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Bellevue Real Estate, Mortgage, and Economy 1/8/12

Posted on 08 January 2012

Here is the Bellevue Real Estate Report for January 8, 2012:

Interest Rates Make Small Improvements: The same story lines continue to dominate the conversation. US economic activity continues to show some improvements while uncertainty in Europe keeps a lid on sentiment. This is keeping rates low and the stock markets in a holding pattern. The market analysts we subscribe to continue to suggest that further improvements in interest rates are going to be minor. They site technical factors as well as the continuing improvements in many economic measures here. We will see if that changes at any point where news out of Europe gets much worse. Regardless of the various momentary influences on US markets, particularly the bond and mortgage markets, the 10 yr note continues to find resistance when it falls below 2.00%, recently at 1.95% it is holding. Most technical analysts remain of the opinion that rates will stay low. That sentiment won’t last much longer unless the yield continues to decline which means if rates do not continue to go down they will likely start go move up.

Industry News
State of the Economy:
Last Week in Review

“Workin’ nine to five. What a way to make a livin.’” Dolly Parton. And with last week’s Jobs Report showing that unemployment has reached three-year lows, that’s something more people have been able to do lately. Read on to learn more about what’s happening in the labor market…and with home loan rates.
On Friday, the Labor Department reported that 200,000 jobs were created in December, with 212,000 private job gains offsetting modest losses in government jobs. Adding to the positive spin of the report was the Unemployment Rate falling to 8.5% from a previously reported and upwardly revised 8.7% reading.
While people being removed from the labor force are skewing this unemployment number to some degree, it’s important to note that the U-6 unemployment rate dropped a few ticks as well, to 15.2%. This number includes ALL unemployed individuals, including those “marginally attached” to the labor force, who are either ‘discouraged’ and haven’t sought work recently, as well as those folks working part-time who really desire full-time jobs.
Overall the Jobs Report was a modestly positive reading on the labor market. We still have 5.6 million people unemployed for 27 weeks or more, and that number is little changed this month. But the big takeaway today is that the trend is improving.
The other big takeaway is that bad news out of Europe helped balance out the good Jobs news here at home…allowing Bonds and home loan rates to recover from their initial negative reaction to the Labor Department’s report. The Euro is continuing to be weighed down by rising concern on member countries’ ability to get their deficits in order and their debt in manageable position.
The bottom line is that the problems in the Eurozone are vast, complicated, and without easy solutions…so it will take a very long time for clear resolution. And during times of global uncertainty, money will flow into the relative safe haven of the US Dollar and US Bonds – including Mortgage Bonds, which home loan rates are tied to. This means that home loan rates should continue in their sideways trend and remain near historic lows, making now a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.
Data from Europe Shows Some Improvements, but there hasn’t been much change yet in the sentiment that Europe’s debt issues have been alleviated in the least. The potential change in some of the thinking is that global economies won’t be hurt as badly has had been believed based on recent reports in the US and a few counties in Europe. Presently markets are somewhat less fearful, but it is a fragile belief that doesn’t have a lot of substance yet.

Banks in Europe still barely hanging on; They are hoarding assets that they may need as collateral if they have to borrow from the European Central Bank. Each day we get news from the region, an ongoing and frustrating mess that is nowhere near a resolution.

Real Estate Miscellaneous Stats:

Market Analysts See Real Estate Recovery by 2013: While there is still negativity around Real Estate nationwide, there are some that think we are close to being out of the woods. Case Shiller reports that home values have dropped 31% since their peak in 2006 nationwide. A Bloomberg News report quotes Scott Simon of PIMCO saying values will likely drop another 7%. The good news is this makes housing very cheap. Zillow reports that housing declines in 2011 were the smallest in 4 years. This is consistent with most analysts views of a recovery. They predict appreciation will return in 2016 and will be at 3% through that time. Freddy Mac’s chief economist predicts a 1% decline in 2012 and 2% appreciation in 2013. Existing-home sales rose to an annualized 4.42 million in November, the highest in 10 months after figures were revised, the National Association of Realtors said this past week. Moody’s Analytics Inc. expects home prices to drop about 3 percent in 2012 as more foreclosed homes go on sale.

Loan Program Of The Week. Foreign National Loan: Guild Mortgage has access to lenders with programs for foreign national home buyers. These are buyers that have no residency status in the US, no us income, do not have a Social Security Number or no US based assets. These programs require a 50% down payment but generous loan limits are available. Qualification includes getting a TIN, documenting income and source of assets via translated documents. Call for more details.

Bellevue Real Estate Report