January 26, 2010
Confidence
Fixing the economy can all be described with one word: Confidence. We need the consumer to be confident enough to make long-term decisions such as purchasing a house for their long-term security. We need businesses to be confident enough to hire workers so that they can expand in the long-run. We need investors confident enough to purchase financial instruments so that banks are confident enough to lend to businesses and consumers. Certainly, the past few years have not been a period of confidence. On the other hand, sometimes events outside our own control give us another perspective. The tragedy beset upon Haiti is of a magnitude that is hard to conceive. Yet, the response of the world to the aid of this small country also is of a magnitude that is hard to conceive.
While we expect major economic powers such as our country to step forward, the realization of this world effort comes from stories of countries such as Norway. Norway, with a population about half the size of New York City, is contributing over $17 million to the cause. The plight of Haiti puts our crisis in perspective. This country knew of their vulnerability to an earthquake, but did not have the financial resources to rebuild. Our problems are many and many have suffered. But we are a great and resilient country and we must have the confidence that we can overcome our issues. Perhaps as we rally around Haiti, it will move us to rally our country out of our own crisis of confidence. We can do so much more for the world if our own economy is stronger. One indication would be a positive preliminary report of economic growth for the fourth quarter. This indicator is just around the corner.
The Markets. Rates eased again in the past week. Freddie Mac announced that for the week ending January 21, 30-year fixed rates averaged 4.99%, down from 5.06% the week before. The average for 15-year fixed eased to 4.40%. Adjustables were also lower with the average for one-year adjustables falling to 4.32% and five-year adjustables falling to 4.27%. A year ago 30-year fixed rates were at 5.12%. “Fixed rates followed bond yields lower for the third consecutive week, pushing 30-year loans below 5 percent once more,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve’s target rate following its upcoming committee meeting on January 26th and 27th. Because of reduced sample sizes and work disruptions that occur with severe weather, housing starts tend to be more volatile during winter months. Indeed, housing starts declined 4.0 percent in December, falling short of the market consensus of no change. Building permits, which are less vulnerable to weather interruptions, unexpectedly jumped 10.9 percent. “Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Current Indices For Adjustable Rate Mortgages
Updated January 22, 2010
| Daily Value | Monthly Value | |
| Jan 21 | December | |
| 6-month Treasury Security | 0.14% | 0.17% |
| 1-year Treasury Security | 0.31% | 0.37% |
| 3-year Treasury Security | 1.41% | 1.38% |
| 5-year Treasury Security | 2.38% | 2.34% |
| 10-year Treasury Security | 3.62% | 3.59% |
| 12-month LIBOR | 1.000% (Dec) | |
| 12-month MTA | 0.471% (Dec | |
| 11th District Cost of Funds | 2.093% (Nov) | |
| Prime Rate | 3.25% |
It’s going to be harder to get a government-backed mortgage from now on. Looking to shore up its weakening finances, the Federal Housing Administration has announced stricter standards. The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger downpayments. The FHA will also reduce the amount of money a seller can provide a homebuyer for closing costs, as well as tighten its enforcement of lenders. “Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” FHA Commissioner David Stevens said in a statement. Source: CNN/Money. Editors Note: These changes go into effect shortly and anyone who is thinking about purchasing a home can benefit by using the old rules if they act quickly.
Real estate investors are moving back into the market, according to a recent survey from Move.com. According to the Move.com survey, 12.1 percent of home buyers today plan to buy a home as an investment property, compared to 5.6 percent in March 2009. The survey found that 15.8 percent of those interested in investment property were men and 8.1 percent were women and 52.6 percent of the investment buyers were between ages 35 to 49. Of the 25.3 percent of buyers who are focusing on foreclosure properties, 42 percent regard the purchase they are considering an investment and don’t plan to live in the property themselves; 13.2 percent plan to rent out the property; 11.3 percent are going to fix up the property and resell it; and 17.4 percent plan to house a family member until the property can be sold profitably. Of the 9.8 percent of buyers who say that they plan to purchase and live in a property in the next two years, 5.4 percent plan to purchase in the next 12 months; 48.3 percent are first-time buyers; 52.8 percent are women, and 44.1 percent are men. Source: Move.com
Home prices are expected to grow modestly this year and sales will keep rising as the housing market continues to recover from the worst downturn since the Great Depression, the National Association of Realtors said in their latest report. Home resales are projected to total 5.7 million this year, up from an estimated 5 million last year. Prices will climb about 4 percent after a projected decline of 13 percent last year, according to Lawrence Yun, chief economist for the trade association. “Going into 2010, I anticipate that prices will also begin stabilizing or begin to modestly improve,” Yun indicated at the association’s annual conference. “That should help ease buyers’ anxiety.” Yun said. The housing market’s rebound has been aided by an aggressive federal intervention to lower mortgage rates and bring more buyers into the market. Home resales rose in the previous quarter to the highest level in more than two years, something Yun said shows buyers are eager to get back into the market. A federal tax credit of up to $8,000 for first-time homebuyers has helped stoke sales last year. The buyers can claim the credit if they sign a contract by April 30 and close the deal by the end of June. Lawmakers also expanded the program to include a $6,500 credit for existing homeowners who have lived in their current residence for at least five years. Source: National Association of Realtors
Kurt Galitski
Meet Kurt Galitski - The Kurt Real Estate Group, your new best friend. Distinctive Strategies that Deliver Record-Setting Results. When you combine Kurt’s passion and knowledge of the real estate market, you really gain an appreciation for what makes Kurt different. But what truly sets him apart from the crowd are his 5 distinctive strategies and his property management… For Kurt, getting into real estate was not an accident, it was a deliberate and calculated decision to deliver a better experience to home buyers, sellers, and landlords that they have ever received before. Today, you could ask any one of hundreds of clients, read his Yelp reviews, or look at his track record of being featured in Orange Coast Magazine in excess of eight consecutive years and you too will say mission accomplished. www.KurtRealEstate.com www.KurtPropertyManagement.com 877-957-6677
Follow Me:
