Austin Mortgage Market Update – For the week of June 13, 2011

For the week of June 13, 2011 – Vol. 9, Issue 24

>> Austin Mortgage Market Update

QUOTE OF THE WEEK…“There is nothing either good or bad, but thinking makes it so.”–William Shakespeare

INFO THAT HITS US WHERE WE LIVE… There are those who think the housing market is in bad shape, with the start of a second dip in home prices. Then there are those who see something better — a bumpy bottoming of home prices, which will soon head back up. Those of us in the second camp were given more ammunition last week by real estate data company Altos Research. Their evidence shows prices bottomed out in March and achieved seasonal rises in April and May. Their VP of market analytics said in a recent webcast: “We’re pretty confident that means there is going to be a rebound.… There’s still plenty of movement upside and we’re going to probably move…back into positive ground.”

 

The researchers also reported that median list prices for single-family homes were up from March to May in all but two of the 20 cities they track. They further pointed out that, except for the last boom, the housing market historically has never seen constant price appreciation. There has always been some price volatility, so the latest dipping “…is really just the start of the next housing cycle.” Other industry data revealed that in real estate listings in 16 of the 20 largest U.S. metro areas, the average number of days on the market dropped from 150 in December to 140, while median listing prices went from $224,900 to $246,000. This is not yet a housing recovery, but it’s also not a double dip.

BUSINESS TIP OF THE WEEK…Don’t play favorites. Yes, lavish your attention on those wonderful new customers you need to grow, but make sure you still treat existing clients like VIPs. One way to do this is with special offers and loyalty rewards for long-term and returning customers.

>> Review of Last Week

UNDER TWELVE THOUSAND…That’s not just a price range for used cars, it’s also where the Dow landed last week. Not surprising, as we’ve now had six down weeks in the stock market, matching the six weeks there’s been a negative mood on Wall Street. That mood of course has come from signs of a slowdown in the economic recovery, even though there have also been signs of economic progress. Speaking in Atlanta on Tuesday, Fed Chairman Ben Bernanke admitted that our economic growth has been slower than expected this year. He also said the inflation triggered by higher energy prices was a passing thing and that the economy should get its mojo back in the second half of the year. But even then, Bernanke feels economic conditions will still justify keeping the federal funds rate at exceptionally low levels for the now familiar “extended period.”

More disappointing news came with new weekly jobless claims up by 1,000 and still above the 400,000 threshold. Better news was the fact that continuing claims dipped again, to 3.68 million. Best news of all, the trade deficit shrank $3.1 billion in April to $43.7 billion. And the March trade deficit was revised to be $1.4 billion less than originally reported. These smaller trade deficits will raise the reading for GDP growth.

For the week, the Dow ended down 1.6%, at 11,952; the S&P 500 was down 2.2%, at 1,271; and the Nasdaq was down 3.3%, at 2,644.

 

The stock slide helped Treasury bonds rally, although the bulls were by no means dominant. The FNMA 4.0% bond we watch ended the week down .78, closing at $100.24. Nevertheless, national average rates for fixed-rate conforming mortgages dropped for the eighth week in a row, to their lowest levels since November. Freddie Mac’s survey also had 1-year adjustable-rate mortgages at their lowest level in the report’s history.

DID YOU KNOW?…Bathroom remodels have the highest average return on investment, around 102%. Kitchen remodels record the second highest average return, around 90%.

>> This Week’s Forecast

STORE SALES, PRICE MOVES,  HOME BUILDING…Last week’s lull in economic news will now be followed by a barrage of data from all directions. One report that matters is May Retail Sales, expected to dip slightly overall, but gain slightly when you take out slowing auto sales. The prices we consumers pay will be reflected in the inflation reports. The May Consumer Price Index (CPI) is forecast to come in flat, while the Core CPI, taking out food and gas, should be up 0.2%, not going in the right direction.

 

Thursday reveals the status of homebuilding. May Housing Starts are expected up a bit, although not back to their pre-downturn levels. May Building Permits, indicating starts a short time out, should also come in at a similar rate, though down slightly from April.

>> 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 June 13 – June 17

 

Date Time (ET) Release For Consensus Prior Impact
Tu

Jun 14

08:30 Retail Sales May -0.7% 0.5% HIGH
Tu

Jun 14

08:30 Retail Sales ex-auto May 0.2% 0.6% HIGH
Tu

Jun 14

08:30 Producer Price Index (PPI) May 0.1% 0.8% Moderate
Tu

Jun 14

08:30 Core PPI May 0.2% 0.3% Moderate
Tu

Jun 14

10:00 Business Inventories Apr 1.0% 1.0% Moderate
W

Jun 15

08:30 Consumer Price Index (CPI) May 0.1% 0.4% HIGH
W

Jun 15

08:30 Core CPI May 0.1% 0.2% HIGH
W

Jun 15

08:30 Empire State Manufacturing Index Jun 10.0 11.9 Moderate
W

Jun 15

09:15 Industrial Production May 0.2% 0.0% Moderate
W

Jun 15

09:15 Capacity Utilization May 77.0% 76.9% Moderate
W

Jun 15

10:30 Crude Inventories 6/11 NA -4.845K Moderate
Th

Jun 16

08:30 Initial Unemployment Claims 6/11 421K 427K Moderate
Th

Jun 16

08:30 Continuing Unemployment Claims 6/04 3.690M 3.676M Moderate
Th

Jun 16

08:30 Housing Starts May 540K 523K Moderate
Th

Jun 16

08:30 Building Permits May 548K 551K Moderate
Th

Jun 16

10:00 Philadelphia Fed Manufacturing Index Jun 7.0 3.9 HIGH
F

Jun 17

09:55 Univ. of Michigan Consumer Sentiment Jun 73.5 74.3 Moderate
F

Jun 17

10:00 Leading Economic Indicators (LEI) Index May 0.4% -0.3% Moderate

 

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months…As Fed Chairman Bernanke said yet again last week, he expects that the slow pace of the recovery will warrant keeping the Funds Rate at its super low 0%-0.25% level for an extended period. 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%

After FOMC meeting on: Consensus
Jun 22 0%–0.25%
Aug 9 0%–0.25%
Sep 20 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Jun 22 <1%  
Aug 9 <1%  
Sep 20 <1%  
   
   

 

 

 

About Max Leaman Austin Mortgage

GREAT RATES, LOW FEES, CLOSE ON TIME™ ---- 2012 Ranked #1 Austin Residential Mortgage Lender (Austin Business Journal) 2010, 2011 & 2012 Five Star Professional (Texas Monthly) 2009, 2010, 2011, 2012, 2013 PrimeLending Chairman's Circle Award 2009, 2010, 2011, 2012 Scotsman Guide Top Originator (Top 200 Mortgage Professionals in U.S.A.) Better Business Bureau "A+ Rating" National Lender Rankings (Scotsman Guide): Top Purchase Volume (No. 10) Most Loans Closed (No. 32) Top Dollar Volume (No. 88)

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