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Market update January 2014

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  1. 1. I s su e 15 , Vo lu me 3 / J an u ar y 1 7, 2 014 Positive Signs to Kick Off 2014 The Week Ahead -> The “Keys” Tim McLaughlin - Very quiet week data wise in the market This week, the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury released the December edition of the Obama Administration's Housing Scorecard: a comprehensive report on the nation’s housing market. The latest data shows progress among many key indicators. Home values continue to rise, contributing to both an increase in homeowners’ equity and a decline in underwater borrowers. Prediction Last MBA Mortgage Applications - 11.9% 1/23 Chicago Fed Manufacturing - 0.60 1/23 Initial Jobless Claims 330K 326K “December’s Housing Scorecard shows that we are continuing to make progress helping struggling homeowners get back on their feet,” said Associate Deputy Assistant Secretary for Economic Affairs Edward J. Szymanoski. 1/23 Continuing Claims 2900K 3030K 1/23 US PMI Preliminary 55.0 54.4 1/23 House Price Index (MoM) 0.3% 0.5% Another positive note is that home values continue to rise. As of October 2013, the Federal Housing Finance Agency (FHFA) purchase-only index rose 8.2% from last year and ticked up 0.5% (seasonally adjusted) from September, showing that home values are now on par with prices in early 2005. The S&P/Case-Shiller 20-City Home Price Index for October posted returns of 13.6% over the past 12 months and was up 0.2% (not seasonally adjusted) over September, indicating that home values are at the same level as in mid-2004. 1/23 BB Consumer Comfort - -31.0 1/23 Existing Home Sales 4.95M 4.90M 1/23 Existing Home Sales (MoM) 1.0% -4.3% 1/23 Leading Index 0.2% 0.8% 1/23 KC Fed Manufacturing - -3 Additionally, homeowners’ equity continues to rise. Homeowners’ equity jumped $418 billion, or 4.5%, to $9.67 trillion in the third quarter of 2013, which is slightly higher than its value at the end of 2003. The equity homeowners have in their homes (total property value less mortgage debt outstanding) is up $3.4 trillion or 55%, since the end of 2011. In regards to impaired borrowers, millions of home owners are no longer underwater. The number of underwater borrowers has fallen 47.5% since the beginning of 2012, from 12.1 million to 6.4 million in the third quarter of 2013, lifting 5.7 million homeowners (who owed more on their mortgages than the value of their homes) above water. The national share of mortgages that are underwater fell from 25.2% to 13.0% over the same period. Positive trends indeed for a housing sector that is beginning to gear up for its spring market. With affordability and interest rates both in a positive range for potential buyers, and housing on the upswing, there is no better time to capitalize on the house of your dreams. Talk to your Weichert “One Stop team” today…we can help!! Date Economic Release 1/22 Secondary Marketing Takeaways: The biggest focus as we start 2014 from a trading desk perspective is the “new” Fed, with new Fed Chairwoman Janet Yellen at the helm, and the direction and speed of MBS tapering. If you remember, the Fed started to pull back last month on the amount of Mortgage Backed Securities it purchases each month, moving from $45B to $35B. With that, the sentiment from the voting members was that they wanted to continuing pairing back $5B to $10B each meeting until their purchases were down to $0. However, that was before the abysmal December employment report was released showing Nonfarm payroll drop from 241K revised in November to only 74K in December. Now, the big question: was December an aberration and should the Fed continue to pare back with the expectation that the numbers will correct themselves, or is the data real and trending and does the Fed need to pumped the brakes as to not upset the pace of the recovery, which is fragile at best? Time will tell, and to be candid, tapering has more of a psychological impact on interest rates than a direct impact given the supply and demand in the market, but the net effect is real and will be felt, so we will watch this closely. © Copyright 2012 Weichert Co. Morris Plains, NJ, USA. All rights reserved. Any form of reproduction or distribution is strictly prohibited. Company NMLS # 2731. Mortgage Access Corp. d/b/a Weichert Financial Services, Executive Offices, 225 Littleton Road, Morris Plains, NJ 07950. 1-800-829-CASH. Licensed by the NJ Dept of Banking and Insurance. Licensed Mortgage Banker with the State Dept of Banking in NY and CT. Licensed by the Pennsylvania Department of Banking, Mortgage Lender 21042. Licensed Lender in AK, AR, DE, MD, D.C., GA, ME, MN, WI, IA, IN, LA, VT, WV, NC, ID, NE, WY, OK, TN, MI. Licensed by the Virginia State Corporation Commission, License #MC297. Certificate of Authority to transact business in CO. To check the license status of your mortgage loan originator, visit Licensed Lender in SC. Licensed Mortgage Lender in TX. Licensed with the Financial Institutions Division in New Mexico, License # 01297. Licensed by the Department of Corporations under the California Residential Mortgage Lending Act. Licensed Mortgage Broker and Lender Ohio. Licensed Loan Broker and Lender Rhode Island. Licensed Oregon Mortgage Lender License #ML2528. Illinois Residential Mortgage Licensee, License #MB.0006377. Mississippi Licensed Mortgage Company, License #357/2008. Washington Consumer Loan License # CL-2731. Alabama Consumer Credit License #21213. Mortgage Access Corp. arranges loans with third-party providers. Equal Housing Lender.