The Good, The Bad and The Ugly – Your Market Update for July 1st, 2010
Here are some great links to get you started.
Housing Market Data for Portland, OR
Barry Riholtz (The Big Picture) Interviewed about the Housing Market
House and Senate Pass Unemployment / Homebuyer Tax Credit Extension
Pending Home Sales drop 30% month-over-month
This is about as good (bad?) as it gets, folks.
Rates are back to all-time lows today. The recent dip in stocks has helped drive Mortgage Bond buying, even at rates that would have been laughed at 5 years ago. Don’t expect rates to move much further down, because we can already see diminishing returns setting in. If you have been waiting for the right time to buy and you are positioned to make that leap, now is the right time. The housing market is full of opportunity for buyers, many people are (almost) literally giving away their homes through short sales and even banks are looking at ways to get rid of their foreclosed-upon REO properties.
One of the classic indicators for mortgage rates are treasury bond prices. At these low levels, we see how shaky those ties are, as treasury bonds are still being pushed higher on international and domestic concerns, while mortgage rates seem to have bottomed out.
Holden Lewis over at Bankrate wrote today in his Blog that the Bankrate Rate Survey showed an all-new low for rates. Check out that article (and some shameless promotion of his Twitter account) here.
Do you Feel Stimulated Yet?
We are finally getting to see the “real” state of housing, as reports roll in for purchases during May, the first data we’ve had in a while that was not colored by the new homebuyer tax credit – I’ll give you a hint, it’s not pretty.
When Bloomberg News surveyed 36 different economists, they predicted a month-over-month drop of 4% – 25% in pending home sales. If you read through the links above, you know that the actual drop in pending home sales was 30% – which shows that, even this far into the recession, the calculations that economists use are fairly worthless is predicting reality.
I’m seriously considering writing a book entitled “accurately predicting economic factors in a recession” – it would only be 1 page, and that page would say “keep calculating until you get a negative result, and then double that negative result”.
The long-term effects of the homebuyer tax credit are as-of-yet unknown, but we do know that it has not been a magic bullet for the housing market, and that it has been an excellent source of income for inmates.
Jobs Report Due Tomorrow – Do we even want to know?
Here are the basics. Earlier this week, ADP released their National Employment Report for June, which showed a gain of 13k, much less than the estimate of 61k or May’s 57k gain. Today we see that jobless claims are up to 472k, again worse than estimates and worse than the previous months number.
So, the best data we have shows that we lost about 250,000 jobs from the first phase of the census operation ending. The government will continue to employ a skeleton crew of census workers to complete wrap-up operations, but for most areas, the initial push (and most of the jobs) has ended. This means that to break even, we need to have created a quarter of a million jobs. Its not going to happen.
But, how much are we going to miss? The general consensus that I’ve seen (which is optimistic in my opinion) is only 100k-130k jobs lost. That means that 120k-150k jobs were created to “soak up” some of the census losses. Can we be pleasantly surprised tomorrow morning? Sure we can; its entirely possible that a bunch of phantom jobs will swoop in and boost the market. More likely, we will get a pretty negative report tomorrow and, moving into the weekend, we will hear a lot about double-dipping and economic uncertainty
But where do we go from there?
For the market, we are going into a 3-day weekend. This means a lot of time for sentiment and inertia to build up one way or another. If we go into this weekend after a week of bad news, its likely that we will move into Tuesday riding a wave of uncertainty and see some level of fallout from that.
So, until then, we will cross our fingers that jobs are going to come back and, with them, some sense of stability in the economy.
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Geoff Boyd – PrimeLending – Clackamas, OR
Here’s the biggest problem with VA Loans: most Active Military Personnel and Veterans are not aware that they have access to this EXCELLENT program. The military does not do a great job of educating them about their benefits, so they just don’t know about them. One of the best programs available for Veterans (besides 10% off everything at Home Depot) is the VA Mortgage Loan program, which provides low-cost Home loans for Active Military Personnel and Veterans. So, it often falls to loan officers and agents (REALTORS too!) to educate the consumer. If you haven’t done so yet; check out Part 1 of this series: 
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