The Headlines Were Overly Rosy On February’s Case-Shiller Index
Earlier this week, Standard & Poors released its February Case-Shiller Index, a home price tracker for select metropolitan areas.
Overwhelmingly, home values fell in the 20 markets tracked by the Case-Shiller. Only San Diego showed a modest increase. The other 19 markets averaged a 1.23 percent decline between January and February.
However, that’s not the story you read in the most papers. Instead, headlines read that home values were up in the United States, citing annualized data.
Unfortunately for active home buyers and sellers, year-over-year data isn’t all that helpful when making a real estate decisions. It’s the month-to-month data that matters. Month-to-month changes in home prices are what defines a housing market. Month-to-month is what sets the tone for contracts and negotiations on a purchase.
The rosier, annualized data published this past week just doesn’t capture the reality of what was the February 2010 market. And even then, the data is somewhat useless because it’s from February and May will be upon us next week.
Case-Shiller is on a 2-month lag — hardly reflective of the “right now” of real estate.
When you’re looking for real estate data that actionable, consider using sources that are more “real-time”. A real estate agent may be the right place to start. Because for all the data that Case-Shiller and the other housing indices collect, it can never be as relevant to your individual needs as a well-executed, timely market analysis.
A Simple Explanation Of The Federal Reserve Statement (April 28, 2010 Edition)
Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.
In its press release, the FOMC noted that, since March, the U.S. economy “has continued to strengthen” and that the jobs markets “is beginning to improve”. This is a step up from the last meeting after which the Fed said jobs were “stabilizing”.
It also reiterated that business spending “has risen significantly”.
Today’s statement marks the 7th straight press release in which the Fed shows optimism for the U.S. economy. Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year’s financial crisis.
Threats remain to growth, however. The Fed fingered a few:
- Employers are reluctant to hire new workers
- High unemployment threatens consumer spending
- Consumer credit (still) remains tight
Also in its statement, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent “for an extended period”. This was expected.
Overall, the statement’s tone was positive and the Fed noted that inflation is within tolerance.
Mortgage market reaction has been muted thus far. Mortgage rates are unchanged post-FOMC.
The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010. The 55-day span between meetings will be the FOMC’s longest of 2010.
164 South Avenue 57, Highland Park
164 South Avenue 57, Highland Park
164 South Avenue 57, Highland park, offered for sale at: $449,000
Private Shangrila perched high above the street: Beautiful views of the Arroyo Seco Valley in this Vintage Craftsman Style Cottage with living room, formal dining room, kitchen, 3 bedrooms, 1 bath This home is a private enchanted garden paradise located within an Historic Preservation Overlay Zone & only 3 short blocks from Highland Park’s Metrolink Station & central to everything local. The interior is artistic & traditional with a delightful tiled fireplace & an abundance of built-in cabinetry. Appliances included: gas, stove, refrigerator, washer/dryer & 2 off street parking spaces (garage gone). Here at 164 S. Ave. 57, you can discover a neighborhood that respects its history & treasures its Architectural Heirlooms!
New Homes Sales Were Strong in March, But Not As Strong As The News Would Have You Believe
The sales of newly-built homes soared in March. Even more than what was expected. But the news may not be as glowing as what the media is telling us.
Take a look at the headlines from last Friday:
- Sales of new homes rocketed up 27 percent in March (WaPo)
- New-home sales rise fastest in 47 years (CNNMoney)
- Sales of New Homes Climb by Most Since 1963 (Business Week)
None of these statements is false, per se, but each is somewhat misleading. The biggest reason why March’s New Home Sales was even able to rise 27 percent is because data from the month before it — February — was the worst in New Home Sales history.
In February, new homes sold posted its lowest level in recorded history.
A better comparison would be against March a year earlier; or October 2009, the month before the home buyer tax credit’s initial expiration date.
Against both of those time periods, March 2010 fared well.
Home buyers – first-timers and repeats alike — went under contract last month, taking advantage of the soon-to-expire federal home buyer tax credit program. The credit gives up to $8,000 for first-time buyers and up to $6,500 for repeat ones.
Buyers must be in mutual contract on or before April 30, 2010 to be eligible for the credit, and must closed on or before June 30, 2010.
The New Home Sales data included other strong housing data, too. The current supply of new homes nationwide is at a multi-year low. Along with stronger home demand, this should push home prices higher throughout the coming months.
It’s no wonder builders are bullish on the economy.
What’s Ahead For Mortgage Rates This Week : April 26, 2010
Mortgage markets worsened last week in see-saw trading. By the time Friday’s market closed, mortgage rates were higher across the board — ARMs, fixed rates, FHA and conventional.
The biggest stories of last week were actually non-stories.
First, the ash cloud from Iceland’s Eyjafjallajökull volcano dissipated, allowing warehouses to move inventory, airlines to move people, and businesses to move product. In addition, Greece moved closer to securing emergency funding that will help it stave off default.
When these two issues were threats earlier in the month, mortgage bonds rallied on safe haven buying, driving rates down. As the threats lessened over the course of last week, however, mortgage bonds sold off and mortgage rates rose.
By contrast, this week features lots of stories. Economic data will be at the forefront, as will the Federal Reserve which meets for one of its 8 scheduled meetings of the year.
- Monday : Greece is expected to announce an aid package
- Tuesday : Case-Shiller Index reports on home values from February
- Wednesday : Fed adjourns from its 2-day meeting
- Thursday : Initial Unemployment Claims are released
- Friday : GDP and consumer confidence numbers are released
Furthermore, Wall Street will have its eye on the Senate’s questioning of key Goldman Sachs employees in the wake of the SEC’s fraud charge.
In general, news that’s “good” for the U.S. economy will be bad for mortgage rates, and vice verse. And with mortgage rates changing as quickly as they have been, rates could really rise in a hurry.
The best defense against rising mortgage rates is to execute a rate lock. If you’re nervous about rates moving higher, call your loan officer and execute your rate lock today.
OPEN HOUSES FOR SUNDAY APRIL 25 IN NORTHEAST LOS ANGELES
Listing of Sunday’s Open Houses from I-Tech MLS
Listing of Sunday’s Open Houses from Combined L.A. Westside MLS
Featuring Open Houses in the Los Angeles communities of Eagle Rock, Highland Park, Mount Washington, Glassell Park, Sycamore Grove, Garvanza, Montecito Heights, Cypress Park, Lincoln Heights, El Sereno, Monterey Hills, and Hermon.
The Bob Taylor Properties Network of informative blogs and websites
Bob-Taylor.com Our original website
BobTaylorProperties.com The company blog
NelaLive.net Community events and commentary
EclecticAngelino.com A headline newsfeed from around Northeast L.A.
TaylorHotSheet.com Market updates and open houses
WeMarketRealEstate.com Our intensive marketing strategies
RealEstateHomeBuyersGuide.com Information for home buyers
Fight Your Real Estate Property Tax Bill Without A Lawyer
More than 60 percent of U.S. homes are “over-assessed”, says an industry trade group. Homeowners pay more in property taxes than they otherwise should have to. You might be one of them.
Have you considered fighting your real estate tax bill?
In this 4-minute piece from The Today Show, you’ll learn:
- When to file your tax bill dispute for the best chances of winning
- How to pull your “property card” and check for tax bill-raising errors
- What to do if the taxing authority turns down your request
Most importantly, you’ll learn that don’t need to hire an attorney to fight your tax bill. You just need to be prepared. Do your research and make your case. It’s estimated that nearly half of all contesting homeowners are successful.
How Iceland’s Volcanoes Are Helping Mortgage Rates Fall
Mortgage rates and home affordability have improved lately, thanks to an unlikely ally — Mother Nature.
In the 7 days since Iceland’s Eyjafjallajökull erupted, ash clouds have grounded planes, disrupted businesses, and stranded exports in warehouses worldwide.
It’s a drag on commerce that’s spilled over onto Wall Street. As experts debate the potential for future seismic activity, traders are taking some of their investment risk off the table.
In trading circles, it’s called “safe haven buying”. When the market gets cloudy, investors often move their cash into relatively safe assets. This includes government-backed securities — mortgage-bonds among them.
Demand for bonds rise, pushing up prices and driving down rates.
Conforming and FHA mortgage rates touched a 3-week low earlier this week.
Volcanic eruptions and like natural disasters remind us: mortgage rates change for all sorts of reasons. Some we can predict, most we cannot. There’s literally thousands of influences on the U.S. mortgage market.
If you’ve been shopping for a home or floating a mortgage rate, luck’s been on your side. Mortgage rates have fallen post-Eyjafjallajökull. However, as ash clouds dissipate and business resumes worldwide, investors will regain their collective appetite for risk and safe haven buying will reach its natural end.
When that happens, mortgage rates will rise.
Therefore, use the seismic uncertainty to your advantage. Consider locking your mortgage rate sooner rather than later — while rates are still low.
Housing Starts Data Hints That Housing Will Expand Even After The Tax Credit Expires
After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.
It’s yet another signal that the housing market nationwide is stabilized.
A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.
This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago. Revisions to prior data have all been higher, too.
Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.
Housing permits are an important data point in housing because permits are precursors to actual housing starts. According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.
Therefore, because March’s housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.
This, too, reflects well on housing because the federal home buyer tax credit won’t be in existence this summer. The simple fact the homes are being built now shows that housing is likely to expand even after the tax credit expires.
Non-military members must be under contract by April 30, 2010 and closed by June 30, 2010 in order to claim up to $8,000 in federal tax credits.
REAL ESTATE MARKET STATS 04/11/2010 – 04/18/2010: NORTHEAST LOS ANGELES
These zip codes include the Northeast Los Angeles communities of Eagle Rock, Highland Park, Mount Washington, Glassell Park, Sycamore Grove, Garvanza, Montecito Heights, Cypress Park, Lincoln Heights, El Sereno, Monterey Hills, and Hermon.
The Bob Taylor Properties Network of informative blogs and websites
Bob-Taylor.com Our original website
BobTaylorProperties.com The company blog
NelaLive.net Community events and commentary
EclecticAngelino.com A headline newsfeed from around Northeast L.A.
TaylorHotSheet.com Market updates and open houses
WeMarketRealEstate.com Our intensive marketing strategies
RealEstateHomeBuyersGuide.com Information for home buyers