Weekly Comments

***FHA mortgage insurance premiums will go up again on April 18^th, from .9% to 1.15%, essentially increasing mortgage payments by about $30 per month (for $150,000 loan). 

Financial Markets

The Dow Jones topped of Friday encouragingly, at 12,130, which is down over 260 pts for the week.  Political turmoil throughout the middle-east has investors fleeing stocks for safe-haven bonds and various commodities.  The developments over-seas have only temporarily assisted with mortgage rates this past week. 

As you probably have all noticed gas pump prices increasing by the minute, the price of oil has spiked to $97 per barrel.  High oil prices will adversely affect mortgage rates because the price of oil has a direct impact on inflation, which is a mortgage-backed security’s arch-nemesis.

An increase in oil prices leads to instantly higher shipping costs and producers of goods have no choice but to pass the cost increase on to the consumer.  If the costs of the goods we consume are increasing by 5-7% per year, yet the mortgage-backed security is only earning 4% rate of return, the investor effectively loses his money by parking it in the bond.  The rate of return for the investor (which is the mortgage rate for the borrower) has to increase to make it an attractive investment again. 

Local Economy and Real Estate Market

Moody’s released a report about the future of the Las Vegas tourism industry, and appears to be cautiously optimistic.  The reader’s digest version is that visitor volume will continue to improve but profitability will not make major strides until 2012, because of all of the new hotel rooms that have been added over the past 12 months.  The “X” factor is…our favorite topic this week…OIL.  High oil prices will lead to higher airfares and less visitors to Las Vegas.

http://www.lasvegassun.com/news/2011/feb/24/moodys-report-las-vegas-strip-recovery-will-accele/

Home sales for Southern Nevada reached nearly 3,400 for the month of January, with the median price of new homes increasing slightly and the median price of resales dropping.  20% of the 3,098 resale transactions were short-sales.  ½ of the buyers paid cash..

http://www.lvrj.com/business/las-vegas-existing-home-sales-fall-median-price-at-115-000-116861648.html

Weekly Comments

Good Evening,

Financial Markets

The Dow Jones chugs along and ends the week with another 100 + point gain, landing at 12,391.  100 pts may not seem like much, but it is equivalent to nearly 1%.  If you earned 1% per week, your initial investment would double every two years. 

The bond market, and in particular mortgage backed securities, held its own, with the price of the Fannie MAE 4.0 Coupon improving slightly this week.  There were no significant reports that provided momentum for the rally.  It was more a matter of a market that was long overdue for a correction of some sort. 

On tap for the upcoming week is the Consumer Confidence Index, Existing Home Sales, New Home Sales, GDP and of course the Jobless Claims report.  It could be the makings of a tumultuous week for mortgage rates.   

Local Economy and Real Estate Market

Marcus and Millichap, a California-based research firm, released a retail sales report that predicts Las Vegas will experience an increase of 8% as a result of improving economic conditions nationally.  The report also predicts that casinos will expand payroll for the first time in 4 years. 

http://www.lasvegassun.com/news/2011/feb/15/firm-predicts-tourism-boost-will-help-businesses-n/

From a national perspective, 30 day mortgage delinquencies fell in the 4^th quarter of 2010 to its lowest level in two years.  Below is the link to real estate expert Diana Olick’s article. 

http://www.cnbc.com/id/41646405


This past month represents our 5-month anniversary, opening up a branch for Primary Residential Mortgage Inc.  Up until now, I have only been able to tell you what we “CAN” do for you and your clients.  I’d like to take a moment to tell you what we “HAVE DONE”.     

·         The past 7 purchase transactions have taken an average of 20.7 days to go from application to final approval and docs to title.  The fastest being 14 days, all but one was final-approved in less than 20 days.  2 were transferred from other lenders that struggled for weeks to secure financing. 

·         This past week, we funded a 95% conventional loan in which the buyer’s FICO score was under 680. 

·         Because I have access to a phenomenal “in-house” underwriter (who is seated literally 20 feet away from me) I have a 100% conversion rate of prequalifications, meaning not one buyer that I have prequalified has gone to contact and then unable to secure financing.

It has been a pleasure working with you all (you are only on this email if we have worked together previously) and look forward to providing a superior home buying experience for your clients! 

Weekly Comments

Financial Markets

The Bulls continue to run as the Down Jones gaining another 1.5% (181 pts) and ended the week at 12,273.  Friday’s micro-rally stemmed from the announcement of Egyptian President Mubarak’s decision to resign as well as a US Consumer Sentiment report that met expectations.  Included in the report was the Barometer of Economic Conditions that reached a level of 86.8, which is the highest it has been in over 3 years. 

Mortgage rates continue to inch higher as stocks continue to gain ground.  Also contributing to the bond market sell-off is the rise in commodities.

A significant 3-pronged proposal by the White House to unwind and dismantle Fannie Mae and Freddie Mac was released Friday.  The premise and hope is that the private markets, over time, will take over for Fannie Mae and Freddie Mac.  The general consensus is that it will inevitably lead to higher mortgage rates for the consumer, but that it will take years to make the transition.  Below is a link to an article in the USA Today that discusses the proposal.

http://www.usatoday.com/money/economy/housing/2011-02-11-fannie-freddie-mortgage-overhaul_N.htm?csp=34money&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+UsatodaycomMoney-TopStories+%28Money+-+Top+Stories%29

Local Economy and Real Estate Market

This past week I attended a round table discussion in which Real Estate Attorney, Robert Noggle, informed the attendees about how foreclosure mediation works, and I thought I would share with you the “cliff notes”.  Basically, once a home owner receives a Notice of Default, they have 30 days to request mediation.  In this instance, the home owner has the opportunity to meet with a representative from the bank for up to 4 hours to come to a resolution.  Robert mentioned that over 50% walk away with a resolution.  He also recommended that a homeowner bring an attorney with them, and was the first to admit that there was a self-interest in the recommendation but that there were other valid reasons why the homeowner should have representation.  Below is a link to the Nevada Supreme Court website where a home owner can look into mediation procedures. 

http://nevadajudiciary.us/index.php/foreclosuremediation

Dennis Smith released predictions for real estate in 2011.  If your 2010 was successful, then expect more of the same.  He expects new home sales, re-sales and home values to be relatively flat, with small upticks in re-sales.   

http://www.lvrj.com/business/expect-flat-home-sales-prices-this-year-115862704.html

Weekly Comments

Financial Markets

The Dow Jones closed at its highest level since the summer of 2008, gaining 268 pts for the week and ending at 12,092.  The stock market rally was somewhat surprising considering that the employment report released yesterday was considered disappointing in some regards. 

According to the report, the private sector added 36,000 jobs for the month of January, which is far off from analysts’ expectations of nearly 150,000.  However, the average hourly earnings rose .4%, which was a pleasant surprise and the national unemployment rate dropped to 9%.  Also encouraging was the U6 reading (real rate of unemployment which includes “underemployment”), which dropped from 16.7% to 16.1%. 

Mortgage rates worsened as more investors sold their positions in bonds to satisfy their appetites for stocks.     
Local Economy and Real Estate Market

The Center for Business and Economic Research reported this past week that “the confidence level by the valley’s business leaders has reached its highest point in three years”.  Stephen Brown, the center’s director, stated that the report has a direct correlation to future outcome in economic conditions, based on similar reports conducted in other parts of the country.

http://www.lasvegassun.com/news/2011/feb/03/las-vegas-business-leaders-say-confidence-level-3-/

NASA representative Lori Garver visited Rober Bigelow’s Aerospace Facility in North Las Vegas yesterday.  Bigelow hopes to convince NASA to contribute funds to help develop his ultimate dream of space travel and lodging by 2015.  I’m not really sure how this relates to real estate in Southern Nevada, I just thought it was cool. 

http://www.lasvegassun.com/news/2011/feb/05/nlv-company-wants-build-inflatable-space-station-n/

Products of mention to help you sell more homes:

·         FHA Choice Plus (Now, PRMI will allow FICO scores as low as 580!)

·         95% conventional financing with FICO as low as 660

·         90% financing for 2^nd homes

·         90% financing for jumbo loans up to $600,000