Bellevue Real Estate, Mortgage, and Economy 6/6/11
Posted on 06 June 2011
Here is the Bellevue Real Estate Report for June 6, 2011:
QUOTE OF THE WEEK…”Obstacles don’t matter very much…if you want to do a job bad enough, you’ll find a way to get it done.”–Jack Youngblood, Pro Football Hall of Famer
INFO THAT HITS US WHERE WE LIVE… Last Tuesday another housing market obstacle appeared in the form of Standard & Poor’s Case-Shiller Home Price Index for March. Prices for 20 major metro areas dropped 0.8% for the month and were down 3.6% from a year ago. These numbers had some folks claiming the double dip in housing prices had arrived. But Case-Shiller’s longer term data reveals that in their 20 measured metros, home prices are still UP 38.2% since January 2000. This shows that in real estate, you have to look at the long term picture, just like you do with your 401K. You can see a chart of the info here:
http://www.nytimes.com/interactive/2011/05/31/business/economy/case-shiller-index.html?emc=eta1#city/IND20
National average home prices are also misleading. First, the national average rarely matches the price situation in a specific local housing market. Beyond that, distressed sales at substantial discounts make up a portion of that national average price. In fact, when distressed sales are excluded, home prices are off just 0.5% year-over-year in April, according to data aggregator CoreLogic. If that’s a double dip, you’d need a magnifying glass to see it. Finally, the Mortgage Bankers Association reported purchase loan demand unchanged from the prior week and up 7.6% from a year ago. But MBA researchers do expect mortgage rates to rise the last three months of this year and continue to increase gradually through 2012.
DOWN ONCE AGAIN…We watch the stock market to see how professional investors view the economy going forward. Well, their response to this week’s disappointing economic data left the Dow recording its fifth straight weekly loss. The highlight was the May Employment Report, with a way weaker than expected growth of just 54,000 new jobs for the month and the unemployment rate ticking up to 9.1% thanks to an expanding workforce. We also had a lower than expected ISM Manufacturing Index. Both reports were showing increases, but at a much slower rate, which was upsetting to Wall Street. For the week, the Dow ended down 2.3%, at 12,151; the S&P 500 was down 2.3%, at 1,300; and the Nasdaq was down 2.3%, at 2,733.
On a more encouraging note, the ISM Services Index increased more than expected in May. This is the larger sector of the economy and contributes the overwhelming bulk of U.S. jobs. In addition, the final reading for Q1 Productivity showed it rising at a 1.8% annual rate, an upward revision from previous estimates. Economists are debating whether the May slowdown will continue, or is just a monthly aberration brought on by the economic effects of the disaster in Japan and the severe weather in this country. New jobless claims were down for the week, although still above 400,000, while continuing claims dipped to 3.71 million.
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