Weekly Market Update for May 7th

Mortgage and Lending with Peoples Home Loans NMLS 13530



Keeping you updated on the market!
For the week of

May 7, 2012




Once again we are compelled to lead with home prices. That's actually a good thing, because home prices are increasingly on the rise and increasingly portend higher prices.

The latest pricing data, from Trulia, show that asking prices rose nationally 1.9 percent in the three-month moving average from February to April. When you look at monthly comparisons, asking prices were up 0.5 percent from March to April.

Of course, asking isn't getting – an asking price isn't the sales price. But we all know that we set prices rationally. It's important not to waste time on an unrealistic asking price. In other words, Trulia's data suggests that prices are rising, and rising strongly, in many markets. This, in turn, suggests that we should expect higher reported sales prices from S&P/Case-Shiller and Corelogic in the near future

Seeing a rising national asking price is nice, but it's really meaningless to any particular market. The price trend in Denver has no bearing on the price trend in Philadelphia or vice versa. The same can be said for most combinations of any two markets.

What we find interesting, though, is the price trends in the most hardest hit areas – such as Phoenix and Miami – are posting double-digit increases. If we've said it once, we've said it numerous times over the past couple years: markets clear. In other words, prices fall to reach a level where they draw sufficient interest to clear inventory. Once inventory clears, prices again start moving higher.

Clearing markets is painful but salutary, and maybe not as painful as our expectations lead us to believe. We mentioned a couple weeks ago what turned out to be the non-issue of an explosion in option ARM defaults that were expected to sink the market. That never occurred.

The foreclosure overhang that everyone has been talking about for the past six months also appears to be a non-issue. CNBC reports that the number of homes entering foreclosure is up for April, but is still down more than 30 percent from a year ago.

Earlier this year, most financial outlets were lamenting impending doom once banks started foreclosing in earnest and dumping properties on the market. Lost in all the rhetoric was the fact that bankers are rational. Short sales, deeds-in-lieu, renegotiation make a difference, and they've been on the rise. Bankers don't want to upset markets, especially through mass REO sales.

The lesson here is that it's rarely the anticipated that upsets market; it's mostly the unanticipated. The distressed property overhang has been anticipated and is being dealt with accordingly and rationally.

What we anticipate, and what we would like to see at this point are more acco mmodating lending standards. The current overly strict standards is the number one hindrance to the recovery in our opinion. To be sure, mortgage lending rates remain at historical lows, and that's good for those able to get the rate. But what we really need are rates and mortgage products to acco mmodate all borrowers needs, not just those with 800 FICO scores.





Date and Time



Consumer Credit

Mon., May 7,
3:00 pm , et

$8 Billion (Increase)

Important. Consumer willingness to borrow reflects increased consumer confidence.

Mortgage Applications

Wed., May 9,
7:00 am, et


Important. Purchase applications are again trending higher, but activity is still being lead by lower-priced homes.

International Trade

Thurs., May 10,
8:30 am, et

$49.7 Billion (Deficit)

Moderately Important. The deficit continues to swell because of rising energy prices.

Producer Price Index

Fri., May 11,
8:30 am, et

All Goods: 0.1% (Increase)
Core: 0.2% (Increase)

Important. Producer prices remained subdued, so there should be no impact on credit markets and lending rates.




It Was Only a Matter of Time

The financial term “catching a falling knife” refers to buying into a market where prices are falling and then continue to fall after buying. There is a reproaching quality to the term, similar to someone wagging a finger and shaking a head.

A recent Reuters article had that reproaching quality. The article pointed out that more than one million Americans who had taken out a mortgage in the past two years are now underwater: The implicit lesson being, according to Reuters, that they should have waited and that they should have put more money down.

The reality is that it's impossible to call a market bottom, but in the long term it's nearly always better to buy into a market after a precipitous drop than after a precipitous rise. In other words, whoever bought or refinanced a house over the past two year has made a smart decision that will work out to his or her advantage over the next five years.

The good thing about real estate is that it's nearly always a long-term investment. Better yet, it's a long-term investment that doesn't continually bombard and upset owners with price updates. That means Reuters attempt to alarm likely fell on deaf ears, and that, too, is a good thing.



Posted by

Michael Dutra

Regional Sales Manager

Peoples Home Loans

Phone: (508) 372-9176

Cell: (401) 486-6894

Email: Mike@TeamDutra.com

Website: www.TeamDutra.com 


Lending in ALL 50 States


NMLS 13530


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Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Mike:This is some good Info for all,keep up the good work,and good luck with your business in 2012,  E

May 05, 2012 10:33 PM #1
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