June, 2011 | Arizona Mortgage

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Archive for June, 2011

Pending Home Sales Unexpectedly Spike In May

Pending Home Sales The summer housing market is heating up.

According to data from the National Association of REALTORS®, the Pending Home Sales Index smashed analyst expectations, jumping 8 percent on a monthly basis in May.

Wall Street calls were for an increase of just 0.5 percent.

It was a surprise result that, coupled with the recent stronger-than-expected New Home Sales and Existing Home Sales readings, has sparked housing market optimism in Arizona and nationwide.

The biggest reason for the optimism is because of what the Pending Home Sales Index measures.

In contrast to “traditional” housing data which reports on how housing performed two months ago, for example, the Pending Home Sales Index is a forward-looking indicator; a predictor of future market activity based on freshly-written contracts between buyers and sellers.

In other words, the Pending Home Sales Index looks ahead — not back. This is reflected in its methodology which states that 80% of homes under contract close within 2 months, and a large percentage of the rest close within Months 3 and 4.

Because May’s Pending Home Sales Index rose sharply, therefore, we can expect similar jumps in the Existing Home Sales figures of June and July.

For housing and home prices, this is a positive but the gains won’t apply to each home equally. The Pending Home Sales Index is still a national report for a market built on local sales. What’s happening on your particular street in your particular neighborhood may not reflect what’s happening somewhere else.

For accurate, real-time data in your local market, ask a real estate agent for statistics.

Home Values Climb 0.8 Percent In April

FHFA Home Price Index (From Peak To Present)

Maybe homes in Scottsdale are holding value better than we thought.

Between March and April of this year, home values rose 0.8 percent nationally, according to the Federal Housing Finance Agency’s Home Price Index. It’s the index’s first month-to-month improvement since May of last year.

Values are down 19 percent since peaking 4 years ago.

Private-sector data affirms the government’s report.

Tuesday, the S&P’s Case-Shiller Index also showed home values higher by 0.8 percent in April, on a monthly basis. Led by Washington, D.C. and San Francisco, 13 of the Case-Shiller’s 20 tracked markets showed improvement in April.

In March, just 2 markets did.

As a home seller , it’s nice to see reports of rising home prices after multiple months of “bad news”. However, the data may not be as rosy as it appears to be. National real estate surveys including the Home Price Index and the Case-Shiller Index are flawed for everyday buyers and sellers.

The biggest flaw is “age”. Both the Home Price Index and the Case-Shiller Index report on a near 2-month delay.

This week, the calendar turns to July. Yet, we’re still discussing housing news from April. The housing market of 60 days ago was very different from the housing market of today. Mortgage rates are different, market drivers are different, and the pool of buyers is likely different, too.

We can’t discuss today’s housing market with “April” in mind. The data is irrelevant.

Another flaw is that both reports are national in scope. Real estate, by contrast, is local.

When we cite the Home Price Index or the Case-Shiller Index, for example, and say “home values rose 0.8% in April”, we’re just giving a national average. On the local level, some markets rose by more, some rose by less, and others actually fell.

People buy homes on a specific block of a specific street in a specific neighborhood. Data for homes like that can’t be captured in a national survey.

The group that gets the most value from the Home Price Index and Case-Shiller is Wall Street and policy-makers. The indices do a fair job of reporting how housing behaves as a whole, but for individuals concerned with buying and selling homes, the best place to find real-time, accurate data is from a real estate professional.

Top 25 Least Expensive U.S. Cities

25 Least Expensive U.S. Cities

A report issued Monday by the U.S. government showed core inflation rising 2.5 percent in the last 12 months for its biggest one-year gain since January 2010.

Everyday living is becoming expensive, it seems.

But there are some U.S. towns in which the cost of living remains affordable — and downright cheap — as compared to the national average. They’re detailed in a BusinessWeek piece titled “The Cheapest 25 Cities In The U.S“.

In comparing costs across 340 urban areas as compiled by the Council of Community & Economic Research, cities in Texas, Arkansas, Tennessee and Oklahoma ranked consistently high. Cities in Hawaii did not.

Take note, though. Although the BusinessWeek piece highlights inexpensive cities in which to live, a low cost of living does not necessarily correlate to a high standard of living. Cost-leader Harlingen, Texas, for example, boasts a poverty rate nearly triple the national average.

Other “Inexpensive Cities” feature similar poverty rates.

The Top 10 “cheapest cities”, as shown by BusinessWeek are:

Harlingen, Texas
Pueblo, Colorado
Pryor Creek, Oklahoma
McAllen, Texas
Cookeville, Tennessee
Commerce-Hunt County, Texas
Brownsville, Texas
Fort Smith, Arkansas
Muskogee, Oklahoma
Springfield, Illinois

And, at the other end of the spectrum, the top 5 most expensive cities/areas were, in order, Manhattan, New York; Brooklyn, New York; Honolulu, Hawaii; San Francisco, CA; and Queens, New York.

Manhattan’s cost of living is more than twice the national average.

The complete list is available at the BusinessWeek website.

What’s Ahead For Mortgage Rates This Week : June 27, 2011

Fed Funds Rate Mortgage markets improved again last week on a revised economic outlook for the U.S. economy, and ongoing concerns about Greece and its sovereign debt.

Conforming mortgage rates in AZ fell last week and now hover near the all-time lows set last November.

Adjustable-rate mortgages are especially low.

There were three big stories last week that will carry forward into this week.

First, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged in its current target range of 0.000-0.250 percent. This was expected. However, the Fed revised its growth estimates for the U.S. economy lower. This was not expected.

Mortgage rates dipped on the news.

Second, Greece moved closer to avoiding insolvency. The nation-state’s parliament must now pass a package of spending cuts and tax increases to appease Eurozone leaders and the IMF. Without passage, though, bankruptcy may be unavoidable.

Worries about Greece’s fate sparked a bond market flight-to-quality. This, too, helped mortgage rates ease.

And, lastly, Thursday, the U.S. and other members of the International Energy Agency chose to release 60 million barrels of oil to the market over the next month. You’ve likely experienced the impact as the gas pump already — gas prices are way down nationwide.

Lower gas prices means fewer inflationary pressures and inflation is the enemy of mortgage rates. Less inflation, lower mortgage rates.

This week, mortgage rates may reverse.

There isn’t much new data due for release — inflation data due Monday, housing data due Wednesday, and a series of confidence reports throughout the week — but there are 3 scheduled treasury auctions that could pull rates up or down.

Monday : 2-Year Treasury Note auction
Tuesday : 5-Year Treasury Note auction
Wednesday : 7-Year Treasury Note auction

If demand is high at any/all of the auctions, mortgage rates should drop. If demand is weak, mortgage rates should rise.

New Home Supplies Drop, And So Does Homebuilder Confidence

New Home Supply (2010-2011) On paper, the market for newly-built, single-family homes looks healthy.

Last month, the number of new homes sold on an annualized, seasonally-adjusted basis tallied 319,000. The May reading is the second-highest of the year, and 6 percent above the current 12-month average.

These are strong numbers in isolation. However, after accounting for the dwindling supply of new homes for sale as well, the figures look even stronger.

In May, at the current pace of sales, the complete, national inventory of new homes for sale would have been sold in just 6.2 months.

That’s the quickest pace in a year and a 3-month improvement from a year ago.

To hear it from homebuilders, though, you’d think that sales were crashing.

Homebuilder confidence slipped to a 9-month low this month; builders report slowing foot traffic; and the prospects for the next 6 months appear weak. This is not the portrait painted by HUD’s May New Home Sales report.

As a home buyer in Phoenix , this dichotomy may work to your advantage.

Falling supplies and rising demand correlate to higher home prices. Yet, builders are pessimistic for their market. Therefore, despite the economics, psychology may help buyers experience more favorable negotiations, including complimentary upgrades and other builder concessions.

If you’re a buyer in today’s market, it’s a reason to consider the new home market. There may be good value once you know where to look.

A Simple Explanation Of The Federal Reserve Statement (June 22, 2011 Edition)

Putting the FOMC statement in plain English Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 10-0 — the fourth straight unanimous vote for the nation’s Central Bank.

In its press release, the FOMC said that the economy is recovering, although “somewhat more slowly” than what was expected. Labor markets have been weaker than anticipated and the Fed believes that is, in part, a result of higher food and energy costs, and supply chain disruptions as a result of “tragic events in Japan”.

Some economic bright spots identified by the Fed include expanding household spending, and increased business investment.

These comments were in-line with what Wall Street expected from Chairman Ben Bernanke and the members of the Federal Open Market Committee.

The Fed stayed on message with respect to inflation, too. It acknowledged inflationary pressures on the economy, but attributed them to rising commodity costs and the aforementioned supply-chain disruption. The Fed expects long-term inflation to be stable.

And, lastly, the Federal Reserve re-affirmed its plan to end its $600 billion pledge to bond markets June 30, and to hold the Fed Funds Rate near zero percent “for an extended period” of time.

Again, no surprise.

Mortgage market reaction to the FOMC statement has been even this afternoon. Mortgage rates in Mesa are unchanged and leaning lower. Note that sentiment can shift quickly, however. If today’s mortgage rates fit your budget, consider locking in your rate.

The FOMC’s next scheduled meeting is August 9, 2011.

Existing Homes Sales Slip In May

Existing Home Sales (2010-2011) Home resales slipped 4 percent in May, falling below the 5,000,000-unit mark on a seasonally-adjusted, annualized basis for the first time since February.

April’s resales were revised lower, too.

Analysts were surprised by the figures because it runs counter to the National Association of REALTORS® monthly Pending Home Sales reports.

The association’s Pending Home Sales Index is purported to be a forward-looking indicator for the housing market because 80% of homes under contract close within 60 days and recent Pending Home Sales readings show an increase in “pending” homes.

This month’s Existing Home Sales, however, fell flat.

May’s drop in home resales wasn’t limited to a particular region or price point, either. All 4 geographic regions lag last May’s results. Five of the 6 valuation ranges fell, too.

$0-$100,000 : +6.7 percent annual change
$100,000-$250,000 : -21.6 percent annual change
$250,000-$500,000 : -16.0 percent annual change
$500,000-$750,000 : -11.0 percent annual change
$750,000-$1,000,000 : -20.7 percent annual change
$1,000,000 or more : -11.0 percent annual change

The Existing Home Sales report wasn’t all bad, however.

Although the months of housing stock rose to 9.3 in May, the number of homes for sale nationwide fell 1%. This suggests that there weren’t as many buyers in May as compared to April — a function of weather, jobs and the economy. Since April, the jobs market and the economy have shown steady, slow improvement and Mother Nature has been less destructive.

Home resales should rebound in June and July, therefore.

If you’re a buyer in today’s market, home supplies are higher and mortgage rates are lower. The combination makes for ample bargain-hunting. There’s excellent “deals” to be found in Scottsdale. Ask your real estate agent for help in finding them.

Homebuilder Confidence Slips To 9-Month Low

Homebuilder confidence slips in June 2011

Despite rising new home sales and an increase in building permits nationwide, home builder confidence slipped to a 9-month low in June. The monthly Housing Market Index from the National Association of Homebuilders registered 13 this month — three ticks lower than last month, and its lowest level since September 2010.

June’s 3-point drop from May is the biggest one-month move since May 2010, the month after the expiration of the federal home buyer tax credit. The retreat could signal favorable pricing for new home buyers in Scottsdale in the months ahead.

When builders get less bullish on housing, they may be more willing to negotiate for upgrades and discounts. Ultimately, this can help new home buyers buy homes at better, lower prices.

A closer look at the Housing Market Index shows why this may be true.

The Housing Market Index is not a single-reading statistic. It’s a composite; the result of 3 separate surveys, each meant to measure a specific facet of a home builder’s business. The survey questions are:

How are market conditions for the sale of new homes today?

How are market conditions for the sale of new homes in 6 months?

How is prospective buyer foot traffic?

How are market conditions for the sale of new homes today?
How are market conditions for the sale of new homes in 6 months?
How is prospective buyer foot traffic?

When builders reply, their responses are tallied and mapped to a scale of 1-100. Readings over 50 are considered favorable. Readings under 50 are considered unfavorable. The HMI has not been higher than 50 in more than 5 years.

In June, the HMI composite reading of 13 was anchored by falling foot traffic and reduced expectations for “future sales”. Homebuilders expect new home sales to be down through the New Year.

Therefore, if you’re a home buyer in AZ and have considered “buying new”, the time may be right for making an offer. Financing is cheap, home values are low, and builders are pessimistic — a terrific combination for today’s home buyer.

What’s Ahead For Mortgage Rates : Week of June 20, 2011

FOMC meets Tue-Wed this week Mortgage markets improved last week as Wall Street managed news on both sides of the economic coin. There were several instances of higher-than-expected inflation — an event that tends to lead rates higher — but weak domestic jobs data and a soft manufacturing report suppressed the damage.

Rates were also held low by ongoing issues in Greece.

In Greece, the government is currently struggling to meet its debt obligations — despite a restructuring of existing debt negotiated in 2010.

Without a plan for its new debt, though, Greece will likely to default on what it owes. Eurozone and international banking leaders have failed to reach consensus on the situation, and now the citizens of Greece are in a state of social unrest.

The uncertainly surrounding the nation-state spurred a bond market flight-to-quality last week. That, too, helped to keep rates low.

Last week, mortgage rates fell for the sixth week out of nine, a streak that’s dropped conforming mortgage rates in Phoenix to their lowest levels of the year.

This week, that could change.

Wednesday, the Federal Open Market Committee adjourns from a 2-day meeting and anytime the Fed meets, there’s a good chance that mortgage rates will move. The FOMC makes the nation’s monetary policy.

The meeting adjourns at 12:30 PM ET and Fed Chairman Ben Bernanke will follow with a press conference at 2:15 PM ET. The press conference is meant to give context to the FOMC’s decision, and allow for back-and-forth with the press corps. Wall Street will watch closely, too, for signals of the Fed’s next action(s).

In addition, this week will see the results of May’s Existing Home Sales report and New Home Sales report. Both are considered important to the housing market, and to the economy overall.

If you’re still floating a mortgage rate, falling mortgage rates have helped you. There’s not much room for rates to fall further, however. Consider calling your loan officer and locking something in.

How To Clean Outdoor Furniture : Resin, Wood And Metal

This week marks the official start of Summer in Phoenix. If your home’s outdoor area has furniture in it, you’ll want to make sure that your furniture is clean.

In this 4-minute video from Lowe’s, you’ll learn tricks to keep your outdoor furniture clean, and protected from the elements. All types of outdoor furniture are covered in the lesson including metal, resin-based, and wooden.

The offered tips include:

Why you should never remove the “care tags” from a furniture pillow
Choosing the proper pressure-washer tip for the job at-hand
How to use car wax as a rust-preventative

Furthermore, the instructional video includes tips for cleaning fabrics and canopies; and for shampooing an outdoor rug.

There’s lot of reasons to keep your outdoor furniture clean — health reasons among them — but it shouldn’t be lost that clean furniture will have a longer useful life than furniture that’s been neglected or ignored.

Clean your outdoor pieces at least twice annually and they’ll give you years of good looks and comfort.

How To Clean Outdoor Furniture : Resin, Wood And Metal

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Archive for June, 2011

Pending Home Sales Unexpectedly Spike In May

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