week in review

Financial Markets

The Debt Ceiling Debate continues to take center stage, and investors continue to sell stocks until a deal is made.  The Dow dropped over 500 points this week, landing at 12,143.  Another blow to stocks was the GDP (Gross Domestic Product) reading of 1.3% for the 2^nd quarter of 2011.  Forecasters expected growth of 1.9%.  That wasn’t the worst of the report.  The report also revised 1^st quarter GDP that was reported at 1.9% to .4%!  (Not sure how that even happens…Did someone not use their abacus correctly the first time?)…A recession is defined as negative growth in GDP for 2 straight quarters and the US economy is getting dangerously close to this.  So you will hear about fears of a double dip recession in the upcoming weeks as a result of this report.  

Mortgage rates improved primarily because of a move the US Treasury made, that essentially bought an extra two weeks.  They set up a contingency plan that would pay investors of US Debt on time regardless if Congress passes a budget by Tuesday.  This indicates that the bond market is not yet concerned that a deal won’t get done. 

Southern Nevada Real Estate and Economy

A great article that supports that home prices in Nevada have over-corrected according to Mark Boud, a California-based real estate economist.  Something that I have said to many of my clients, just as prices didn’t make sense in 2006, they don’t make sense today.  Below is the link to the article in its entirety, actually twice because both papers covered the story.  Mark stated that the market is undervalued by as much as 45%. 

http://www.lvrj.com/business/home-price-drops-said-to-reflect-overcorrection-125939798.html

http://www.vegasinc.com/news/2011/jul/26/economist/

The Desert Express high-speed rail from Las Vegas to Victorville has passed all but one minor hurdle….a 4 billion dollar loan from the government…Below is an article with more details. 

http://www.vegasinc.com/news/2011/jul/25/runaway-train/

week in review

Primary Residential Mortgage ranked 10^th in the nation for issuing FHA loans for the first half of 2011.  Within the top 10, they ranked 5^th in percentage of serious delinquencies, which is about where we would like to see our parent company.  It shows that we are closing loans correctly, which gives us confidence that FHA would want to continue working with us but also shows that we are taking risk in the FHA loans that we close.   

Financial Markets

The Dow Jones gained over 370 points for the week from its low of 12,296, and ended the week at 12,668.  The gain was primarily a result of weakness in the bond market as opposed to strength in stocks.

The bond market is seeing selling pressure because investors are concerned that Congress and the White House won’t come to an agreement on the budget and most importantly raising the debt ceiling.  By not raising the debt ceiling, US Bonds could very well likely see a downgrade in its rating, which will trigger foreign investors to flee the US bond market in general and we will see a significant sell-off, which leads to yields moving in the opposite direction and would send mortgage rates up sharply.  On Friday, mortgage backed securities were extremely volatile.  They started out strong because it was rumored that the White House was close to an agreement on the budget and debt ceiling, only to have White House Press Secretary Jay Carney refute the rumors, which instigated the sell-off. 

Southern Nevada Real Estate and Economy

Home builders nationwide and locally were greeted to a better than expected sales number for the month of June this past week.  459 new permits were pulled in June 2011, up from 435 in May 2011 and up from 402 in June 2010.  Interesting quotes in the article below:

“Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders”. 

“In past modern-day recessions, housing accounted for 15-20% of overall economic growth.  This time around, (between 2009 and 2010) housing contributed to just 4% of the nation’s gross domestic product”…

These statistics are great examples of how the economy and housing are entangled together and why it has been such a long drawn out process to recover from the latest recession.  You need jobs to help housing and you need housing to help jobs…

http://www.lvrj.com/business/building-jumps-in-june-after-slow-spring-125875248.html

week in review

Financial Markets

The Dow Jones gained nearly 250 points for the week, providing distance to the 12,000 threshold it seemed to be stuck on and ended the week at 12,657.  However, Friday’s national jobs report put a damper on the overall weekly gains.  June’s unemployment report unveiled that only 18,000 jobs were created and missed estimates by over 100,000.  The private sector created 57,000 jobs while the public sector (government jobs) lost 39,000 jobs, so the silver lining is that the growth is coming from business owners and not over bloated government spending.  The national unemployment rate ticked up to 9.2%. 

Mortgage rates have remained fairly flat, bouncing between mid to upper 4% for 30 year fixed mortgages. 

Southern Nevada Real Estate and Economy

June sales for single family homes in Southern Nevada reached over 3,600 for the month which is up from nearly 3,000 in May (16.7%) and up roughly 300 (8%) from June 2010.  Another 911 condos/townhomes closed escrow as well, bringing the total to 4,540 sales for the month of June.  According to the article below, this is the 3^rd highest number of existing home sales ever recorded! 50% of the sales were paid with cash and the median priced home dropped from $126,000 to $124,500.  Last, there was a reported 22,702 homes listed on the MLS.  Below is the article in the LV Sun in its entirety. 

http://www.vegasinc.com/news/2011/jul/08/las-vegas-home-sales-surge-prices-continue-fal/

Below is a brief article that lists the top 15 worst real estate markets in the US, and Las Vegas is not on it! 

http://www.lvrj.com/business/yahoo-posts-worst-housing-list-and-no-mention-of-las-vegas-124878094.html

July is a great time to take a snap shot and analyze my performance so far for 2011.  Some interesting statistics so far:

·         20% of the clients I provided financing for so far this year were borrowers that were declined by previous lenders

·         The average transaction took 29.6 days to close (We are constantly improving to lower this number)…The quickest being 11 days.

·         Over 90% of the clients I provided financing for involved purchasing a home (as opposed to refinancing).