Real Estate Update for week ending June 14, 2013 All real estate news was positive again this week. Data Quick reported the May home sales median price increases. Year over year Los Angeles County median prices were up 31% from May 2012. Ventura county was up 12.4% and Orange county up 21%. Southern California was up 25.7%. The number of homes sold was the highest May sales since 2006 and the 2nd highest May ever recorded. CAR also issues these numbers and the May figures should be out in the next week or so. CoreLogic, a foreclosure data company, reported that 850,000 homeowners that were under water on January 1 had positive equity by the end of the first quarter due to rising prices. Data quick reported that Notices of Defaults, the first filing notice for foreclosures, were down 10.2% in May from April. It looks like the foreclosures are really winding down. For the 6th straight week rising interest rate fears dominated the news. All eyes are on the Federal Reserve and other central banks around the world trying to figure out when and how they will trim and stop their stimulus programs. These programs were designed to bring down interest rates to encourage people to borrow. Making money “cheap” was designed to get people borrowing and spending. In the U.S. alone the Federal Reserve has initiated 3 separate quantitative easing programs over the past 5 years. The current program, QE3, includes purchases of treasury bonds and mortgages which bring down long term rates. This is the first time that this has ever been done, so nobody knows what will happen as the Fed and other central banks stop these programs. On May 1 mortgage rates were close to 3% on 30 year conforming loans and the 10 year treasury bond yield was 1.66%. On May 3 a story broke that with so much positive growth in corporate earnings, jobs, real estate, investments, etc, the Fed and other central banks around the world were considering finding a way to end these programs. Rates began going up on that day. On May 22 in an attempt to calm the markets Fed Chairman, Ben Bernanke testified in front of congress that the Fed would taper off the program in a way that would not harm the economy. He further stated that this would not begin soon and gave no timing for when he would begin drawing down the mortgage and bond purchases. Obviously, that did not calm the markets as today the 30 year conforming loan rate is about 4% and the 10 year Treasury bond yield is 2.14. (it was all the way up to 2.25 Wednesday) The stock market dropped this week on fears of uncertainty with the ramifications of these easing programs ending. The DOW ended the week at 15,070, down 1.2%. The Nasdeq was down 1.3% and the S&P was down 1% for the week. There was really no negative news or low earnings! Just the uncertainty of how high interest rates will go, and how soon, as well as how higher borrowing costs will affect earnings and the economy has caused markets to worry. Fannie Mae reported that the conforming 30 year loan rate went from 3.91% last week to 3.98% this week and the 15 year conforming rate loan went from 3.03% to 3.10%.
Posted on: Mon, 17 Jun 2013 06:02:23 +0000
Trending Topics
© 2015