According to Warren Buffett we've gotten past the economic "Pearl Harbor" and on our way to a very slow recovery. How slow is slow will be up to the labor markets which brings to mind a turtle with a carrot dangling in front of his face. For us the good news is the carrot will contain low inflation and low interest rates for some time to come. He also went on to state the housing market will recover in about a year and the commercial market problem has yet to hit. Here is a riddle for you. What happens every Friday, is tragic, and is only expected to become worse? The answer is regulators shutting down banks, this time in Nevada and Washington. Late last week interest rates dropped back down by an 1/8% and seem to be flat this morning. I don't expect much movements in the market until Friday when we get the release of the Employment Situation. The consensus among economists is to see 50k jobs lost compared with 20k in January. The worsening is a reflection of cold weather, while on the upside there should be some temporary hiring for the 2010 Census.
Over the next few months, Fannie Mae will release a number of Selling and Servicing Guide announcements which means they are going to scrutinize loan quality even more. This will put added pressure on lenders to deliver higher quality loans or face the dreaded penalty of buyback. I honestly don't know how credit standards can get much tighter other then asking a borrower to take a physical fitness test equivalent to joining the NFL. On a positive note Sunnyvale and Poway, Ca. made the top 5 list for home prices on the rise. #1 was Lexington, Massachusetts with a rise of 36%. That's because price per square foot, a measure that helps evenly compare houses against each other, has stayed flat in Lexington this time last year. That suggests that the city's 10% drop in inventory means not only market demand, but demand for lower-price houses.
Are we heading for lower rates, or higher rates? Certainly there is no inflationary pressure, although GDP for the fourth quarter was revised slightly higher, and was the strongest quarter of economic growth in more than six years. But Existing Home Sales decreased over 7% in January and was much weaker than expected. At over 3 million units available for sale, at the current pace this is almost an eight month supply and for the sales in January, 38% were "distressed" sales which include foreclosures. Maybe we'll get another tax related surge in the coming months based on the April 30th date, maybe not. Market activity appears to have improved this weekend as I have several appointment today thanks to you rolling up your sleeves and getting down and dirty over the weekend. I am VERY fortunate to be an increment part of an outstanding team and can't thank you enough for all of your support. Knowing that April 15th is next month, here's a new word for you: "Intaxicaton", which is the euphoria at getting a tax refund which lasts until you realize it was your money to start with.
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