Financial Market Update
Last Week; was another volatile one in the financial markets. The overriding factor is what's up with the US and global economic outlook? For all the talk and forecasts there is still no real consensus about the impact of sovereign debt problems in Europe and the possible negative impact on growth in Europe and in the US. The Asian economies, based the most recent data out of China and Japan are improving, in Europe the outlook remains cloudy with the banks in the region facing potential debt defaults from a number of countries. Last week however, some of the fear that Europe's problems would drag the US back into recession dissipated leading to a good week for equities based on the key indexes. The DJIA jumped 279 points, the NASDAQ +24 and the S&P 500 +27. The mortgage market whipped around all week and ended about unchanged on the week; the 10 yr treasury note yield also about flat (+2 bp to 3.23%).
This week; will likely be another choppy one with the stock market opening better on Monday. The market volatility should continue with not much in the way of significant economic releases. May housing starts are expected to be weaker while building permits should improve a little. Weekly unemployment claims will continue at 450K new unemployment claims filed; 2+ million a month initiating unemployment claims. Some talk in Washington that the home buyers tax credit will be extended past the end of this month as getting loans closed to beat the deadline is taking longer to close. Those that signed their contracts by the end of April should be allowed the time it takes to close. There are no Treasury auctions this week, on Thursday Treasury will officially announce next week's auctions----about $112B in 3 auctions. The interest rate markets this week will continue to be driven by how the stock market trades; stocks rally, bond and mortgage prices decline, stocks sell bond and mortgage prices improve----nothing new. One key to US stock market direction is how the euro currency trades, if the euro gains some strength the stock market will likely improve.
This week; will likely be another choppy one with the stock market opening better on Monday. The market volatility should continue with not much in the way of significant economic releases. May housing starts are expected to be weaker while building permits should improve a little. Weekly unemployment claims will continue at 450K new unemployment claims filed; 2+ million a month initiating unemployment claims. Some talk in Washington that the home buyers tax credit will be extended past the end of this month as getting loans closed to beat the deadline is taking longer to close. Those that signed their contracts by the end of April should be allowed the time it takes to close. There are no Treasury auctions this week, on Thursday Treasury will officially announce next week's auctions----about $112B in 3 auctions. The interest rate markets this week will continue to be driven by how the stock market trades; stocks rally, bond and mortgage prices decline, stocks sell bond and mortgage prices improve----nothing new. One key to US stock market direction is how the euro currency trades, if the euro gains some strength the stock market will likely improve.
Market update & advice from our brokerage
Following is a summary of real estate activity in San Diego County for the last month. As many of you know we do not include "Sold" data since so many of those escrows, especially with the long process short sales, actually went under contract months ago and do not reflect market momentum as it is now. We use new "Pending" and new "Contingent" contracts since they are new activity.
It looks like the expiration of the Federal Tax Credit has had an effect on activity in San Diego as it has in many markets. The number of new escrows is down and we'll have to see how that plays out over the next few months. California still has a $10,000 tax credit in place.
Detached Homes: 7,057 homes are now on the market, up from 6,547 last month and an increase of about 8%. The number of new escrows opened last month was 1,677, down from 2,235 the prior month. This gives us a 4.2 month supply of homes on the market, up from 2.9 last month. Usually 4 months of supply means prices are in the neutral range. Additionally, 2,496 homes went "Contingent" (short sales under contract but awaiting lender approvals). When you add this number to the number of new "pendings" we show 4,174 homes went under contract, giving us less than 2 months of supply and a strong market. Keep in mind that some homes move from "contingent" to "pending" in the same month as lenders approve them.
Attached Homes: 3,360 units are now on the market, up from 3,215 last month and 876 went under contract, down from 1,210 a month ago. This gives us 3.8 months of inventory which means prices are neutral. When we add back in the new "Contingents" another 2001 units went under contract for a total of 2,877 units giving us about 1.1 months of inventory and a market with rising prices.
It looks like the expiration of the US Tax Credit has slowed the San Diego market somewhat but still leaves our activity at neutral or positive levels.
R. Ungar, Associate Broker – Keller Williams Realty
It looks like the expiration of the Federal Tax Credit has had an effect on activity in San Diego as it has in many markets. The number of new escrows is down and we'll have to see how that plays out over the next few months. California still has a $10,000 tax credit in place.
Detached Homes: 7,057 homes are now on the market, up from 6,547 last month and an increase of about 8%. The number of new escrows opened last month was 1,677, down from 2,235 the prior month. This gives us a 4.2 month supply of homes on the market, up from 2.9 last month. Usually 4 months of supply means prices are in the neutral range. Additionally, 2,496 homes went "Contingent" (short sales under contract but awaiting lender approvals). When you add this number to the number of new "pendings" we show 4,174 homes went under contract, giving us less than 2 months of supply and a strong market. Keep in mind that some homes move from "contingent" to "pending" in the same month as lenders approve them.
Attached Homes: 3,360 units are now on the market, up from 3,215 last month and 876 went under contract, down from 1,210 a month ago. This gives us 3.8 months of inventory which means prices are neutral. When we add back in the new "Contingents" another 2001 units went under contract for a total of 2,877 units giving us about 1.1 months of inventory and a market with rising prices.
It looks like the expiration of the US Tax Credit has slowed the San Diego market somewhat but still leaves our activity at neutral or positive levels.
R. Ungar, Associate Broker – Keller Williams Realty
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