week in review

Financial Markets

The Dow Jones posted an inevitable rally this past week, gaining 467 points in 5 days.  The biggest gains came on Friday, as investors bought into stocks primarily as a result of Fed Chairman Ben Bernanke’s speech.  According to analysts, he demonstrated just enough concern about the current economic conditions without showing panic.  The Fed hinted towards further stimulus to keep the economy out of a double dip recession but did not specify what tactics it would take.  The tactics could be released in September where the Fed will have an unprecedented 2-day meeting as opposed to the more common 1 day meeting.   

Mortgage rates held steady with typical 30 year fixed mortgage rates holding in the low 4’s.  

Southern Nevada Real Estate and Economy

A deeper dive into the July home sales report for Southern Nevada revealed interesting statistics.  46% of the purchases were by absentee owners, purchased as vacation homes or investment properties.  Resale homes are on pace reach an all-time high.  The average price per square foot for resale homes is $70.33 while the average for new construction homes is $99.47. 

http://www.vegasinc.com/news/2011/aug/23/economy-politics-cost-las-vegas-home-sales-report-/

We will be accepting loan applications for FHA loans up to $400,000 until September 15^th.  We are required to have credit approval by September 30^th in order to secure the financing.  After September 15^th, we can only accept loan applications for loan amounts up to $287,500…

With the addition to a critical fulfillment employee, we have drastically improved turn-times for our closings for the month of August.  My clients on average have secured final approval in 17 days from date of application!!  We are extremely proud and excited of this accomplishment.  Our branch is now ranked in the top 10 in the nation for PRMI for number of loans closed year to date, all this in our first year being open for business.  I want to thank you for your support and look forward to continued success working together!   

week in review

Financial Markets

The Dow Jones logged another disappointing week, losing over 400 points in value (slightly over 4%).  The Dow landed abruptly at 10,817, primarily over concerns about the global economy.  The stock market had its worst 4-week performance since March of 2009.  Mortgage rates improved despite what is typically considered a bond killer, a hot Consumer Price Index read.  CPI came in at .5%, much higher than .2% that was expected.  This would translate into an annual inflation rate of 6%.  Bonds, in the eyes of investors, appear to be a much safer play at the moment than the stock market.  In ordinary times we would have seen mortgage rates increase in the face of a report such as this. 

Southern Nevada Real Estate and Economy

An article published in the LV Review Journal highlights just how affordable purchasing a home in Las Vegas is as compared to renting.  Trulia.com, a San Francisco-based real estate tracking firm ranks Las Vegas #1 in the nation in this category.  It also mentions that investors from foreign countries that most commonly click on real estate in Las Vegas are investors from Canada and China. 

http://www.lvrj.com/business/survey-ranks-las-vegas-best-place-to-buy-home-127923503.html

Below is an article in which various research firms attempt to predict home values for Southern Nevada.  The most discouraging prediction comes from Fieserv, which is of the opinion that Las Vegas real estate won’t reach values from 2006 until the year 2030.  Mark Boud, a California-based economist is of the opinion that Las Vegas will see a 31% gain over the next five years.  Both agree that values will not completely bottom until 2012. 

http://www.vegasinc.com/news/2011/aug/16/firm-las-vegas-home-prices-will-hit-bottom-late-20/

FHA loan limits will go into effect on September 30^th.  I have been told that many of the major banks will no longer accept applications for FHA buyers requiring financing for more than the loan limits that are not set to go into effect for another 40 days.  We will be accepting applications for FHA buyers seeking between $287,500 and $400,000 up until the September 30^th deadline.    

week in review

Financial Markets

The Dow Jones lost ground again this week, but certainly could have been much worse.  At one point, the index was down over 600 points for the week.  The Dow ended the week at 11,269.  A healthy Retail Sales report instigated a rally on Friday, as sales were up .5%.  Investors seemed undeterred from purchasing stocks by the Consumer Sentiment Index, which came in at 54.9, much lower than the 62.5 number that was expected.  Mortgage rates for 30 year fixed products are now hovering in the low 4’s as a result of the carnage left behind in the stock market. 

Southern Nevada Real Estate and Economy

July sales for Clark County were released this week.  According to the GLVAR, 3,164 single family residences and 873 condos were sold for the month.  The sales clip is up 7.3% from July 2010 and down 12.8% from June 2011.  52% were purchased with cash.  20.2% were short-sales, 50.2% were foreclosures. 

http://www.vegasinc.com/news/2011/aug/09/home-prices-continued-fall-july-amid-decline-sales/

On a positive note for our region’s biggest industry, Gaming Revenue is up 19.9% for the month of June for Clark County as compared to June 2010, this according to the below article in the RJ. 

http://www.lvrj.com/business/nevada-gaming-revenues-jump-16-percent-in-june-127450258.html

As a reminder, we rolled out financing for individuals that own more than 4 financed properties.

week in review

FHA loan limits will drop form $400,000 to $287,500 on October 1^{st ,}  for Clark County.  This may be perceived as a big blow to what is already seemingly scarce financing supply for housing but if you drill down the numbers, it doesn’t appear that it would have a significant effect on the housing marking in Southern Nevada.  Here is why:

According to my trusted partners at Chicago Title, in the past 12 months there have been 2,398 sales between the price range of $300,000 and $415,000.  (This is the price range that is affected by FHA lowering the loan limits to $287,500).  Of  2,398 sales, only 278 were purchased using FHA financing.  Of the 278, it is quite possible that roughly 50% of these borrowers would have qualified for a conventional loan putting 5% down.  This translates into roughly 10 sales per month out of an estimated 4,000 sales that would be affected by the lower loan limits, which represents 1/4 of a percent of the housing market.  It is probably a good time to partner with a mortgage company that has the most aggressive conventional financing.   PRMI offers 95% financing with as low as a 660 FICO score.    

Financial Markets

My suggestion would be to not take a peek at your IRA or 401k statements…The Dow Jones dropped over 750 points for the week, down over 1,000 points for the past 2 weeks, essentially dropping 8%.  A typical 401k account with $100,000 drops roughly $8,000 in value.  The Dow ended Friday up 60 points because a better than expected jobs report was released.  154,000 new jobs were created for the month of July.  May/June numbers were revised upwards with an additional 54,000 jobs (all in the private sector) than previously thought.  Last, hourly earnings increased .4%, another good sign for the job market. 

Now for the bad news, The S and P downgraded US bonds from AAA to AA, despite a deal that was struck to raise the debt ceiling to stave off defaulting on debt.  This could result in a temporary double whammy, stock market sell off and bond market sell-off, which leads to higher mortgage rates in conjunction with loss of wealth.

Southern Nevada Real Estate and Economy

Not much in the way of local economic real estate data this week, but always a hot topic is the water levels at Lake Mead.  According to the below article in the RJ, the Colorado River is on track for its 3^rd wettest year in 50 years.  The water level is expected to get its biggest boost in nearly 15 years. 

http://www.lvrj.com/news/snowfall-giving-lake-mead-a-lift-127085668.html