Category: Economic Update

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Economic Update For The Week Ending February 14, 2014 With Syd Leibovitch

economicupdate0214This week the stock market saw another week of positive territory with strong gains seen in all three indices as investors took into account bad weather as an excuse for some soft economic data. While U.S. export prices rose 0.2%  in January, the third straight monthly increase, factory production fell 0.8% in January, the biggest drop in more than 4-1/2 years. The Dow closed out the week at 16,154.39 up 2.28%  from last week’s close of 15,794.08. The Nasdaq was also up, ending the week at 4,244.03 up 2.86% from last week’s 4,125.86 close. The S&P 500 ended the week at 1,838.63, up 2.32% from last week’s 1,797.02 close.

The  10-year Treasury note yield rate rose slightly to 2.75% after ending last week at 2.71%. It was 2.00% a year ago.

Interest rates saw a slight rise this week after several lower weeks. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate up to 4.28% from 4.23% last week.  The 15-year-fixed stayed solid at 3.33% the same as last week’s 3.33%. A year ago the 30-year fixed was at 3.53% and the 15-year was at 2.77%.

 

The latest quarterly report from the National Association of Realtors® shows that the

median existing single-family home price increased in 73% of measured markets, with 119 out of 164 metropolitan statistical areas (MSAs) showing gains based on closings in the fourth quarter compared with the fourth quarter of 2012. Forty-two areas, 26 % had double-digit increases. The national median existing single-family home price was $196,900 in the fourth quarter, up 10.1%  from $178,900 in the fourth quarter of 2012. In the third quarter the median price rose 12.5% from a year earlier. In the West, existing-home sales dropped -12.7% in the fourth quarter, and are -8.1% below a year ago. Lack of inventory remains a concern. The median existing single-family home price in the West jumped 15.5% to $286,200 in the fourth quarter from the fourth quarter of 2012.

 

Credit reporting agency TransUnion released a report showing that the amount of late payments on home loans has hit the lowest level in more than 5 years. Nationwide, 3.85% of mortgage holders were at least two months behind on their payments in the October-December quarter, compared to 5.08% a year before.

 

The California Association of Realtors®reported that the percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in the fourth quarter of 2013 was unchanged from the third quarter of 2013 at 32%, but was down from 48% in fourth-quarter 2012, according to C.A.R.’s Traditional Housing Affordability Index (HAI).  Home buyers needed to earn a minimum annual income of $89,240 to qualify for the purchase of a $431,510 statewide median-priced, existing single-family home in the fourth quarter of 2013.The median home price was $352,450 in fourth-quarter 2012, and an annual income of $66,860 was needed to purchase a home at that price. California housing affordability hit a record high of 56% in first quarter of 2012 but has steadily declined since then. In Los Angeles the affordability index in the fourth quarter of 2013 was 34%, down from the third quarter’s 35% and much reduced from the fourth quarter of 2012’s 50%.

DataQuick reported that home prices fell 3.8% in January compared with December and sales were down -9.9% year over year, though the median price was up 18.4% compared with January of last year. January’s median home price, $380,000, is the lowest since May 2013.  For the six-county Southland area 14,471 new and resale homes and condos were sold last month, a three-year low for January. For Los Angeles alone, 5,308 homes were sold, a -7.4% decrease from January 2013. The median price however rose 20.6% from $340,000 to $410,000.

 There was an article this week in the L.A. Times about home prices stalling. A broker was quoted in the Inland Empire. That is not what is happening here! I doubt it’s happening there either. We definitely need more homes on the market as we are seeing record sales prices! We all should have bought more Real Estate in the last few years. Let’s not be saying the same thing at years end! 

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Economic Update For January 2014 With Syd Leibovitch

economicupdate01312014January saw some corrections in the stock market with the S&P 500 and the Dow posting their biggest monthly percentage decline since May 2012. This was the first January since 2010 with a decline.

The Dow closed out the month at 15,698.85  down -5.3% from last month’s close of 16,576.60 and down -1.14% from last week’s close of 15,879.11.

The Nasdaq fared a bit better, ended the month at 4,103.88 down -1.7% from last month’s close of 4,166.66 and down -0.59% from last week’s 4,128.17 close.

The S&P 500 ended the month at 1,782.59, a drop of -3.56% from last month’s 1,848.36 close and down -0.43% from last week’s 1,790.29 close.

Interest rates dropped during the month. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate dropped to 4.32% from 4.39% last week and 4.53% at the start of the month.  The 15-year-fixed fell to 3.40% from last week’s 3.44% and 3.55% at the start of the month. A year ago the 30-year fixed was at 3.53% and the 15-year was at 2.81%.

Over the course of January 10-year Treasury note yield rate fell after starting the month at 3.0%  It closed out the month at 2.67%  after ending last week at 2.75%. It was 2.02% a year ago.

Los Angeles County’s unemployment rate fell to 9.2% in December down from 9.5% in November and 10.3% in December 2012. This is its lowest point in more than five years. The state rate is 8.3% and the national rate was 6.7% in December.

Consumer confidence has risen again. The Conference Board reported that the consumer confidence index increased to 80.7 this month from a downwardly revised 77.5 in December beating economists’ estimates of a 79 reading. The index is now higher than it was in September before the confidence-eroding government shutdown and is at its highest level since August. However the consumer sentiment gauge from the University of Michigan and Thomson Reuters registered a final reading of 81.2 in January, down from December’s 82.5. In December, consumer spending rose a seasonally adjusted 0.4% which was above analysts’ expectations of a 0.2% gain. Economists are predicting consumer spending will rise at least 2% over the course of the year.

The Commerce Department reported that sales of new U.S. homes decreased -7% to a 414,000 annualized pace in December, lower than was predicted by economists who predicted a 455,000 pace last month. For all of 2013, demand was up 16.4% to 428,000. The median sales price of a new home rose 4.6%  from December 2012 to $270,200. New-housing demand has rebounded from a record-low 306,000 homes sold in 2011, the record peak was 1.28 million in 2005. I would attribute this to very low inventory which is also causing rapid price increases.

The latest S&P/Case-Shiller Home Price Index shows that the 20-city composite rose 13.7% year over year through November 2013 while declining -0.1% from the previous month. Nine out of 20 cities recorded positive  monthly returns  including Los Angeles which saw a 0.1% increase. It is predicted that while housing prices will continue to rise, the pace of the rise will be slower in 2014.

The National Association of Realtors reported that its Pending Home Sales Index dropped -8.7%last month to 92.4, the lowest level since October 2011. Contracts were down 8.8% from the December 2012 levels. It is believed that unusually harsh weather across the country caused the low numbers of potential buyers. The index in the West dropped 9.8%  in December to 85.7, and is 16.0%  below December 2012 and this is attributed to  the lack of inventory in the market.

As I wrote last week we are beginning to see another increase in prices and buyer demand. It appears that 2014 will be much like 2013. The question is: How high can prices go? That’s not a new question. We recently sold a home in Beverly Hills for $15 million that the buyer bought for $475,000 in 1976! A valley home that just sold for $630,000 was purchased for $98,000 in 1980. All my life, with the exception of a few down years every 20 years or so, I have been hearing the question: How high can prices go? The answer is: Who knows! Definitely they are going up. The question is how long. I’d expect these gains to begin to level in a year or so. Anyone who doesn’t buy now will wish in 6 months that they did!

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Economic Update For The Week Ending January 24, 2014 with Syd Leibovitch

economic update 01242014Stocks took a substantial slide this week as the Dow closed the week under the 16,000 mark with both the Dow and S&P 500 taking their worst weekly losses in over a year. There was a substantial selloff on Thursday as investors digested weak Chinese economic data and dealt with currency drops in emerging markets. Some economists are saying that this may be the beginning of a correction in the stock market after last year’s meteoric rise. The Dow closed out the week at 15,879.11 down -3.52% from last week’s close of 16,458.56. The Nasdaq closed at 4,128.17 down -1.65% from last week’s 4,197.58 close. The S&P 500 finished the week at 1,790.29 down –2.63% from last week’s 1,838.70 close.

Interest rates dropped this week awaiting the next meeting of the Fed later this month. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate dropped to 4.39% from 4.41% last week.  The 15-year-fixed fell to 3.44% from last week’s 3.45%. A year ago the 30-year fixed was at 3.42% and the 15-year was at 2.71%. Loans over $417,000 are about 1/2% higher in rate.

The 10-year Treasury note yield rate continues to fall this week ending at 2.75%, after last week’s 2.84% close. It was 1.88% a year ago, but reached 3% in December.

The National Association of Realtors® reported that existing home sales were up 1.0% in December increasing to a seasonally adjusted annual rate of 4.87 million in December from a downwardly revised 4.82 million in November. This is – 0.6%  below the 4.90 million-unit level in December 2012. For all of 2013, there were 5.09 million sales, which is 9.1% higher than 2012. It was the strongest performance since 2006. The national median existing-home price for all of 2013 was $197,100, 11.5%  above the 2012 median of $176,800, and was the strongest gain since 2005 when it rose 12.4%. The median existing-home price for all housing types in December was $198,000, up 9.9%  from December 2012. Distressed homes represented 14% of December sales; they were 24% in December 2012. Total housing inventory at the end of December fell 9.3%  to 1.86 million existing homes available for sale, which represents a 4.6-month supply at the current sales pace, down from 5.1 months in November. I use these numbers to point out that the dramatic price increase we have seen has been similar though out many areas nationally.

 Realtor.com® released its final National Housing Trend Report for 2013 which showed that the median list price for December 2013 was 8.1% above December 2012, the median age of inventory was down by -5.1% and the number of units for sale was essentially unchanged. The total inventory of homes for sale in the United States declined from 1,846,155 units in November to 1,731,017 units in December, while month-over-month inventory rose from 101 to 112 days, and the median list price declined from $197,700 to $194,500. The median price for the Los Angeles-Long Beach MSA rose 28.5% for the year, up to $455,000 while the amount of listings fell by -9.75% to 19,633 and the median age of inventory fell for the year by 12.33% to 64.

DataQuick announced that California foreclosure activity hit an eight-year low in the fourth quarter of 2013 with a total of 18,120 default notices filed on houses and condominiums from October through December, down -10.8% from 20,314 in the previous quarter and down a whopping -52.6%from 38,212 from the same period of 2012. This marks the lowest number of default notices since 15,337 were filed in the fourth quarter of 2005.

The Pending Homes Sales Index for December from the California Association of Realtors® showed that pending sales dropped -25.2%  in December to reach 68.8 down from a revised index of 92 in November, based on signed contracts. Pending sales were down 16.8% from the revised 82.8 index recorded in December 2012. The share of equity sales in December dipped to 84.3%, down from 86.4% in November. Equity sales made up 63.4%  of sales in December 2012. The share of distressed sales to total sales in Los Angeles County was 18% in December 2013. It was 14% in November and 35% in December 2012.

We are seeing activity begin to increase dramatically. Over the last week our open escrow count has began to increase rapidly. We are also seeing what appears to me as another surge in prices. This is not unusual. It is common for prices to increase steadily from February to June or so and then flatten. I’d expect the same in 2014!

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Economic Update For The Week Ending January 10 by Syd Leibovitch

stats01102014The labor market closed out 2013 by adding just 74,000 jobs in December, the lowest number of new jobs since January 2011. However, the unemployment rate fell from 7% to 6.7%, the lowest since October 2008, the Labor Department said, mostly due to a drop of 347,000 in the labor force — the number of Americans working or looking for work. Most economists feel that the low number was an outlier and not an indicator of the future of the job market. By contrast, ADP’s survey showed that businesses added 238,000 jobs in December, the most in 13 months and economists were predicting a jobs report closer to the 200,000 mark.  The Labor Department’s report showed businesses added 87,000 jobs while federal, state and local governments cut 13,000. Job gains for November were revised upward to 241,000 from 203,000. All told the economy gained an average of 182,000 jobs per month in 2013 essentially the same as in 2012 (2.18 million jobs in 2012, 2.19 million in 2012). Congress continues to debate an unemployment insurance bill that would extend emergency unemployment insurance for the 1.4 million Americans.

This disappointing job report caused rates to drop sharply throughout the day. By the end of the day rates dropped by about 1/8% in rate or 1% in loan fee! It was a shockingly low number that took everyone by surprise. The question now is: what does this do to the Federal Reserves announced drawing down of mortgage and bond buying stimulus program? The announced draw down has driven rates up.

Stocks were mixed this week as investors processed the jobs numbers as well as disappointing returns from Sears, and news that the Target credit card data breach was larger than expected. TheDow closed out the week at 16,437.05 down –0.2% from last week’s close of 16,469.99. The Nasdaq closed at 4,174.66 up 1.03% from last week’s 4,131.91 close. The S&P 500 finished the week at 1,842.37 up 0.6% from last week’s 1,831.37 close.

The 10-year Treasury note yield rate spent the week diving back under 3% ending at  2.88%, after last week’s 3.01% close, the highest number seen since July 2011.  It was 1.91% a year ago.

Interest rates remained relatively flat this week as the Market waits the see how the Federal Reserve will move forward with the bond-buying program. Policy makers at the Fed including the newly-appointed Janet Yellen will meet later this month to set the pace for the bond-buying taper. The Freddie Mac Weekly Primary Mortgage Market Survey showed that the 30-year-fixed rate dropped slightly to 4.51% from 4.53% last week.  The 15-year-fixed rose to 3.56% from last week’s 3.55%. A year ago the 30-year fixed was at 3.40% and the 15-year was at 2.66%. Expect these rates to be lower when announced next week due to today’s drop. Jumbo and high balance conforming rates are about 3/8% higher than the Freddie Mac rate.

The new mortgage rules issued by the Consumer Financial Protection Bureau take effect today. The rules are designed to discourage predatory lending. Most lenders have already adopted these practices so there shouldn’t be too much difference however there will be increasing attention paid to a borrower’s debt-to-income ratio; it may become harder for people with higher debt loads to get approved for a new home if they cannot stay below the 43% debt-to-income ratio.

The latest Fannie Mae Monthly National Housing Survey for December shows that 49% of U.S. adults say home prices will rise throughout 2014, up from 43% in December 2012. The survey showed that 33% of homeowners say it’s a good time to sell, up from 21% a year ago. People also believe that home values will rise more this year: 3.2% in December compared to 2.6% in December 2012.
CoreLogic released data showing that U.S. home prices increased 0.1% in November, up 11.8%from a year ago but showing a slowing pace of increase. These figures aren’t adjusted for seasonal patterns.

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Economic Update For The Week Ending October 4

capitol buildingWe are four days into the government shutdown and Congress now has less than two weeks to raise the debt ceiling before the U.S. is unable to borrow money to pay its bills, a move that could lead to a historic default. Most industry analysts still believe this will not occur. Frankly, I am surprised that the stock markets and the economy has held up so will this week. You would think that with such dysfunction in our government and 750,000 government workers furloughed the markets would react more negatively. I fear that if they can not agree to increase the debt limit, which will lead to the first default in U.S. history, the negative impact will be much more severe! I really do not think a default will happen.

Due to the turmoil of the government shutdown stocks continued to act uncertainly. The Dow rose on Friday but had its second down week in a row closing at 15,072.58 down -1.22% from last week’s 15,358.24 close. The Nasdaq eked out another modest gain, closing at 3,807.75, a gain of .69% off last week’s 3,781.59 close, for its fifth straight week of positive numbers. The S&P 500 was down very slightly, closing the week at 1,690.50 just a hair below last week’s 1,691.75 close. The yield rate for the 10-year Treasury note was at 2.66% nearly on par with last week’s 2.64% finish.

ADP reported that businesses added 166,000 jobs in September below the 180,000 number expected by economists. The payroll processor also adjusted its previously reported August figure downward from 176,000 to 159,000. The Labor department did not release its jobs numbers due to the government shutdown. Those numbers are really the numbers that experts look at.

The government shutdown appears to be having an impact on interest rates. Rates were down again this week according to the  Freddie Mac Weekly Primary Mortgage Market Survey. The 30-year fixed rate dropped down to 4.22% down from 4.32% last week. The 15-year rate also fell to 3.29% from 3.37%. These are the lowest averages seen since late June. A year ago this week according to the survey, the 30-year rate was at 3.36% while the 15-year rate was at 2.69%. Jumbo and high balance conforming are running around 4.625% for 30 year fixed and 3.75% for 15 year terms.

For some reason it seems like open escrows have picked up in the last couple weeks. I would not have expected this.

 

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Los Angeles Market Report March 2013

Provides local real estate market statistics for the Los Angeles and Westside areas.

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