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Jan 13, 2009 Real Estate & Economic Report from Ed Bisquera of Mortgage Express metro markets of Portland, Oregon & Vancouver, Washington. Featuring news for homebuyers, homeowners, realtors and the general real estate market.
Daunting Numbers It was not like we were not warned. They were expected. Yet, the reality of the numbers were quite sobering. The employment statistics for December and 2008 were horrific to say the least. Over 2.5 million jobs were lost in 2008 and the loss in December alone was over 500,000. The job losses caused the unemployment rate to shoot up to 7.2%. Here is an interesting perspective. We lost more jobs in the past year than in any year since the end of World War II.
Daunting numbers indeed. But the interesting thing is that the markets barely blinked when they were released. The Dow shed almost 150 points, rates were down slightly and oil prices also fell, but moderately. How could the markets react so moderately in the face of such important news? Could it be that the bad news has been priced into the markets already? If this is the case, then rates, oil and the stock market are as low as they are going to go for the near term. Certainly the movements downward were significant during the latter half of 2008. For example, oil prices moved from $140 per barrel mid-year to $40 by the end of the year. That is quite a swing. It would not be surprising to see a period of consolidation where the markets bounce around before the next movement is signaled. The market may be waiting for any glimmer of hope that the worst is behind us and it may be until then that we witness any further fireworks.
Daunting numbers indeed. But the interesting thing is that the markets barely blinked when they were released. The Dow shed almost 150 points, rates were down slightly and oil prices also fell, but moderately. How could the markets react so moderately in the face of such important news? Could it be that the bad news has been priced into the markets already? If this is the case, then rates, oil and the stock market are as low as they are going to go for the near term. Certainly the movements downward were significant during the latter half of 2008. For example, oil prices moved from $140 per barrel mid-year to $40 by the end of the year. That is quite a swing. It would not be surprising to see a period of consolidation where the markets bounce around before the next movement is signaled. The market may be waiting for any glimmer of hope that the worst is behind us and it may be until then that we witness any further fireworks.
The Markets. Mortgages continued their assault on record lows as they dropped for the tenth week in a row. Freddie Mac announced that for the week ending January 8, 30-year fixed rates averaged 5.01%, down from 5.10% the week before. The average for 15-year fixed fell to 4.62%. Adjustables were mixed with the average for one-year adjustables increasing to 4.95% and five-year adjustables falling to 5.49%. A year ago 30-year fixed rates were at 5.87%. "Rates for 30-year fixed mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said Frank Nothaft, Freddie Mac vice president and chief economist. "On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008. Since the end of October 2008, these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan."
Current Indices For Adjustable Rate Mortgages
Updated January 9, 2009
| Daily Value | Monthly Value | |
| Jan 8 | December | |
| 6-month Treasury Security | 0.28% | 0.26% |
| 1-year Treasury Security | 0.44% | 0.49% |
| 3-year Treasury Security | 1.16% | 1.07% |
| 5-year Treasury Security | 1.60% | 1.52% |
| 10-year Treasury Security | 2.47% | 2.42% |
| 12-month LIBOR–WSJ | 2.406% (Dec) | |
| 12-month MTA | 1.823% (Dec) | |
| 11th District Cost of Funds | 3.155% (Nov) | |
| Prime Rate | 3.25% (Dec) |
Baby Boomers Will Drive Real Estate Market For Next 20 Years
A study of the Baby Boom generation by AARP and the National Association of Home Builders concluded that because the number of people age 65 and older will grow to 70 million by 2030, where boomers choose to live will have maximum impact on the housing industry. While boomers will reflect the patterns of earlier generations and mostly age in place, said Elinor Ginzler, senior vice president of AARP, “The sheer number of boomers will increase demand for a whole variety of home and community options. Key findings from the study include the facts that 79 percent would like to stay in their current homes as long as possible and 50 percent of those who plan to move want a home that is newer than their current home. Source: The Chicago Tribune
Endangered Neighborhoods Enjoy Respite With Low New Housing Starts
The pace of teardowns has slowed and preservationists are applauding the trend. About 75,000 homes a year were torn down across the country at the peak of the market. The National Trust has expanded its list of endangered neighborhoods to include 500 neighborhoods in 40 states. The demolitions have triggered bitter battles between preservationists and suburbanites seeking new homes in mature, urban neighborhoods. But with new housing starts at a 26-year low, teardowns are experiencing a lull. For instance, in Westport, Conn., teardown permits were down 33 percent in 2008 compared to the previous year. "The idea that you’re going to make a lot of money tearing down an old house to build a new one, that’s gone," says Morris Davis, a real estate economist at the University of Wisconsin in Madison who has advised the Federal Reserve on the teardown trend. "We’re advising communities to take advantage of this slowdown and use it as a cooling-off period," says Adrian Fine, a regional director for the National Trust for Historic Preservation in Washington. "It gives them a little more time to have a less heated and less controversial discussion to protect a specific neighborhood and balance that with the need for growth and development." Source: The Christian Science Monitor
==About Ed==
As your trusted Mortgage Consultant & Advisor, I help you understand the process of acquiring a residential, commercial or investment property loan. Communication and integrity are very important to me in earning your trust and your business. I'm your "Mortgage Matchmaker" helping you through the mortgage process and showing you innovations and the latest news you can use in the real estate and mortgage industry.
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