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Archive for April, 2011|
Economic Roundup: Apr 25, 2011
April 26, 2011
Posted in Economic Roundup
Real estate news dominated last week’s economic headlines with the sales of existing homes for March, including single-family, townhomes, condominiums and co-ops, reaching a rate of 5.1 million units, according to the latest findings from the National Association of REALTORS®.
March’s performance was 3.7 percent higher than an upwardly revised 4.92 million units for February, but still 6.3 percent below March 2010′s 5.44 million pace, NAR reported.
“Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” said NAR chief economist Lawrence Yun, who said he expects the improving sales pattern to continue. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain.”
Where new housing is concerned, permits for new housing units issued in March were at an annual rate of 594,000, marking an 11.2 percent increase over February’s revised rate of 534,000, according to the latest figures released by the Census Bureau last week.
While March’s permits showed a monthly upward trend, it was still 13.3 percent below the March 2010 estimate of 685,000. Permits for single-family homes in March were at a rate of 405,000, which was 5.7 percent above February’s revised figure of 383,000.
Construction starts on private housing starts in March were at an annual rate of 549,000, which was 7.2 percent above February’s revised estimate of 512,000, but 13.4 percent below March 2010′s rate of 634,000. Starts on single-family homes for March were at a rate of 422,000, which was 7.7 percent above February’s revised figure of 392,000.
Initial jobless claims for the week ending April 16, dipped to 403,000, a decrease of 13,000 from the previous week’s revised figure of 416,000, according to the Employment and Training Administration. The four-week moving average was 399,000, an increase of 2,250 from the previous week’s revised average of 396,750.
The advance number for unemployed workers that were insured during the week ending April 9 was 3,695,000, a decrease of 7,000 from the preceding week’s revised level of 3,702,000.
New homes sales data for March from the Census Bureau leads this week’s financial headlines on Monday, followed by Consumer Confidence figures for February from the Conference Board on Tuesday.
Wednesday will see durable goods orders for March from the Census Bureau, followed by advance figures for Q1′s gross domestic product from the Bureau of Economic Analysis on Thursday. Also on Thursday, the Employment and Training Administration will release initial jobless claims data for last week.
The week’s financial news wraps up Friday with personal income and spending data for March from the Bureau of Economic Analysis, and April’s consumer confidence index from the University of Michigan.
Economic Roundup: Apr 18, 2011
April 26, 2011
Posted in Economic Roundup
Last week saw a busy calendar of economic updates, starting off with somewhat encouraging foreign trade news. February’s total exports of $165.1 billion and imports of $210.9 billion resulted in a goods and services deficit of $45.8 billion, down from $47 billion in January, the Census Bureau reported Tuesday. February exports were $2.4 billion less than January’s exports of $167.5 billion, and February imports were $3.6 billion less than January imports of $214.5 billion.
In related news, U.S. import prices rose 2.7 percent in March and export prices advanced 1.5 percent for the month, the Bureau of Labor Statistics reported last Wednesday. These gains both followed 1.4 percent increases for both categories in February. Prices for overall exports rose 9.5 percent for the year ended in March, the largest 12-month advance since July 2008.
Higher prices for both agricultural and nonagricultural exports contributed to both the monthly and 12-month increases in overall export prices, while higher fuel prices and nonfuel prices drove the import price increase.
At home, advance estimates from the Census Bureau for March’s U.S. retail and food services sales were $389.3 billion, an increase of 0.4 percent over February, and 7.1 percent above March 2010. Total sales for January through March 2011 were up 8.1 percent from the same period a year ago. The January to February 2011 percent change was revised from +1.0 percent to +1.1 percent.
Three key retail sales segments for March were retail trade sales, which were up 0.3 percent from February 2011, and 7.3 percent above last year; gasoline stations sales, which were up 16.7 percent from March 2010; and nonstore retailers sales, which were up 12.4 percent from last year.
March’s Producer Price Index for finished goods slightly tapered back its growth in March with a 0.7 percent gain, which followed a 1.6 percent increase in February and a 0.8 percent gain in January, according to the Bureau of Labor Statistics.
March’s PPI gains could mostly be chalked up to increased energy prices, with nearly 90 percent of the increase in the finished goods index attributed to a 2.6 percent rise in prices for finished energy goods, the Bureau reported.
In related news, February’s combined value of distributive trade sales and manufacturers shipments was estimated at $1.17 trillion, up 0.2 percent from January 2011 and up 10.9 percent from February 2010, according to the Census Bureau.
Manufacturers’ and trade inventories were at an end-of-month level of $1.45 trillion, up 0.5 percent from January 2011 and up 9.1 percent from February 2010. This put the total business inventories/sales ratio based on seasonally adjusted data at the end of February at 1.24, slightly down from February 2010′s ratio of 1.26, the Bureau reported.
Initial jobless benefit claims for the week ending April 9 totaled 412,000, an increase of 27,000 from the previous week’s revised figure of 385,000, the Employment and Training Administration reported Thursday. The four-week moving average was 395,750, an increase of 5,500 from the previous week’s revised average of 390,250.
Encouragingly, the advance number for insured unemployed workers during the week ending April 2 was 3,680,000, a decrease of 58,000 from the preceding week’s revised level of 3,738,000. The four-week moving average was 3,728,750, a decrease of 20,750 from the preceding week’s revised average of 3,749,500.
This week’s financial news begins Tuesday with the Census Bureau’s data for March housing construction starts and permits. In related news, on Wednesday the National Association of REALTORS® will release March’s existing home sales stats.
Thursday wraps up the week’s economic news with initial jobless claims for this week, which will be released by the Employment and Training Administration, and the Conference Board will release its leading economic indicators data for March.
It’s Time to Make Your Move
April 13, 2011
Posted in WJB Insight
|Don’t let the gloom and doom of recent magazine and newspaper articles convince you that real estate isn’t a good investment. That news is often based on a reaction to what’s already happened in the housing market, but not necessarily with an eye to what could happen in the market.
In fact, there are some experts who would argue the pendulum is ready to swing back in the housing market, or is already in the process. Let’s take a look at some of the reasons why now might be an excellent time to buy the home you’ve always wanted.
First off, let’s negate the gloom and doom. Right now, it is very easy to look at the pace of current home sales, which is obviously off from previous years, and conclude that the market is in poor shape so now is not a good time to buy. Wrong. There are some key reasons why now is a great time to buy. Pricing
Home prices are still down. If you subscribe to the notion of buying low and selling high when making an investment, then you’ve come to the right market. Even if home prices tick down a little more, they will be coming back up.
Why do we say this? One look at U.S. home prices over time will show that today’s home prices have finished their descent from the housing bubble’s price spike, and are now essentially where they should be if the bubble had never happened and they had continued on the historic trend of housing price increases. Or, in some markets, they are below that.
Moreover, many analysts will point to the inventory of foreclosed homes or homes that could go on the market as short sales as evidence of factors that will push home prices further down, but they miss other market factors that temper that trend’s overall effect. Pointing solely to foreclosure inventory ignores the fact that the pace of new housing construction starts and new home inventory is down to a level that compensates for an increase in foreclosure inventory.
Also, it ignores the geographic nature of real estate. While there are some areas of the country that could aptly be described as foreclosure markets, many large real estate markets initially impacted by the bubble bursting are now on the road to recovery. Financing
Let’s look at rates. Lately, they have been bouncing up and down slightly, but in general they have been hovering at around 4.8 percent to 5 percent for a 30-year fixed-rate home loan. While a tenth of a percent can amount to a lot when we’re talking about six- and seven-figure home prices (or more), that tenth of a percent is nitpicking when you put it into a historic context.
Why? Because, as the analysts at mortgage research firm Metrostudy note, the average rate for 30-year mortgages over the past 40 years has been 8.9 percent. Over the long term, rates are expected to rise from today’s historically low rates. Earlier this year, in fact, Freddie Mac predicted that the rate on 30-year fixed-rate loans would reach 5.5 percent by the fourth quarter and average out at 5.8 percent during 2012. But that is still significantly lower than the historical average.
Let’s say that prices do drop below today’s levels. It’s reasonable to expect that mortgage interest rates would increase accordingly. So, if that’s the case, why wait for rates to increase? The difference in buying power between a mortgage at, say, 4.5 percent and 7.5 percent interest is considerable, Metrostudy notes. If you could afford to borrow $200,000 at 4.5 percent, you could only afford $145,000 at 7.5 percent. Waiting for prices to drop further could put you in a worse position when you factor in increasing rates.
And true, the standards for borrowing a home loan have become more stringent these days, but if you are in the right financial circumstances to finance a home, then you needn’t worry. There are many options for qualified home buyers, from government-backed loans like those offered by the FHA to ARMs, interest-only options and more. The right lender will be able to guide you to the options that work best for your unique financial situation and goals. With WJB’s industry-leading turn times, experienced loan officers and cutting-edge technology that lets us track loans in real time, we’re a great choice for your home financing.
Along with the adage about buying low and selling high, remember what one of this nation’s greatest wealth-makers, Warren Buffet, once said about investing: “Be fearful when others are greedy and be greedy only when others are fearful.”
All the gloom-and-doom reporting and declining activity in real estate sales has intimidated a lot of people into inactivity. They can’t recognize the value of historically low prices and mortgage rates. Now could be the moment to make your move.
Are you looking to trade up into the home you’ve always wanted, or would you like to leverage the market conditions to purchase investment property? Your moment of opportunity has come. Please reach out to me using the contact information on this message and I’d be happy to review your options with you. Contact me today to learn more.
Economic Roundup: Apr 11, 2011
April 11, 2011
Posted in Economic Roundup
|Consumer credit increased at an annual rate of 3.75 percent for February 2011, according to the latest findings released by the Federal Reserve last week.
During February, American consumers kept their credit cards in their pockets, with revolving debt dropping by an annual rate of 4.1 percent to $794 billion.
That said, borrowers increased their use of non-revolving debt, such as student and car loans, for the seventh straight month. Non-revolving credit increased at an annual rate of 7.75 percent to $1.63 trillion.
Together, revolving and non-revolving debt brought the total of U.S. consumer credit to $2.41 trillion. The fact that consumers were opting for credit for bigger ticket items could point to continuing economic improvement, according to Theresa Chen, an economist at Barclays Capital.
“This is consistent with the strength seen in auto sales over the past few months as auto-related loans make up a large portion of non-revolving debt,” Chen told Reuters news service. “The persistent increase in headline consumer credit is a positive development, consistent with the broader economic recovery.”
Also pointing in that direction were continued drops in initial jobless claims. The Employment and Training Administration reported that for the week ending April 2, the advance figure for seasonally adjusted initial claims was 382,000, a decrease of 10,000 from the previous week’s revised figure of 392,000. The four-week moving average was 389,500, a decrease of 5,750 from the previous week’s revised average of 395,250.
The advance total for seasonally adjusted insured unemployment during the week ending March 26 was 3,723,000, a decrease of 9,000 from the preceding week. The four-week moving average was 3,745,750, a decrease of 24,000 from the preceding week’s revised average.
After last week’s somewhat light financial news calendar, this week will see a volley of economic headlines, starting with February’s balance of trade and March’s export and import prices from the Census Bureau on Tuesday. The Bureau will follow that with March’s retail sales data and February’s business inventories on Wednesday.
Thursday will see March’s producer price index from the Bureau of Labor Statistics, which will follow up on Friday with the corresponding consumer price index. Also on Friday will be the release of March’s industrial production and capacity utilization data from the Federal Reserve, to wrap up the week.
Economic Roundup: Apr 4, 2011
April 4, 2011
Posted in Economic Roundup
|Personal income and spending gains for February outpaced market expectations slightly, but still couldn’t match January’s more optimistic pace, according to the latest findings from the Bureau of Economic Analysis released last week.
Personal income increased $38.1 billion, or 0.3 percent, and disposable personal income (DPI) increased $36.0 billion, or 0.3 percent, in February, the Bureau reported. Personal consumption expenditures (PCE) increased $69.1 billion, or 0.7 percent.
|By comparison, personal income for January increased $147.4 billion, or 1.2 percent; DPI increased $92.0 billion, or 0.8 percent; and PCE increased $29.5 billion, or 0.3 percent, based on revised estimates.
Real disposable income (DPI adjusted to remove price changes) for January decreased 0.1 percent in contrast to January’s increase of 0.5 percent. Real PCE (PCE adjusted to remove price changes) increased 0.3 percent, in contrast to a decrease of less than 0.1 percent.
While income and spending were up for February, The Conference Board’s Consumer Confidence Index dropped from February’s encouraging 72 (based on 1985′s baseline of 100) down to 63.4 for March.
That said, the Board’s Present Situation Index, which measures how consumers feel about the current economic climate, improved to 36.9 from 33.8, but March’s Expectations Index decreased to 81.1 from 97.5 last month.
“The sharp decline in confidence was prompted by a sharp decline in expectations,” said Lynn Franco, director of The Conference Board’s Consumer Research Center. “Consumers’ inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions. On the other hand, consumers’ assessment of current conditions improved, indicating that while the short-term future may be uncertain, the economy continues to expand.”
Another economic measure that showed a surprise drop was February’s factory orders, which bucked a three-month upward trend and decreased $0.4 billion or 0.1 percent to $446.0 billion, the Census Bureau reported last week.
Shipments were up six consecutive months, increasing $1.4 billion or 0.3 percent to $448.3 billion in February. That said, February’s increase was off pace from January’s 1.7 percent gain.
Meanwhile, unfilled orders, up 10 of the last 11 months, increased $3.9 billion or 0.5 percent to $834.8 billion in February. This put the unfilled orders-to-shipments ratio at 5.64, up from 5.63 in January. Not surprisingly, inventories, which were up 13 of the last 14 months, increased $4.6 billion or 0.8 percent in February to $565.0 billion.
On a more optimistic note, the Employment and Training Administration reported last week that for the week ending March 26, initial unemployment claims dropped by 6,000 to 388,000. The four-week moving average was 394,250, marking an increase of 3,250 from the previous week’s revised average of 391,000.
The administration also reported that the advance number for seasonally adjusted insured unemployment during the week ending March 19 was 3,714,000, a decrease of 51,000 from the preceding week’s revised level of 3,765,000. The four-week moving average was 3,765,250, a decrease of 32,750 from the preceding week’s revised average of 3,798,000.
This week’s calendar of financial headlines will be very light.
On Thursday, the Employment and Training Administration will release the initial jobless claims figures for this week, and the Federal Reserve will release February’s consumer credit data. And on Friday, the Census Bureau will release wholesale inventory figures for February.
A more normal flow of financial news is expected to resume next week.