Our Real Estate Blog

MARKET RECAP (1/18/2010)

January 18th, 2010 1:25 PM by Lehel S.

MARKET RECAP
A relatively slow week on the national housing-data front meant that the few data releases that occurred were subjected to heightened scrutiny. The data on foreclosures was the lead release, and it was heavily scrutinized.
Unfortunately, the numbers were big and record setting, and big and record-setting numbers always pique interest. On that front, a record 2.8 million properties with a mortgage received a foreclosure notice last year, jumping 21% from 2008 and 120% from 2007, according to RealtyTrac's analysis.
Not surprisingly, the usual suspects topped the list: Nevada , Arizona and Florida continued to post the most foreclosures, with 10% of houses in Nevada getting at least one foreclosure notice during the year. More than 6% of Arizona households received a foreclosure filing in 2009. Florida garnered the third spot with 5.9% of its housing units receiving at least one foreclosure filing.
December's numbers suggest accelerating momentum; nearly 350,000 properties were involved in some foreclosure action, 14% higher than in November. However, a more encompassing picture suggests some improvement: Activity in the fourth quarter of 2009 was actually down 7% from the third quarter.
Whether the bigger-picture trend will hold is debatable. RealtyTrac has its doubts. The company's CEO, James Saccacio, said, “In the long term, a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog.”
The obvious question is, will a growing number of foreclosures (if that is the case) drive home prices lower? It is difficult to say, as all real estate is local. It is likely that the hardest hit burgs in Nevada , Arizona and Florida are skewing the national data. Regionally, the Federal Reserve reported that its New York , Philadelphia , Richmond , Atlanta , Minneapolis and Kansas City districts noted relative weakness at the high end and relative strength at the low end of the market for December.
For anyone interested in picking up a foreclosed property, or any property for that matter, rates are still attractive. Indeed, Bankrate.com reported that mortgage rates eased for a second-consecutive week nationally last week. Lower rates and the end of the holiday season, in turn, produced a surge in refinance demand and an up-tick in purchase demand.
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Economic
IndicatorRelease
Date and TimeConsensus
EstimateAnalysis
Housing Market Index
(January)Tues, Jan. 19,
1:00 pm, et 17 Index Important. Recent drops in new home sales and contracts will weigh on home-builder sentiment.
Mortgage Applications Wed, Jan. 20,
7:00 am, etNone Important. Now that the holidays have past, market watchers want to see an increase in purchase activity.
Housing Starts
(December)Wed, Jan. 20,
8:30 am, et590,000 (Annualized) Important. The expected increase in December starts is an encouraging sign.
Producer Price Index
(December)Wed, Jan. 20,
8:30 am, etAll Goods: 0.1% (Increase)
Core: 0.2%
(Increase)Important. The data suggest producer-induced inflation remains a non-issue.
Leading Indicators
(December)Thurs, Jan. 21,
10:00 am, et0.7%
(Increase) Important. The indicators predict more economic growth through the first half of 2010.

 
Let us Remember the Long Term
Many psychologists have been asking an intriguing question lately: Is too much easily accessed, short-snippet information impairing our ability to think and contemplate? They are speaking, of course, of the torrent of information readily available through the Internet.
There is no definitive answer, at least not yet. However, it is likely that so much information presented so immediately has changed our view of the long term. Before the Internet, the long-term was viewed in years, if not decades. Today, “now” matters more than ever. Problem is so much focus on “now” means that what is happening “now” is often unreasonably extrapolated far into the future.
We have been warning – with predictable regularity – that mortgage rates will rise. We have also been saying that the housing market and employment will improve. We still expect all three scenarios to play out over the next six months. However, six months can seem an eternity in today's market, which makes it difficult to convince someone to act today.
We have been importuning for the past few months or so for people to take advantage of a terrific market for homebuyers and borrowers. We have been fairly steady and accurate on our calls. Yes, mortgage rates and housing prices might have eased, but not much.
Our calls to action were not based on what is occurring at the moment, but what is likely to occur when considering long-term historical data and where we will likely be a few years out – where we see higher employment, higher national housing prices, greater economic growth, and higher mortgage rates. This means today is a very good time to act when considering where the market is likely to be a few years out.

Posted in:General
Posted by Lehel S. on January 18th, 2010 1:25 PM

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