This Week: is Holy Week. Trade likely will be quiet with the religious holiday. Most all of the data points this week are centered on the housing sector; starts and permits for Mar, new and existing home sales, the NAHB housing market index Monday and the FHFA housing price index on Thursday. The only other releases are weekly claims on Thursday and the and the April Philadelphia Fed business index also on Friday. That's it for the week. Markets closed on Friday.
Until a week ago the overwhelming consensus in the markets was that the US economy would have a strong Q1 and optimism for the rest of the year was being touted as continued improvement. Over the past week investors were beginning to re-think the economic outlook and lowering expectations. It started with the IMF saying it is revising lower GDP Q1 growth from 2.0% to 1.5%; markets had accepted growth in Q1 at +3.0%. The Fed's Beige Book out last week, while remaining optimistic, showed indications that growth isn't as powerful as markets were thinking. The National Federation of Independent Business overall index fell in April, taking the optimism that had improved since last Oct totally away. Small businesses account for the majority of jobs. This is also earnings season with companies reporting Q1; so far earnings have been a little disappointing.
Consumer spending declining, until recently, have been ignored by investors. Even with gasoline and food prices increasing markets generally didn't pay much attention until last week. $4.00+ gasoline and rapidly increasing food prices will, as we have continued to mention, slow consumer spending. Bernanke out there saying the increase in energy and commodity prices are "transitory" may not be; markets beginning to understand that. With consumer spending less than expected and the housing markets still showing no signs of stabilizing, let alone improving, investors are getting a little nervous.
TBWS
Financial Market Update
This Week: not much in the way of economic reports. Interest rate markets will continue to take their lead from how the stock market performs each day. The bellwether 10 yr note, although likely to edge higher over the next few months, has twice found near term support when its yield climbs to 3.50% and in turn is keeping mortgage interest rates from increasing. We continue our outlook that rates will increase but the level of increases won't be excessive; likely not over 4.00% for the 10 and another 40 basis points higher for mortgage rates for the rest of the year.
Tuesday the Fed will release the minutes from the FOMC meeting on March 15th; recently there has been an increase of the number of Fed officials that are wanting less easing and an end to QE 2. Global base lending rates are increasing and the Fed has to begin its moves to withdraw from easing. We do not expect the Fed will increase its base lending rate (FF) immediately, the first step will be ending QE 2, whether it ends prematurely is where the debate centers.
Two economic reports this week head up or focus; tomorrow the March ISM services sector index and on Thursday Feb consumer credit. Recent spikes in oil prices have likely caused consumers to cut back on other spending, the level of borrowing using credit cards should be watched. This week the ECB will meet with expectations that the bank will increase its base rate as inflation ion Europe has pushed up above the ECB target of 2.0%.
TBWS
Tuesday the Fed will release the minutes from the FOMC meeting on March 15th; recently there has been an increase of the number of Fed officials that are wanting less easing and an end to QE 2. Global base lending rates are increasing and the Fed has to begin its moves to withdraw from easing. We do not expect the Fed will increase its base lending rate (FF) immediately, the first step will be ending QE 2, whether it ends prematurely is where the debate centers.
Two economic reports this week head up or focus; tomorrow the March ISM services sector index and on Thursday Feb consumer credit. Recent spikes in oil prices have likely caused consumers to cut back on other spending, the level of borrowing using credit cards should be watched. This week the ECB will meet with expectations that the bank will increase its base rate as inflation ion Europe has pushed up above the ECB target of 2.0%.
TBWS
Market update & advice from our brokerage
It's hard to believe the NCAA Basketball Tournament final is tonight and the baseball season has started (Padres 2-1), so I guess that means Spring has sprung!
Our local real estate market is showing signs of a recovery with prices still on the stable side. What follows is a statistical summary of county wide activity but the performance in any micro area or zip code could be different, as could other markets across the country.
Detached Homes: 7,567 homes are on the market vs. 7,542 last month, a difference of only 25 new listings. 1,897 new escrows were opened in March compared to 1,767 in February, a gain of 130. This shows that we have a supply of inventory of 3.99 months. Anything less than 5 months inventory is considered a seller's market but since this is on the high end we'll call it a neutral situation with prices stable. Additionally, 2,206 short sales went "contingent" (offer accepted by seller, awaiting lender approval). Ultimately, some of these will close and others will not but if we add that number to the new escrows opened to see how many homes went off the market we get 4,103 which gives us a turnover time of 1.84 months. Buyers are not yet aggressively bidding prices up and sellers need to price their homes very competitively to attract a motivated buyer.
Attached Homes (Condos): 3,657 condos were on the market at the end of March compared to 3,781 the month prior, a decrease of 124 properties. 921 new condo escrows opened in March vs. 854 the month prior, giving us a 3.97 month inventory supply, which is in the neutral range with prices stable. Another 1,446 condos went contingent last month, giving us a total of 2,267 that came off the market, a number that gives us 1.54 months of inventory. Condo owners also need to price competitively to sell as buyers are not overly aggressive.
Interest rates and prices are still extremely low, giving buyers an awesome opportunity to get the best of both worlds. It is my personal opinion that we are close enough to the bottom that hopefully the downside risk is minimized. I think that if you can capture both the low price and interest rate you'll be happy down the road.
On a positive note, it was reported today that both national and local unemployment rates are improving, and that should help the markets as it continues during the recovery period. Interest rates and unemployment are the two strongest factors in the housing market that drive consumer confidence.
Have a great April and let me know if I can help with anything!
R. Ungar, Associate Broker – Keller Williams Realty
Our local real estate market is showing signs of a recovery with prices still on the stable side. What follows is a statistical summary of county wide activity but the performance in any micro area or zip code could be different, as could other markets across the country.
Detached Homes: 7,567 homes are on the market vs. 7,542 last month, a difference of only 25 new listings. 1,897 new escrows were opened in March compared to 1,767 in February, a gain of 130. This shows that we have a supply of inventory of 3.99 months. Anything less than 5 months inventory is considered a seller's market but since this is on the high end we'll call it a neutral situation with prices stable. Additionally, 2,206 short sales went "contingent" (offer accepted by seller, awaiting lender approval). Ultimately, some of these will close and others will not but if we add that number to the new escrows opened to see how many homes went off the market we get 4,103 which gives us a turnover time of 1.84 months. Buyers are not yet aggressively bidding prices up and sellers need to price their homes very competitively to attract a motivated buyer.
Attached Homes (Condos): 3,657 condos were on the market at the end of March compared to 3,781 the month prior, a decrease of 124 properties. 921 new condo escrows opened in March vs. 854 the month prior, giving us a 3.97 month inventory supply, which is in the neutral range with prices stable. Another 1,446 condos went contingent last month, giving us a total of 2,267 that came off the market, a number that gives us 1.54 months of inventory. Condo owners also need to price competitively to sell as buyers are not overly aggressive.
Interest rates and prices are still extremely low, giving buyers an awesome opportunity to get the best of both worlds. It is my personal opinion that we are close enough to the bottom that hopefully the downside risk is minimized. I think that if you can capture both the low price and interest rate you'll be happy down the road.
On a positive note, it was reported today that both national and local unemployment rates are improving, and that should help the markets as it continues during the recovery period. Interest rates and unemployment are the two strongest factors in the housing market that drive consumer confidence.
Have a great April and let me know if I can help with anything!
R. Ungar, Associate Broker – Keller Williams Realty
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