Meet Bellevue

Bellevue Real Estate, Mortgage, and Economy 7/12/10

Posted on 12 July 2010

Here is the Bellevue Real Estate Report for July 12, 2010.

Last week I reported that on Friday, the President signed into law a bill that extends to September 30 the closing deadline for claiming the federal homebuyer tax credit. We want to add he signed a second bill that retroactively reinstates the National Flood Insurance program, which expired May 31, until September 30. This news is important for home buyers who are shopping in areas where flood insurance is necessary to get a mortgage. It would obviously behoove these buyers to close before September 30.

National average mortgage rates hit new lows again last week, as reported in Freddie Mac’s weekly Primary Mortgage Market Survey. However, the Mortgage Bankers Association revealed that it was refinancing homeowners who were principally taking advantage of these rates, making up the lion’s share of last week’s loan applications. Incidentally, with these heightened levels of refi activity, the effective rate of all outstanding mortgages was just under 6% in the first quarter of 2010, the lowest on record since 1977.

DOUBLE DIP DOUBLE TALK… Lately it’s been hard to ignore all the talk about threats of a “double-dip” recession. So last week it was refreshing to see The Wall Street Journal identify all this talk as “exaggerated fears of a double-dip recession.” They pointed out: “Growth may be slowing from its first-quarter peak…but most indicators point to continued global growth.” Investors quickly came to their senses, stopping the recent stock market slide and sending all major indexes up for the week by 5% and more!

There certainly was adequate support for a more positive economic outlook. The “continued global growth” the Journal mentioned was backed by the latest forecast from the International Monetary Fund. The IMF increased its estimate of 2010 GDP growth from 4.2% to 4.6%. Some fretted that the ISM Services Index dropped a tad from its May reading. But levels above 50 signal expansion, so June’s 53.8 shows our non-manufacturing sectors are still experiencing healthy economic growth.

Initial jobless claims came in better than expected for the week, dropping by 21,000. Retailers reported June same store sales, which weren’t the debacle some had predicted, with Macy’s and Nordstrom actually coming in with some pretty good numbers. Finally, the Q2 corporate earnings season begins this week and first estimates are that profits will be up 34% overall vs. last year. Does any of this sound like a dip to you?

For the week, the Dow ended UP 5.3%, to 10198.03; the S&P 500 was UP 5.4%, to 1077.96; and the Nasdaq was UP 5.0%, to 2196.45.