Market Commentary for the Final Week of 2015!

 

Week two of the year-end holiday season has only one monthly economic report scheduled for release that is relevant to mortgage rates in addition to a couple of potentially influential Treasury auctions. There is nothing of importance Monday, but we still may see some movement in the markets and mortgage pricing as traders return from the extended holiday weekend.

The Conference Board will post their Consumer Confidence Index (CCI) for December late Tuesday morning. This is a fairly important release because it measures consumer willingness to spend. If consumers are more confident about their personal financial and employment situations, they are more apt to make a large purchase in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched closely by market participants and can affect mortgage rate direction. Current forecasts are calling for an increase in confidence from November’s reading of 90.4. Analysts are expecting Tuesday’s release to show a reading of 93.5, meaning consumers felt much better about their own financial situation than they did in November. The lower the reading, the better the news it is for bonds and mortgage pricing.

We also have Treasury auctions scheduled the first three days of the week. The two that are most likely to influence mortgage rates are Tuesday’s 5-year and Wednesday’s 7-year Note sales. If those sales are met with a strong demand, bond prices may rise enough to lead to improvements in mortgage rates shortly after the results are posted. But a lackluster investor demand may create bond selling and upward revisions to mortgage rates Tuesday and/or Wednesday. Results will be announced at 1:00 PM each day, so any reaction will come during early afternoon trading.

The bond market will close at 2:00 PM ET Thursday ahead of the New Year’s Day holiday, but the stock markets are scheduled to be open for a full day of trading. All banks and major U.S. financial markets will be closed Friday for the holiday and will reopen Monday morning for regular hours. As a result of the holiday schedule, we should see another round of lighter than normal trading a couple days. Therefore, don’t be surprised to see larger moves in bonds with little apparent reason. I would be more concerned with bond losses early in the week than any that may come later in the week.

Overall, I am expecting to see Tuesday be the most active day for mortgage rates, although I don’t see much to be worried about in this week’s calendar. It is difficult to label any day as the calmest because even Monday that doesn’t have anything scheduled to be posted could also be relatively busy following last week’s light holiday trading. Accordingly, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

10 Ways To Make Sure You Don’t Go Insane When You’re Moving

 

Going through the escrow process can be stressful when you’re buying a home. Once you do, you get the privilege of living in the home you’ve worked so hard for. But first, you have to move.

Ugh.

Not only is moving a pain, it’s also, not coincidentally, a huge stressor that can cause anxiety, depression, and even divorce!

“Almost two in three (61 percent) placed the ordeal at the top of their stress list in a poll of 2,000 adults who have moved homes in the past three years,” said Express. They found that misplaced possessions and waiting too long to pack were among the “most stressful moving day moments.”

So how do you move without losing your mind? These 10 tips will help.

1. Breathe

When thing start to go wrong – you don’t have room in your last remaining box for the rest of the guest room knickknacks, your mover just dropped the box with your champagne glasses in it, or your labeling pen just ran out—there’s one thing that can help: just breathe. And count to 10 while you’re at it. It won’t fix the situation, but it will help you to keep your cool and stay focused on the task at hand.

2. Relax

Powering through the packing, moving, and unpacking may sound like a great idea, but it might not be a pleasant experience if it means you’re skipping the activities that help keep you happy. Whether making time for morning yoga, lighting candles and playing calm music, or taking a bubble bath with a good book is your method for relaxing, let yourself have it. It might feel counterintuitive if you have a ton of work to do, but you may actually be more productive once you’ve taken the edge off.

3. Drink

Specifically, water to keep yourself hydrated. Packing may not seem like hard physical work, but all that lifting, stretching, twisting, and kneeling is actually quite a workout.

Make sure you also set aside a bottle of wine for when you’re done moving (plus one or two for when you have your friends over to help you pack).

4. Get some sleep

When we’re overtired, we’re more likely to be grouchy, which can make what is already an unpleasant experience even more so.

5. Label everything (we mean everything)

What seems like a hassle at the time will pay off later when you are able to easily locate the one remote control you need to make all of your electronics work because you listed all the contents on each box. Whether you label them per room (bedrooms are a given) or by type (bed linens in one, towels in another, all boxable electronics together) or a hybrid of both, you’ll be happy you made the effort.

6. Make a plan

You may not be the type of person to plan every minute of your day on a regular basis, but, when you’re moving, it helps to stick to a schedule. Anxiety and stress will start to wrestle with each other when moving day has arrived and you’re nowhere near done with your packing.

Work backwards from your moving day, boxing up items that are not used and identifying throwaways and donations first.

7. Ask for help

Friends and family can take the pain out of packing and moving. Make it a party with pizza and beverages, and they may just come back to help the next time you move, too.

8. Turn on your utilities before you move into your new home

Post-move, you’ll be exhausted. You know what will make it better? Being able to turn on the gas stove and boil some water for tea then kick up your feet and watch Jimmy Fallon. If that’s not possible because you don’t have access to the home before moving day, at least make sure you have a mobile hotspot or some other way to access Internet on a laptop so you can watch Hulu or Netflix.

The memory of the whole family gathered around a 13″ screen on your first night in your new house will be with you forever.

9. Move the most important stuff yourself

There are bound to be a few things that are too important to trust to a truck. Set aside your important papers, jewelry, and your Great-Grandmother’s china to move on your own.

10. Do your research on movers

You don’t want to end up on Dateline because the shady mover you hired took your stuff hostage. The key to finding a good mover is research, research, research. Ask for referrals and then check them out thoroughly to look for complaints. ProtectYourMove.gov will tell you if they are licensed or have ever had a formal complaint, and MovingScam.com is a great place to look because they have a message board loaded with detailed info as well as a black list of moving companies to stay away from.

Written by Jaymi Naciri

Market Commentary for the Week of December 21st - Happy Holidays!

 

This week brings us the release of six pieces of monthly and quarterly economic data that are considered relevant to mortgage rates. It is a holiday-shortened week with the financial markets closing early Thursday and remaining closed Friday in observance of Christmas. None of the week’s data is considered key, but some of it does carry enough importance to affect mortgage pricing. None of the week’s reports come Monday.

The first of this week’s releases is the final revision to the 3rd Quarter Gross Domestic Product (GDP) early Tuesday morning. I don’t think this data will have an impact on mortgage rates unless it varies greatly from its expected reading. Last month’s first revision showed that the economy expanded at a 2.1% annual pace during the quarter and this month’s final revision is expected to show a 2.0% growth rate. A revision higher than that would be considered bad news for bonds. But since this data is quite aged at this point and 4th quarter numbers will be posted next month, I am not expecting this release to affect rates Tuesday.

November’s Existing Home Sales figures will be released late Tuesday morning. The National Association of Realtors is expected to announce a decline in home resales last month, indicating a slowing housing sector. This report will give us a measurement of housing sector strength and mortgage credit demand. A sizable decline in sales would be considered positive for bonds and mortgage rates because a softening housing market makes broader economic growth more difficult. But unless the actual sales figures vary greatly from forecasts, the results will probably have a minor impact on mortgage rates.

There are four pieces of economic data being posted Wednesday morning. It starts with November’s Durable Goods Orders at 8:30 AM ET. This data gives us an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years such as appliances, airplanes and electronics. Analysts are expecting the report to show a 0.7% decline in new orders. A larger drop in new orders would indicate that the manufacturing sector was weaker than many had thought. This would be good news for the bond market and should help push mortgage rates lower. However, a large jump in orders could lead to mortgage rates moving higher early Wednesday morning. This data is known to be quite volatile from month-to-month though, so it is not unusual to see large headline numbers in this report.

Next up is November’s Personal Income and Outlays data, also at 8:30 AM ET. It will give us an important measurement of consumer ability to spend and current spending habits. Since consumer spending makes up over two-thirds of the U.S. economy, any related data usually has a noticeable impact on the financial markets and mortgage rates. Current forecasts are calling for a 0.3% increase in income and a 0.3% increase in spending. If this report reveals weaker than expected readings, we could see the bond market improve and mortgage rates drop slightly Wednesday morning, especially if the Durable Goods Orders report gives us favorable results also.

The third release of the day is the revised University of Michigan Index of Consumer Sentiment for December just before 10:00 AM ET. Current forecasts are calling for a slight increase (92.0 from 91.8), meaning surveyed consumers felt a little better about their own financial and employment situations than they did in October. Bond traders would prefer to see a decline because waning confidence usually means consumers are less likely to make a large purchase in the near future.

November’s New Home Sales data is the final monthly economic report of the week. This report gives us another measurement of housing sector strength and mortgage credit demand. It is the sister report of Tuesday’s Existing Home Sales report, but covers a much smaller portion of the housing market than that one does. A weakening housing sector is considered good news for the bond market and mortgage rates because broader economic growth is less likely in the immediate future. Since bonds tend to thrive in weaker economic conditions, a large decline would be considered favorable for bond prices and mortgage rates. Current forecasts are calling for an increase in sales of newly constructed homes. Ideally, we would like to see a large drop in sales.

We also have early closings this week that sometimes influence trading. The stock and bond markets will both close early Thursday ahead of Friday’s Christmas Day holiday and will reopen for regular trading hours Monday. Trading will likely be thin Wednesday afternoon as traders head home for the holiday. It is fairly common for some traders to sell small portions of their holdings before a holiday or long weekend to protect themselves from unforeseen events that may take place while U.S. markets are closed. That is more common on 3-day weekends than just a day-and-a-half holiday, especially when the geopolitical and international financial issues seem to be calm. However, the possibility does exist, so minor losses in trading Thursday morning will not be of much concern.

Overall, labeling Wednesday as the key day of the week for mortgage rates is an easy call with four report releases, but Tuesday may also be pretty active for the markets and mortgage rates. Despite the shortened week, it still would be prudent to watch the markets and maintain contact with your mortgage professional if still floating an interest rate.

Market Commentary for the Week of December 14th

 

This week has only four monthly economic reports scheduled for release in addition to some key Fed events that should significantly affect the financial and mortgage markets. All of the week’s events take place over the three middle days of the week, so we should see plenty of movement in rates during that time frame.

November’s Consumer Price Index (CPI) will start the week’s activities at 8:30 AM ET today. It is similar to last Friday’s Producer Price Index, except it tracks inflationary pressures at the important consumer level of the economy. Current forecasts show no change in the overall reading and an increase of 0.2% in the core data that excludes more volatile food and energy prices. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates. Therefore, weak readings would be favorable for the bond market and mortgage shoppers.

Next up is November’s Housing Starts at 8:30 AM ET tomorrow morning. This data isn’t known to be highly influential on bonds or mortgage pricing, but it does give us an indication of housing sector strength by tracking new home groundbreakings. Analysts are expecting to see an increase in new starts, indicating strength in the new home portion of the housing sector. Slowing starts would be favorable for the bond market, although a wide variance is likely needed for the data to cause noticeable movement in the markets or mortgage rates Wednesday morning.

November’s Industrial Production report will be posted mid-morning tomorrow. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts are calling for a 0.1% decline in output, indicating manufacturing softness. A larger than expected decline would be good news for bonds, while a stronger reading would show manufacturing strength and be considered bad news for rates.

Tomorrow also has some significant FOMC events that can be highly influential on the financial and mortgage markets. The two-day FOMC meeting that began Tuesday will adjourn at 2:00 PM ET Wednesday. This is where the general consensus expects Fed Chair Janet Yellen and friends to make the Fed’s first hike to key short-term interest rates since 2006. At the same time their post-meeting statement is made, they will also release revised economic projections. That will be followed by a press conference with Chair Yellen at 2:30 PM ET.

I am one of those many that are expecting a rate hike tomorrow afternoon, although there is still a chance that the Fed will wait for the next meeting to make a move in my opinion. The markets certainly have a .25% bump built in right now, so what can we expect after the announcement? Let’s tackle the easy one first. That would be the Fed not making a move yet. I am fairly certain that the bond market would rally and we would see a sizable improvement in mortgage rates. The more complicated scenario is if the Fed does announce a .25% rate increase. If this is what happens, I believe that there is a good chance of seeing an initial negative knee-jerk reaction in bonds that would push rates higher. However, shortly after we may see a reversal that would lead to rates starting a downward trend. This is obviously all speculation at this point. I am leaning towards the Fed making the rate hike this week and am expecting an interesting couple of days once the meeting adjourns.

The final economic release of the week be November’s Leading Economic Indicators (LEI) from the Conference Board late Thursday morning. This release attempts to measure or predict economic activity over the next three to six months. It is expected to show a 0.2% increase, meaning that it is predicting slight economic growth over the next several months. This probably will not have much influence on bond prices or affect mortgage rates unless it shows a much stronger reading than forecasts. The weaker the reading, the better the news it is for bonds and mortgage pricing.

Overall, Wednesday is the key day of the week due to the Fed schedule, but Tuesday could be a bit active also. The calmest day will likely be Monday or Friday. It is highly probable that this will be a highly volatile week for the mortgage market. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Teaching Kids to Budget During the Holidays

It’s never too early to start teaching kids money management skills. And the holidays are a wonderful time because you need to plan how much you will spend if you don’t want to be swimming in the red ink in January. An added bonus is that teaching your kids about budgeting will help you think through your budget and look for ways to spend smarter.

Even if your kids are still young enough to believe in Santa, they can still learn about how you set budgets for family and friends. You will just need to remember to add in a special line item for the Santa gifts that you keep hidden.

The discussions should go beyond just the actual present.  We may spend a lot on presents, but there are other money drains that we need to remember:

• Gifts. How much are you spending on immediate family? Extended family? Friends? Co-workers? Teachers?
• Supplies for making gifts
• Cards (with postage)
• Family Christmas letters
• Gift wrappings and bows and ribbons and tags
• Parties (hostess gifts don’t have to be expensive, but they should be factored in. And don’t forget if you need to buy special clothing.)
• The cost of bringing traditional family meals to gatherings

It’s also good to get your kids thinking about how they may be influenced by the media. A good opener is asking them what they received last Christmas. If they don’t remember, but you remember then begging for something, it could be a great way of exploring what is a real want and what is a media driven want.

• Discuss why advertisements target kids and encourage your kids to not believe everything they see when it comes to commercials.
• Let your kids know that local, green, and used items can be just as good as brand name items they see frequently in ads

How to Involve the Kids

Have your kids write out a list of everyone you want to give a gift to and the amount you want to spend per person. Now, you will need to stick to these amounts and not buy expensive gifts out of obligation or wanting to impress people.

Have money budgeted for charity or other donations like giving trees. In order to become generous adults, kids need to see generosity in action.

And work with your kids on creating homemade gifts. They could make cookies or cookie mixes in a jar. Planning ahead helps you to batch process gifts and could save money if you plan around sales. Often, flour and sugar are on sale this time of year, and you may be able to find canning jars in clearance since canning season is over.

Take the kids shopping with you so they can see how to look for the best price. Turn it into a game. Look for coupons. Compare prices.

And most importantly, keep a running tally of your spending to help everyone stay on the same page. If you overspend in one area, work together to find areas where you can adjust the budget. Sometimes, kids can come up with amazingly creative ideas that we haven’t thought of.

Why Real Estate Market Conditions Matter

 

A Comparable Market Analysis (CMA) can tell you what buyers recently paid for homes similar to yours, but that’s not all you need to know to choose the right listing price. You need to know the market’s appetite for your home, and that can only come from an overview of your community’s current market conditions.Market conditions are like a weather report; it helps you predict what the current crop of buyers will do. Using this knowledge, you can price your home to sell quickly, and for the most money possible.

Why is a quick sale important? The right price generates a bumper crop of buyers. If you price your home too high compared to other similar homes, you’ll appear to be testing the market. Buyers will assume that you’re going to be too difficult in negotiations.

Here’s what you need to know – what kind of a market are you in? Market conditions are formed by buyer attitudes, made sunny or cloudy by jobs, incomes, mortgage interest rates, and overall consumer confidence.

It’s possible that your community could have buyer’s and seller’s markets simultaneously. For example, your neighborhood may be hot, while the subdivision a mile away is stone cold.

A seller’s market is characterized by confident buyers, short “days on market” and low inventory levels of less than six months on hand. This usually results in rising prices.

A buyer’s market is characterized by longer “days on market,” and high inventory levels of seven months’ supply or more. To get buyers to come in from out of the storm, sellers must offer incentives such as seller-paid closing costs or lower prices.

The market conditions will tell you the long and short-term trends. If the market is heating up, you can ask a little more for your home. If the market is cooling, you may need to price your home slightly under the market in order to attract more buyers.
One thing you absolutely should never do is ignore market conditions. It’s said the market is always right. If you price your home too high, you’ll know when you get few to no showings.

That’s why it’s important to ask your real estate agent for occasional market updates as well as a fresh CMA. You’ll get a better idea of what your home will sell for and how long it will take to sell. And read our blog every Monday for the National mortgage market analysis for the upcoming week.

Written by Blanche Evans

Market Commentary for the Week of Pearl Harbor Day

 

This week has only three pieces of monthly economic data scheduled for release in addition to a couple of Treasury auctions that have the potential to influence mortgage rates. Two of the economic releases are considered highly important though and the Treasury auctions are the more important set we regularly deal with, so despite the lack of a busy calendar we still should see noticeable movement in rates this week.

The first events we need to deal with are the two Treasury auctions Wednesday and Thursday. Wednesday’s 10-year Note auction is the more important one and will likely have a bigger influence on mortgage rates. Results of the sales will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements to mortgage pricing during afternoon hours those days. On the other hand, a weak interest in the auctions could lead to upward revisions to mortgage rates.

All three of the week’s monthly economic reports are set for release Friday. November’s Retail Sales report is the first at 8:30 AM ET. This report will give us a key measurement of consumer spending by tracking sales at retail level establishments. This data is highly important to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rapidly rising consumer spending raises the possibility of seeing solid economic growth. Since long-term securities such as mortgage bonds are usually more appealing to investors during weaker economic conditions, a large increase in retail sales will likely drive bond prices lower and mortgage rates higher Friday. Current forecasts are calling for an increase of 0.4% in November’s sales.

The second relevant report of the week will be November’s Producer Price Index (PPI), also early Friday morning. It measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If Friday’s release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond well and mortgage rates could fall. Current forecasts are showing a 0.1% increase in the overall index and a 0.1% decline in the core data.

The final report of the week is the release of December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up such a large part of our economy, any related data is watched closely. Friday’s release is expected to show a reading of 91.6, which would be a decline from last month’s final reading of 93.1. A larger decline in confidence would be considered good news for the bond market and mortgage rates.

Overall, Friday should be the most active day of the week with all of the week’s relevant data being posted, but Wednesday afternoon could be fairly active also. The calmest day will likely be Tuesday. It will probably be a calmer week than last week in terms of mortgage rate movement although we still should see rates change over the week. Accordingly, maintaining contact with your mortgage professional is still recommended if still floating an interest rate.

Finding The Sweet Spot When Pricing Your Home

 

When sitting down with your REALTOR^® to price your home, you’ll be looking at competitive homes that are the most similar in size, location and amenities as your home. You may find that prices can be thousands of dollars higher or lower. It’s tempting to pick the highest price and say, “Let’s list it here.” But what if your home doesn’t sell at that price? High prices are a strategy that can work in an accelerating market, but it’s risky. Your home can sit for months without selling and you’ll end up marking the price down, perhaps lower than it should have sold for in the first place.

Pricing your home is a science. The science is choosing the right price at which your home will sell quickly. How do you do that? By analyzing your local market conditions and where your home fits in the spectrum.

The only way your home will sell at the highest price possible is if your buyer agrees to your home’s value. To best determine market value, you have three important tools: CMAs, appraisals, and your REALTOR’s^® knowledge of the market.

The “comps”

A comparative market analysis (CMA) is a side-by-side comparison of similar homes for sale as well as homes that have recently sold in your neighborhood. REALTORS^® use CMAs to compare the features that make each home unique, including age, location, number of bedrooms, baths, room sizes, updates, condition, etc.

As a seller, you should be able to see where your home fits — in the top or lower price range of similar homes. For example, if a similar home to yours has been recently renovated with a new kitchen, expect it to sell for more than your home if your home has not been improved.

The appraisal

An appraisal is a market analysis performed by a professional appraiser using a variety of sources, including multiple listing system data and conforming loan formulas.

Appraisers most often work for lenders to determine market values, so that lenders can weigh the risk of making a loan to a homebuyer. Appraisals come after an offer is made when the buyer applies for a loan. Even though the buyer pays for the appraisal, the lender uses it to determine whether or not to make the loan at the contract price.

Additional market data

Your REALTOR^® has access to data that may not be public through the Multiple Listing Service. This data is provided to broker members to track market trends over weeks, months and years. Some brokers pay data companies for specific markets that help them plan their business, such as the number of listings on hand, which zip codes are the hottest, and whether closings are trending up or down over last month or last year.

Your REALTOR^® uses all this data to help you hit the sweet spot of pricing. That’s high enough to reflect your home’s value, but attractive enough to buyers to get it sold quickly.

Written by Blanche Evans