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Weekly Update: September 2nd, 2019

NATIONAL MARKET UPDATE

The national lack of housing inventory led to July's 2.5% drop in the Pending Home Sales index of contracts signed on existing homes. But after June's 2.8% gain, closed sales in August should be roughly unchanged.

Consumers are willing to buy, as the Conference Board reported Americans are brimming with confidence about the economy and the labor market. The August gauge of present conditions hit its highest read in 19 years!

Add to that the fact that price gains have slowed. The Case-Shiller home price index grew just 0.2% in June, up only 3.1% from a year ago, exactly half the annual price gain we saw in June 2018.

REVIEW OF LAST WEEK

STOCKS SPIKE AS TRADE TENSIONS EASE... Beijing and Washington seemed to adopt less strident tones in their negotiating gamesmanship. This, plus solid economic data sent stocks soaring, to end August on a high note.

Accounting for 70% of our economic growth, consumer spending shot up 4.7% in Q2, its biggest gain in four years. And economy-wide corporate profits gained 5.3% in Q2 after pundits predicted declines.

Fold in the stimulus of Fed rate cuts and you can see why some analysts see an extension of the economic expansion. Yes, others are calling for a recession, but in reality no one's showing up. 

The week ended with the Dow UP 3.0%, to 26,403; the S&P 500 UP 2.8%, to 2,926; and the Nasdaq UP 2.7%, to 7,963.

Although stocks rose, the volatility drove investors to the safe haven of bonds. The 30YR FNMA 4.0% bond ended UP .16, to $103.80. In Freddie Mac's Primary Mortgage Market Survey, the national average 30-year fixed mortgage rate rose slightly but is almost a full percent lower than last year. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... Despite all the reports of a "looming" recession, a realtor.comsurvey reports 98% of economists, strategists, academics, and policymakers do not believe one will start this year, and more than 60% do not see one in 2020 either.

THIS WEEK'S FORECAST

MANUFACTURING AND SERVICES SECTORS, JOBS ALL GAIN... The ISM Manufacturing and ISM Services indexes are expected to show both sectors of the economy continuing to expand. Also growing should be Nonfarm Payrolls and Average Hourly Earnings in Friday's August Employment Report.

U.S. financial markets were closed Monday, September 2, for Labor Day.

NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months... The Fed Futures market still expects September and October rate cuts, but no further moves in December. Note: In the lower chart, a 100% probability of change is a 0% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

AFTER FOMC MEETING ON:CONSENSUSSep 18 1.75%-2.00%
Oct 30 | 1.50%-1.75%
Dec 11 | 1.50%-1.75%

Probability of change from current policy:

AFTER FOMC MEETING ON:CONSENSUSSep 18 100%Oct 30 57%Dec 11 51%

BUSINESS TIP OF THE WEEK

Instead of focusing on the numbers, focus on serving your customers and your community. When you give to others, it's astonishing how much others will give back to you.

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Weekly Update: August 26, 2019

NATIONAL MARKET UPDATE

Continuing the upward trend that began in January, Existing Home Sales climbed 2.5% in July, to a 5.420 million annual rate. The recovery has now taken year-over-year sales into positive space, up 0.6%, for the first time in 17 months.

July New Home Sales fell 12.8%, but mostly because June sales were revised up to a post-recession high 728,000, the 20% monthly gain the largest since 1992! Plus, July's number is still 4.3% higher than last year.

Freddie Mac's chief economist noted that thanks to the drop in rates, "homepurchase demand is up five percent from a year ago...while refinances surged to their highest share in three and a half years."  

REVIEW OF LAST WEEK

TRADE TENSIONS TRIP TRADERS... Friday, China unveiled retaliatory tariffs, the President responded by ordering American companies to look for "an alternative to China," and the three major stock indexes finished down for the week.

Traders were initially heartened after Fed Chair Powell's Jackson Hole speech left the door open for a rate cut in September as a hedge against "a global slowdown," though "the U.S. economy has continued to perform well overall."

How well? Solid earnings from major retailers show consumer spending that drives 70% of the economy is very healthy. Wages have grown above 3% 12 months in a row, the longest streak since 2007, and unemployment nears a 50-year low.

The week ended with the Dow down 1.0%, to 25629; the S&P 500 down 1.4%, to 2847; and the Nasdaq down 1.8%, to 7752.

In bonds, investors sought a safe haven in Treasuries, though the 30YR FNMA 4.0% bond ended down .06, to $103.64. Freddie Mac reported the national average 30-year fixed mortgage rate fell to another three-year low in the Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... First American says single-family starts are a more reliable recession indicator. They were down 20% or more year-over-year before four of the past five recessions, while the yield curve inverted 31 times without a subsequent recession. (Please note: single-family starts were UP 1.9% year-over-year in July.)

THIS WEEK'S FORECAST

PENDING HOME SALES, GDP GROW, CONSUMERS SPEND, INFLATION OK...Contracts on existing homes should gain in July by the Pending Home Sales index, and GDP is forecast at still solid 2.0% growth. Analysts predict Personal Spendingwill show a rise in consumer spending, while Core PCE Prices inflation stays mild.

NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months... The Fed Chair's speech on Friday left the Futures market certain of a September rate cut, with a good probability of one in October, but that's it for the year. Note: In the lower chart, a 100% probability of change is a 0% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

AFTER FOMC MEETING ON:CONSENSUSSep 18 1.75%-2.00%

Oct 30 1.50%-1.75%
Dec 111.50%-1.75%

Probability of change from current policy:

AFTER FOMC MEETING ON:CONSENSUSSep 18 100%Oct 30 67%Dec 11 47%

BUSINESS TIP OF THE WEEK

86% of consumers consult online reviews. The secret to getting them? Send a client a request for a review by text or email the day the work is done or the deal closes.  

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Weekly Update: August 19, 2019

NATIONAL MARKET UPDATE

Housing Starts disappointed in July, down 4.0%, to a 1.191 million annual rate. But it was all due to volatile multi-family starts, as single family starts were up 1.3%, and starts overall are up 0.6% from a year ago.

Building Permits gained a solid 8.4% in July. Plus, the number of homes under construction has been moving lower and housing completions higher, so workers are becoming available, easing builders' concerns about labor shortages. 

And, hey, mortgage rates are down and wages are growing near the fastest pace in a decade, expanding affordability. No wonder, as Freddie Mac's chief economist noted, "mortgage demand reached a three-year high." 

REVIEW OF LAST WEEK

ANOTHER BUMPY RIDE... Stocks roller coastered all week, finally ending down. Why? Pick your poison: more trade worries, or recession fears brought on by the yield of the 10-year Treasury dropping below that of the 2-year. 

This "yield curve inversion" in the past signaled a recession starting an average of 18 months out (putting it past the 2020 election). Cooler economic heads noted such inversions were usually tied to Fed rate tightening, yet we just had a cut!

We're hardly on the verge of recession. Consumer spending drives 70% of the economy and Retail Sales, up five months in a row, gained a strong 0.7% in July. Plus productivity is growing and the job market's strong, great for real estate. 

The week ended with the Dow down 1.5%, to 25886; the S&P 500 down 1.0%, to 2889; and the Nasdaq down 0.8%, to 7896.

Bonds rose, as investors chose a safe haven for assets over the weekend. The 30YR FNMA 4.0% bond was UP .28, to $103.70. Freddie Mac's Primary Mortgage Market Survey reported the national average 30-year fixed mortgage rate held near a three-year low. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... In 2018, Millennials took out more new mortgages than any other generation, and the next group is starting up. The number of Generation Z consumers, born 1995 and later, who took out a mortgage more than doubled from Q2 2018 to Q2 2019.

THIS WEEK'S FORECAST

EXISTING HOME SALES UP, NEW HOME SALES STEADY, FED MINUTES...  Analysts expect a bump in Existing Home Sales in July, but New Home Sales should come in at the same rate as June. Pundits will scrutinize FOMC Minutes from the Fed's last meet for signs of further rate cuts. Woo-hoo!

NOTE: Weaker economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and higher loan rates.

FEDERAL RESERVE WATCH

Forecasting Federal Reserve policy changes in coming months... Following two rate cuts the futures market expects in September and October, there is now a 64% chance of a rate change in December, with a 58% probability it will be another drop. Note: In the lower chart, a 100% probability of change is a 0% probability the rate will stay the same.

Current Fed Funds Rate: 2.00%-2.25%

AFTER FOMC MEETING ON:CONSENSUS

Sep 18 1.75%-2.00%
Oct 30 1.50%-1.75%
Dec 11 1.25%-1.50%

Probability of change from current policy:

AFTER FOMC MEETING ON:CONSENSUS

Sep 18   100%

Oct 30   82%

Dec 11   64%

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Inside Look 006 | Mortgage Market Update

🏡💥💵Happy Monday!! Hope you had a great weekend. Here is this week's mortgage market update. Here are the highlights:

🏡💥💵Happy Monday!! Hope you had a great weekend. Here is this week's mortgage market update.

Here are the highlights:

  • Interest rates have come down over the last several weeks and even more so in the last week. Rates are in the high 3's to low 4's and the lowest they have been since about January of 2018.

  • Fed Chairman Jerome Powell surprised everyone last week announcing that they will not increase rates at all this year while anticipation was for 2 rate hikes.

  • Lower rates means more buying power for buyers & an opportunity for current homeowners to potentially lower their monthly carrying costs.

  • Reports due out this week: Housing Starts, Case-Shiller Home Price Indices, Initial Jobless claims and the Fed favorite: Personal Consumption Expenditures (PCE)

If you have any questions or if I can help with anything, please do not hesitate to call.

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Where Are Interest Rates Headed in 2019?

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The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.

Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily throughout 2019.

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How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly. But don’t let the prediction that rates will increase stop you from purchasing your dream home this year!

Let’s take a look at a historical view of interest rates over the last 45 years.

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Bottom Line

Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

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HOME MAINTENANCE YOU SHOULD BE DOING MONTHLY

According to NerdWallet, nearly half of homeowners cite unexpected home repairs as a source of anxiety. And no wonder — surprise repairs can be costly, and they also seem to pop up at the worst possible time. Fortunately, there’s something you can do to reduce the chances of those kinds of repairs being necessary: Maintenance!

Home maintenance can be daunting for a new homeowner. The list may seem endless, but if you break tasks down into categories that can be easily scheduled, you can take some of the pressure off and make it easy to stay on top of home maintenance.

Some maintenance can happen weekly, while other maintenance is only necessary once a year! To get you started, here’s a checklist of the kinds of maintenance you should be performing monthly if you want your home to stay in good condition.

Clean your drains and disposal. Pouring boiling water down a drain is a quick way to clean out sludge. If the drain is still moving sluggishly, baking soda and vinegar can help break up obstructions. Tossing some ice cubes into your disposal will both sharpen the blades and help flush out debris.

Check vents and filters. Clogged-up filters and vents can increase utility costs, as well as present a safety hazard in some instances. You may not necessarily need to replace HVAC filters monthly but keeping an eye on them will help you spot when they do need to be changed.

Demineralize faucets. Faucets and showerheads can build up mineral deposits slowly or quickly depending on how hard your tap water is. Hard water buildup can reduce water flow and even cause faucets to spray water in all the wrong directions. Soaking the faucet filter in vinegar is a quick and easy way to remove mineral deposits.

Check up on safety devices. Your smoke detectors, carbon monoxide detector, and fire extinguisher can only save your life if they’re functional! Be sure to replace smoke alarm and CO2 detector batteries every year, and double check that your fire extinguisher is up-to-date.

Doesn’t sound so hard, does it? If you can work these into your monthly routine, you’ll save yourself a lot of trouble and expense in the long run. Once you’ve tackled those, you can start working on seasonal maintenance!

Financing a home purchase, or refinancing for a lower rate or improvements? Please text, email or call us... Have a great day!

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Inside Look 004: Barry Habib, Founder & CEO of MBS Highway

 

In the fourth episode of Inside Look, we have special guest, Barry Habib, Founder and CEO of MBS Highway. Barry has had many successful businesses that he has founded, grown and sold throughout his career. This includes Mortgage Market Guide, Healthcare Imaging Solutions, and Certified Mortgage Associates. During his mortgage sales career, he was recognized for having the highest annual origination production in the US on two occasions. He also personally originated over $2 Billion dollars in mortgage loan production over his career. He was just named the top Real Estate forecaster by Zillow and Pulsenomics and has been presented with the Crystal Ball Award for the most accurate Real Estate forecasts out of 150 of the top economists in the US

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Inside Look 002: CCAR Scholarship Now Accepting Applications

Episode 2 of Inside Look. In the second episode of Inside Look, we take a look at the Contra Costa Association of REALTORs Scholarship Foundation. The Contra Costa Association of Realtors® (CCAR) Scholarship Foundation provides college scholarship grants to qualifying students in the fields of economics, marketing, communication, finance, business and real estate. Our commitment to support higher education is the heart of the Contra Costa Association of Realtors®’ desire to make a difference! In the last five years alone, the Foundation has awarded nearly $250,000 in college grants to deserving students whose families reside in Contra Costa County. We are accepting applications. The deadline for applications is April 30th. Thanks for watching episode 2. My goal is to bring you value with the videos that I do and I hope that you come back and watch future episodes. Please comment below, subscribe to the channel and please share with your friends and groups.

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The Cost of Waiting: Interest Rates Edition

cost of waiting.jpeg

Some Highlights:

  • Interest rates are projected to increase steadily heading into 2019.
  • The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.
  • Rates are still low right now. Don’t wait until rates hit 5% to start searching for your dream home!

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Inside Look 001: Trusts

Episode 1 of Inside Look. We talk with attorney Daniel Quane of Doyle Quane & Freeman about why you need to set up a trust, how it works, how it protects you and your family. Special Guest: Daniel Doyle | Attorney | Doyle, Quane & Freeman | http://www.familylawgroup.com/ Thanks for watching episode 1. My goal is to bring you value with the videos that I do and I hope that you come back and watch future episodes. Please comment below, subscribe to the channel and please share with your friends and groups.

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The Impact Staging Your Home Has on Sales Price

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Some Highlights:

  • The National Association of Realtors surveyed their members & released the findings of their Annual Profile of Home Staging.
  • 50% of staged homes saw a 1-10% increase in dollar value offers from buyers.
  • 77% of buyer’s agents said staging made it easier for buyers to visualize the home as their own.
  • The top rooms to stage in order to attract more buyers are the living room, master bedroom, kitchen, and dining room.

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A Housing Bubble? Industry Experts Say NO!

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With residential home prices continuing to appreciate at levels above historic norms, some are questioning if we are heading toward another housing bubble (and subsequent burst) like the one we experienced in 2006-2008.

Recently, five housing experts weighed in on the question.

Rick Sharga, Executive VP at Ten-X:

“We’re definitely not in a bubble.”

“We have a handful of markets that are frothy and probably have hit an affordability wall of sorts but…while prices nominally have surpassed the 2006 peak, we’re not talking about 2006 dollars.”

 

Christopher Thornberg, Partner at Beacon Economics:

“There is no direct or indirect sign of any kind of bubble.”

“Steady as she goes. Prices continue to rise. Sales roughly flat.…Overall this market is in an almost boring place.”

 

Bill McBride, Calculated Risk:

“I wouldn't call house prices a bubble.”

“So prices may be a little overvalued, but there is little speculation and I don't expect house prices to decline nationally like during the bust.”

 

David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices:

“Housing is not repeating the bubble period of 2000-2006.”

“…price increases vary unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging.”

 

Bing Bai & Edward Golding, Urban Institute:

“We are not in a bubble and nowhere near the situation preceding the 2008 housing crisis.”

“Despite recent increases, house prices remain affordable by historical standards, suggesting that home prices are tracking a broader economic expansion.”

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Home Buying Myths Slayed

Some Highlights:   1) Interest rates are still below historic numbers.  2) 88% of property managers raised their rent in the last 12 months!  3) The credit score requirements for mortgage approval continue to fall.

Some Highlights:

1) Interest rates are still below historic numbers.

2) 88% of property managers raised their rent in the last 12 months!

3) The credit score requirements for mortgage approval continue to fall.

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3 Questions to Ask Before You Buy Your Dream Home

If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interests at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.  Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.   Get Pre-Qualified    1. Why am I buying a home in the first place?    This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.  For example, a  survey  by  Braun  showed that over 75% of parents say,  “their child’s education is an important part of the search for a new home.”   This survey supports a study by the  Joint Center for Housing Studies at Harvard University  which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:  A good place to raise children and for them to get a good education  A place where you and your family feel safe  More space for you and your family  Control of that space  What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.   Get Pre-Qualified    2. Where are home values headed?   According to the latest   Existing Home Sales Report   from the  National Association of Realtors   (NAR),  the median price of homes sold in May (the latest data available) was $252,800, which is up 5.8% from last year. This increase also marks the 63rd consecutive month with year-over-year gains.  If we look at home prices year over year,  CoreLogic  is    forecasting  an increase of 5.3% over the next twelve months. In other words, a home that costs you $250,000 today will cost you an additional $13,250 if you wait until next year to buy it.   What does that mean to you?   Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy.      Get Pre-Qualified    3. Where are mortgage interest rates headed?   A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.  The  Mortgage Bankers Association   (MBA),   NAR , and  Fannie Mae  have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:

If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interests at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

Ask yourself the following 3 questions to help determine if now is a good time for you to buy in today’s market.

Get Pre-Qualified

1. Why am I buying a home in the first place? 

This is truly the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

For example, a survey by Braun showed that over 75% of parents say, “their child’s education is an important part of the search for a new home.”

This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the top four reasons Americans buy a home have nothing to do with money. They are:

A good place to raise children and for them to get a good education

A place where you and your family feel safe

More space for you and your family

Control of that space

What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

Get Pre-Qualified

2. Where are home values headed?

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the median price of homes sold in May (the latest data available) was $252,800, which is up 5.8% from last year. This increase also marks the 63rd consecutive month with year-over-year gains.

If we look at home prices year over year, CoreLogic is forecasting an increase of 5.3% over the next twelve months. In other words, a home that costs you $250,000 today will cost you an additional $13,250 if you wait until next year to buy it.

What does that mean to you?

Simply put, with prices increasing each month, it might cost you more if you wait until next year to buy. Your down payment will also need to be higher in order to account for the higher price of the home you wish to buy. 

Get Pre-Qualified

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long-term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates.

The Mortgage Bankers Association (MBA), NAR, and Fannie Mae have all projected that mortgage interest rates will increase over the next twelve months, as you can see in the chart below:

Bottom Line   Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.

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