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When it rains it pours

By
Real Estate Broker/Owner with Prudential California Realty/Gem Mortgage

 

 

Rainy Day

 

Long Beach, Ca.  Well, I guess when it rains, it pours.  Unemployment figures not withstanding, see below.  I still believe that during such interesting times that there are always opportunities that arise for both first time home buyers and investors alike.  Imagine a 4 bedroom, 3 bath home selling for $275000.00 in Anaheim.  How about newer 6 bedroom homes in Corona selling in the mid $300000.00 range.  Lucrative opportunities are everywhere to be found.  Lets be realistic, home buyers concerned about their jobs are taking a lets wait and see attitude; that is healthy.  However, remember that with the government selling so many bonds to stimulate the economy that the interest for mortgages has begun to move up.  This is going against the trend the government would like to see, it shows that the Fed can only really influence short term rates.

The unemployment rate reached the highest level since 1992 and payrolls tumbled in January, with millions more likely to lose their jobs before a stimulus and emergency-lending programs temper the U.S. economys freefall.  The jobless rate rose to 7.6 percent from 7.2 percent in December, the Labor Department said today in Washington. Payrolls fell by 598,000, the biggest monthly decline since December 1974. Losses spanned almost all industries, from construction and manufacturing to retailing, trucking, media and finance.  "We are in the middle of a very severe, a violent, collapse in activity and it could go on for months," James Galbraith, an economics professor at the University of Texas in Austin, said in an interview with Bloomberg Television. The report will likely diminish objections "that somehow the presidents recovery plan is too large and should be trimmed back."

The market is currently digesting the Unemployment data, which (this should be no surprise) points to a grim economy.  January's sharp drop in employment brings job losses to 3.6 million since the start of the recession in December 2007," Commissioner of Labor Statistics Keith Hall said in a statement, and "about half the decline occurred in the last three months." Manufacturing was down 207,000, the worst since October 1982, construction industries were down 111,000 jobs, and retail businesses cut another 45,000. Normally, an economy as bad as this would push rates lower, but instead, due to the supply and demand concerns, we find the 10-yr back up 2.95% and 30-yr mortgages either unchanged or worse by .25. We have to pay for the debt and people who buy it are demanding a higher rate of return.

Kirk Mulhearn is a Long Beach Real Estate Broker and professional mortgage planner and can be reached at: 562/965-0054

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Comments (1)

Michael A. Caruso
Surterre Properties - Laguna Niguel, CA

Hi Kirk,

The rain is a nice change I think...On the subject of unemployment, I can't believe that the unemployment rate is the worst it's been in 34 years!

Michael

 

Feb 06, 2009 05:22 AM