February 9, 2010
What is another 800,000 or so…
The job market lost 820,000 jobs last month. Well not exactly last month. This number included the "adjustment of statistics" for the past year. In this column we will not get into how the government miscounts so badly. However, we will point out that it just makes the deep recession we are coming out of even deeper. Eventually we must replace all of these jobs and we have dug ourselves quite a hole to climb out of. Certainly this makes the jobs programs proposed by the Administration more likely to become law as the next phase of stimulus kicks into gear.
And certainly, the fact that there would be such a significant adjustment is one reason the stock market became so volatile this week. Thursday was particularly brutal, especially when we mixed in concerns about the debt of foreign governments. When you remove this big adjustment, the numbers for January were not all that bad. The loss of 20,000 jobs is not positive, but it still is much better than the hundreds of thousands of jobs we were losing just a few quarters ago. However, it is still a long way from recovering from seven million jobs lost. This does help by way of the fact that it takes some of the upward pressure off of rates, oil prices and other commodities, at least in the short-run.
The Markets. Rates continued to be stable in the past week. Freddie Mac announced that for the week ending February 4, 30-year fixed rates averaged 5.01%, up from 4.98% the week before. The average for 15-year fixed rose slightly to 4.40%. Adjustables were mixed with the average for one-year adjustables falling to 4.22% and five-year adjustables rising slightly to 4.27%. A year ago 30-year fixed rates were at 5.25%. “Rates remained relatively stable for a second week amid news of a strengthening housing market," said Frank Nothaft, Freddie Mac vice president and chief economist. “Residential fixed investment rose for two consecutive quarters over the last half of 2009 following a steady quarterly decline since the beginning of 2006. Pending existing home sales rebounded by 1 percent in December from a record drop in November that was due in part to the original expiration of the homebuyer tax credit, according to the National Association of Realtors. Even more encouraging news came from the Federal Reserve’s Senior Loan Officer Opinion Survey, which reported that banks have generally stopped tightening standards on most types of loans in the fourth quarter of 2009, with commercial real estate as the exception.” 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 February 5, 2010
|
Daily Value |
Monthly Value |
|
|
February 4 |
January |
|
|
6-month Treasury Security |
0.16% |
0.15% |
|
1-year Treasury Security |
0.32% |
0.35% |
|
3-year Treasury Security |
1.34% |
1.49% |
|
5-year Treasury Security |
2.29% |
2.48% |
|
10-year Treasury Security |
3.62% |
3.73% |
|
12-month LIBOR |
0.906% (Jan) |
|
|
12-month MTA |
0.463% (Jan) |
|
|
11th District Cost of Funds |
1.828% (Dec) |
|
|
Prime Rate |
3.25% (12/08) |
The FHA-backed 203(k) rehab loan is an increasingly popular option in today’s market because so many available properties, especially foreclosures, are in need of repair. A streamlined 203(k) provides money to pay for improvements such as a new roof, appliances, furnace, energy-efficient windows, and cosmetic improvements like carpet, paint, and remodeled kitchens and baths. The maximum loan available is $35,000. The buyer must put down 3.5 percent of the acquisition. At closing, the seller is paid and the remaining money goes into an escrow account to pay for repairs. A licensed contractor must complete the work within six months. Some lenders allow the borrower to do minor cosmetic work like painting themselves. Source: Minneapolis-St. Paul Star-Tribune
Green market research firm SBI Energy forecasts that in the next five years, the market for energy-efficient home renovation products will grow 15 percent, 50 percent faster than the renovations market as a whole. According to the report, the energy-efficient market will reach $35 billion and claim 15 percent of all home renovation dollars spent. "The growth will come as a result of the tax credits, new incentives, and the reality that more agencies and utilities are promoting the fact that adding improved energy efficiency is the most cost-effective way to decrease home utility bills," says Norman Deschamps, author and SBI Energy analyst. Source: SBI Reports
Falling prices for real estate and the declining value of the dollar are luring investors from all over the world to purchase properties for as little as half what they might have paid four years ago. "This could be a once-in-a-generation opportunity for real estate investment," says Arthur Wong, whose Calgary, Alberta-based U.S. Real Estate Fund has invested $5 million in properties in the U.S. Southwest and plans to buy millions more. Buyers from countries like Brazil, Canada, France, and the Netherlands, whose currencies are particularly strong against the dollar, are spending millions on luxury condos in New York City, Las Vegas, and Miami. Foreign buyers also find the warm climates of California, Texas, and Arizona attractive. Peter Zalewski, a principal with Miami-based Condo Vultures, says he has sold foreign condo buyers seven bulk deals in downtown Miami alone, with investors coming from Argentina, Canada, Colombia, Italy, Norway, and Venezuela. Source: MSNB
On Your Team,
Kurt Galitski
The Kurt Real Estate Group
Vice President, Weichman Realtors
877-957-6677
