MARKET RECAP
The news is understandably slow the week between Christmas and New Year's Day. The most notable release was last Friday's news on new home sales, which rose to an annualized rate of 315,000 units in November, a 1.6-percent gain over October.
To be sure, we have a long way to go until we reach the normalized construction rate of 1.5-million units per year. Nevertheless, we expect the new-home market to gain pace in 2012. After all, there are only 158,000 units in inventory. Even at the current slow sales pace, this equates to a record low six-month supply
Over the past three years, new-home construction has fallen far below historical norms and also below the level needed to keep pace with population growth. The fact is our country gains roughly 2.7 million people and one million new households annually.
You might not see supply as a problem. We are all familiar with the glut of distressed properties. Indeed, Bank of America expects eight million distressed homes to come to market over the next four years. These homes, we've so often heard, will continue to depress new home construction.
We view B-of-A's outlook with a skeptical eye. There is a likely prospect that many of these distressed properties will simply go away. Destruction is too frequently overlooked in many supply projections. A house is not a permanent structure. Many are destroyed by fire, wind and flood each year. Many more are lost through simple decay and abandonment. Based on U.S. Census data, 300,000 homes are lost annually. That number will surely rise in years to come.
In short, the math – low inventory plus more households minus more home destruction – suggests to us a rebound in new-home construction. We are not alone in this contention, either. Wells Fargo projects that housing starts will continue to rise each year for the next five years before reaching once again the normalized construction rate of 1.5-million units annually by 2017.
Of course, projections are one thing, betting on those projections is another. Here, we see an encouraging trend. Big money is starting to wager on housing. The Wall Street Journal reports that many large hedge funds are investing billions in housing-related investments. Other investors have followed suit. Shares of homebuilders are up 30 percent over the past three months, making them one of the best performing investments in the market.
Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
Construction Spending(November)
Tues., Jan. 3,10:00 am, et
No Change
Important. Residential spending is accelerating and contributing more to economic growth.
Mortgage Applications
Wed., Jan. 4,7:00 am, et
None
Important. Markets are anticipating increased purchase activity to start 2012.
Factory Orders(November)
Wed., Jan. 4,10:00 am, et
2.5% (Increase)
Important. Growing order momentum is indicative of increased economic activity.
Employment Situation(December)
Fri., Jan. 6,8:30 am , et
Unemployment Rate: 8.7%Payrolls: 150,000 (Increase)
Very Important. Job growth is accelerating, which is encouraging for housing, but less so for low interest rates
Up For A New Year
As we approach the end of the old year nearly all of us stop to ask, “How will the new year unfold?” Of course, none of us know with any certainty the answer to that question, but it can be insightful (and fun) to ponder. So, how will 2012 unfold, at least as it pertains to the housing and mortgage markets?
Both markets will obviously be influenced by economic growth, which, in turn, will spur job growth. We see a pick up in economic growth and job growth in 2012.
The economy has been growing at a sluggish rate for too long now. The United States is unique in that Americans tire of pessimism quicker than most other cultures, and then we do something about it. In our opinion, rising consumer confidence points to a lot of pent-up demand that is waiting to bust loose, and will bust loose in 2012.
A pick up in demand, in turn, necessitates new hires. In fact, a recent survey by CareerBuilder.com found that nearly one in four employers is keen to add new permanent full-time employees. These employers are simply waiting for a clear sign the coast is clear. We think they will get that sign in the first quarter of 2012.
Greater economic activity will obviously impact the housing market. We see accelerated sales volume in both the new and existing home markets. We also expect to see prices stabilize in the first half of the year, and then appreciate perceptibly in the second half.
As for the mortgage market? This is much more difficult to call. The Federal Reserve has stated it intends to hold rates low through 2012. However, all it takes are a few persuasive signs that the economy is back on track, and the Fed could easily backtrack from its stated goals. All we can say is that we would be much less surprised to see mortgage rates 50 basis points higher six months from today than 50 basis points lower.
Article Courtesy of Patti Wilson, Senior Loan Officer, Mutual of Omaha Bank
(239) 357-0739
patti.wilson@mutualofomahabank.com
Showing posts with label Sanibel Island Beaches. Show all posts
Showing posts with label Sanibel Island Beaches. Show all posts
Monday, January 2, 2012
Monday, October 17, 2011
Market Recap Week of October 17, 2011
MARKET RECAP
We've reported frequently on the encouraging data on home prices. The most recent encouraging data comes courtesy of Zillow, which shows that home prices inched 0.1 percent higher in August, with the average home price moving to $172,600. Zillow's data also show that the national foreclosure rate dropped to 9.2 homes out of every 10,000 homes, down from 10.9 homes out of every 10,000 in 2010.
Unfortunately, the good vibes on pricing and foreclosures were tempered by a warning that foreclosures will accelerate once the controversial robo-signing imbroglio passes. In fact, Zillow believes foreclosure inventory will pressure home prices and that prices won't bottom until 2012 “at the earliest.”
It's possible we could see national average and median home prices fall. Locally, prices could just as easily fall, stagnate, or rise. In fact, a rise might be more in the offing for many local markets. After all, national data is skewed by a few regions – Nevada , Arizona , Central Florida and Central California . Overall, we still see prices firming and rising in many markets, though that trend might not be reflected in national numbers.
As for mortgage rates, we can say categorically that they have been rising nationally and locally since last Friday, thanks in part to an employment report that showed the economy created more jobs in September than most economists had expected. In many markets, rates were up 20 basis points on the 30-year fixed-rate loan. This shouldn't come as a surprise; the yield on the 10-year US Treasury note – the foundation for long-term mortgages – has risen 35 basis-points over the past 10 days.
To be sure, mortgage rates could reverse course and return to the long-term down trend, but there is a real danger to a strategy predicated on returning to the long-term trend in a market that has been trending higher; that is the obvious: the short-term trend might not reverse.
Another danger is supply and demand. Falling mortgage rates do stimulate demand, but if supply isn't rising at an accommodating pace, there is no guarantee that an ultra-low mortgage rate will be filled. Loans, like all good and services, are rationed by price. If you can get a higher price for your product, you get it.
In short, if someone is satisfied with his rate, the best strategy is to ignore the daily vicissitudes and lock. Regret is a tough emotion to overcome, particularly in a market that is showing signs of wanting to move higher.
Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
Industrial Production(September)
Mon., Oct. 17,9:15 am, et
0.2% (Increase)
Important. The rising production trend is encouraging for the economic outlook.
Producer Price Index(September)
Tues., Oct. 18,8:30 am, et
All Goods: 0.4% (Increase)Core: 0.1% (Increase)
Important. Producer prices remain subdued and non-inflationary.
Home Builders Index(October)
Tues., Oct. 18,10:00 am, et
14 Index
Important. Activity remains at multi-decade lows, though some markets are showing increased activity.
Mortgage Applications
Wed., Oct.19,7:00 am, et
None
Important. The uptick in purchase applications could signal improved October home sales.
Consumer Price Index(September)
Wed., Oct.19,8:30 am, et
All Goods: 0.3% (Increase)Core: 0.1% (Increase)
Important. Consumer prices are pushing the Federal Reserve's upper-range target and could turn inflationary.
Housing Starts(September)
Wed., Oct.19,8:30 am, et
590,000 (Annualized)
Important. Starts remain at a three-year depressed level.
Existing Home Sales(September)
Thurs., Oct. 20,10:00 am, et
4.9 Million (Annualized)
Important. After surging in August, sales are expected to pull back to the longer-term trend.
Mortgage Market Debate
It's no secret that a lot of mortgage lending is in government-backed loans. Nationally, Fannie Mae, Freddie Mac, and the FHA back nine in 10 new mortgages. The federal government is looking to pull back and see if more private investors and lenders can be lured into the market.
There are legitimate concerns with a prospective federal pull back. There is the possibility of reduced available credit, thus leading to fewer sales and lower home prices. We've already seen some reduction in volume in higher priced homes when limits on loans backed by Fannie and Freddie declined at the beginning of October.
There is also the concern that sellers will find that fewer potential buyers qualify to purchase their properties. Less liberal down payments and lower loan limits could also hamstring trade-up buyers who want to tap their home equity as a down payment for their new residence.
Here's the conundrum: If we went to return to a more market-driven lending environment, we have to attract private investment, which means rates would have to rise. Private lenders and investors require a greater return than public sources of funds. It's worth noting, though, that many private lenders are flush with money they could put to work. What's more, private lenders and investors will add diversity to the market, which it is currently lacking.
The point is, we can see the mortgage market changing. We can't say whether it will be a net positive in the short term, but we think it raises the uncertainly level enough for borrowers to seriously consider taking advantage of the mortgage market as it is today.
This Mortgage Matters Compliments of Patti Wilson,
Senior Loan Officer Mutual of Omaha Bank.
Email to: patti.wilson@mutualofomahabank.com
We've reported frequently on the encouraging data on home prices. The most recent encouraging data comes courtesy of Zillow, which shows that home prices inched 0.1 percent higher in August, with the average home price moving to $172,600. Zillow's data also show that the national foreclosure rate dropped to 9.2 homes out of every 10,000 homes, down from 10.9 homes out of every 10,000 in 2010.
Unfortunately, the good vibes on pricing and foreclosures were tempered by a warning that foreclosures will accelerate once the controversial robo-signing imbroglio passes. In fact, Zillow believes foreclosure inventory will pressure home prices and that prices won't bottom until 2012 “at the earliest.”
It's possible we could see national average and median home prices fall. Locally, prices could just as easily fall, stagnate, or rise. In fact, a rise might be more in the offing for many local markets. After all, national data is skewed by a few regions – Nevada , Arizona , Central Florida and Central California . Overall, we still see prices firming and rising in many markets, though that trend might not be reflected in national numbers.
As for mortgage rates, we can say categorically that they have been rising nationally and locally since last Friday, thanks in part to an employment report that showed the economy created more jobs in September than most economists had expected. In many markets, rates were up 20 basis points on the 30-year fixed-rate loan. This shouldn't come as a surprise; the yield on the 10-year US Treasury note – the foundation for long-term mortgages – has risen 35 basis-points over the past 10 days.
To be sure, mortgage rates could reverse course and return to the long-term down trend, but there is a real danger to a strategy predicated on returning to the long-term trend in a market that has been trending higher; that is the obvious: the short-term trend might not reverse.
Another danger is supply and demand. Falling mortgage rates do stimulate demand, but if supply isn't rising at an accommodating pace, there is no guarantee that an ultra-low mortgage rate will be filled. Loans, like all good and services, are rationed by price. If you can get a higher price for your product, you get it.
In short, if someone is satisfied with his rate, the best strategy is to ignore the daily vicissitudes and lock. Regret is a tough emotion to overcome, particularly in a market that is showing signs of wanting to move higher.
Economic Indicator
Release Date and Time
Consensus Estimate
Analysis
Industrial Production(September)
Mon., Oct. 17,9:15 am, et
0.2% (Increase)
Important. The rising production trend is encouraging for the economic outlook.
Producer Price Index(September)
Tues., Oct. 18,8:30 am, et
All Goods: 0.4% (Increase)Core: 0.1% (Increase)
Important. Producer prices remain subdued and non-inflationary.
Home Builders Index(October)
Tues., Oct. 18,10:00 am, et
14 Index
Important. Activity remains at multi-decade lows, though some markets are showing increased activity.
Mortgage Applications
Wed., Oct.19,7:00 am, et
None
Important. The uptick in purchase applications could signal improved October home sales.
Consumer Price Index(September)
Wed., Oct.19,8:30 am, et
All Goods: 0.3% (Increase)Core: 0.1% (Increase)
Important. Consumer prices are pushing the Federal Reserve's upper-range target and could turn inflationary.
Housing Starts(September)
Wed., Oct.19,8:30 am, et
590,000 (Annualized)
Important. Starts remain at a three-year depressed level.
Existing Home Sales(September)
Thurs., Oct. 20,10:00 am, et
4.9 Million (Annualized)
Important. After surging in August, sales are expected to pull back to the longer-term trend.
Mortgage Market Debate
It's no secret that a lot of mortgage lending is in government-backed loans. Nationally, Fannie Mae, Freddie Mac, and the FHA back nine in 10 new mortgages. The federal government is looking to pull back and see if more private investors and lenders can be lured into the market.
There are legitimate concerns with a prospective federal pull back. There is the possibility of reduced available credit, thus leading to fewer sales and lower home prices. We've already seen some reduction in volume in higher priced homes when limits on loans backed by Fannie and Freddie declined at the beginning of October.
There is also the concern that sellers will find that fewer potential buyers qualify to purchase their properties. Less liberal down payments and lower loan limits could also hamstring trade-up buyers who want to tap their home equity as a down payment for their new residence.
Here's the conundrum: If we went to return to a more market-driven lending environment, we have to attract private investment, which means rates would have to rise. Private lenders and investors require a greater return than public sources of funds. It's worth noting, though, that many private lenders are flush with money they could put to work. What's more, private lenders and investors will add diversity to the market, which it is currently lacking.
The point is, we can see the mortgage market changing. We can't say whether it will be a net positive in the short term, but we think it raises the uncertainly level enough for borrowers to seriously consider taking advantage of the mortgage market as it is today.
This Mortgage Matters Compliments of Patti Wilson,
Senior Loan Officer Mutual of Omaha Bank.
Email to: patti.wilson@mutualofomahabank.com
Wednesday, July 7, 2010
Sanibel Beaches June 2010 Attendance Breaks All Previous Years' Levels
Today the City of Sanibel announced that the June 2010 attendance at the public beaches on Sanibel exceeded all previous years' monthly activity for June. Sanibel City Manager Judith Zimomra reported that "Our beaches are pristine and in excellent condition...and our summer visitors are here." The public parking lots at Sanibel's beaches generated $132,822 for the period between June 1 and June 30th, 2010.
Zimomra went on to state, "These numbers are very important to us inasmuch as the unseasonable cold winter deflated beach parking revenues for First Quarter 2010 by 24%, which was approximately $82,100. "Activity at Sanibel's beaches is a major economic indicator for our community and our region" Zimomra concluded, "Thus, we are committed to maintaining this great asset to world-class destination standards."
The City of Sanibel maintains 24.5 miles of shoreline, of which 11.75 is direct Gulf of Mexico shoreline and can be accessed from 7 public parking lots. All funds generated from the public beach parking lots are utilized exclusively for maintaining the beaches, Fishing Pier, dune vegetation, trails, bathrooms and parking lots. In addition to the revenue generated at the public parking lot, the City receives an annual grant from the Lee County Tourist Development Council to maintain the Beaches.
Sanibel's natural beaches provide habitat for a number of listed and endangered species including least terns, snowy plovers, gopher tortoises and sea turtles. In addition to being maintained in a natural state, Sanibel's beaches are noted for receiving the following recognitions:
2010 Trip Advisor Travelers' Choice Destination Awards - #6, Top 10 Beach & Sun Destinations in the United States
Fodor's Travel - #1, Best Beaches for Seashells
CNN Travel - #1, Best Beaches for Shells
Travel + Leisure Magazine - Top Shelling Beach
Travels.com - #1, Best Florida Beaches for Kids
Women's Health Magazine - Best Beachcombing
Florida Beaches Guide - Florida Best Beaches for Weddings
Florida Beaches Guide - Florida Best Snowbird Beaches
PlacesAroundFlorida.com - Best Shelling Beach
Shermans Travel - #10, Top 10 Family Beaches
2008 Conde Nast Traveler Reader's Choice Award - #10, Island Destination - North America
Click here to view a map of all Sanibel's public beaches and parking lots.
Zimomra went on to state, "These numbers are very important to us inasmuch as the unseasonable cold winter deflated beach parking revenues for First Quarter 2010 by 24%, which was approximately $82,100. "Activity at Sanibel's beaches is a major economic indicator for our community and our region" Zimomra concluded, "Thus, we are committed to maintaining this great asset to world-class destination standards."
The City of Sanibel maintains 24.5 miles of shoreline, of which 11.75 is direct Gulf of Mexico shoreline and can be accessed from 7 public parking lots. All funds generated from the public beach parking lots are utilized exclusively for maintaining the beaches, Fishing Pier, dune vegetation, trails, bathrooms and parking lots. In addition to the revenue generated at the public parking lot, the City receives an annual grant from the Lee County Tourist Development Council to maintain the Beaches.
Sanibel's natural beaches provide habitat for a number of listed and endangered species including least terns, snowy plovers, gopher tortoises and sea turtles. In addition to being maintained in a natural state, Sanibel's beaches are noted for receiving the following recognitions:
2010 Trip Advisor Travelers' Choice Destination Awards - #6, Top 10 Beach & Sun Destinations in the United States
Fodor's Travel - #1, Best Beaches for Seashells
CNN Travel - #1, Best Beaches for Shells
Travel + Leisure Magazine - Top Shelling Beach
Travels.com - #1, Best Florida Beaches for Kids
Women's Health Magazine - Best Beachcombing
Florida Beaches Guide - Florida Best Beaches for Weddings
Florida Beaches Guide - Florida Best Snowbird Beaches
PlacesAroundFlorida.com - Best Shelling Beach
Shermans Travel - #10, Top 10 Family Beaches
2008 Conde Nast Traveler Reader's Choice Award - #10, Island Destination - North America
Click here to view a map of all Sanibel's public beaches and parking lots.
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