Economic Commentary-

It is now December. Therefore, it is right that we start looking at the first of the year. We are not trying to downplay the data released in December. However, for example, the employment numbers tend to be skewed by seasonal factors and even though there are adjustments, this year the adjustments may be hard to analyze because of the rapidly changing environment. Witness the precipitous drop in the weekly unemployment claims reported the last week in November. The volatility of the markets the Friday after Thanksgiving was due to the Dubai debt crisis and certainly it did not help that many participants were on the sidelines for the Holiday.

Come the first of the year we will have a whole new ball game. By the end of January and early February, we will have retail sales figures that measure Holiday spending. We will also have the first reading on the economy in the last quarter of the year. Finally, we will have the first "post-Holiday" employment report. If we are indeed recovering and not in danger of a double-dip, these numbers will be critical. Meanwhile, the downward revision in the third quarter economic growth was widely expected. The fact that it was partially due to a paring down of inventories actually bodes well for future growth. Of course, this brings us back to the future. If the markets are to stay strong as they have for most of this year, rates will have to stay low as they have for all of this year. Right now rates on home loans are at record lows. And we must show that the economy will stay in positive territory but not overheat so that rates do not rise.

The Markets- 

Rates moved down to record lows in the past week. Freddie Mac announced that for the week ending November 25, 30-year fixed rates averaged 4.78%, down from 4.83% the week before. The average for 15-year fixed fell to 4.29%. Adjustables were mixed with the average for one-year adjustables staying at 4.35% and five-year adjustables decreasing to 4.18%. A year ago 30-year fixed rates were at 5.97%. "Long-term rates eased for the fourth consecutive week to record levels," said Frank Nothaft, Freddie Mac vice president and chief economist." Rates for 30-year fixed loans tied an all-time record low while both 15-year fixed and 5-year ARMs broke their corresponding records. Rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year’s peak set in mid-June, which shaves roughly $100 off the payments on a $200,000 mortgage. House prices are slowly beginning to firm now. For instance, annual house price declines slowed for the sixth consecutive month in September, down only 3 percent, and represented the smallest decline since February 2008, according to the Federal Housing Finance Agency’s purchase-only house price index. Moreover, 11 of the 20 major metropolitan areas experienced monthly house price increases between August and September, based on the S&P/Case-Shiller 20-city house price indices." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages
Updated November 27, 2009

Real Estate News - 

Baby boomers considering where they’ll spend their retirement say they prefer single-story living in suburbia, according to a survey conducted by the National Association of Home Builders and the MetLife Mature Market Institute. The survey of owners and renters 55 and older identified some interesting preferences: One-third would choose a close-in suburb; another third prefer an outlying suburb; 25 percent desire a rural community; and 9 percent want to live in the center city. About 79 percent want a single-story home, 15 percent prefer a two-story, and 6 percent want a split level. Most respondents say they’d like their next home to be the same size as their current one. Source: MetLife Mature Market Institute

Homeowners in the United States were more optimistic about the future of the housing market last quarter than they have been in 18 months, according to the Zillow Q3 Homeowner Confidence Survey. According to the Seattle-based company’s study, 41 percent believe their home’s value will increase in the next six months. An additional 43 percent say their home’s value will remain the same, with only 17 percent expecting their home’s value to drop. “Homeowners are clearly confused about the housing market, and with good reason,” said Stan Humphries, Zillow’s chief economist. “Home values in different parts of the country have shown varied performance in the third quarter." Source: DSNews

Housing industry consultant John Burns says low rates and the home buyer tax credit, plus the availability of FHA loans – “the new subprime,” as he calls it – will combine to keep housing transaction levels at “near normal” through Spring 2010. First-time homebuyers are about half of the market, he says, while the expansion of the housing tax credit will get senior buyers “off the fence” and buying retirement properties. What would have happened if Congress hadn’t extended the tax credit? “I think we would see housing 

Baby boomers considering where they’ll spend their retirement say they prefer single-story living in suburbia, according to a survey conducted by the National Association of Home Builders and the MetLife Mature Market Institute. The survey of owners and renters 55 and older identified some interesting preferences: One-third would choose a close-in suburb; another third prefer an outlying suburb; 25 percent desire a rural community; and 9 percent want to live in the center city. About 79 percent want a single-story home, 15 percent prefer a two-story, and 6 percent want a split level. Most respondents say they’d like their next home to be the same size as their current one. Source: MetLife Mature Market Institute

Homeowners in the United States were more optimistic about the future of the housing market last quarter than they have been in 18 months, according to the Zillow Q3 Homeowner Confidence Survey. According to the Seattle-based company’s study, 41 percent believe their home’s value will increase in the next six months. An additional 43 percent say their home’s value will remain the same, with only 17 percent expecting their home’s value to drop. “Homeowners are clearly confused about the housing market, and with good reason,” said Stan Humphries, Zillow’s chief economist. “Home values in different parts of the country have shown varied performance in the third quarter." Source: DSNews

Housing industry consultant John Burns says low rates and the home buyer tax credit, plus the availability of FHA loans – “the new subprime,” as he calls it – will combine to keep housing transaction levels at “near normal” through Spring 2010. First-time homebuyers are about half of the market, he says, while the expansion of the housing tax credit will get senior buyers “off the fence” and buying retirement properties. What would have happened if Congress hadn’t extended the tax credit? “I think we would see housing crater,” Burns said. Burns clients include home builders, lenders, and equity investors. Source: The Wall Street Journal