Texas Mortgage Market Update – For the week of April 9, 2012

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

 

 Date Time (ET) Release For Consensus Prior Impact
W

Apr 11

10:30 Crude Inventories 04/07 NA 9.009M Moderate
W

Apr 11

14:00 Federal Budget Mar NA –$188.2B Moderate
W

Apr 11

14:00 Fed’s Beige Book Apr NA NA Moderate
Th

Apr 12

08:30 Initial Unemployment Claims 04/07 355K 357K Moderate
Th

Apr 12

08:30 Continuing Unemployment Claims 03/31 3.350M 3.338M Moderate
Th

Apr 12

08:30 Producer Price Index (PPI) Mar 0.3% 0.4% Moderate
Th

Apr 12

08:30 Core PPI Mar 0.2% 0.2% Moderate
Th

Apr 12

08:30 Trade Balance Feb –$52.0B –$52.6B Moderate
F

Apr 13

08:30 Consumer Price Index (CPI) Mar 0.3% 0.4% HIGH
F

Apr 13

08:30 Core CPI Mar 0.2% 0.1% HIGH
F

Apr 13

09:55 Univ. of Michigan Consumer Sentiment Apr 76.1 76.2 Moderate

 

>> 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%

After FOMC meeting on: Consensus
Apr 25 0%–0.25%
Jun 20 0%–0.25%
Jul 31 0%–0.25%

 

Probability of change from current policy:

 

After FOMC meeting on: Consensus  
Apr 25      <1%  
Jun 20      <1%  
Jul 31      <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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