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Monday
Jul242017

Existing home sales and prices up

California existing home sales and prices up in June - The California Association of Realtors announced that sales of existing, single-family detached homes totaled a seasonally adjusted annualized rate of 443,150 units in June. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The June figure was up 3.3% from the revised 428,890 level in May and up 2.4% compared with home sales in June 2016 of a revised 432,880. Year-to-date sales are running 3.2% ahead of last year’s pace.  
The statewide median price was up 0.9% from a revised $550,080 in May to reach $555,150 in June, and was 7.0% higher than the revised $518,830 recorded in June 2016. The median sales price is the point at which half of homes sold for more and half sold for less. 

Foreign home buyers set U.S. record - The National Association of Realtors announced that foreigners purchased 284,455 residential properties in the 12 months ending March 31, 2017. That's an increase of about 34% from the same period one year ago. The dollar volume surged nearly 50% to $153 billion. That was a new record. Chinese nationals purchased $31.7 billion worth of residential properties, up from $27.3 billion one year earlier. The group with the largest increase was Canadians who purchased $19 billion worth of residential properties, up from $8.9 billion in the 12 months ending March 31, 2016. It was a dramatic jump considering that the strong U.S. dollar makes properties more expensive. Foreign buyers spent $35 billion on California residential properties. That was up from $27 billion one year earlier. Asian buyers represented 71% of foreign buyers in California, up from 51% a year earlier. 

 

Saturday
Mar252017

Mortgage rates drop this week

Mortgage rates drop this week  - The Freddie Mac Primary Mortgage Survey released on March 23, 2017 reported that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.23%, down from 4.30% last week. The 15-year fixed average rate was 3.44%, down from 3.50% last week. The 5/1 ARM average rate was 3.24%, down from 3.28% last week. 


U.S. new home sales surge in February - The Commerce Department reported that new home sales rose 6.1% in February from January's sales pace levels.  Year over year new home sales increased a staggering 13% from last February, 2016. The National Association of home Builders / Wells Fargo builder sentiment index rose to its highest reading since June 2005. 


Low inventory leads to a decline in sales of pending existing homes - The California Association of Realtors reported that new contracts signed for the purchase of existing homes in February declined 2.6% year over year from the number of contracts last February.  Month over month pending sales increases 3.2% from January's pending contract level. It's best to compare year over year rather than month over month due to seasonal reasons.  Pending home sales is an indicator of closed sales.

Wednesday
Feb222017

Economy shows signs of inflation picking up

Mortgage rates hold steady  - The Freddie Mac Primary Mortgage Survey released on February 16, 2017 reported that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.15%. The 15-year fixed average rate was 3.35%.  The 5/1 ARM average rate was 3.18%.

Economy shows signs of inflation picking up - The prices Americans pay for goods and services surged in January by the largest amount in four years, mostly reflecting a rebound in the cost of gasoline that’s taking a bigger chunk out of household incomes. The government's reported consumer price index (CPI) showed that  consumer prices rose 2.5 percent in January from a year earlier, the highest rate since March 2012. About 1/2 of the rise was attributed to higher gas prices. Rent and medical costs also saw a spike from a year earlier. The seasonally adjusted 0.6% rise in January was double the 0.3% economists predicted.  Core inflation which strips out gasoline and food prices rose 0.3% in January and was up 2.3% from last January.  We watch inflation because when inflation rises it causes interest rates to rise. Fortunately rates have risen on the expectation of higher inflation, so rates remained steady despite the higher CPI report.

California home closed escrows higher in January - The California Association of Realtors reported that home sales totaled 420,100 in January on a seasonally adjusted basis. The number of sales increased 2.1% from December's sales pace and 4.4% from last January. Although the median price dropped slightly from December it was up 4.8% from January 2016's median. Inventory levels rose to a 3.7 month supply in January from a 2.7 month supply in December as more homeowners put their homes on the market. There was a 4.3 month supply last January.

Monday
Feb202017

The 30-year fixed rate average is 4.15%

Mortgage rates hold steady  - The Freddie Mac Primary Mortgage Survey released on February 16, 2017 reported that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.15%. The 15-year fixed average rate was 3.35%.  The 5/1 ARM average rate was 3.18%.



Economy shows signs of inflation picking up - The prices Americans pay for goods and services surged in January by the largest amount in four years, mostly reflecting a rebound in the cost of gasoline that’s taking a bigger chunk out of household incomes. The government's reported consumer price index (CPI) showed that  consumer prices rose 2.5 percent in January from a year earlier, the highest rate since March 2012. About 1/2 of the rise was attributed to higher gas prices. Rent and medical costs also saw a spike from a year earlier. The seasonally adjusted 0.6% rise in January was double the 0.3% economists predicted.  Core inflation which strips out gasoline and food prices rose 0.3% in January and was up 2.3% from last January.  We watch inflation because when inflation rises it causes interest rates to rise. Fortunately rates have risen on the expectation of higher inflation, so rates remained steady despite the higher CPI report.

California home closed escrows higher in January - The California Association of Realtors reported that home sales totaled 420,100 in January on a seasonally adjusted basis. The number of sales increased 2.1% from December's sales pace and 4.4% from last January. Although the median price dropped slightly from December it was up 4.8% from January 2016's median. Inventory levels rose to a 3.7 month supply in January from a 2.7 month supply in December as more homeowners put their homes on the market. There was a 4.3 month supply last January.

Saturday
Jan142017

Mortgage rates lower again this week 

 


Mortgage rates lower again this week - After surging in the weeks following the election, mortgage rates have settled in a little lower dropping slightly in the past couple weeks. The Freddie Mac Primary Mortgage Survey released on January 12, 2017 revealed that average mortgage rates from lenders surveyed for the most popular mortgage products were as follows: The 30-year fixed rate average was 4.12%. The 15-year fixed average rate was 3.37%.   The 5/1 ARM average rate was 3.23%.


Moody's settles investigation for $864 million - It's not really big news, but I was glad to see thatMoody's, the rating company, was fined $864 million for its role in the financial crises.  Moody's was accused of over rating mortgage securities. For example, they rated some mortgage backed security products as high as U.S. Government Bonds. When those investments  collapsed and lost all or nearly all their value the Justice Department and other agencies investigated them.  It appeared they were selling ratings to investment firms, rather than doing a true evaluation. The ratings especially the AAA ratings made these products seem risk free and investors around the world, which included mutual funds, governments, retirement funds, unions, individuals, etc. stocked up on them only to lose all or almost all of their money when these investments collapsed. The amount of money lost was so great it almost collapsed the world's financial system.  The ratings agencies' defense has been that they didn't understand how these products were structured because they were so complicated and that is why they were so wrong! Unfortunately, Moody's made much more in rating fees than $864 million so who knows if this is a deterrent to keep something like this from happening again. Trillions were lost. It could not have happened without the rating companies being so wrong. Nobody was criminally charged!


Consumer confidence at peak levels - University of Michigan Surveys of Consumers chief economist, Richard Curtin wrote this week "Consumer confidence remained unchanged at the cyclical peak levels recorded in December. The Current Conditions Index rose 0.6 points to reach its highest level since 2004, and the Expectations Index fell 0.6 points which was lower than only the 2015 peak during the past dozen years. The post-election surge in optimism was accompanied by an unprecedented degree of both positive and negative concerns about the incoming administration spontaneously mentioned when asked about economic news. The importance of government policies and partisanship has sharply risen over the past half century. From 1960 to 2000, the combined average of positive and negative references to government policies was just 6%; during the past six years, this proportion averaged 20%, and rose to new peaks in early January. The Expectations Index was a strong 90.9, supporting a real consumption growth of 2.7% in 2017."

 

From what we are seeing out in the marketplace it looks like prices are beginning to move up  at a good pace. Activity is strong and inventory levels are low.  I'd expect home prices to increase at the quickest pace in the next few months.  Home prices don't move at a consistent even  pace throughout the year. It's not unusual to see prices begin to increase from February through spring and level out for the remainder of the year. It looks like the seasonal moving up process is starting just a little early this year as the economy has improved, and buyers are more optimistic than they were last January. Interest rates which have risen are on everyone's mind, but nobody seems to realize that they are about at the same level that they were in December of 2015 before dropping sharply last year as the economy stalled. This year growth has picked back up both in the U.S. and around the world