UPDATE On Market: Buy Now or Miss Out

More news on the Mortgage and Real Estate Market!!


With coming Financial Reports monthly reports, Jim Belote provides input on the national market trends.  As you will read, the counter balance of perceived lower sales and lower prices(still happening in some areas but not in all) vs mortgage rates points to an opportune time to "buy, invest, sell" as noted in the summary section.


Though prices are stable in Hampton Roads, I suspect December sales will indicate a slowdown.  Hard to know if it is systemic or a single month due to season and tough weather.  Yet even with different real estate results than national results, the national financial situation will impact us!!!


Pressures on mortgage rates will be global thus impacting markets with declining, stable or rising prices.  As noted in previous blogs, higher rates make even lower priced homes more expensive to the  buyer via higher mortgage payments.


Read below!   Question and comment...we can talk about it!

Keeping you updated on the market! For the week of  January 10, 2011 MARKET RECAP Home prices are the leading concern as we begin the new year. Clear Capital reports that prices dropped 4.1 percent across the nation in 2010, and it was a volatile decline at that. Values declined 5.3 percent over the first 12 weeks of the year, then spiked 9.7 percent through mid-August, only to drop 9.4 percent through year's end. Clear Capital sees prices dropping another 3.9 percent through 2011. Another analytics firm, Altos Research, also reports less-than-encouraging pricing news. According to Altos, home prices dropped 1.6 percent in December, with new listings actually hitting the market lower than that. The good news from Altos is that prices will “likely” increase modestly as we head into the spring season. Shadow inventory remains a concern, but Altos reports that inventories were cut nearly 6 percent in the 10 largest markets in December. The latest spat of negative data doesn't mean we should throw in the towel on price stability, or that buyers should wait for lower prices before taking the dive into the housing pool. The heavy across-the-board discounting is over. Changes in prices going forward will be incremental and specific to local markets – some markets will see additional discounting, some won't. What's more, markets are dynamic: money saved from any additional discounting could easily be offset by mortgage-rate increases. Goldman Sachs expects that the Federal Reserve will end its second round of quantitative easing in June, and that 10-year Treasury yields (a benchmark for 30-year mortgage rates) will climb to 3.75 percent by year-end, and then advance to 4.25 percent by the close of 2012. The historical average spread between a prime 30-year fixed-rate mortgage and the 10-year Treasury note is around two percentage points, which means if Goldman Sachs proves accurate on its prediction, we could be looking at 5.75 percent 30-year loans this year and 6.25 percent loans in 2012. Of course, a forecast is no sure thing. In fact, forecasts are often wrong, but there are mitigating circumstances to consider. A majority of top decision-makers at the Federal Reserve believe that concerns over falling prices have eased and that inflation will gradually rise. Recent data support that belief: employment is improving – ADP Employer Services reports that 297,000 new private-sector jobs were created in December, triple the consensus estimate; manufacturing has expanded for 17-consecutive months; stocks continue to trend up; and rising food, energy, and commodity prices are stoking inflation fears. Our advice remains the same as it has for the past two months: get the mortgage application in, and, unless you have a strong gambler's constitution, lock instead of playing the floating-rate game. We don't think borrowers will be giving up much. Let’s remember that we are still within 50-basis points of a 50-year low. Economic Indicator Release Date and Time Consensus Estimate Analysis Wholesale Trade (November) Tues., Jan. 11, 10:00 am, et 1.1% (Increase) Moderately Important. Strong business activity will lead to stronger activity on the consumer side. Mortgage Applications Wed., Jan 12, 7:00 am, et None Important. Purchase applications are expected to drive mortgage activity going forward. Import Prices (December) Wed., Jan 12, 8:30 am, et 1.2% (Increase) Important. The uptrend in prices is raising inflation concerns. International Trade (November) Thurs., Jan 13, 8:30 am, et $39 Billion (Deficit) Moderately Important. More exports are offsetting higher import prices to shrink the trade deficit. Producer Price Index (December) Thurs., Jan 13, 8:30 am, et All Goods: 0.8% (Increase) Core: 0.3% (Increase) Important: Producer costs are rising at an increasing rate and could pressure consumer prices. Consumer Price Index (December) Fri., Jan. 14, 8:30 am, et All Goods: 0.4% (Increase) Core: 0.2% (Increase) Very Important. Consumer-price inflation has returned, limiting the chances of further interest-rate reductions. Let's Not Forget the Other Half Actually, it's much more than half. Most media accounts are peppered with sad stories of people who are under water or who are facing foreclosure because of job loss or because they simply took on too much house and too much financing. The fact is that the vast majority of mortgagors have a job and are current on their payments. Many of these folks are underwater, to be sure, but most are not, so there is still plenty of opportunity for plenty of people to buy, invest, or sell. While there is currently some slack in demand, reduced prices and low interest rates should keep home purchases attractive. The market is now simply waiting on a robust recovery – most likely lead by job growth – to spur consumers into taking advantage of very affordable conditions.