Saturday, December 30, 2006

Good news for a potential rise in the housing market!!

The U.S. Commerce Department this week reported that sales of new homes increased in November, the third month of increases in the last four months "which is a sign that this year's drop in housing might be ending." The Commerce Department reported that sales of new single-family homes rose 3.4 percent in November to a seasonally adjusted annual rate of 1.047 million units. This was a positive sign, as economists had been expecting only a 1.1 percent gain.

--Information from the Associated Press.

Thursday, December 14, 2006

Home Buying News Minneapolis Minnesota! Interest Rates Remain Unchanged

Are you buying a home in Minneapolis, Minnesota? Here's some good news...


The Fed has just announced they have decided to remain in a "paused" mode and will NOT be making any changes to the Fed Funds Rate at this time. But as expected - Fed President Jeffrey Lacker still disagreed with the vote, and said another .25% hike was needed.

Because the Fed Funds Rate influences many Adjustable Rate loans, as well as being tied to the Prime Rate - the Fed's decisions can impact you greatly, especially if you are one of the millions of Americans who have an Adjustable Rate Mortgage, Home Equity Line of Credit, credit cards, or any one of the other debts impacted by the Fed Funds Rate or Prime. So for now, a continued "pause" is good news.

The Fed's main charge is to control inflation - not just for us, but for our future generations as well. And although inflation remains above the Fed's "comfort zone", they appear willing to be patient a bit longer, and see if their previous string of seventeen rate hikes will be enough to help inflation settle back down. In fact, the Fed said that it expects inflation to moderate in the coming months.

Just wanted to keep you posted on the breaking news - if you have any questions or if I can be of any service to you or your clients, please don't hesitate to call or email me right now!

(612) 280 - 5046

Wednesday, December 13, 2006

Has housing hit the bottom?

The U.S. housing market appears to be emerging from its recent travails and the "worst may well be over," former Federal Reserve Chairman Alan Greenspan was quoted as saying on Friday.
"I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out," Greenspan said at an event in Calgary, Canada, sponsored by BMO Financial Group, according to a transcript BMO made available.
"There is a good chance of coming out of this in good shape, but average housing prices are likely to be down this year relative to 2005. I don't know, but I think the worst of this may well be over," he added.
Applications for U.S. home mortgages jumped in the latest week bolstered by increases in refinancing and new home purchases as long-term rates decreased, according to data from the Mortgage Bond Association.
Greenspan, the former Fed chief's comments suggest a more sanguine view of the U.S. housing market than that offered by current Fed chairman Ben Bernanke, who said last week that the housing market was currently undergoing a "substantial correction."

Some bond market participants in London said on Monday that Greenspan's remarks helped drive bond prices down further and yields higher, and obscured concerns surrounding the news that North Korea said it safely and successfully conducted an underground nuclear test over the weekend.
U.S. bond markets were closed on Monday in observance of the Columbus Day holiday.
Greenspan said the fall of communism, not sharp interest rate cuts by the Fed, was behind the housing boom in the early part of the decade. Cheap labor flooding into the West after the fall of the Berlin Wall had a disinflationary effect, causing bond yields to fall and house values to rise, he said.
On another topic, the former Fed chair said that China is unlikely to quickly adopt a flexible exchange rate regime as it transitions to a market economy from a centrally planned one.
Many economists and policy-makers believe China keeps the value of its yuan currency low to make Chinese exports cheaper on world markets, fueling export-led growth but contributing to China's large trade surplus with the United States.
"The greatest fear of the central government of China is insurrection and so they refuse to revalue their currency in the hopes of continued surging job growth," Greenspan said.
He said the "threat" of U.S. trade protectionism had dissipated since U.S. Sens. Charles Schumer and Lindsey Graham had decided not to push for a vote on their bill to place high tariffs on Chinese imports into the United States.
"Schumer never thought he would get the congressional support he did," Greenspan said of the New York Democrat. "He was only trying to pressure China to revalue (the yen), not to actually slap a 27.5 percent tariff on Chinese goods."

Monday, December 04, 2006

Homebuyers think for themselves despite dismal news about buying homes

WASHINGTON, D.C. - The nation's prospective home buyers may derive some of their information on the housing market from the news media, but at the end of the day the things that matter far more when they are deciding whether to make a purchase include the price of the new home, mortgage interest rates and their housing needs, according to a new nationwide survey commissioned by NAHB.
"While the majority of the households we polled indicated that they found the media a reliable source of information on the housing market, what they read in the newspaper, saw on television or heard on the radio was no substitute for actually going out and shopping the market," said Thomas Riehle, a partner in RT Strategies, which conducted the research for NAHB.
"When people are actually thinking about buying a home, they are driven by the details of how it will impact their family budget and lifestyle and contribute to their long-term wealth, and that gives them a much closer perspective on the market than what can be conveyed in news coverage," Riehle continued.
When asked to rate the importance of several factors that might affect their decision to buy or not to buy a home, survey respondents put the home's price at the top of the list, with 80% citing its significance.
That was followed by: the potential for the new home to appreciate in value, 71%; the prospect of selling their current home at a fair price, 70%; the level of mortgage interest rates, 69%; and personal life changes, such as a new job or an addition to the family, 60%. On a list of eight items, news stories on real estate market conditions ranked second from the bottom, with 28% saying that it was an important factor behind their decision to buy.
When further asked about the influence of the news media on their decisions of when to buy a home, only 19% of the respondents said it played an important role; 23% indicated that it had some importance on their decision; and 7% said it played a minor role. A full 48% said it had no influence whatsoever.
Sixty-one percent of the survey participants said that the media is "sometimes trustworthy" as a source of information on the housing market and 5% said that it is "always trustworthy." Twenty percent and 8%, respectively, said it is "seldom trustworthy" and "never trustworthy."
"The media provides an important service by giving consumers the big picture of what is occurring in the housing marketplace, even the big picture in their local markets," said NAHB President David Pressly, a home builder from Statesville, N.C. "But despite that, local reporting can't convey the information that consumers consider the most when they are looking for a new home.
"The fact is that even as the national market is slowing down from the unsustainable pace of the past few years, there are sizable numbers of families who need new homes. And with a wide selection of new homes to choose from, with mortgage rates remaining near historic lows and with incomes and jobs continuing to grow, the opportunities are extremely favorable for buyers in today's marketplace."
Home builders are working down their existing inventory of homes fairly quickly and the current slowdown in production is expected by NAHB economists to have run its course by the middle of 2007. From that point forward, the industry is expecting to see a good balance in the marketplace between supply and demand, setting the stage for a healthy and sustainable trend for housing, supported by a growing U.S. economy.