Archives for July 2011

Initial Invitation

Initial Invitation
 
  
Kurt Galitski
The Kurt Real Estate Group
Weichman Associates-Realtors
COSTA MESA, CA
Office: 877-957-6677
Cell: 714-957-6677
Kurt@KurtRealEstate.com
   http://www.KurtRealEstate.com
License # 01348644 Licensed Broker and California Certified in Distressed Properties and Foreclosures
  For the latest and most complete source of real estate information and guidance, turn to the most trusted name in real estate- Kurt Galitski and The Kurt Real Estate Group. – Where Real Estate Never Sleeps!  
   
 

Hello Posterous,

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Kurt Galitski
The Kurt Real Estate Group
Weichman Associates-Realtors
Office: 877-957-6677
Cell: 714-957-6677
Kurt@KurtRealEstate.com

   

 

Posted via email from The Kurt Real Estate Group

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Real Estate Week In Review

For the week of Jul 25, 2011 — Vol. 9, Issue 30

In This Issue…
Last Week in Review: You could feel the heat last week, both around the country and in Washington DC, as the debt ceiling debate raged on.

Forecast for the Week: Earnings season continues, plus reports on housing, the economy, and how the consumer is feeling.

View: Flying the skies just got friendlier, thanks to these new rules.

Last Week in Review
“The heat is on.” The title of that Glenn Frey song not only applied to the sweltering temperatures around much of the nation last week, it also applied to the debt ceiling debate, as the heat was on our leaders in Washington to finalize a solution to our debt situation. Why is this important? Read on for details.

It only takes a look at what is happening in Europe these days to understand why it’s crucial that the United States finds a solution to the debt ceiling issue. Not only have eight European banks recently failed a stress test, but last week there was news that Greek, Italian, Portuguese, and French “credit default swaps” (which are insurance policies against default) were trading at record levels. While the European Union is continuing to work to contain Europe’s debt problems and prevent a default in Greece (and elsewhere), these events bode a very important lesson for the US.

Why? Because solving our debt ceiling debate and finding a long-term plan for lowering our deficit and being fiscally sound will raise confidence in our debt and help the US keep its AAA credit rating from the various credit rating firms like Moody’s and Standard and Poor’s. This will help investors continue to see the US as the ultra safe haven for their money, which is a key aspect of our continued economic recovery.

Speaking of our economic recovery, there was some good news last week for the housing sector, as June Housing Starts and Building Permits were both reported better than expected. While this is only one number and one number doesn’t make a trend, this is a good figure, and I will be watching closely for follow through in future readings.

If you’ve been thinking about buying or refinancing a home, give me a call or send me an email to learn how you can take advantage of home loan rates that remain near some of the best levels we’ve seen this year. Or forward this newsletter on to someone you know who may benefit.

Forecast for the Week

Earnings season continues, with reports from 3M, Ford, and Exxon, among others. Plus, a busy week is ahead when it comes to economic reports. Look for:

  • On Tuesday we’ll get an idea about how people are feeling about the economy with the Consumer Confidence Report.
  • Tuesday also brings a report on New Home Sales, which will be followed by the Pending Home Sales Report on Thursday.
  • Thursday also brings another weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless claims came in at 418,000, above the 400,000 mark for the 15th consecutive week. This leading indicator on job market health tells us that the labor market pains have not subsided.
  • Rounding out the week is a double read on the state of the economy with Wednesday’s Durable Goods Orders, which gives us an update on consumer and business buying behavior on big-ticket items, and Friday’s Gross Domestic Product Report, which is the broadest measure of economic activity.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, uncertainty in Washington and overseas caused volatility and anxiety in the markets last week, which put pressure on the Bond market and home loan rates. But remember, rates are still very attractive right now. Let me know if I can answer any questions for you.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jul 22, 2011)
Japanese Candlestick Chart
The Mortgage Market Guide View…
New Passenger-Friendly Rules for Air Travel

New rules will also raise compensation if you’re bumped.

By Susannah Snider, Kiplinger.com

When Jacqueline Tanzella flew from San Francisco to Florida recently for a family vacation, she paid $25 for Delta Airlines to check her bag. She landed around midnight; her suitcase didn’t. Tanzella made it through the night by borrowing pajamas from an aunt and a new Superman toothbrush from her nephew. But she wasn’t happy. “I didn’t pay a $25 fee only to be inconvenienced by not having my bag until the next morning,” she says. “Most retailers would reimburse me or give me a credit in a situation like this.”

Baggage fees are getting scrutiny in expanded airline passenger protections announced by the Department of Transportation. One rule requires airlines to reimburse bag-check fees if your luggage is lost. That won’t help fliers like Tanzella, whose bags are merely delayed, and some experts are grumbling that the protections lack bite. “It is only incremental improvement,” says Rick Seaney, of FareCompare.com. The new protections will also increase the amount that airlines must pay passengers who are involuntarily bumped (from a maximum of $800 now to a maximum of $1,300), limit the time international flights may sit on the tarmac, and require taxes and fees to be more clearly displayed in advertised fares.

Expect some negative side effects. For instance, less overbooking by airlines to avoid higher “bump” fees could put upward pressure on fares, says CrankyFlier.com’s Brett Snyder. The new rules go into effect in August.

Reprinted with permission. All Contents ©2011 The Kiplinger Washington Editors. www.kiplinger.com.

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Economic Calendar for the Week of July 25-29, 2011

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of July 25 – July 29

Date ET Economic Report For Estimate Actual Prior Impact
Tue. July 26 10:00 Consumer Confidence Jul 56.0 58.5 Moderate
Tue. July 26 10:00 New Home Sales Jun 320K 319K Moderate
Wed. July 27 08:30 Durable Goods Orders Jun 0.4% 2.1% Moderate
Wed. July 27 02:00 Beige Book Moderate
Thu. July 28 10:00 Pending Home Sales May -3.0% 8.2 Moderate
Thu. July 28 08:30 Jobless Claims (Initial) 7/23 415K 418K Moderate
Fri. July 29 08:30 Gross Domestic Product (GDP) Q2 1.6% 1.9% Moderate
Fri. July 29 08:30 GDP Chain Deflator Q2 2.0% 2.0% Moderate
Fri. July 29 08:30 Employment Cost Index (ECI) Q2 0.5% 0.6% HIGH
Fri. July 29 01:00 Chicago PMI Jul 58.0 61.1 HIGH
Fri. July 29 10:00 Consumer Sentiment Index (UoM) Jul 63.8 63.8 Moderate
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
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Costa Mesa Real Estate Week In Review

In This Issue…
Last Week in Review: The debt ceiling debate raged on – plus a double dose of inflation news.

Forecast for the Week: Earnings season and the debt ceiling debate will continue, plus a busy middle of the week for economic reports.

View: Wondering if the potential government shutdown could impact you…or your home closing? Don’t miss these important details!

Last Week in Review

“What we’ve got here is a failure to communicate.” That famous line from the 1967 movie Cool Hand Luke certainly seems to apply to our leaders on Capitol Hill, as the debt ceiling debate rages on. Read on to learn how this could impact our economy, the mortgage industry, and home loan closings.

Last week, the political gridlock and confusion within Washington DC around the debt ceiling and budget deficit debate prompted credit ratings firm Moody’s to announce that it was reviewing US Debt for a possible downgrade. Even though Moody’s acknowledged that the chances are low for a default, they said the chances are no longer “minimal.” Moody’s announcement was followed by a similar announcement from credit ratings firm Standard and Poor’s, which said that a US debt default is a 50-50 chance, even if the US raises the debt ceiling. Standard and Poor’s is looking for a “credible solution” to the long-term debt problems, and in that absence, the United States’ current “AAA” credit rating could be cut.

Why is this significant? Lowering the deficit and being fiscally sound raises confidence in our debt. This would not only translate into maintaining our AAA rating, but it would reinforce the United States’ role as the reserve currency of the world or a place where investors will place their money as the ultra safe haven. This is a key factor for our continued economic recovery. To learn how a potential government shutdown could impact the mortgage industry and home loan closings, see the View article below for details. Also, call or email me if you have any questions at all. I’ll be monitoring this situation closely in the weeks ahead.

The gridlock on Capitol Hill wasn’t the only thing heating up last week. Both the core Producer Price Index (which measures inflation at the wholesale level) and the core Consumer Price Index were reported hotter than expected. Remember, inflation is the arch enemy of Bonds and home loan rates, like Kryptonite to Superman, because inflation erodes the value of the fixed return provided by a Bond, which causes home loan rates to rise. This is another area I’ll be monitoring closely in the weeks and months ahead.

The bottom line is that home loan rates still remain near some of the best levels we’ve seen this year. If you have been thinking about purchasing or refinancing a home, call or email me to learn more or forward this newsletter on to someone you know who may benefit.

Forecast for the Week

A big week for earnings season is ahead (with reports from IBM, Bank of America, Goldman Sachs, Wells Fargo, Apple, Microsoft, and GE, among others) and the debt ceiling debate will certainly rage on, and both of these could impact the markets. Also, the middle of the week is chock full of economic reports. Look for:

  • A double does of housing news with Tuesday’s Housing Starts and Buildings Permits Report and Wednesday’s Existing Home Sales Report.
  • Thursday brings another weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless claims fell 22,000 to 405,000 and while the decline is good news, better news will be when Jobless Claims consistently fall below the 400,000 level.
  • Thursday also brings the Philadelphia Fed Report, which is considered an important manufacturing indicator.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates were unable to improve above a key technical level. I’ll be watching closely to see how the news and events of the week impact rates and the markets.

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Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jul 15, 2011)
Japanese Candlestick Chart
The Mortgage Market Guide View…
Government Shutdown and the Impact on Mortgages

In the wake of news stories that the US will face a government shutdown and default on its outstanding loans if a debt ceiling agreement isn’t reached, many people may be wondering what the impact would be to the mortgage industry and closings.

The last time we went through a government shutdown in 1995, it was a pain, but not a panic. If a shutdown were to occur again, mortgage expert Linda Davidson points out the following top six areas that could be impacted:

1. FHA Case Numbers: For each FHA loan, we are required to order a FHA case number. This number is generated before an appraisal can even be ordered. With a shutdown, we may not be able to order case numbers. Because of this, it is critical to let us know if there is a contract executed on any loan, so that our office can go ahead and order a case number without risking the loan being on hold during a shutdown. Note: with the new FHA guidelines, a contract must be executed before a case number can be ordered.

The ability to close FHA loans is questionable, depending if HUD keeps its website running to obtain FHA case numbers and CAIVRS. During the November 1995 shutdown, case numbers could not be obtained, but this was prior to the internet and was a manual process. The shutdown in 1995 mainly caused a delay rather than a drop in FHA loan origination. But if lenders decide to stop accepting FHA applications, it could be a problem. I think we may see delays but not a complete shutdown of the FHA.

2. 4506 IRS Transcripts: Each loan requires the verification of at least one tax return by the IRS to verify the numbers that each customer presents on their tax returns. During a shutdown, this process would be delayed as the IRS wouldn’t be at work to verify the transcripts.

3. Verifying Employment of a Government Employee: We are required to verify the employment of each customer. If the customer is a federal government employee, we would be unable to verify his or her employment during a shutdown.

4. FEMA: Homes in a Flood Zone: Homes that are determined to be in a flood zone would not be able to close as flood insurance could not be obtained.

5. USDA: During a shutdown, the USDA office would be closed because they have government underwriters that insure behind the lender. With a shutdown, we would see delays with all USDA loans.

6. VA: Like the FHA, the disruption is possible – but not absolute – during a shutdown. This would all depend on if they continued to allow their website to function. A disruption would cause delays in VA appraisals and the issuing of certificates of eligibility. If the website was closed during a shutdown, we would see delays in all VA loans.

Stay tuned for updates if necessary on this very important time period. And if you have any questions, please call or email today.

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Economic Calendar for the Week of July 18-22, 2011

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of July 18 – July 22

Date ET Economic Report For Estimate Actual Prior Impact
Tue. July 19 08:30 Building Permits Jun 600K 609K Moderate
Tue. July 19 08:30 Housing Starts Jun 570K 560K Moderate
Wed. July 20 10:00 Existing Home Sales Jun 4.93M 4.81M Moderate
Thu. July 21 08:30 Jobless Claims (Initial) 7/16 411K 405K Moderate
Thu. July 21 10:00 Philadelphia Fed Index Jul 0.0% -7.70 HIGH
Thu. July 21 10:00 Index of Leading Econ Ind (LEI) Jun 0.3% 0.8% Low
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
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Real Estate Week In Review

In This Issue…

Last Week in Review: Mixed reports and volatility stirred up the markets. Read what happened.

Forecast for the Week: Get ready for a busy and possibly another volatile week. Why? Read on!

View: If you drive for work or a charity, you’ll want to read this! See what’s changed and what it means to you.

Last Week in Review
“HE THAT SPEAKS MUCH, IS MUCH MISTAKEN.” Those words by Benjamin Franklin rang true last week, after a report earlier in the week had the markets buzzing about the potential for a strong Jobs Report… only to have those expectations crash at week’s end. Here’s what happened and how it impacted Bonds and home loan rates.

Major shocker. According to the Labor Department’s “Non-Farm Payroll” Jobs Report, only 18,000 jobs were gained during the month of June. That number was significantly below the recently upwardly revised gain of 125,000 new jobs that were expected, and showed employers hiring the fewest number of workers in 9 months.

Unemployment ticks up. The Unemployment Rate was also a disappointment, rising from 9.1% to 9.2%. While this facet of the report isn’t unexpected – as the Unemployment Rate can rise as more people re-enter the labor market in “job seeker” mode – the overall disappointing report re-ignites fears that the economic recovery is slowing and remains a bit stagnant.

Is there a silver lining? There was one somewhat bright spot in the Jobs Report. All of the job gains came from the private sector, with government agencies being the ones losing jobs as they deal with budget pressures. So while gains have slowed, the growth that exists is at least coming from the private sector.

Why were expectations so high? Just one day before the Jobs Report was released, the markets saw the ADP Employment Report, which was far better than anyone expected. Instead of the 60,000 job gains that were expected, the report showed 157,000 jobs added in June. That pleasant surprise boosted Stocks… and also boosted expectations that the Jobs Report would come in better than expected too.

In addition, the weekly Initial Jobless Claims Report also gave the markets a positive outlook on employment, as the report showed a decrease in the number of new unemployment claims. Although the number was still above the important 400,000 mark, it indicated that the previous week’s higher number could have been an “anomaly” week – with the July 4th holiday slowing down the count for many states as well as Minnesota’s state government shutting down and forcing several thousand state employees to file claims themselves.

Speaking of Minnesota, the state may serve as a warning. In the wake of the state government shutdown, many political and market experts are looking to Minnesota as a glimpse of what could happen at the federal level if Congress and the White House can’t reach an agreement. The political climate in the state has mirrored what is happening on the federal level, as the battle continues over a budget deal. And just last week, Fitch Ratings has downgraded Minnesota’s debt rating, which means the State will need to pay higher interest rates to investors due to increased risk. No matter how you look at the situation, it’s not a pretty picture of what happens when compromise isn’t reached.

Overall, the news last week led to volatility both in expectations and in market movement. In the end, Bonds made some strong gains at the end of the week to help home loan rates finish strong. That means rates are still near historic lows and represent a great opportunity. Call or email to see how the situation may benefit you.

Forecast for the Week

Get ready for another busy week… and possible volatility. This week’s inflation reports and upcoming auctions will determine if the rally continues.

  • The week starts with the Balance of Trade report on Tuesday and the release of the Fed’s FOMC Meeting Minutes on Wednesday.
  • The big news hits toward the end of the week, when inflation will be in the spotlight. The Producer Price Index (PPI) will be released on Thursday and the Consumer Price Index (CPI) is due on Friday. If the inflation readings are hot, the rally inspired by last week’s Jobs Report could be short lived. I will monitor this issue closely to see how it may impact you or your home loan plans.
  • Retail sales will also be released on Thursday. This is the most timely indicator of broad consumer spending patterns.
  • Thursday we’ll also see the weekly Initial and Continuing Jobless Claims Report. After last week’s mixed employment reports, the markets will be watching this as closely as ever.
  • We’ll see a triple dose of manufacturing news this week. The Empire State Index, Capacity Utilization, and Industrial Production are all on tap Friday.
  • Finally, the Consumer Sentiment Index is due out on Friday. This index is important because the level of consumer sentiment is directly related to the strength of consumer spending, which accounts for two-thirds of the economy

In addition to those reports, Bonds and home loan rates may be impacted by the Treasury Auctions this week. Remember, the Fed buying (known as the second round of Quantitative Easing or QE2) is over – so this week’s auctions will be interesting and may stir up the markets.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates experienced a volatile week but finished strong after disappointing employment news pressured Stocks. I’ll be watching closely to see if the slower economic recovery continues… and how this week’s news impacts home loan rates.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jul 08, 2011)
Japanese Candlestick Chart
The Mortgage Market Guide View…
Mileage Rates Go Up Due to High Gas Prices

If you drive a car, truck or van for work, you’ll be able to get an additional 4.5 cents per mile. Beginning July 1, here are the standard mileage rates for the remainder of 2011:

  • Businesses = 55.5 cents per mile driven (up from 51 cents through June)
  • Medical or moving = 23.5 cents per mile driven (up from 19 cents through June)

The Internal Revenue Service (IRS) increased the mileage rate in response to the recent high gas prices. These mileage rates are used to calculate deductible costs for driving an automobile for business, medical and moving purposes. NOTE: The rate for driving that is related to charities remains unchanged at 14 cents per mile, since that rate is set by a statute. You can read the official release in the IRS’ Announcement 2011-40.

Make Sure You Qualify

Before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

Additional Option

Although the IRS provides the standard mileage rate for ease and convenience, you’re not required to use it. If you prefer, you can calculate the actual costs of using your vehicle instead of using the standard mileage rates.

Remember, if you have questions are concerns, talk to a tax consultant or accountant to discuss your options and unique situation.

Economic Calendar for the Week of July 11-15, 2011

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of July 11 – July 15

Date ET Economic Report For Estimate Actual Prior Impact
Tue. July 12 08:30 Balance of Trade May NA -$43.7B Moderate
Wed. July 13 02:00 FOMC Minutes Jun HIGH
Thu. July 14 08:30 Retail Sales ex-auto Jun NA 0.5% HIGH
Thu. July 14 08:30 Retail Sales Jun NA -0.2% HIGH
Thu. July 14 08:30 Producer Price Index (PPI) Jun NA 0.2% Moderate
Thu. July 14 08:30 Core Producer Price Index (PPI) Jun NA 0.2% Moderate
Thu. July 14 08:30 Jobless Claims (Initial) 7/09 NA NA Moderate
Fri. July 15 08:30 Core Consumer Price Index (CPI) Jun NA 0.3% HIGH
Fri. July 15 08:30 Consumer Price Index (CPI) Jun NA 0.2% HIGH
Fri. July 15 08:30 Empire State Index Jul NA -7.8% Moderate
Fri. July 15 09:15 Capacity Utilization Jun NA 76.7% Low
Fri. July 15 09:15 Industrial Production Jun NA 0.1% Moderate
Fri. July 15 10:00 Consumer Sentiment Index (UoM) Jul NA 71.5 Moderate
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.
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