Market Update – April 11th, 2016

 

While many signs point to a U.S. economy accelerating on the road to recovery, global markets continue to put potholes in front of the Fed.

As the Federal Reserve gears up for its next Federal Open Market Committee (FOMC) meeting April 26 and 27, the likelihood of an increase to the Fed's benchmark Fed Funds Rate has been detoured.

Recently released FOMC March meeting minutes noted an increase to the Fed Funds Rate would "signal a sense of urgency" that is not "appropriate" at this time. The Fed gave a shout out to a range of labor market indicators, including strong employment growth and rising labor force participation. Gross Domestic Product also is projected to expand thanks to increases in household spending.

But many FOMC members see the strength in household spending offset by weakness in exports associated with lackluster foreign growth and the stronger U.S. dollar. Minutes stated "a sharp, though temporary, deterioration in global financial conditions earlier this year had not been fully resolved." Global conditions have led investors to consider the safety of the Bond markets, including Mortgage Bonds. Since home loan rates are tied to Mortgage Bonds, this uncertainty overseas is one reason home loan rates have remained attractive so far this year.

In housing news, home prices posted a 6.8 percent annual gain from February 2015 to February 2016, according to CoreLogic, a leading provider of housing analytics. Month-over-month prices also were up 1.1 percent from January to February.

At this time, home loan rates are still hovering in historically-low territory.

If you or someone you know has any questions about buying or selling a home, please don't hesitate to email or call me.


Posted on April 11, 2016 at 7:13 pm
Randy Jeremiah | Posted in Uncategorized |

Market Update – March 7th, 2016

 

February job creation was something to sing about. But lackluster wage growth might not provide the financial security workers hope for.

In February, 242,000 jobs were created, well above the 190,000 expected, the Labor Department reported. Plus, December's and January's numbers were revised higher. The Labor Force Participation Rate also ticked up to 62.9 percent, the highest since January 2015, while the Unemployment Rate remained at 4.9 percent (which is near what the Fed considers full employment).

Despite this positive news, wage growth is still a concern, falling -0.1 percent from January. Year-over-year wage growth rose a modest 2.2 percent from February 2015 to February 2016.

In housing news, January home prices, including distressed sales, rose 6.9 percent from January 2015, according to CoreLogic, a leading provider of property information and analytics. On a month-over-month basis, prices were up 0.5 percent from December 2015 to January 2016. Looking ahead, CoreLogic has forecasted a 5.5 percent increase from January 2016 to January 2017.

Finally, home loan rates continue to hover just above all-time lows, which is great for homebuyers and homeowners considering a refinance.

If you or someone you know has any questions about home purchases or selling, please don't hesitate to email or call me.


Posted on March 7, 2016 at 9:48 pm
Randy Jeremiah | Posted in Uncategorized |

Market Update – February 29th, 2016

 

News headlines shared the latest word on housing sales, Gross Domestic Product and inflation … helping home loan rates remain in historically low territory.

In housing news, January Existing Home Sales edged 0.4 percent higher from December to an annual rate of 5.47 million units, according to the National Association of REALTORS®. The increase was the highest level since July 2015. In the past year, sales are up 11 percent, the largest year-over-year gain since the 16.3 percent annual rise in July 2013. January New Home Sales, on the other hand, fell 9.2 percent from December.

The second reading of Gross Domestic Product (GDP) from the final quarter of 2015 showed growth of 1 percent, above the 0.4 percent expected and the 0.7 percent recorded in the first reading. GDP is one of the primary gauges of the health of our country's economy and represents the total dollar value of all goods and services produced over a specific time period. Readings should be at least 2.5 percent to signify growth.

Finally, inflation, as measured by the Core Personal Consumption Expenditures index, rose 0.3 percent in January from December and year-over-year 1.5 percent. Inflation is not Bond-friendly news, meaning it also isn't a good sign for home loan rates, which are tied to Mortgage Bonds. While inflation has not been an issue for some time, after the rise in January's Core Consumer Price Index as well, it is definitely something to monitor.

The mix of news held Mortgage Bonds fairly steady the past week, helping keep home loan rates near historic lows.

If you or someone you know has any questions about buying or selling a home, please don't hesitate to contact me.


Posted on February 29, 2016 at 6:00 pm
Randy Jeremiah | Posted in Uncategorized |

Market Update – February 22, 2016

 

Across the country, builders are still breaking ground on new homes, though the number has declined thanks, in part, to Mother Nature. The good news is that more than one million homes are waiting to be built.

January Housing Starts hit a three-month low. Starts, which measure the beginning of excavation on a home's foundation, fell 3.8 percent from December to an annual rate of 1.099 million units. This was lower than the 1.171 million expected. All four major regions across the country saw declines, but a big East Coast snowstorm caused a halt in some late-month construction in the area. In line with expectations, January Building Permits, a sign of future construction, hit 1.202 million units.

In other news, key regional manufacturing data from New York and Philadelphia continues to paint a bleak picture with yet another month of contraction. The sector is still being weighed down by a stronger dollar and weak overseas demand, which are plaguing expectations of future business conditions for the first half of this year.

Finally, the January Core Consumer Price Index (CPI), which is an inflation measure that strips out volatile food and energy, rose 0.3 percent. This was the largest gain since August 2011. Year-over-year, Core CPI rose by 2.2 percent, the largest increase since June 2012. Blame rising rents and higher medical costs.

Why is this important? Inflation has been a non-issue for many years. If January's increase becomes a trend rather than a one-time pop in inflation, home loan rates could move higher. Rates are tied to Mortgage Bonds, and inflation reduces the value of fixed investments like Bonds.

For now, home loan rates remain near historic lows.

If you or someone you know has any questions about buying or selling a home, please don't hesitate to contact me.


Posted on February 22, 2016 at 6:00 pm
Randy Jeremiah | Posted in Uncategorized |

Oregon and Southwest Washington Real Estate Market Update

The speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates and larger economics factors. The Oregon economy continues to expand and I do not see this changing in the foreseeable future. However, similar to many West Coast markets, Oregon’s inventory constraints are becoming problematic. I believe we will see more listings come online in 2016 as home equity levels continue to expand, but unfortunately it will not be enough to meet demand, and the market will remain imbalanced. I have kept the needle at the same level as last quarter. The market currently favors sellers, but buyers are growing weary of multiple offer situations and are likely to wait for inventories to rise, which will hopefully happen in the Spring.

Looking forward, I believe 2016 will be a year of few surprises. Because it is an election year, I do not expect to see any significant governmental moves that would have a major impact on the U.S. economy or the housing market.


Posted on February 18, 2016 at 10:22 pm
Randy Jeremiah | Posted in Market Update | Tagged , , , ,

Market Update – February 16th, 2016

"Rainy days seem to wind up sunny, long as you got a little spending money." Jimmy Buffett. U.S. consumers kept the purse strings loose in January, creating a bright spot in what have been hazy days on the economic front.

January Retail Sales rose 0.2 percent marking the third straight month of strong consumer spending, the Commerce Department reported Friday. Spending may have been fueled by lower prices at the gas pump and the belief that strong employment prospects are here to stay. Consumer spending accounts for more than two-thirds of U.S. economic activity.

In other news, Federal Reserve Chair Janet Yellen recognized the U.S. is progressing toward the Fed's goal of maximum employment in her semi-annual report to Congress. However, the continued drop in oil prices and the strength of the dollar have negatively impacted the manufacturing sector. Yellen also said foreign economic developments pose risks to U.S. economic growth. Finally, she noted if these factors "prove persistent," they could "weigh on the outlook" for U.S. economic activity.

So why is this important? Weak economic news normally causes home loan rates to improve while strong economic news normally has the opposite result. Right now, home loan rates remain near historically low levels, helping to create a sunny outlook for homebuyers.

If you or someone you know has any questions about the housing market, current rates or home loan products, please contact me.


Posted on February 16, 2016 at 7:53 pm
Randy Jeremiah | Posted in Market Update | Tagged , , , , ,