New Home Sales Climb after Four Months of Decline

New Home Sales Climb:

Sales of new homes rose in September after four straight monthly declines.

The Commerce Department said Wednesday that sales of new homes rose 5.7 percent last month to a seasonally adjusted annual rate of 313,000 homes.  A big reason for the gain was that the median sales price fell 3.1 percent to $204,400.  This is a great indicator that builders have identified that there is good demand in the first time home buyer segment. The number of new homes on the market was also unchanged at 163,000, a record low.

Home builders started projects in September at the fastest pace in 17 months, a hopeful sign for the economy. But most of the gain was driven by a surge in volatile apartment construction, a sign that many are choosing to rent rather than own a home.

Single-family home construction, which represents nearly 70 percent of homes built, rose slightly.  March through August is typically the peak buying season, so an increase like this after the busy season is encouraging for the overall housing market.
What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +5 basis points from last Friday to the prior Friday which moved mortgage rates sideways. We were trading better (lower rates) in the beginning of the week but reversed course and MBS moved lower (higher rates) after the parameters of the Greek/European debt bailout were released.

While it is certainly not a perfect plan, it did remove some uncertainty in the market place.  This uncertainty was helping to keep mortgage rates lower because investors parked their funds in bonds until they found out what the actual plan for Europe was.  Now that they know the plan, they have sold out of their positions in bonds and as a result rates have been pressured higher.
It is important to note that since the lowest rates on record (09/22/11) mortgage backed securities have dropped -281 basis points which have pushed mortgage rates higher.  You are not going to see those great rates again.  Rates will still be very attractive for awhile but they are trending upward.

Can Lipstick Avert A Crisis?

Weekly Update:  October 28, 2011

We are running in place.  U.S. growth for the 3^rd quarter came in at 2.5%.  That is just enough to accommodate the new young adults joining the workforce but not enough to push down unemployment.  Still, it’s better than falling off the treadmill.  The Personal Consumption Index is ‘running in place’ as well with inflation coming in basically flat. 

This, and the weak U.S. economy, continue to hold rates down.

The main factor impacting rates (and the stock market) recently are the ebbs and flows in Europe.  For  the past 2 months, when investors feared a European crisis was at hand, rates dropped into the 3’s.  As the panic went away, rates went back up into the 4’s.  This week fears waned as the European community agreed to allow Greece to pay back only ½ of what they owe.  Sounds like a default to me, but it’s not called that because the banks that hold the debt agreed to the ‘hair cut’.  A pig is still a pig, even with lipstick, but if the lipstick averts a crisis, I’m all for it.  As long as we stay out of the ‘crisis zone’ you won’t see rates drop back into the 3’s.  Let you clients know this so that they don’t keep sitting on the fence waiting for something to happen that might not happen.

This week Freddie Mac’s 30 yr. fixed rate survey remained 4.1% with fees and assuming good credit. 

Starkey Mortgage is an Equal Housing Lender.

The views expressed are those of the author and do not represent Starkey Mortgage

When is Down UP in Real Estate?...

Pending home sales fell for the third consecutive month in September according to data released today by the National Association of Realtors^® (NAR)^.  NAR's Pending Home Sales Index, a forward looking indicator of home sales contracts signed during the month, fell 4.6 percent to 84.5 in September from 88.6 in August and 89.7 in July.  Even with the downturn the index is still 6.4 percent higher than the September 2010 level of 79.4.

TEXAS CRANKING OUT JOBS

COLLEGE STATION (Real Estate Center) – Texas was responsible for 19.4 percent of the total jobs created nationwide from September 2010 to September 2011, according to the Real Estate Center's latest

Monthly Review of the Texas Economy.

Texas gained 248,800 nonfarm jobs during the period, an annual growth rate of 2.4 percent compared with 1.1 percent for the United States.

The state’s private sector added 281,400 jobs, an annual growth rate of 3.3 percent compared with 1.7 percent for the nation’s private sector.

Texas’ seasonally adjusted unemployment rate increased to 8.5 percent in September 2011 from 8.2 in September 2010. The nation’s rate decreased from 9.6 to 9.1 percent.

All industries except the information industry and the state’s government sector had more jobs in September 2011 than in September 2010. The state’s mining and logging industry ranked first in job creation, followed by construction and the professional and business services industry.

All Texas metro areas except Abilene, Wichita Falls and Killeen-Temple-Fort Hood had more jobs in September 2011 than in September 2010. Victoria ranked first in job creation, followed by Corpus Christi, Laredo, Odessa and College Station-Bryan.

The state’s actual unemployment rate in September 2011 was 8.4 percent. Midland had the lowest rate followed by Amarillo, Odessa, College Station-Bryan and Lubbock.

The report was written by Research Economist Dr. Ali Anari and Chief Economist Dr. Mark Dotzour.

RECON -

Real Estate Center Online News

October 25, 2011

copyright 2011. All rights reserved.

Material herein is published according to the fair-use doctrine of U.S. copyright laws related to non-profit, educational institutions. Items attributed to sources other than the Real Estate Center at Texas A&M University should not be reprinted without permission of the original source.

Detroit Leads All Case-Shiller Cities In Home Price Improvement

The August 2011 Case-Shiller Index was released this week. On a monthly basis, 10 of 20 tracked markets worsened. On an annual basis, valuation degradation was worse.

Only Detroit and Washington, D.C. posted higher home values in August 2011 as compared to August 2010, rising 2.7% and 0.3%, respectively.

However, the index has been moving in the right direction. Since bottoming out in March of this year, the Case-Shiller Index

is up nearly 4 percent.

We have to remember that the Case-Shiller Index is a flawed product; its methodology too narrow to be the final word for housing markets.

The Case-Shiller Index has 3 main flaws.

The first Case-Shiller Index flaw is its relatively small sample size. Although it’s positioned as a national housing index, Case-Shiller data represents just 20 cities nationwide, and they’re not even the 20 most populous U.S. cities. For example, cities like Houston (#4), Philadelphia (#5), San Antonio (#7) and San Jose (#10) are excluded from the Case-Shiller Index findings.

By contrast, Minneapolis (#48) and Tampa (#55) make the list.

A second Case-Shiller Index flaw is the way in which it measures home price changes. The Case-Shiller Index formula ignores all home sales except for "repeat sales" of the same home. New homes don’t count for the Case-Shiller Index. Furthermore, the index ignores condominium and multi-family home sales, too.

In some cities, condos can account for a large percentage of sales.

And the third Case-Shiller Index flaw is that the data is reported on a 2-month lag. Next week marks the start of November, yet we’re still discussing data from August. A lot can change in two months (and it often does). The Case-Shiller Index is far from "real-time".

As a monthly release, the Case-Shiller Index does more to help people with a long-term view of housing, including politicians and economists, than it does for everyday buyers and sellers of property in D/FW who negotiate prices based on current demand and supply.

A real estate agent can tell you which homes have sold in the last 7 days, and at what prices. The Case-Shiller Index cannot.

The Government's Revamped HARP program for Underwater Homeowners

The Federal Home Finance Agency announced big changes to its Home Affordable Refinance Program Monday. More commonly called HARP, the Home Affordable Refinance Program is meant to give “underwater homeowners” opportunity to refinance.
With average, 30-year fixed rate mortgages still hovering near 4.000 percent, there are more than a million homeowners in Rancho Santa Margarita and nationwide who stand to benefit from the program overhaul.
To qualify for the re-released HARP program, you must meet 4 basic criteria :

1. Your existing home loan must be guaranteed by Fannie Mae or Freddie Mac
2. Your home must be a 1- to 4-unit property
3. You must have a perfect mortgage payment history going back 6 months
4. You may not have had more than one 30-day late payment on your mortgage going back 12 months 

Most notable about the new HARP refinance program, though, is that the government is waiving loan-to-value requirements on a HARP loans. Homeowners’ participation in the program  are no longer restricted by their home’s appraised value. In fact, the new HARP doesn’t even require an appraisal, in most instances.
With the new HARP program, underwater mortgages can be refinanced without LTV limit or penalty.
According to the government’s press release, pricing considerations for the new HARP program will be released on or before November 15, 2011; and lenders are expected to be offering the program as of December 1, 2011.
If you think you may be eligible, first confirm that either Fannie Mae or Freddie Mac is backing your loan. Both groups provide a simple, online lookup.

• Fannie Mae loan lookup : http://www.fanniemae.com/loanlookup/
• Freddie Mac loan lookup : https://ww3.freddiemac.com/corporate/

If your loan cannot be located on either of these two sites, your current mortgage is not backed by Fannie Mae or Freddie Mac, and is not HARP-eligible.
The FHFA’s official press release contains an FAQ section. In it, you’ll find minimum qualification standards, as well as information related to condominiums and to mortgage insurance.
The HARP program is meant to help a wide group of homeowners, but each applicant’s situation is unique. For specific HARP questions, be sure to talk with a loan officer.

Foreclosures Drop in DFW

DFW HOME FORECLOSURES DOWN 10 PERCENT FROM 2010
DALLAS (Dallas Morning News) – A recent study by the Dallas Morning News suggests that DFW's housing market woes may have hit bottom.
According to the study, home foreclosures in the first half of this year were down more than 10 percent from the same period last year, and more than 25 percent from the same period in 2008.
Lenders foreclosed on more than 7,800 DFW homes during the first half of this year, reports Addison-based Foreclosure Listing Service. The total value of those properties was almost $779 million.
Foreclosure rates are highest in places such as Celina, Anna, Princeton, Lavon, Little Elm, Lancaster, Glenn Heights, Forest Hill, Blue Mound and Fate.
D'Ann Petersen with the Federal Research Bank of Dallas said foreclosures bear watching and may remain elevated until there's sustained improvement in the housing market.
"The housing market is still wobbly, but it does appear to have reached a bottom," she said.
Source:

RECON

Real Estate Center Online News

October 21, 2011

Copyright 2011. All rights reserved.

Would You Rather Be Lucky Or Smart?

Many of you may have been beating yourself up for the past 3-4 years (or maybe your entire adult life) over the past performance of your stock picks, or the performance of your 401k,  or by comparing yourself to the investment success stories told by your friends.  Well, here is something that might convince you to go easy on yourself.  Read the excerpt below and then my comments as to whether it's better to be lucky or smart. 

 

This excerpt is from the article ‘Don’t Blink! The Hazards of Confidence’ (The New York Times Magazine October 19, 2011)  by Daniel Kahneman, an emeritus professor of psychology and of public affairs at Princeton University and a winner of the 2002 Noble Prize in Economics.

  

“Mutual funds are run by highly experienced and hard-working professionals who buy and sell stocks to achieve the best possible results for their clients. Nevertheless, the evidence from more than 50 years of research is conclusive: for a large majority of fund managers, the selection of stocks is more like rolling dice than like playing poker. At least two out of every three mutual funds underperform the overall market in any given year.

 

More important, the year-to-year correlation among the outcomes of mutual funds is very small, barely different from zero. The funds that were successful in any given year were mostly lucky; they had a good roll of the dice…The subjective experience of traders is that they are making sensible, educated guesses in a situation of great uncertainty. In highly efficient markets, however, educated guesses are not more accurate than blind guesses.

Some years after my introduction to the world of finance, I had an unusual opportunity to examine the illusion of skill up close. I was invited to speak to a group of investment advisers in a firm that provided financial advice and other services to very wealthy clients. I asked for some data to prepare my presentation and was granted a small treasure: a spreadsheet summarizing the investment outcomes of some 25 anonymous wealth advisers, for eight consecutive years. The advisers’ scores for each year were the main determinant of their year-end bonuses. It was a simple matter to rank the advisers by their performance and to answer a question: Did the same advisers consistently achieve better returns for their clients year after year? Did some advisers consistently display more skill than others?

To find the answer, I computed the correlations between the rankings of advisers in different years…That yielded 28 correlations, one for each pair of years. While I was prepared to find little year-to-year consistency, I was still surprised to find that the average of the 28 correlations was .01. In other words, zero. The stability that would indicate differences in skill was not to be found. The results resembled what you would expect from a dice-rolling contest, not a game of skill.”

What this tells me is that luck has a lot to do with how we succeed.  Since that is the case, you should strive to be lucky.  You say, “But luck, by its very definition, is beyond my control!” Not really.  Luck happens when you stumble upon a situation that works in your favor.  So the goal should be to create more situations to stumble upon.  It does indeed boil down to the old adage, ‘The harder I work, the luckier I get.’  But make sure that your work creates more rolls of the dice, more chances for you to become lucky.  Don’t waste energy on work that doesn’t create an opportunity for luck to strike.  And don’t loose energy when it doesn’t strike -  just go out and create another opportunity.  So, would I rather be lucky or smart?  I’d rather be smart because my smarts allow me to create the opportunities where luck happens.

Weekly Update, 10/21/11: To Dip Or Not To Dip?

To dip or not to dip, that is the question.  Just when you think we are headed back into recession, a report pulls you back out.  Housing starts surprised to the upside and so did the CPI,  coming in at a year over year figure of 3.9% inflation - the Fed’s target is 2%.    GE announced it earnings are up 18% and McDonald’s earnings came in above estimates.   But the Eurozone fears persist and last night Fed Governor Daniel Tarullo made headlines as he called for the Fed to engage in another round of Mortgage Bond purchases.  All of this simply means we are still on the edge and could be pushed either way – double dip or continued slow recovery. 

Remember last week when I said ‘mortgage rates tend to follow the 10 year Treasury bill, not exactly, but generally in terms of movement up and down’?  Well, this week is a perfect example of how sometimes that is not the case.  The CPI inflation data pushed the 10 year T Bill up while the Fed Governor’s announcement that they might buy mortgages again kept mortgage rates low.  As a result, your borrower’s buying power continues to be phenomenal.  Stay tuned, Europe looks like its coming to a head and that might give us an answer as to which way we’ll go from here.

Weekly Update 10/14/2011 - The New Normal

The “New Normal” is what this week is about.  It's important to make sure our ‘reality’ lines up with actual ‘reality’.  This involves understanding who to belive instead of our ususal sources of information.  Rates have ticked up over the past 2 weeks because fears over a double-dip recession and a Greek default have calmed down.  BUT, borrowers are still reading the two week old ‘Lowest Rates of All Time’ headlines.  To understand the new reality, we look to Uncle Sam.

Mortgage rates tend to follow the 10 year Treasury bill, not exactly, but generally in terms of movement up and down.  The yield on a 10 yr T bill has gone from 1.7%  to 2.2% -or an increase of ½% in RATE from the lowest low.  Mortgage rates have reacted in a similar upward fashion, but not as much because the Fed’s buying of mortgages is helping to keep them down. 

Don’t risk loosing an opportunity on an incorrect reality.  Go to ANY financial website and look at the 10 Yr. T-bill charts.  You will see what waiting might have cost you and that the best time to grab an opportunity is when it's in front of you....like right now.

Stephan Akin, Sr. Loan Officer, NMLSR# 231112
Office: 214.987.9999
Apply Online: www.stephanakin.com
One of the Top Originators nationally 2010
One of D Magazine's Best Mortgage Professionals 2010

WR Starkey Mortgage, LLP NMLSR # 2146
2740 N. Dallas Pkwy., Suite 150, Plano, TX 75093

The views expressed are those of the author and do not represent Starkey Mortgage.

Starkey Mortgage is an equal housing lender.

Weekly Update - October 7th, 2011

Good news this week with jobless claims coming in above expectations and fears over the Eurozone seem to have calmed down.  But the job growth is not enough to drop the unemployment rate.  Also, the actions in Europe are not enough to stop the eventual default of Greece.  So, the best image I’ve heard is that we are running in place on a treadmill.  We are running fast enough not to fall off but we are NOT running fast enough to reach the controls so we can and adjust the speed.

Now the Fed did start buying mortgages this week.  However, the good economic news is pushing up harder than the Fed can push down…so rates did tick up a bit.  But we are still in the ‘lowest of all time’ zone.   I have people ask me EVERY DAY, “Well, should I wait?  Do you think rates will get better?  So and so said that  rates will drop to 2%”.  And what I don’t say back, but I will say to you my dear readers is: “WHAT?!!?  Are you STUPID?  you’ve just been given the lowest rate of ALL TIME and you want to risk that on the hope that you’ll get just a little more.  You greedy fool…it’s like someone gave you $1,000 dollars and you decided to keep walking in hopes that the a guy in the next block will give you $1,010.”  Go figure.  By the way, the media is a week behind and rates have already ticked up....

The views expressed are those of the author and do not represent Starkey Mortgage.

Starkey Mortgage is an equal housing lender.

Apply on line: http://www.stephanakin.com/