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May 12, 2009
The stock market, oil and long-term rates are all higher. This can only mean one thing. We have definitive signs that the end of the recession is in sight. On the other hand, it does not mean that the pain is over. Federal Reserve Chairman Ben Bernanke was the latest to remind us that recovery will be choppy to say the least. For example, we received what was considered positive job news this past week. In reality, the news indicated that less people were laid off as compared to the month before. The unemployment rate still rose. Many more will lose their jobs before this recession is over. Many others will lose their homes. Rates are still at record lows and the stock market and oil prices are far below where they were just one year ago. A recovery is not here until the economy starts growing and is creating jobs instead of shedding them. We might not actually be creating jobs on a net basis until next year. On the other hand, it is comforting to know that the economy is no longer in a "free fall" and things have stabilized. The next move should be up from here. At least that is what the markets and our economic leaders are saying.
Current Indices For Adjustable Rate Mortgages
The National Association of Realtors says more than 50 percent of March’s home sales were tied to first-time buyers, many of whom snapped up foreclosed homes and other distressed properties. Experts believe getting first-time buyers off the sidelines to take advantage of historically low rates and federal tax credits will reduce the glut of homes on the market and spark a recovery. Some point out that first-time buyers are helping to revitalize communities in Florida, California, and other states hit hard by foreclosures. However, distressed properties often sell for 20 percent less than traditional properties, and the increase in lower-end sales is driving down the national median home price. Source: USA Today The housing market is looking healthier, but U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday that it is too early to tell if the recovery has taken hold. "We do have some early signs, I think, that the market is stabilizing. Since January, what we’ve seen is both prices and sales volumes moving up and down around a relatively stable number," Donovan said. Donavan also said he was optimistic that President Obama’s policies are bolstering the market. "I think in particular when you get below the national level what you see is that in markets like California that were the hardest hit, that is where the signs (of recovery) are the strongest," he said. Source: Reuters News |
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Spring is in the Air. Will Summer Heat Up? 
The Markets. Rates on home loans rose last week but at a much slower pace than comparable Treasuries. Freddie Mac announced that for the week ending May 7, 30-year fixed rates averaged 4.84%, up from 4.78% the week before. The average for 15-year rose to 4.51%. Adjustables were also up with the average for one-year adjustables increasing slightly to 4.78% and five-year adjustables rising to 4.90%. A year ago 30-year fixed rates were at 6.09%. "Rates rose slightly this week amid positive economic news that the economy may be approaching the bottom of the recession," said Frank Nothaft, Freddie Mac vice president and chief economist. "In terms of the household sector, the final April estimate of consumer sentiment, as measured by the University of Michigan, was revised above the market consensus. On the business side, the ISM Manufacturing Index for April also exceeded market expectations. In addition, the positive news was corroborated by Fed Chairman Bernanke when he stated that he expects economic activity to bottom out, then to turn up later this year. He also noted that the housing market is beginning to stabilize. For instance, pending existing home sales rose for the second consecutive time in March and represented the first back-to-back monthly increase since March 2008." 
The vacancy rate of homeowner housing was virtually unchanged in the first quarter of 2008 compared to the rate in 2007, with vacancies at 2.9 percent and 2.8 percent respectively, according to the U.S. Census Bureau. The vacancy rate in the first quarter of the last two years is about 70 percent higher than it was from 1995 to 2005, when the first quarter homeowner vacancy rate never rose above 1.8 percent and generally stood at 1.7 percent or lower. The rental vacancy rate has also remained steady for the last two years at about 10.1 percent. Source: The U.S. Census Bureau