday August 7th – National Employment Situation

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, August 4, 2015

Understanding The Different Types Of Mortgage Loans

Getting a house is an exciting time for anyone. It is yours, and that means you can do what you want, paint it the colors you wish, and decorate it how you desire. Before signing, it is important to understand the type of mortgage loan and how it differs from other options available.
There are three main options when it comes to this type of agreement: the fixed rate, adjustable rate, and interest only jumbo rate. For the most part, one of the first two types of payment arrangements is taken. Sometimes, those who are exceptionally well off and have a note of over $625,000 will negotiate for an interest only arrangement in which only the interest is paid for a set number of years. After that time, payments are made to the principle.
Fixed Rate
The interest on the note is fixed at a certain percentage, and it won't go up over the life of a loan. It makes budgeting for the housing payment easy, as you know what the cost is going to be from month to month. Terms can be set as little as five years, but most run between 15 and 30 years as they are the most affordable.
If you utilize escrow to handle your insurance and property taxes, there may be a slight increase or decrease from year to year in the monthly payment. This variation has nothing to do with the actual terms of the mortgage loan. Instead, it has to do with taxes going up or down and insurance changes.
Adjustable Rate
An adjustable rate means that the interest will vary from year to year. Initially, many homebuyers take this type of mortgage loan because the rate is lower than a fixed rate. However, the rate will change over time. Usually, there is an initial rate that will stay the same anywhere from a few months to a few years.
The rate change is partly tied to an index. This is a way that rates are measured, and it can change several times throughout the year. The rate that is charged is based on this index; when the rate goes up so do the payments, and when it comes down, the payments may go down as well. Most adjustable rate providers will put a "cap" on the rate. This limits how high it can go. However, the "cap" can work in reverse and limit how low the interest rate can go as well.
Before taking an adjustable rate mortgage loan, you need to know how high the cap is, how frequently the rate will adjust, and if there are any limits to how low the interest can go. You also need to know how soon to expect the payments to go up and if you can comfortably afford the monthly note if it reaches its maximum.
Taking out a mortgage can be both exciting and nerve-wracking. By doing your research and having a clear budget, you can get the best loan for your budget.

Article Source:

Saturday, August 1, 2015

Wage Growth Shocker Pushes Mortgage Rates To 2-Month Lows

Get out your calendar.  Flip, swipe, or glance back at May 29th.  That's where we have to go to see mortgage rates any lower than they are today.  After a delightful, but incredibly boring streak of mostly good days, rates finally swung for the fences.  Actually, that might be a bit of a stretch depending on your perspective, but consider the following. 

Mortgage rates tend to be broken up in .125% increments.  For the past several weeks (or more, depending on the lender), rates haven't moved enough for the actual interest rate to change.  Instead, the upfront costs act like fine-tuning adjustments for any given rate.  In other words, you might be quoted 4.125% on two different days, but with $1000 origination one day and only $500 the next.  The rate is the same, but paying less for it means the effective rate is lower (fewer dollars out of your pocket over time).  In that case, we'd say "rates fell" because the effective rate is lower, even though the contract rate (the thing that ends up on Good Faith Estimates and ultimately the Note) remained the same. 

With all that having been said, after multiple weeks of unchanged contract rates, we've finally seen lenders move down an eighth (.125).  Sure, they were pretty close before, but today's solid move left no doubt.  Since July 16th, we haven't seen the effective rate change more than 0.02%, and that only happened a few times.  Today's drop was 0.06%--certainly enough for a 'swung for the fences' metaphor.

Today's gains came courtesy of an exceptionally weak reading on wage growth.  It was less than a third the pace of the previous quarter, and way below expectations.  A lack of wage growth is one of the key reasons the Fed could hold off on raising rates.  And although the Fed Funds Rate doesn't control mortgage rates in the short term, it tends to move the same direction over time.  As such, big news for the Fed's rate hike plans is usually also big news for rates across the board.  It was certainly a home run for rates today.

Read on HERE