Bellevue Real Estate, Mortgage, and Economy 3/22/10
Posted on 22 March 2010
Here is the updated Bellevue Real Estate Report for 3/22/10.
February housing starts were down 5.9%, to an annual rate of 575,000 units, but this was higher than consensus expectations and almost all the drop came from multi-family units. Single-family homes were off only 0.6% in February and are still up 39.8% over their low a year ago. Meanwhile, new building permits for February fell 1.6%, to an annual rate of 612,000, but that was also better than estimates and permits are still up an estimated 11.3% from a year ago. The experts all thought we’d see a MAJOR drop in home building given the record snow storms on the East Coast. But we didn’t. The Mortgage Bankers Association (MBA) estimates we’ll see 694,000 housing starts in 2010, a 20% hike from 2009 numbers.
At last week’s meeting, the Fed confirmed it would end its purchasing of mortgage-backed securities, as scheduled, on March 31. This buying program has helped keep interest rates historically low the past year. Even though the Fed will stop buying, they have no plans to sell the bonds they’ve bought, which may have put pressure on rates to go up. The MBA currently predicts rates to rise very gradually for the rest of the year and keep rising in 2011 and 2012. But let’s face it. If mortgages get into the 6% range, which is NOT being forecast until NEXT year, they would still be at a very attractive level which should in no way slow the housing recovery. Buyers who want to take advantage of today’s low mortgage rates AND the homebuyer tax credit should note they need to sign a contract by April 30 and close by June 30.
NOW THAT’S MORE LIKE IT… Investors felt good enough about the economy to push stock market indexes up for the week, landing them at their highest levels in over a year. There was a modest drop in the markets on Friday, with India’s central bank hiking rates a bit and continued concern over Greek debt. But, hey, stocks had already gone up eight days in a row by that point. For the week, the Dow was UP 1.1%, to 10741.98; the S&P 500 went UP 0.9%, to 1159.90; while the Nasdaq headed UP 0.3%, to 2374.41
Tuesday the Fed didn’t touch the rate and their statement still predicted “exceptionally low levels of the federal funds rate for an extended period.” Corporations and investors like cheap money as much as you and I, so this kept stock prices heading up. We also had nice quarterly earnings from FedEx, Nike and Guess, plus General Electric’s forecast of an earnings turnaround at GE Capital, their financial division.
Both the Consumer Price Index and the Producer Price Index came in below expectations, showing inflation remains in check. Initial unemployment claims met estimates. Industrial production, capacity utilization and the Philadelphia Fed Index of manufacturing all surpassed estimates. It’s interesting that in the last two weeks, the economic data has outperformed what you would have expected, given the harsh winter weather. Payrolls, retail sales, manufacturing measures and housing starts all beat expectations. Some observers now expect a payroll increase in March. Let’s hope they’re right.
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