It seems that every day there is another economic report out that different individuals interpret differently. Today, the joblessness report showed that "only" 502,000 new unemployment claims were made, which was 10,000 less than the previous month and 8,000 less than anticipated. The "gurus" jumped all over this report, letting us know that this was economic news. Although it probably was good news because things were getting significantly worse, it certainly wasn't good news for the 502,000 individuals putting in new unemployment claims. And this was on top of the over 10% already receiving regular and extended unemployment benefits, not to mention those who have taken lesser work or given up looking (estimates are a total of approximately 17.5%). Also, in today's news, WalMart announced its 3Q economkic figures, and the net revenue was better than anticipated. That could be interpreted as good news, or not so good if one factors in that the increased net was based on lower than anticipated revenues, which means that obviously WalMart had made some "efficiencies" to improve its numbers. Over 80% of the companies reporting 3Q figures have reported better than anticipated numbers. Does that mean that we are gradually coming out of the recession (hopefully), or that companies are cutting jobs making themselves more profitable, or that the "experts" are under-estimating, or some combination of the three? It all depends on PERCEPTION. Most experts believe that the worst of the recession has passed, and that there will be gradual, but slow improvement during 2010. Historically, companies begin recovery periods by hiring part-time workers before they add full-time employees. However, since the average number of hours the American worker has dropped to only 33 hours per week, will companies then simply have existing workers put in a little more time. I believe that this figure of number of average hours per week will be a significant one to look at when we want to see how much progress is being made in getting out of the recession. The housing market is an important one to follow as an indicator of the economy. Government incentives have slightly shored up the housing market, but it will not bounce back until there is some restoration of consumer confidence. For anyone who is in a position to buy a house, there has rarely been this great a buying situation, when you consider the combination of relatively low prices, low mortgage rates (average 30 year mortgage rates dropped today to 4.91%), tax incentives, and selection on market. Yet, many potential buyers are still adopting a "wait-and-see" approach, and just taking their time. Most experts believe that home prices, and mortgage interest rates will nudge up toward the second half of 2010. Again, consumer confidence and perception is a primary factor in this evaluation. So, what is really going on? Huge US deficits, a weak US dollar, a recession, high joblessness and under-employment, are all unfortunate realities. Corporations have reacted by making themselves more cost-efficient, but unfortunately that exacerbates the unemployment challenge. The economy does not appear to be getting any worse! The next important step is to see how consumer confidence reacts. Halloween shopping was nearly 30% down this year, and if Christmas shopping bounces back somewhat, that will be an important indicator that consumer confidence is increasing. Many major retailers have already announced that they will beging "Black Friday" sales early, and be more aggressive in their marketing this season. Hopefully, some of the seasonal employment will be extended and we see a restoration in the job area as early as the second quarter of 2010. Vacation travel during the holidays, and overall travel in January and February of next year, will also be important indicators of consumer confidence. Since most experts believe that one of the driving forces in creating this recession is the high cost of energy, job creation should be created by having the government create alternative energy incentives, and for hiring and re-training into that industry. T.Boone Pickens has promoted heavily his Pickens Plan, with the goal of US energy independence, by using alternative energy (he prefers windmills), and natural gas (because of its abundance in the US). Creating jobs in this area would be a short-term and a long-term solution, because it addresses not only employment, but a stronger US energy policy. The American electorate must demand from it's politicians that they become leaders. Leadership and statesmanship means that "polls" should not dictate policy, but that they need to be effective problem solvers. It can be done, and must be done, for the U.S. to again become the strongest economy in the world. I truly believe that if the American public clearly demands "real change," instead of empty promises, we can "jump-start" our economy, and consumer confidence. I urge you all to join with me.
Follow me on Twitter: @rgbrody (www.twitter.com/rgbrody) My consulting website: http://tinyurl.com/rgbcons My real-estate website: http://tinyurl.com/rgb242
Last night, news media were reporting that they anticipated the jobless rate to rise slightly to 9.9%. At around the same time, it was announced that President Obama would today sign into law a bill that would: (1) extend unemployment benefit eligibility by up to an additional 20 weeks (meaning to a maximum of 99 weeks, if eligible- the maximum is for those 26 states where unemployment exceeds 8.5%); (2)extend and enhance the New Homebuyers Credit from November 30th until June 30th (This bill requires going into contract by April 30th and closing by June 30th). This bill will now NOT only provide first time buyers a tax credit of up to $8,000, but would extend to homeowners who've lived in their present home at least five of the last eight years (at a credit of up to $6,500); and (3) a modification of the law for businesses that have had losses to offset gains for more years back than the present law permits, thus hopefully freeing up cash flow for corporations. Early this morning, the official joblessness rate was announced as a higher than anticipated 10.2%, the highest unemployment rate in 26 years. What is even more disconcerting is that this figure does not account for those no longer seeking employment, or working part-time, or in much lower positions. In addition, the average US worker's work-week is now averaging approximately 33 hours per week, one of the lowest averages in many years. One would therefore expect that the stock market would have a "correction" from yesterday's increase, and stock market indexes did indeed open sharply lower this morning. What this means is that our political leaders need to seriously and immediately address the most urgent economic condition facing this nation today - - - unemployment and under- employment! While I believe the bill being signed today is both necessary and helpful, we now need to apply pressure on elected officials to use some "common sense solutions" to address both employment and other economic issues. Unfortunately, it is uncommon for political leaders to use "common sense." (Is a political leader using common sense an oxymoron?) When I consult to a business, organization, or individual, I explore alternatives and explain all possible ramifications of actions or inactions. Isn't it about time our politicians did the same thing?
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Today, FNMA appeared to be prepared to alter its established policy regarding foreclosures on properties they control. It appears that they have made the decision to rent out these distressed properties instead of foreclosing and selling them. If this policy is maintained, it would go a long way toward stabilizing housing because it would somewhat reduce the "supply side" of homes by removing these distressed properties from the marketplace. The net effect of that should eventually be shoring up home prices, as well as reducing the amount of average days on market for houses listed for sale. It would also reduce "bottom-feeding" tendencies, and create a more realistically priced housing market. In addition, the Fed's decision this week to maintain low interest rates for the foreseeable future, should help keep mortgage interest rates close to the low levels they currently are at. In addition, news about the Fed and certain large public companies working together to share the risk on distressed properties/ loans, should eventually loosen the mortgage lending market to some degree. The recent election results have also indicated that people have become "fed up" with the high taxes they are paying. If this then translates into finally addressing the high real estate taxes paid in certain areas of the country, this will also help the housing market. There also seems to finally be some awareness that we must control our energy costs, and if that rhetoric translates into some action, it would be another positive for the housing market and real estate industry. Finally, if our politicians now get the message that the joblessness issue has to be addressed, and Americans begin to see some job creation and consumer confidence, then there will be a rebound in the housing market. The consensus is that the housing market has or nearly has bottomed out. Therefore, 2010 should be a much better year.
Ever since Senator Reid's office announced that the Senate would be extending and enhancing the 1st Time Homebuyers Credit, there has been much less "buzz" around stating the urgency of doing that. My fear is that we are being lulled into apathy and the "it's going to happen" mode, while politicians play typical political games. The present credit is scheduled to expire November 30th, and we are already entering into the traditional slow season for real estate (just what we need on top of the present real estate reality). The market and the economy needs further jump starting, and this credit is one of the few government stimuli out there that goes directly to the American consumer. Remember that a healthy real estate market not only helps realtors, buyers and sellers, buit also helps mortgage brokers and banks, building trades including laborers and suppliers, builders, rtc. This credit is an example of the "trickle up" theory at it's best! Realtors, bankers, homeowners, homebuyers, consumers, building trades, etc. must contact their representatives and senators, and let then know, that we want and need action NOW! Every day without this extention in place hurts the marketplace. This extension should be a "no-brainer." Unfortunately, many politicians are just that - - politicians who are constantly running, instead of statesman who are governing. Tell your politicians that we want and need statesman NOW, and we will demonstrate that at the polls. This is NOT a Republican, Democrat, Conservative or Liberal issue - - this is an issue of helping to repair and mend our economy. Tell them all to do it NOW!
The 3rd Quarter Gross Domestic Product (GDP) figures came out, and the GDP grew by a better than anticipated 3.5%, the best GDP news and first growth in a year. Senate Democratic Majority Leader Harry Reid's office has announced preliminary agreement on BOTH extension of, and enhancement to, the 1st Time Homebuyers Credit. The agreement in the Senate calls for extension of the credit which was scheduled to expire at the end of November to April 30th contract dates, as long as the closing is by end of June. The enhancement to the credit calls for a lesser credit (but still a very significant $6,500 credit) to be given to people who wish to sell one house and purchase another, as long as they lived in their first house at least five years. While critics say that people would have bought houses anyway, even if there was no credit, common sense shows that since there was a spike in 1st time house sales during that period, saying "it would have happened anyway," may be no more than political posturing. Of course, for this to take effect, the full Senate and House have to agree, and the President needs to sign into law. If you believe, as I do, that it is better to help people than the big corporations and banks (many of which got into trouble because of either their own greed or mismanagement), then I urge you to let your government officials know that you want this credit extension and enhancement. Studies indicate that an essential part of economic recovery is a health housing market. These steps will help create that during this crucial time period. Most economists believe that the worst of the recession will be over by the end of the 2nd quarter of 2010, and so this "shoulder" period that the credit will help solidify is truly urgent. We must also urge our elected officials to address the joblessness rate, putting people back to work in retrained positions, to help the US regain its position among the elite economies of the world. We have been let to believe that this is a worldwide crisis, which by and large it is. However, nations like Norway have very low unemployment rates (estimates are between 1.8%- 2%) because they have positioned themselves toward energy independence. China is another example of a country which has benefited from the economic weakness of other nations during this time (for example, a Chinese company is in soloe discussions with Ford to purchase Volvo, and another Chinese company has discussed purchasing Hummer). We need to build upon these promising bits of economic news, and urge that our government officials understand that our number one priority has to be restoring the economy, reducing joblessness, and a health housing market. If the US does not have that as a base, then there will be little chance of other programs succeeding. We, as a nation, cannot continue to have huge and growing deficits, without a sound plan for recovery. We also need to let politicians know that we are tired of empty rhetoric, but need detailed thinking that considers both the long-term and short-term ramifications of our actions.
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As always, politicans are endlessly debating and posturing regarding the extention of the First Time Home Buyer's Credit, presently scheduled to expire on November 30th. It is interesting that there is still no extention, considering that most experts credit this Credit with reinvigorating a badly sagging real estate market. Nationally, it is estimated that home prices have now come back- to 2003 prices. The third quarter of 2009 actually showed an increase in sales, in most parts of the country.
However, there is still much uncertainty in today's economy. Polls show consumer confidence has not yet been restored, and that the major concerns are the recession and job security (high joblessness rate). Historically, a healthy housing market is essential to a properly functioning economy. While the stock market has come back more than 25% from its recent low, it is still far below the level of a couple of years ago. The extention of the housing credit is an effective way to keep the housing market stable.
At this time, we not only need an extention of the 1st Time Housing Credit, but an expansion of the program, so that more individuals are covered. Items that should be expanded include: Income requirements (allowable income should be increased); Broader, looser definition of 1st time Buyer should be utilized; Partial Credit should be considered for anyone purchasing more expensive house; etc.
I urge everyone to contact their elected officials as soon as possible, and urge them to both extend and expand the Home Buyers Credit.
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According to data released today, housing sales have now risen in the US for three months in a row. Home prices in most areas have also stopped their decline, and in most areas are nudging upward. Many factors are probably responsible for this including: the 1st time buyers credit; low mortgage interest rates; polls showing slight improvement in consumer confidence regarding the economy; economic projections for the worst of the recession to be ending in either the 1st or 2nd quarter of 2010; a slight increase in availability of mortgage money; an improvement in stock market performance; etc.
However, not all areas of the country have seen the same trend. Real estate marketing and sales remains an entity peculiar to local areas. This means that one community may see its real estate market rebound before another, just as the drop in the market started in certain areas before others.
We are entering into a period where there may never be a better time to purchase a house. Of course, only those who are somewhat financially secure, with good credit, will be able to take advantage of this. And the high joblessness rate combined with little optimism on that front in the short-term, have created the major stumbling block to the housing market recovery.
The most important way to help the housing market is to lower the joblessness rate. Those truly interested in a timely economic recovery should urge our political leaders to make their #1 priorit
According to data released today, housing sales have now risen in the US for three months in a row. Home prices in most areas have also stopped their decline, and in most areas are nudging upward. Many factors are probably responsible for this including: the 1st time buyers credit; low mortgage interest rates; polls showing slight improvement in consumer confidence regarding the economy; economic projections for the worst of the recession to be ending in either the 1st or 2nd quarter of 2010; a slight increase in availability of mortgage money; an improvement in stock market performance; etc.
However, not all areas of the country have seen the same trend. Real estate marketing and sales remains an entity peculiar to local areas. This means that one community may see its real estate market rebound before another, just as the drop in the market started in certain areas before others.
We are entering into a period where there may never be a better time to purchase a house. Of course, only those who are somewhat financially secure, with good credit, will be able to take advantage of this. And the high joblessness rate combined with little optimism on that front in the short-term, have created the major stumbling block to the housing market recovery.
The most important way to help the housing market is to lower the joblessness rate. Those truly interested in a timely economic recovery should urge our political leaders to make their #1 priority!
Benchmark mortgage rates were just announced as being reduced to approximately 4.84%. This is the LOWEST rate since May, and over one percent lower than it was a year ago. This has created a double digit percentage increase in mortgage applications, as well. If a potential buyer has good credit, and if the house comps out, it means that today's buyer can get a LOT MORE HOUSE for a MUCH LOWER MONTHLY PAYMENT.
The Fed has given indications that they do not intend imminently to raise rates, but most economists believe that by the second quarter of 2010, there is a probably that interest rates will begin to move up. All of this is complicated by the decrease in the value of the dollar related to foreign currencies, the uncertain energy situation, the rise in the price of gold (which means that many believe inflation is next), the uncertain job market (becaause even though many believe recession has bottomed or near-bottomed, the jobless rate is still startling, and is lagging behind dramatically).
Therefore, if you have savings, can afford 20% down, have good credit, and decent job security, this may be the best home buying market in quite a long time - - - past, present or future.
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The real estate market appears to have either bottomed out, or neared the bottom in terms of pricing, length of time sales take, and units sold. While we still appear to be far from it becoming another Seller's Market, the days of the buyer having such a big advantage seem to probably be near the end. Some of the reasons include:
1) Mortgage Interest Rates are still at or near historic lows. Eventually the Fed will once again ease up on interest rates, permitting them to gradually increase. They will probably state that they are doing it to stem inflation, and that the time is now right. That is probably political economic talk, but remember the next Federal election is over a year away!
2) Housing prices have dropped dramatically in many markets, causing additional buyer interest.
3) Eventually, the recession will ease somewhat, and the job market will improve. First, there will be more part-time positions available, followed by more full-time employment. That will mean that there will be more potential buyers.
4) Many are predicting that by the middle of 2010, the economy will begin to show recovery. That should cause consumer confidence.
5) The stock market went up over 15% in the 3rd Quarter. Most do NOT believe that this quarter will show the same increase, but if consumers begin to feel more confident, historically the real estate market benefits.
6) Many believe that the Federal Government will extend the First Time Buyers Credit. If that occurs, the housing market will benefit also.
While none of us have "crystal balls," many of us believe that 2010 will be a far better year for real estate than 2009 was.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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