Interest Rates
Retail mortgage rates remained in the same narrow range they have been in for the last few weeks at around 5%. More on rates…………In a speech on February 23 former head of the Federal Reserve Alan Greenspan said that the 10 year Treasury yield is the “one statistic that I watch every morning and afternoon” and the National Association of Business Economists (NABE) forecasts that the Fed will increase its benchmark rate by .25% to .50% within six months.

When Rate
This week 4.95
1 Month Ago 4.97
1 Year Ago 5.03
2 Years Ago 6.13

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.
Source: Federal Reserve Statistical H.15.

Mortgage Industry Update
• The Treasury Department said this week that thru February there have been 170,000 permanent loan modifications or about 15.5% of those eligible. In addition another 91,800 have been approved by lenders but are just waiting to be accepted by homeowners. There are also 835,000 in trial modification.
• In mid February the President announced a plan to help underwater homeowners in the five states where the foreclosure crisis has hit the hardest. The states are CA, FL, MI, NV and AZ. The state’s Housing Finance Agencies must submit a proposal to the Treasury Department for using the funds. The program targets reducing loan balances, second liens and people out of work.
• The state of Pennsylvania has a program that provides emergency assistance funds to homeowners with financial hardships, job loss, medical issues or even divorce. The program will loan up to $60,000 for maximum 36 months for homeowners in their primary residence. Last year several thousand people took advantage of the program administered by the state’s Housing Finance Agency. The program was started in 1983.

Good News
• In a Reuter’s poll of economists most believe the economy will grow at a 2.9% rate in 2010 which is less than fourth quarter 2009 growth. One benefit will be that the Fed will likely keep rates low.
• The Bloomberg Professional Global confidence Index fell to 53.8 in March from 54.9 in February but the index was over 50 for the eighth consecutive month. Anything over 50 indicates optimism for the economy.
• Retail sales increased .3% in February according to the Commerce Department but the prior two months figures were adjusted downward. February forecast was for a decline of .2%.

Statistics of Interest/Concern
• The National Federation of Independent Businesses (NFIB) said its small business optimism index was 88 in February down slightly from January and below 90 for the 17th consecutive month.
• The Commerce Department said wholesale inventories fell by .2% in January compared to the forecast of an increase of .2%.

Foreclosure Headlines
• RealtyTrac reported there were 308,524 foreclosure notices in February down 2.3% from January but still up 6% from February 2009. Nevada led the nation with one foreclosure per 102 homes Arizona was second with one per 163 homes.
• A Washington Post story today estimated that 5 to 7 million properties are at risk for foreclosure and the number could grow as more homeowners become distressed. For example, Chase estimates while foreclosures fell steadily last year the bank expects an increase this year that could possibly double in fourth quarter 2010. The story cited RealtyTrac’s data that shows 75% of homeowners more than 90 days delinquent are prime borrowers and most of them have not made a payment in six months.
• A group called the Mortgage Investors Coalition (MIC) recently submitted a proposal to Congress to overhaul the refinancing of underwater mortgages by writing down loan balances on first and second mortgages. The plan proposes that the loan to value be capped at 96.5 and that a new FHA loan be used to provide new financing.

Job Market Headlines
• Initial weekly jobless claims were 462,000 forecast was for 460,000.
• The four week moving average for weekly initial claims was 475,500 up 5,000 from previous week.
• Continuing jobless claims were up 37,000 to 4.5 million with the states reporting that an additional 5.6 million were collecting extended unemployment benefits.
• The jobless rates increased in 30 states during January down from 43 in December according to the Labor Department.
• According to the Department of Labor at the start of the recession 146.2 million Americans were working compared to 138.6 million as of February 28, 2010. If employers added 29,000 jobs per week starting March 11 it would take five years to get back to 146.2 million.
• Manpower a global employment services firm said U.S. employers are slightly less willing to hire workers in the coming quarter than three months ago.

Comments/Observations
The Center for Budget & Policy Priorities released a report saying that states took in $87 billion less in revenue during the period from October 2008 to September 2009 than the previous 12 months. This was the steepest decline in state revenues on record. Also, Arizona announced this week it was borrowing $250 million from the federal government to replenish its unemployment fund so it can pay its unemployment claims.

If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.

The city of Kansas City’s school district to avoid filing bankruptcy is closing almost half of its schools due to a lack of funding and declining student population.

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Video Comments - Phoenix median home prices by zip code through January 2010

Phoenix home PRICE trends - Continued flat

Despite January usually being the weakest month of the year for home prices, prices remained generally flat in January. In some areas the price trend is clearly up.

After spending most of my Saturday on it, my Queen Creek real estate page looks great (and is accurate) now.

My zip code real estate pages (sometimes called mash-ups) take a bunch of data from different sources and put it all together for easy analysis. But as I add information, the complexity increases. And as the complexity increases, making changes becomes tough.

Yesterday I had to change a lot of HTML code in this website, change a lot of the Perl code used to generate some of the zip code specific features of this website, dive into MySql and make hand changes to 85242/85142 data (which I hate to do because anytime you open it up you have the potential to screw up the entire database), and change the code in ChartDirector that creates my custom graphs. Even after the zip code changed last July, home sales would still show up for the old zip code, 85242, so I added some error checking code to my programs to convert those 85242s to 85142s. For my e-newsletter, I had to create a new email list in my Lyris program for 85142 and copy all the subscribers from the 85242 newsletter to the new 85142 newsletter list program.

Whew! I think I got everything right but I wouldn’t be surprised at all if a few bugs are hiding out there. Let me know if you find any bugs.

And by the way, prices look stable in Queen Creek 85142.

(Well, that blew most of my Saturday, now I need to work on sending out my weekly newsletters on Arizona real estate.)

When Rate
This week N/A
1 Month Ago 5.01
1 Year Ago 5.15
2 Years Ago 6.03

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.
Source: Federal Reserve Statistical H.15.

Mortgage Industry Update
• The Making Home Affordable Refinance Program has been extended until June 30, 2011. This program allows a homeowner to refinance up to 125% of the home’s value. However, note that very few lenders will go to 125%.
• Fannie Mae reported fourth quarter loss of $15.2 Billion down slightly from its third quarter loss of $18.9 Billion. The loss resulted in negative equity which triggered a request to the Treasury Department for $15.3 Billion so the firm could stay technically solvent.
• In another announcement Fannie Mae said it would start purchasing up to 200,000 loans per month that are more than four months delinquent. The total could be between $40 and $50 Billion per month. They say this will help reduce their expenses.
• Barney Frank the House Financial Services Committee Chairman said Friday that he agrees with the Administration’s decision to fully support Fannie Mae and Freddie Mac bondholders. He went on to say that he did not want the bondholders to think they were without risk however unlikely that might be.
• Freddie Mac has indicated it will stop buying interest only loans on September 1, 2010.

Good News
• The Labor Department reported that productivity in fourth quarter was a higher than expected 6.9% and for all of 2009 was up 3.8% the biggest annual increase in 7 years.
• Consumer spending increased .5% in January according to the Commerce Department. This increase following December’s increase of .3% and 1.7% for the fourth quarter 2009.
• The ISM Services Sector Index for February rose to 53.0 from January’s 50.5. February’s reading was the highest since December 2007. Readings above 50 indicate expansion in the service sector which makes up about 70% of the economy.

Statistics of Interest/Concern
• According to the NAR pending home sales declined 7.6% in January.
• The Commerce Department said construction spending was down .6% in January following decline of 1.2% in December. January was the third monthly decline in a row.
• The ISM Manufacturing Index fell to 56.5 in February from 58.4 in January. Anything below 50 indicates contraction in the manufacturing sector. The index had been above 50 for seven consecutive months.

Foreclosure Headlines
• Last November 30th the government announced the Home Affordable Foreclosure Alternatives (HAFA) Supplemental Directive 09-09 to help address the foreclosure crisis. The program outlines how borrowers can do short sales or Deed-in-lieu to avoid foreclosure. This program applies to primary homes for loans originated before January 1, 2009. There are some additional qualifying criteria that both borrowers and lenders must meet. The program is effective April 5, 2010 but some servicers may have already signed up. This is another option for homeowners who are struggling with their mortgage. To explore this option you should contact your lender. Finally, if you would like a copy of the Directive please let me know.

Job Market Headlines
• February jobless rate came in at 9.7% unchanged from January according to the Labor Department.
• Initial weekly jobless claims were down 29,000 to 469,000 in line with forecast.
• The four week moving average for jobless claims was down 3500 to 470,750.
• Continuing jobless claims came in at 4.5 million down 134,000 from previous week. Note that this does not include the 5.9 million receiving extended unemployment benefits.
• The outplacement firm Challenger, Gray and Christmas reported that February planned layoffs declined 41% to 42,090 the lowest number since June 2006.

Comments/Observations
There is no question jobs will be important to the full recovery of the economy. So understanding the challenges in getting people back to work is important. Recently in Kiplinger’s Personal Finance Magazine it was reported that if 100,000 new jobs are created each month for the remainder of 2010 the economy will grow at 3% and the unemployment rate will be 9.5%. While meaningful for the folks getting back to or finding work the fact is these numbers only get us back to break even. During the current recession the economy has lost 8.5 million jobs give or take. At 100,000 per month how long will it take to get all of those folks back to work?

A report from Realpoint on the commercial real estate market shows continued weakness in the market. In their report for January delinquency increased to $45.94 Billion up from December’s $41.64 and well above a year ago when it was $10.79 Billion. The distressed loan category (90 days plus delinquent) increased to $7.42 Billion in January and up some $27.95 Billion from a year ago.

This week two Federal Reserve Officials came out with somewhat contradictory comments highlighting the difficulty in predicting the future for interest rates. Kansas City Fed President Hoening told CNBC the Fed should raise rates sooner rather than later and his view is “raising rates is not creating tightening but removing a substantial easing policy”. Also in a CNBC interview Dallas Fed President Fisher said “I expect we’ll see low interest rates for some time”.

In January, 52.1 percent of the houses and condos that resold had been foreclosed on in the prior 12 months, virtually the same as 52.2 percent in December and November but down from 65.9 percent in January 2009. Such foreclosure resales hit a high of 66.2 percent of all homes resold last March.

When you take away all the support from the housing market, the underlying demand for housing is a lot weaker than we thought,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We clearly pushed some demand forward, and there wasn’t that much demand to pull forward anyway. The housing recovery is going to be very, very slow.

He’s talking about the national housing market, not Arizona, but it’s good to know what’s going on elsewhere.

Nevertheless, if you were planning to buy an Arizona home soon, BUY NOW and get the tax credit. To qualify, you have to have the home under contract by the end of April and some other requirements.

Located near the Camelback Corridor, Arcadia and the Biltmore, and a few doors from the hippiest corner in Phoenix, La Grande Orange, this fixer-upper on half an acre is waiting for your creativity to become the dream house your family will always remember.

3945 E. Roma Ave. Phoenix, 85018

• $299,000
• Half acre
• Fixer-upper
• Not a short sale
• Not bank owned

Bird’s eye view map

Here are all current listings on near half-acre lots (18,001-24,000 square feet) within one mile. This home is priced $97,000 less than the second least expensive home shown which is also a fixer-upper! Potential!

Click to see all current MLS listings and homes sold in last 6 months on half-acre lots within one mile of this home.

Ask your Realtor to show you the home or call me for more information at 480-463-4475. John Wake, Associate Broker, HomeSmart Real Estate

Total (since June 2006) ….. 804,482
Average per Day ………….. 1,077
Average Visit Length ……… 2:53
This Week ………………….. 7,537

Page Views

Total (since June 2006) ….. 1,930,859
Average per Day ………….. 2,467
Average per Visit …………. 2.3
This Week ………………… 17,268

Stats

I consider any week with over 7,000 visits a big week. We’re in the middle of the high season for Arizona home sales so a lot of people are looking online for Arizona homes for sale and information on Arizona real estate.

Home Sale News

A major source of the traffic to this website comes from my email newsletter, Home Sale News. I have been publishing Home Sale News weekly since 2001. If you want to see all home sales in your zip code, you can subscribe to the free weekly e-newsletter at HomeSaleNews.com.

That Home Sale News website looks muy 2001. It needs a complete makeover for sure but I spend so much time each week with the technical requirments of sending out the newsletters that after that I don’t have time to do a remodel.

Here is a sample issue. (The newsletter itself needs a makeover too, obviously. That would be kinda fun to do. Just gotta find the time.)

Food for thought: Clearly one of the challenges to economic recovery is getting people back to work. You may want to check out the Job Market Headlines below. Note the reference to the 318,000 people who are no longer getting extended unemployment benefits. Did these people find jobs or, more likely, are they still looking for work and are no longer getting unemployment benefits? Gentle readers these jobless statistics are for one week.

Interest Rates
This week’s retail mortgage rates remained at the 5% level and maybe a tick below. Some analysts are now saying that the Fed’s support of mortgage rates which ends in March may not mean higher rates in the near term. This is due they say to the markets calm response to the increase in the discount rate (what the Fed charges banks for emergency loans) and the pull back of some other liquidity measures. Some argue that the Fed’s exit from the mortgage market is already “priced in” and the Fed has indicated that it might start the support again if warranted. On the other side of the equation is the Fed has not indicated when it will start selling the billions of dollars of MBS it currently has on its books. The good news may be that demand is down at the moment but that could lead to higher rates at some point as the Fed attempts to attract buyers of its MBS.

When Rate
This week 5.05
1 Month Ago 4.98
1 Year Ago 5.07
2 Years Ago 6.24

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.
Source: Federal Reserve Statistical H.15.

Mortgage Industry Update
• Freddie Mac reported a larger than expected fourth quarter 2009 loss of $6.5 Billion up from last year’s loss of $5.4 Billion. For all of 2009 the mortgage giant lost $21.6 Billion much less than its 2008 loss of $50.1 Billion. The company ended the year with $4.4 Billion in net worth which means for now it will not need a capital infusion from the government/taxpayers. Since it was put into receivership in September 2008 (essentially taken over by the government) it has received $50.7 Billion in tax payer funding.
• Rates on jumbo loans have declined in recent months from high’s of well above 7% to just below 6% recently says Informa Research Services. However, the qualifying and down payment requirements while slightly better still remain stringent.

Good News
• Friday the Commerce Department reported fourth quarter revised GDP was 5.9% up slightly from the previous number and the highest increase in six years. However, inside the numbers the consumer portion shrank from 2% to 1.7%. Consumer spending makes up about 70% of GDP.
• The Case Shiller U.S. Home Price Index declined .2% in December and declined 3.1% for all of 2009. The trend in downward home prices is improving as indicated by Q1 2009 decline of 19%, Q2 2009 decline of 14.7% and Q3 decline of 8.7%.
• The Federal Housing Finance Agency (FHFA) said Thursday that home prices in the U.S. declined 1.5% in 2009.
• The National Association for Business Economists (NABE) says it expects the economy to “remain firmly on track” and grow at 3.1% in both 2010 and 2011.
• The FDIC said that in the fourth quarter 2009 bank profits were $914 million compared to fourth quarter 2008 losses of $37.8 Billion.

Statistics of Interest/Concern
• New home sales fell to a record low in January according to the Commerce Department. Sales of newly built homes declined 11.2% to the lowest level since 1963. It was the third consecutive monthly decline.
• Existing home sales fell 7.2% in January but year over year they actually increased 11.4% according to the National Association of Realtors (NAR).
• The Commerce Department said that durable goods (ex transportation) fell .6% in January after posting an increase of 2% in December. The forecast was for an increase of 1%.
• According to Real Capital Analytics across the country at the end of 2009 there were 340,000 apartments units worth about $28 Billion in delinquency or foreclosure.
• According to the East Valley Tribune there are 70,000 developed vacant lots in the Phoenix metro area but only 8,000 new homes were sold in 2009. In December there were only 479 new homes sold in the metro area.
• The Conference Board’s Consumer Confidence Index fell sharply in February to 46.0 from January’s 56.5. This was the lowest level in 10 months.

Foreclosure Headlines
• Fiserv and Moody’s Economist.com forecast home prices will decline another 6% in 2010 and be mostly flat in 2011. The reason Economy.com founder Mark Zandi says is foreclosures. The latest estimate for foreclosures in 2010 is 4.5 million this after 2.8 million in 2009.
• First American Core Logic reported that 11.3 million or 24% of homeowners with mortgages were upside down at the end of 2009. Nevada led all states with 70% and Arizona was second with 51% of homes upside down.

Job Market Headlines
• Initial weekly jobless claims were up 22,000 to 496,000 the forecast was for 455,000. Note: Since the recession began in December 2007 payrolls have declined every month except for November 2009.
• The four week moving average of initial claims was 473,750 up slightly.
• Continuing jobless claims were up slightly to 4.617 million.
• The number of people getting extended unemployment benefits declined by 318,000 to 5.5 million.
• About 2.7 million jobless workers will lose unemployment benefits by the end of April and 6.3 million have been unemployed for more than six months.
• A Gallup report released this week said that almost 20% of the U.S. workforce lacked adequate employment in January (government data says it is 16.5%) and was struggling to make ends meet.
• The number of jobs needed to absorb new entrants into the labor force (population growth and immigration) has been estimated between 100,000 and 125,000 per month. This would neither add nor subtract from the work force it would simply keep pace with normal economic conditions. The National Association for Business Economists (NABE) forecasts about 50,000 jobs will be added per month in the first quarter of 2010 and will average just over 100,000 for the remainder of 2010. The current estimate for unemployed is 15 million and underemployed 8 million.

Comments/Observations
The data suggests that the housing market remains fragile even with the extension of the buyer tax credit and continued historical low mortgage rates. Don’t be fooled by the strong GDP number as consumer confidence struggles, the job market is a mess and the outlook for more foreclosures is ugly. Policy makers need to focus their attention on creating programs that generate jobs and soon because time is our enemy.

If you have any mortgage or related questions please contact me at burt@gosfm.com.