For the week of May 14, 2012 – Vol. 10, Issue 20

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK…“I’ve been lucky. Opportunities don’t often come along. So, when they do, you have to grab them.” –Audrey Hepburn

INFO THAT HITS US WHERE WE LIVE… There are more and more opportunities to grab in the housing market. After almost six years of price declines, we’re finally seeing signs of stability, as home prices rose in the first quarter in more than half the U.S. metro areas tracked by the National Association of Realtors (NAR). The median price for existing homes sold was higher than a year ago in 51% of the areas — 74 of 146 metros.

That’s a nice turnaround from the fourth quarter of last year when median prices increased in just 29 of 149 metros. The small supply of lower-priced homes in many places should provide a price boost, according to the NAR’s chief economist, who added, “this is good news for many sellers who wish to list now, or for those waiting for prices to improve.” Home sales were UP 4.7% over the prior quarter and UP 5.3% from the first quarter a year ago.

BUSINESS TIP OF THE WEEK… Satisfied customers are your strongest source of leads. When clients have an experience worth talking about, the value of the referrals can be enormous.

>> Review of Last Week

HONEY FOR THE BEARS… The only investors who got a sweet treat last week were the bears who expect to see stocks go down. European worries and a big loss at a big bank sent the Dow on its biggest weekly dive in five months. JPMorgan revealed a pretax trading loss of $2 billion, partially offset by $1 billion in gains. The loss comes at a bad time, when banks are fighting increased regulations, which they and many economists say are unnecessary. Across the pond, a new French Socialist President and Greece’s failure to form a coalition government put austerity plans in doubt.

Weekly initial jobless claims remain elevated but not growing, staying just below 370,000. On the upside, there was a surprise gain in the University of Michigan Consumer Sentiment Survey. This was joined by an unexpected 0.2% dip in overall wholesale prices (PPI), with Core PPI, excluding food and energy, up just 0.2%, as expected.

For the week, the Dow ended down 1.7%, at 12821; the S&P 500 closed down 1.1%, to 1353; and the Nasdaq went down 0.8%, to 2934. 

Global economic worries, including a slowing of China’s economic growth, inspired this week’s flight to safety into bonds. The FNMA 3.5% bond we watch finished the week unchanged, at $104.01. In Freddie Mac’s weekly survey, national average mortgage rates hit record lows for certain types of mortgages for the second week in a row. This was due to the strength in mortgage bond prices due to the continued economic uncertainty.

DID YOU KNOW?… Investors see Building Permits as an indicator of consumer confidence. They watch monthly and yearly trends for signs of weakness that might suggest a contraction in consumer spending.

>> This Week’s Forecast

CONSUMER PRICES AND SPENDING, HOME BUILDING AND A PEEK INTO THE FED…  Tuesday we see how strongly consumers are spending, with April Retail Sales expected up, but not by as much as last month. Prices should hold, as the overall Consumer Price Index (CPI) is forecast flat, with “core” prices (excluding food and energy) up just 0.2%.

We’ll also look into home building, with April Housing Starts predicted up a little, but Building Permits (see above) down a bit. Wednesday’s FOMC Minutes will give us a closer look into what happened at the last Fed meeting.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of May 14 – May 18

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… The Fed has stated its goal is to keep rates super low well into next year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

For the week of May 7, 2012 – Vol. 10, Issue 19

QUOTE OF THE WEEK…“One person with a belief is equal to a force of 99 who have only interests.” –John Stuart Mill, British philosopher and political economist

INFO THAT HITS US WHERE WE LIVE… Happily, it’s becoming easier to believe the housing market is turning around, although in fits and starts. For example, the Q1 Advanced GDP report showed that home building increased for the period at a 19% annual rate, its fourth consecutive quarterly gain. In line with this, several home builders have recently reported higher sales and orders. The National Association of Realtors (NAR) projects new home sales UP 31.6% for 2012.

More evidence: as of March, Realtor.com put the median list price of homes up 5.56% for the year. The NAR’s chief economist offered, “The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the country, which means home prices will be rising in more areas as the year progresses.” The NAR forecasts existing home sales UP nearly 10% for 2012, to 4.68 million units.

BUSINESS TIP OF THE WEEK… Tech companies say it’s better to ship a product sooner even if it has a few bugs. So when your new service or marketing effort is good enough to go, launch it!

>> Review of Last Week

A DOWNER… The broad S&P 500 stock index sank 2.4%, its worst weekly loss of the year and worst performance since mid-December. Friday the Nasdaq saw its worst one-day and weekly loss since late November. The culprit was the April jobs report, with just 115,000 nonfarm jobs added. But the two prior months were revised higher, so there was something for the bulls as well as the bears. The unemployment rate dropped to 8.1%, although, siding with the bears, many economists pointed out this was because more people gave up looking for work.

Other data also revealed a mixed picture. ISM Manufacturing surprised to the upside, but ISM Non-Manufacturing was lower than expected, although both were still just over the line showing growth. Personal spending in March was up at a slower clip than expected, but personal income came in stronger. Spending is up 4% and income is up 3.2% for the year. Core PCE Prices were up 0.2% for the month, so inflation remains within the Fed’s target range.

For the week, the Dow ended down 1.4%, at 13038; the S&P 500 closed down 2.4%, to 1369; and the Nasdaq went down 3.7%, to 2956. 

Unsurprisingly, Friday’s worse than expected Employment Report set off a big flight to safety into bonds. The FNMA 3.5% bond we watch finished the week UP .77, at $104.01. National average mortgage rates continued to edge lower according to Freddie Mac’s weekly Primary Mortgage Market Survey. Rates for some types of mortgages made new record lows. 

DID YOU KNOW?… First quarter home sales closings were the highest for the period in five years. And the boost in first quarter contract signings indicates second quarter sales could be just as good.

>> This Week’s Forecast

QUIET BUT INTERESTING… Not a lot of economic reports this week, but some items of interest. It’s expected the Trade Deficit continued to grow in March, meaning we’re still buying more from them than they are from us. We’ll see if the Federal Budget beats its prior $40 billion+ deficit.

We also want to watch weekly Initial Unemployment Claims, which have been heading back up toward 400,000. Friday we’ll have wholesale price inflation in the form of PPI and Core PPI (excludes food and energy). These numbers are expected to remain low, so the Fed can continue its super low rate policy.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of May 7 – May 11

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… The Fed would have to start raising the Funds Rate if inflation started becoming a problem, but everything appears fine for now. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

Unless you have been hiding under a rock the last few months, you may have noticed Austin, Texas entered into a seller’s market. Properties within 5 miles of downtown Austin are selling for more money and in less time than they have in years. However, this hot market trend is not true for ALL of the properties for sale in Austin. The successful sale of an Austin property comes down to two separate factors: price and presentation.

Presentation of Austin Homes for Sale

We’ll start with the presentation. Lately, homes listed that need improvements and upgrades are typically not selling nearly as fast as the improved properties. This should come as no surprise to anyone. But there are ways to counter this issue if you don’t have the budget to improve your Austin home. As an example, we recently listed a home in South Austin neighborhood of Maple Run. Our clients had owned the home for more than ten years and had two kids. They had not improved the home one bit. It had carpet and linoleum floors to compliment the Formica countertops.

What we did with this property is give them an in-depth staging consultation. They did not have the budget to put in new flooring or countertops so we decided the best course of action was to design the home in a way so as to not bring focus on those unattractive features. We hung curtains in the main living areas, removed all of their personal pictures, created clean spaces on the walls, and for God’s sake, remove all the toys! Then, we came in with our stylish art and accessories and prepared the home for the photographer.

The result: the home sold in 3 days with 4 offers at list price. An amazing result. We have to give credit to the homeowners. They did exactly what we asked and made the front flowerbeds look amazing. Presentation prevailed for this South Austin homeowner.
 

Price of Austin Homes for Sale

After the property is presented well, we focus on price. Pricing can be a touchy subject with most Austin home sellers. Everyone has an emotional attachment to their home and most think their home is the best on the block. What I tell people is this fact: there is little danger in under pricing your home in a seller’s market. On the contrary, there is enormous danger in overpricing your home.

We recently listed a home in Austin’s Zilker Neighborhood, right next to Alamo Darfthouse on S. Lamar. My company, Spyglass Realty, competed against two other Austin real estate agents to win the listing. The reason the home sellers chose us was the home needed to be painted and carpet needed to be installed. The wife had three kids and no time. We manage a full-time crew dedicated to our clients, so choosing us to sell the home was a no-brainer for these clients. Plus, the house was empty and we agreed, as we always do, to stage the home.

In the process of choosing their real estate agent, the home sellers had all three agents come up with a price for the home. The three prices he was given were 720K (us) 735K and 750K. At $720,000, the home was the highest price per square foot home in the area and among the highest price per square foot that would ever sell. The other agents were trying to “buy the listing,” which means they tell the owner the home is worth more than the price for which the home is likely to be sold. They tell the client what they want to hear so they can get the listing. Then, after the home doesn’t sell for a few weeks, they urge the seller to drop the price of the home.

We told the home seller we need to price the home low enough so we can procure multiple offers. If we are wrong in under pricing the home, then we WILL get multiple offers. If we overprice the home, it will certainly generate lower than list price offers and if the market does not respond to the home, the seller will be forced to lower the price. Studies show overpricing the home will usually lead the seller to end up with a price that is lower than if they would have priced it right at the beginning.

The key to pricing a home on the low end is you have to give the market a chance to respond to the home. You can’t list on a Thursday and take the first offer that comes your way. It’s best to wait until the Sunday. If we get an owner that will price on the aggressive side, we will put in the comments “Seller will not respond to offers before Sunday at 7PM.” It lets the market know this is a hot property.

The result: we sold the home in 4 days at $741,000. Twenty one thousand dollars OVER list price. And the other offer we received was just a hair underneath THAT price!

When you price a home like this and it goes that far over list price, you need to have a plan to fight the appraiser. We change the Austin MLS system to show there is no lockbox and the showing instructions to “appointment with agent.” This allows us to meet the appraiser at the property and demonstrate why we think the property should appraise at list price. Every now and then we get the appraiser that says “Oh I can’t talk to you about value, per the law.” Yeah, well that may be true, Mr. Appraiser but I can talk to you. We kill them with kindness but we also let them know the following information:

• We had a bidding war on the property (which in itself is a demonstration of market value),

 

• We point out the upgrades to the home,

 

• We let them know the market trends in the neighborhood. Appraisers are not experts on any certain neighborhood. We are, so sharing our knowledge of the area is a plus, and for the most part, the appraisers appreciate it.

Importance of a Pre-Inspection When Selling Your Austin Home

One other thing we do when listing an Austin home is we get a pre-inspection done. This has a lot of positive affects on the transaction. It allows us to negotiate from a position of strength rather than a position of weakness.

As an example, we list a home at $400,000. Let’s say we get multiple offers on this home and end up settling on an offer of $400,000. On that same offer, the buyers asked for a 10-day option. We tell them we our countering at 5 days because we have painted a “transparent” picture of this home with the inspection report and we are not giving concessions for anything found that was already on our first inspection report.

Did you know agents typically ask for three times the actual amount of repairs when you are in contract? And if you don’t give them the concessions and you have to re-list; there is a stigma on the property by potential buyers that something is wrong.

These are just three of the techniques we use to market and sell property in a seller’s market and all of them have been hugely successful for our Austin real estate clients.

 
Thinking of buying a new home in San Antonio, Texas? If you’ve ever purchased a home you know that the process requires careful research and a long checklist of requirements. Finding a good neighborhood for you and your family requires you to ask important questions about whether your kids will attend quality schools, what activities are offered near home, and how long your daily commute would be.

In short, the research process can be quite a task. Luckily, the San Antonio homes experts at VIP Realty are here to take the guesswork out of finding your next home. Here are our picks for the top 3 family neighborhoods in San Antonio:
 

Alamo Heights

Alamo Heights is ideal for families seeking a suburban lifestyle with plenty of options when it comes to entertainment. Alamo Heights offers a perfect location, just 2 miles north of downtown San Antonio and close to major attractions including the San Antonio Zoo, Japanese Tea Gardens, Brackenridge Park, and the Botanical Park. This eclectic is filled with everything from retail chains and popular restaurants to charming boutiques, high-end gift shops, and mom and pop shops. Most families in Alamo Heights are middle-class, hold jobs in the education, health and finance sectors, and have a median income of around $86,000. Kids in Alamo Heights attend excellent schools including Alamo Heights High School and Cambridge Elementary.
 

King William

Rich in both beauty and history, the King William neighborhood is a quaint San Antonio neighborhood filled with lovely historic homes that date back to the 1800s. This unique neighborhood features many unique Greek, Victorian and Italian-style homes, shaded by tall pecan and cypress trees. The King William neighborhood offers endless culture and entertainment, from art galleries to bed-and-breakfasts. It is also within minutes of San Antonio’s bustling commercial district. King William residents are mostly young professionals and families. Children who live in this neighborhood here attend nearby San Antonio ISD schools with fantastic programs in language and the arts.
 

Stone Oak

Stone Oak is a growing neighborhood filled beautiful single-family homes and townhouses starting at just $150,000. The community is conveniently located just a stone’s throw from downtown San Antonio employers and entertainment. Families with children often choose this community for its excellent schools. Kids here attend North East ISD campuses, which have some of the highest ratings in the San Antonio area. Stone Oak families enjoy the neighborhood’s close proximity to great parks, recreation. Stone Oak is also close to the best shopping areas San Antonio has to offer including The Village at Stone Oak, Rolling Oaks Mall, and The Shops at La Cantera.

For the week of April 16, 2012 – Vol. 10, Issue 16

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK…“Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.” –John Kenneth Galbraith, Canadian-American economist

INFO THAT HITS US WHERE WE LIVE… When people tell you the housing market isn’t showing many positive signs, here are some facts that may change their minds. As of January, the National Association of Realtors (NAR) reported the housing inventory of for-sale homes has fallen to its lowest level since March 2005 — 2.3 million homes, about a six-month supply. Meanwhile, total home sales rose 13% in the last six months, according to another industry survey.

The NAR also reports that sales of second homes in 2011 shot up to their highest market share since the height of the housing boom. This includes both vacation and investment homes. A survey of real estate economists and analysts reported home prices should stabilize this year, rebound in 2013 and accelerate in 2014. Finally, Freddie Mac’s weekly survey revealed that national average mortgage rates hit new all-time lows for 15-year fixed-rate loans and were just above the record low for 30-year mortgages.

BUSINESS TIP OF THE WEEK… When you have more problems than you can handle, start with the ones that are most important. Ask yourself, “what’s the most valuable thing I could be doing right now?”

>> Review of Last Week

SECOND DOWN… The S&P 500 and the Nasdaq lodged their first back-to-back weekly losses, while the Dow had its worst week of the year. Some observers felt stock prices were simply due for a correction after zooming UP 30% since October. But others pointed to genuine economic concerns after China reported its economic growth slowing more than anticipated, dropping from 8.9% in Q4 to 8.1% for Q1. Of course, that’s still over 2.5 times our growth rate! Spain’s rising borrowing costs also worried Wall Street.

Over here, corporate earnings season got off to a great start with Alcoa, Google, JPMorgan Chase and Wells Fargo all coming in better than expected. The February Trade Deficit was lower than expected, as U.S. exports gained, a good thing. BUT weekly unemployment claims shot up to 380,000, Michigan Consumer Sentiment dropped for April and the CPI inflation reading showed consumer prices shot UP 0.3% in March after being UP 0.4% in February.

For the week, the Dow ended down 1.6%, at 12850; the S&P 500 closed down 2.0%, to 1370; and the Nasdaq sank 2.2%, to 3011. 

Good corporate earnings and increasing inflation would have hurt bond prices, but worries over European sovereign debt and China’s economic growth kept investors committed to the safe haven of bonds. The FNMA 3.5% bond we watch finished the week off just .01, at $103.15. National average mortgage rates slipped again last week, as economic concerns kept investors in mortgage bonds, holding prices up and rates down.

DID YOU KNOW?… Crude Inventories is the DOE’s estimate of the weekly change in barrels of crude oil held by commercial facilities. Growing inventories may lower oil prices, diminishing inventories can raise them.

>> This Week’s Forecast

BUILDERS AND EXISTING HOME SALES HANGING IN THERE… A lot of this week’s economic indicators are expected to slip but stay in positive territory, as the economy continues to grow so slowly it’s barely perceptible. But our key points of interest — Tuesday’s Housing Starts and Thursday’s Existing Home Sales — are actually forecast UP, though just by a tick.

Keep an eye on today’s Retail Sales numbers, as they indicate consumers’ willingness to spend at the store on everything up through autos, which are included in the overall number. Cars, of course, are the second biggest consumer purchase after homes.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Apr 16 – Apr 20

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… Last week, Fed Vice Chairman Janet Yellen suggested the central bank could keep the Funds Rate super low through 2015 if necessary. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

Invest, Don’t Just Gather

There are people who mindlessly buy real estate on the assumption it’s value will always go up — that’s so 2006. The first thing you need to do is get familiar with the market and look at which kinds of property are actually appreciating in value in your area. Don’t acquire property — invest.

Your Name Is Your Bond

When you’re investing in real estate, the number one asset you have is your good name. Maintain good relationships with fellow investors, private financiers, owners, and agents — you never know when a property will go on sale without being listed, and those backroom deals are often the best on the market, especially in Texas.

Know Your Loans

Loans for residential investment properties tend to be easier to get than loans for commercial investment properties — the percentage of down payment is smaller, the interest rates are smaller, and so forth. On the other hand, a commercial real estate loan usually doesn’t leave you personally on the hook if the deal falls through.

Be Prompt, But Thorough

When your offer to buy is accepted, the proper thing to do is get your appraisal, your inspections, and any other tests done as efficiently as possible. That does not, no matter how much pressure the other party puts on you, mean you should ever complete the formalities without having all of those tests properly performed.

The Seven-Digit Stretch

If you want to start moving seven digits worth of money at a time — which should be the goal of every real estate investor — you aren’t going to get there without financial help. Spend some time befriending the private lenders, or gathering other investors to partner with you. Once you’ve made your second million-dollar sale, the third and seventh come much more easily.

Austin Investor Mortgages – Up to 10 Per Borrower

While most Austin mortgage lenders are limited to 4 residential home loans per borrower, Max Leaman with PrimeLending received an exception from investors, allowing him to offer up to 10 residential home loans per borrower.

The Texas real estate market is one of the strongest in the country, and few days go by that someone in Texas doesn’t make their first million trading property. Start with the basics and be determined to learn voraciously from everyone willing to teach you, and the next real estate millionaire could be you.

This post was provided by Realty Austin, offering an exceptional selection of investment properties. Browse their selection of luxury Westlake homes and Lake Austin homes today. You can also click here to view more Lake Travis homes.

For the week of April 9, 2012 – Vol. 10, Issue 15

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK…“You miss 100% of the shots you don’t take.” –Wayne Gretzky, hockey’s all-time leading goal scorer

INFO THAT HITS US WHERE WE LIVE… Hopefully, more people will be taking a shot at buying a home, with home ownership regaining its appeal as rents head higher. A real estate research firm reported average apartment rents UP 2.7% last year, while the national vacancy rate went below 5% for the first time since 2001. Increasing rents, plus very affordable home prices and near record low mortgage rates, have made home buying cheaper than renting in most areas, spurring on first-time buyers. 

A major bank housing analyst said apartment rental costs have historically been about 10% lower than after-tax home ownership costs. That difference began shrinking in 2010 and now apartment rents are about 15% higher than home ownership costs. A new survey found that twice as many real estate professionals, compared to three months ago, expect home values to rise. The housing market appears to be stabilizing as home sales trend upward and homebuilders are more optimistic than they’ve been in years.

BUSINESS TIP OF THE WEEK… Focus your networking on the people who have referred business to you or made advantageous introductions. Stay in contact every three months to stay top-of-mind with these important contacts.

>> Review of Last Week

SLIPPING INTO Q2… In a not-so-wonderful start to the second quarter, the Dow suffered its worst weekly loss since last December, while the S&P500 and the Nasdaq also went lower. FOMC Minutes from the last Fed meeting left investors uncertain about monetary policy, while there were renewed concerns about Spain’s sovereign debt. The ISM Services index, measuring the largest sector of our economy, dipped more than expected, but stayed in positive growth territory, as did the better-than-expected ISM Manufacturing index.

Friday, equity markets were closed, but the government’s disappointing jobs report ended the week on a downer for us all. Just 120,000 new jobs were created in March, hugely below expectations. The unemployment rate crept down from 8.3% to 8.2%, but economists explained that was because more people are becoming discouraged and dropping out of the work force.

For the week, the Dow ended down 1.2%, at 13060; the S&P 500 closed down 0.7%, to 1398; and the Nasdaq edged down 0.4%, to 3081. 

Following the weak jobs report, investors sought the safe haven of bonds in Friday’s holiday-shortened session. Bond prices surged, with the FNMA 3.5% bond we watch finishing the week UP .92, to $103.16. National average mortgage rates eased again last week, according to Freddie Mac’s weekly survey. Purchase loan demand rose to its highest level in months. 

DID YOU KNOW?… The typical home purchased in 2011 was built in 1993, with three bedrooms and two bathrooms in 1900 square feet of space, as reported in the latest NAR survey. 

>> This Week’s Forecast

BUDGET, FED VIEWS, INFLATION… Wednesday’s March Federal Budget should show the government running a big deficit, no surprise there. This will be followed by the Federal Reserve’s Beige Book of economic observations from Fed districts around the country. Could be some good stuff.

But the big reports will be PPI wholesale inflation on Thursday and CPI consumer inflation come Friday. The monthly numbers are expected to reflect annual inflation rates slightly above the Fed’s 2% target. This is not good, as inflation cuts consumer buying power, sends mortgage bond prices lower — and mortgage rates up!

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Apr 9 – Apr 13

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… The Fed said it intends to keep the Funds Rate low for quite some time, which is what economists expect. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy:

For the week of April 2, 2012 – Vol. 10, Issue 14

>> Texas Mortgage Market Update 

QUOTE OF THE WEEK…“To succeed, jump as quickly at opportunities as you do at conclusions.” –Benjamin Franklin

INFO THAT HITS US WHERE WE LIVE… Last week’s housing reports supported the fact there are great opportunities in today’s real estate market, as long as you don’t look at just part of the data and jump to conclusions. For example, February Pending Home Sales, measuring contracts on existing homes, were off 0.5% for the month. But wait a second, Pending Home Sales are now UP 13.9% over a year ago!

In the same vein, the S&P/Case-Shiller Home Price Indices slipped a non-seasonally adjusted 0.8% for January and 3.8% from a year ago. But the seasonally-adjusted index of home prices in the 20 largest metro areas was unchanged for the month. And nine of the twenty metros showed price increases! The National Association of Realtors (NAR) expects home prices to rebound in 2012 with existing home sales up 7%-10%, to their highest level in five years.

BUSINESS TIP OF THE WEEK… It’s important to listen to your customers to see things from their point of view. But then firmly set their expectations to what you can deliver, so they’ll be satisfied at the end.

>> Review of Last Week

HIGH-SCORING FIRST QUARTER… We’re not talking basketball, just S&P 500 stocks, which ended the week posting their biggest first quarter gain in over a decade, up a very strong 12%. The Dow registered the best first quarter advance in its history, an 8.1% hike. Not to be outdone, the Nasdaq went up almost 19% the first quarter. Experts said that big institutional investors are feeling a little better about the economy and looking to make money in riskier stocks, pushing prices up.

The economic data continues mixed. Personal income and personal spending were up in February, both good things, but inflation was worrisome. Overall prices are up 2.3% the last 12 months, above the Fed’s 2% target. University of Michigan Consumer Sentiment was up more than expected, but the Consumer Confidence Index was down. Fed Chairman Bernanke voiced his concerns that job market conditions remain far from normal.

For the week, the Dow ended UP 1.0%, at 13212; the S&P 500 closed UP 0.8%, to 1408; and the Nasdaq went UP 0.8%, to 3092. 

Bond prices held steady, as there are still enough economic concerns to keep safe haven buyers participating in the market. The first quarter ended with the FNMA 3.5% bond we watch finishing the week UP .12, at $102.24. After edging up the last two weeks, national average mortgage rates switched direction in Freddie Mac’s weekly survey. Mortgage rates remain firmly at historically low levels. 

DID YOU KNOW?… According to the NAR, the top 3 approaches first-time home buyers use are: 1) online search for homes; 2) online search for info on the home buying process; and 3) contacting a mortgage lender. 

>> This Week’s Forecast

FED MUSINGS, MARCH JOBS… As the Spring home selling season begins, it could certainly use the support of a healthier jobs market. Tomorrow, the FOMC Minutes from the Fed’s March 13 meeting could put some overall economic perspective on the situation. We’ll see.

Then Friday, we get the March Employment Report. Unfortunately, no major improvement is foreseen. The modest rate of job creation we’ve had the last few months should drop a bit, with unemployment still at 8.3%.

>> The Week’s Economic Indicator Calendar

Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.

Economic Calendar for the Week of Apr 2 – Apr 6

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months… Economists expect the Fed to keep the Funds Rate low for quite some time. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

Probability of change from current policy: