Bellevue Real Estate, Mortgage, and Economy 10/11/10
Posted on 11 October 2010
Here is the Bellevue Real Estate Report for October 11, 2010.
With all the conflicting opinions about the housing market, we found this recently published article in the Wall Street Journal to be quite helpful. It’s title says it all, “10 Reasons to Buy a Home”.
Last Monday, the National Association of Realtors (NAR) reported its August Pending Home Sales index UP 4.3% over the prior month. But this measure of signed contracts on existing homes was down 20.1% compared to a year ago. The NAR’s current economic forecast looks to a 6.4% drop in existing home sales for 2010 compared to 2009, putting the volume at 4.82 million, and the median existing home price UP 0.2%, to $172,900. This is a smaller drop and a greater price rise than previously predicted.
On the new homes front, the NAR projects sales off 13.4% for the year to 325,000, although housing starts will be UP 11.3% while the new home median price will dip 0.4% to $215,000. But the NAR projects new home sales UP a whopping 28.9% for 2011 and 28% in 2012, with the median price UP 2.4% next year and 4.9% the year after that. Finally, the President last week signed a bill that keeps in place today’s higher loan limits for Fannie Mae and Freddie Mac guaranteed loans and FHA multifamily programs.
DOW AT 11 THOU… Stocks went up and down all week as investors on Wall Street tried to figure out if it was smarter to be betting on the economy or against it. The economic data coming from the government and corporations pointed opposite ways, but UP was the direction that ultimately prevailed. As a result, the Dow crossed over the 11,000 threshold for the first time since May, as all three major market indexes showed gains for the week and were up from 4.5% to almost 6% for the year. For the week, the Dow ended UP 1.6%, to 1106.48; the S&P 500 was also UP 1.6%, to 1165.15; and the Nasdaq was UP 1.3%, to 2401.91.
It was nice to see Pending Homes Sales ahead for the month, but the 20% drop year-over-year indicates that the housing market still awaits real recovery. Then the week ended with a disappointing September employment report showing payrolls down by 95,000 for the month. This was all due to heavy layoffs in government jobs, as the private sector showed a gain of 64,000 jobs, which was OK, but a bit less than expected. The unemployment rate held at 9.6%
On the good news side, the ISM Services index rose above expectations in September, showing slow but still steady expansion in the non-manufacturing sector of the economy. There were also better-than-expected earnings reports from Alcoa, Yum! Brands, and Costco, with PepsiCo’s Q3 numbers in line with expectations. But some observers felt the biggest push to the upside was investors’ increasing certainty that the Fed will move soon to stimulate the economy with QE-2, its second round of quantitative easing. Of course, negative economic numbers increase chances that the Fed will act sooner.
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