Archives for February 2012

Pending Home Sales Rise to 22-Month High!

Pending Home Sales Rise to 22-Month High!

The housing market appears headed for a strong spring season. After a brief setback in December, the Pending Home Sales Index resumed its climb in January, posting a 2 percent gain over the month prior. The data puts pressure on Orange County home buyers. This is because a “pending home” is a home that’s under contract to sell, but has not yet sold. It’s tracked by the National Association of REALTORS® and, among all housing statistics, it’s the only one that’s “forward-looking”.

The Pending Home Sales Index is important to home buyers throughout California because 80% of homes under contract to sell close within 60 days of contract. In this way, the Pending Home Sales Index forecasts the housing market 1-2 months into the future. This is very different from how NAR’s Existing Home Sales report works; or, how the Census Bureau’s New Home Sales report works. These two metrics tell us what’s already happened in housing. By contrast, the Pending Home Sales Index tells us what’s coming next.

January’s Pending Home Sales Index reading lifts the monthly metric to its highest level since April 2010 — the month during which the 2010 federal home buyer tax credit expired — foreshadowing a strong housing market through March and April 2012, at least. This should not be news, of course. The nation’s home builders have said “foot traffic” is rising and home supplies are scarce nationwide. The only wild-card for housing is the high contract cancellation rate. As compared to last January when just 9 percent of home purchase contracts “failed”, this January saw 33 percent of contracts fail. High failure rates undermine the Pending Home Sales Index’s viability as a forward-looking housing market indicator.

Despite contract failures, though, the combination of low mortgage rates and low home prices is enticing to today’s home buyers. Expect home sales to climb in the coming weeks which will lead to a strong spring season for housing.

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Real Estate Week In Review

In This Issue

Last Week in Review: The markets were closed Monday but the rest of the week had its share of good and bad news.

Forecast for the Week: A plethora of economic reports will hit the wires, with news on inflation, manufacturing, the state of the economy and more.

View: “Thank you” may be two small words, but they carry a large significance.

Last Week in Review
Every cloud has a silver lining.  That popular idiom is one way to look at the headlines last week, both here in the U.S. and overseas. Read on for the details and what they may mean for home loan rates.

There was good news on Friday as Consumer Sentiment rose to 75.3, which is the best level since February of 2011. However, this news was tempered by the rise in oil prices that we have been seeing. There’s a good side and a bad side to higher oil prices.

On the one hand, high oil prices are very detrimental for the fragile U.S. economy, as consumers have to put more of their discretionary dollars into their gas tanks…meaning they have less to spend elsewhere. High oil prices are also inflationary as the added shipping and material costs apply upward price pressures on Producer or Wholesale goods that either have to be absorbed by the producer, thus hurting profits and the ability to expand or hire. Or the added costs get passed onto to the consumer…a la a rise in consumer inflation.

The silver lining is that high oil prices could actually be good news for home loan rates, as the dampening effect on economic growth produces a sluggish economic environment in which Bonds (including Mortgage Bonds, to which home loan rates are tied) thrive. This is an important topic to continue watching in the weeks and months ahead.

In silver linings overseas, after seemingly endless negotiations, Greece, investors and central bankers came to an agreement to provide Greece with 130 Billion Euros ($172 Billion) in financial aid. This will help the country fund itself through March and into the future… as long as it institutes economic reform, austerity measures and meets deficit targets. Any deal with Greece will be very tough to implement and a default could still occur…which makes this another important topic to keep close watch on.

Between some of this uncertainty from overseas being lifted, a lower unemployment rate, and better than expected economic reports, home loan rates have struggled to improve beyond some of the best levels seen over the past two weeks. But yet another silver lining is that home loan rates remain near historic lows, and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

After last week’s holiday-shortened week, there will be plenty of economic reports to watch for.

  • Pending Home Sales will be released on Monday and could have a relatively modest impact on trading.
  • Durable Orders will be delivered on Tuesday. This report gives a look at consumer spending for products that are expected to last at least three years.
  • Another important report will be Consumer Confidence on Tuesday, as the American consumer is a very important player in the U.S. economy.
  • In the manufacturing sector, the Chicago PMI and the ISM Index will be released on Wednesday and Thursday, respectively.
  • The all-important Gross Domestic Product report comes on Wednesday and will give a detailed view on the overall picture of growth in the U.S.
  • Weekly Initial Jobless Claims will be released on Thursday, and last week’s claims remained near four-year lows, signaling that the jobs market could be healing.
  • Finally, the Core Personal Consumption Expenditure (PCE) report will be released on Thursday. This is the Fed’s favorite gauge of inflation.

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. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

  When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

To go one step further – a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, roller coaster trading in the markets continues. I’ll continue to monitor this situation closely.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 24, 2012)
Japanese Candlestick Chart
The Mortgage Market Guide View…
7 Ways to Say Thanks

It’s hard to go through the day without hearing the words “thank you” or “thanks.” However, much of the time, people say those words quickly and without much meaning. Sure, a quick “thanks” is appropriate when someone holds a door for you or hands you something.

But when it comes to saying thank you to a client, partner, or friend for a more significant gesture, it’s important to go the extra mile. This is even more crucial in today’s business environment when success is so dependent on personal connections.

So how do demonstrate your appreciation? Here are 7 ways to say thank you…to strengthen your relationships…and to stand out in the mind of the person you’re thanking.

1. Classic and Classy. Mailing thank you notes has dwindled in today’s email business environment. That means you can really stand out and demonstrate your sincere appreciation by hand writing a brief thank you note and mailing it. Not sure what to write? No problem. Check out this simple advice for writing a thank you note.

2. A Little Surprise. Little surprises can be a fun way to thank a client, colleague, or friend. You may want to write a thank you note, but then slip it into a file that you hand the person. Or you could consider getting the person’s jacket for them when they get ready to leave a meeting…and then slip the note into a pocket just before you hand it to him or her.

3. See You in the Papers. If you have a newsletter, social media page or blog, thank people publicly. A short “shout out” can go a long way.

4. Phone a Friend. There’s something about hearing a person’s voice…and it’s even better when they call just to say thank you rather than to ask for something.

5. Face-to-Face. Dropping by to say thank you goes a long way to demonstrating your sincerity and to strengthening your relationships.

6. Time Is On Your Side. People seem busier than ever. That’s why making time for someone means so much. One way to thank a person is simply to schedule some time for coffee or to chat. Then, turn off your cell phone and give him or her your undivided attention.

7. A Good Cause. Sometimes it’s not appropriate to give money or a gift. That’s ok. You may find that a unique and sincere gesture is to make a donation to a worthy cause that the person cares about. Then, let the person know about your donation as a way of saying thanks.

Economic Calendar for the Week of February 27 – March 02

Date ET Economic Report For Estimate Actual Prior Impact
Mon. February 27 10:00 Pending Home Sales Jan 1.0% -3.5% Moderate
Tue. February 28 08:30 Durable Goods Orders Jan -1.4% 3.0% Moderate
Tue. February 28 10:00 Consumer Confidence Feb 62.5 61.1 Moderate
Wed. February 29 02:00 Beige Book Feb Moderate
Wed. February 29 09:45 Chicago PMI Feb 60.0 60.2 HIGH
Wed. February 29 08:30 GDP Chain Deflator Q4 0.4% 0.4% Moderate
Wed. February 29 08:30 Gross Domestic Product (GDP) Q4 2.8% 2.8% Moderate
Thu. March 01 08:30 Personal Spending Jan 0.3% 0.0% Moderate
Thu. March 01 08:30 Personal Income Jan 0.4% 0.5% Moderate
Thu. March 01 08:30 Personal Consumption Expenditures and Core PCE Jan 0.2% 0.2% HIGH
Thu. March 01 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.8% HIGH
Thu. March 01 10:00 ISM Index Feb 54.5 54.1 HIGH
Thu. March 01 08:30 Jobless Claims (Initial) 2/25 355K 351K 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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Today’s Links

Kurt Galitski’s Life In Costa Mesa

  • Weichman Realtors Open House List for 2/24, 2/25 and 2/26
    Weichman Realtors Open House List for 2/24, 2/25 and 2/26 Friday February 24th, 2012 2873 Alanzo Lane, Costa Mesa 11am-2pm  Saturday- February 25th, 2012 Go out and shop Costa Mesa! How about the swap meet? Sunday- February 26th, 2012 2873 Alanzo Lane, Costa Mesa 1pm-4pm   Weichman…

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Foreclosure Filings Down 19% in One Year!!!

Foreclosure Filings Down 19% in One Year!!!  

Foreclosure filings fell 19 percent last month versus one year ago, says foreclosure-tracking firm Realty-Trac. It’s yet one more signal that the U.S. housing market may have already climbed off its bottom. According to RealtyTrac, a ”foreclosure filing” is any one of the following foreclosure-related events : (1) A default notice on a home; (2) A scheduled auction for a home; or, (3) A bank repossession of a home.

In looking at the January 2012 figures :

  • Default Notices were down 22% from January 2011
  • Scheduled Auctions were down 19% from January 2011
  • Bank Repossessions were down 15% from January 2011

On a monthly basis, however, the numbers weren’t so promising. Default notices and scheduled auctions were mostly unchanged, but bank repossessions rose 8 percent. The rise in bank repossessions is likely because 2010′s robo-signing controversy has been rectified at the state and lender level. This trend toward more bank-owned homes is expected to continue through 2012.

As in most months, January’s foreclosure activity was geographically concentrated. Nevada led the nation in Foreclosures Per Capita, followed closely by California. 13 states fared worse than the national average of 1 foreclosure per 624 households. 37 fared better. The difference in foreclosure frequency among the two groupings was stark :

  • Top 13 Foreclosure States : 1 foreclosure per 435 households, on average
  • Bottom 37 Foreclosure States : 1 foreclosure per 5,101 households, on average

North Dakota had January’s lowest foreclosure rate nationwide. Just 1 in 63,500 homes was in some form of foreclosure in North Dakota last month. As a first-time or seasoned buyer in Orange County, foreclosed homes can be enticing. They’re plentiful and cheap. However, just because a foreclosed home can be bought for a “steal”, that doesn’t mean it’s worth buying. The process of buying a foreclosed homes is different from the process of buying a non-foreclosed home. The contract-and-negotiation process may be different with a foreclosed property, and foreclosed homes are often sold “as-is”. This means the home you buy at auction could be run-down and defective to the point where it’s uninhabitable.

If you plan to buy a foreclosed home, therefore, have a real estate professional on your side. The internet can teach you much about how the California housing market works, but when it comes to writing contracts, you’ll want an experienced agent like Kurt Galtiski on your side.

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Today’s Links

Kurt Galitski’s Life In Costa Mesa

  • Weichman Realtors Open House List for 2/18 and 2/19
    Weichman Realtors Open House List for 2/18 and 2/19  Saturday- February 18th, 2012 431 Augusta Lane, Placentia 1pm-4pm 3144 Coolidge Avenue, Costa Mesa 1pm-4pm 3100 Roosevelt Way, Costa Mesa 1pm-4pm Sunday- February 19th, 2012 431 Augusta Lane, Placentia 1pm-4pm   Weichman Associates Realtors is a full…

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