Financial Markets

The Dow closed Friday at 15,570, up 1.1% for the week and just 150 points away from its all time high.  Stocks have risen 3 weeks straight as earnings season continues to impress investors.  In atypical fashion, mortgage backed securities have also rallied during the same period, improving another 100 basis points over the past two weeks, with 30 yr fixed mortgage rates now in the low 4’s.  In completely unimportant and unrelated news, Twitter is primed to go public and the initial IPO is projected to open for anywhere from $17-$20 per share.  

Southern Nevada Real Estate Related Data

The Las Vegas real estate market continues to be the hotbed of discussion for real estate analysts nationwide.  Generally speaking, Las Vegas led the nation on the way up in appreciation during the housing bubble, led the nation on the way down during the bubble-burst, and now leads the nation again in appreciation on the recovery.  The debate rages on if the recovery is simply a over-due correction to an over-correction, or if it is another bubble in the making with shadow inventory potentially looming.  What is agree-able by most analysts, is that the current median price of homes are in more alignment with average house-hold incomes than during the bubble or the bust.  New home construction is much more aligned with the population growth as well. I Below is Sales Traq’s most recent release which presents great real estate data as always.  http://salestraq.com/ff/fastfacts-a3l5.pdf

Below is a video clip from Channel 13 regarding the most recent discussions to move the Mets’ AAA affiliate baseball team, 51’s, to Summerlin.  http://www.jrn.com/ktnv/news/201992581.html
 

How does the Government Shut-down affect mortgage financing??

It doesn’t, fugghedaboowwd-eht……Actually processing 4506-T’s, which is where the lender gets the borrower’s tax returns directly from the IRS will be delayed, but lenders are working on getting temporary waivers for this.  The same goes for verifying social security numbers but if the borrower provides a copy of their social security card than this can be side-stepped as well. 

Financial Markets
The Dow ended Friday up over 100 pts, just a day after a 300 point gain.  The primary catalyst for the move is word that the political stalemate in Washington over the government shutdown may be nearing an end.  As a nice change of pace, mortgage rates have remained flat the past two weeks, providing for a calm interest rate environment for consumers.   Check out this funny You-Tube clip, basically dumbing-down the debt ceiling debate.  http://www.youtube.com/watch?v=Li0no7O9zmE

Southern Nevada Real Estate Related Data
Notice of Defaults for Clark County are getting filed at an unprecedented clip and it appears  the long awaited “shadow inventory” is about to crash the housing-appreciation party.  Realty Trac reported 1,000 NOD’s on September 30^th alone.  The one day tally was attributed to a law change on October 1^st, and is not considered to be a trend, but we can certainly expect more activity than what we have seen the past 18 months.  Filings are up 36% from 3^rd quarter 2012 to 3^rd quarter 2013. 

http://www.reviewjournal.com/business/housing/housing-default-activity-shifts-high-gear-clark-county-and-nevada

Not so coincidentally, the median priced home for September 2013 dropped 1.1%, down from $182,000 to $180,000, but up nearly 30% from September 2012.

http://www.reviewjournal.com/news/las-vegas-housing-recovery-stalls-after-19-months

For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html

Welcome back Football!  We’ve missed you. 
Beer and buffalo wings for the next 5 months J

Financial Markets
Mortgage-backed securities sailed through gut wrenching swells throughout Thursday and Friday, essentially losing 100 basis points in just a few hours and then gaining back 100 basis points Friday morning.  To offer perspective, a 30 yr fixed rate of 5% on a $200,000 loan may have had a cost of 0 dollars early Thursday, would have cost the consumer nearly $2,000 in points by the end of the day, only to discover Friday morning it would have cost 0 dollars again.  The recovery in mortgage-backed securities stemmed from comments made by Russia’s leader Vladimir Putin, who stated that he would continue to support Syria with arms in spite of a potential external attack.  A meager jobs report released Friday also helped mortgage rates rally.  The weak job report provides speculation that the Fed will continue its 85 Billion per month bond buying program for a longer period of time. 

So, where are rates going? It’s simple…We just have to make educated guesses on what the implications would be to the markets on the following issues:

·        Fed Tapering: Psychological Impact vs. Supply/Demand Math (overwhelming Fed bid vs. less mortgage supply and less Treasury issuance)

·        Fed Rate Policy:  Fed Funds staying put at 0-25bps? For how long?  Says who?

·        New Fed Chairman: Yellen? Summers? Bernanke staying?

·        U.S. Jobs Data:  Labor Force vs. U/E Rate vs. Monthly Non-Farm Payrolls vs. Automation

·        War: Strike on Syria? Higher oil prices?? 

·        U.S. Inflation Data: Where’s the demand-pull inflation?  Can we afford higher energy costs?

·        U.S. Housing Data:  Nation of Renters vs. Purchase demand. And have recent price appreciations already stalled?

·        Emerging Markets: Slower expansion in Brazil, Russia, India, China?

·        Global Central Bank Policy: Will Abenomics work in Japan?  More ECB easing ahead??

·        Great Rotation: Marginal investor dollars going from bonds to stocks. What about repatriation $$ flows?

·        Stock Bubble: QE Inflated Stock Bubble? Do earnings match forward multiples?

·        U.S. Debt Ceiling: We gonna “default”?  Does it matter?

·        European Debt Contagion: Where is the target painted? Portugal? Italy? Greece? Does anyone still care? Why did you read this far down?

The point is, my advice to our clients will be to lock in the interest rate as soon as they can.   Going back to what I wrote last week, the average 30 yr fixed since 1971 is 8.6%.  5% is less than 8.6%.  Trends like “rates are always lower on Fridays when there is a full moon” is pretty much nonsense.    

Southern Nevada Real Estate Related Data

According to a report released by Zillow, As of June 30^th 2013, roughly 51.6% of home owners in Southern Nevada have positive equity.  This is up significantly from the 1^st quarter of 2012 where only 29% of home owners had positive equity, leaving 71% of home owners underwater. 

http://www.reviewjournal.com/business/housing/rising-prices-lift-half-las-vegas-homes-above-water

For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html

First Cal's History

Product Alert:

FHA will now allow financing for borrowers who experienced a short sale, bankruptcy, foreclosure or deed in lieu 12 months after the incident, instead of the 2-3 yrs set in the current guidelines.  ***However, the incident must have been triggered by an “Economic Event”.  An “Economic Event” is either a loss of employment or loss of income by more than 20%. 

Financial Markets

The rise in mortgage rates over the past 90 days is well documented by now.  Mortgage rates reached near historic lows towards the beginning of May.  Mortgage-backed securities launched into a free-fall, dropping nearly 1,000 basis points in just 45 days.  400 basis points were lost in just 4 days of trading in the middle of June, the equivalent of nearly .75% in rate.  The sell-off in mortgage backed securities was historic, never in the history of the instruments’ existence had it ever sold off so dramatically in such a short period of time.  Lost in all this is that while rates moved significantly off its low, the 30 yr fixed is still nearly ½ what the average 30 yr fixed rate is over the past 40 yrs.  The average 30 yr fixed rate mortgage since 1971 is 8.6%.  (according to Freddie Mac analysts quoted in USA Today June 28^th, 2013)

 

Southern Nevada Real Estate Related Data

I noticed an interesting statistic reviewing the UNLV Lied Institute for Real Estate Studies, Report on Nevada’s Housing Market for the month of July.  In 2002, non-owner occupied home buyers represented 40% of the home purchases.  By 2009, this class peaked to roughly 90%.  In 2013, year-to-date, non-occupying home buyers represent 60% of the market.  I believe this class includes home buyers purchasing vacation homes with the intent to eventually move to the area. 

http://business.unlv.edu/uploads/files/DEE_NHM_July2013.pdf

Have a great week! BACK TO SCHOOL BABY!!!

For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html

Best of 3 Worlds, rising stock prices, rising house prices, declining mortgage rates

First Cal Mortgage is the #1 lender in Clark County for Hardest Hit Funds HARP refinances, yet only the top 20^th lender in the area, a true testament to our aggressive menu of products and commitment to pass on pure agency products to the consumer. 

Financial Markets

The Dow closed at 14,565 on Friday, up 11.5% from the same time last year, but down slightly for the day on the heels of a disappointing unemployment report.  Unemployment actually dropped from 7.7% to 7.6%, but the job market only grew by 88,000 jobs.  This is down from 268,000 jobs created for the month of February.  Economists typically like to see 200,000 to 400,000 jobs created monthly to consider strong economic growth. 

Rarely do we get “the best of both worlds” and typically when the stock market surges, bond market sells off causing mortgage interest rates to rise, but over the past month, we have watched rates drop along with rising stock prices.  The FNMA 3.0 coupon has improved over 150 bps over the past month.  This loosely translates into a .25% to .375% improvement in the 30 yr fixed mortgage to the consumer.    

Southern Nevada Real Estate Related Data

According to the CoreLogic, sited in the article below, home prices rose 10.2% for the month of February, nationwide, as compared to February 2012, the largest gain since March of 2006…..Gulp….This marked the 12^th consecutive month of appreciation, underscoring the strength of the housing recovery.  Inventory shortage is not just in Nevada, nationwide, available homes have hit a 13 year low.  Leading the way was Nevada, of course, logging a 19.3% annual gain. 

http://www.reviewjournal.com/business/housing/us-home-prices-rise-nevada-leads-western-states

Have a great week!  For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html

Permission to Surface Captain?

Financial Markets

The Dow closed at 14,089 Friday, and investors appear to be unaffected by the mandatory budget cuts that automatically kicked in as a result of a stale mate in Congress.  The high water mark represents the highest close in 5 years for the Dow, as Consumer Sentiment and US Manufacturing surpassed forecaster expectations, while Construction Spending and Personal Income missed their projected marks. 

Interesting factoid, March and April have been positive months for the Dow since 1950, with average gains of 1% in the stock market.  If the trends hold, we could expect slightly higher mortgage rates for these two months. 

Southern Nevada Real Estate Related Data

According to the below article and Zillow statistics, the number of home owners that have negative equity has made noticeable improvements over the past year.  According to Zillow, by the end of the 3^rd quarter of 2012, 59.2% of home owners in Southern Nevada are underwater, which is down from over 70% just a year earlier.  While an estimated 197,434 homeowners are still underwater, roughly ¼th of them have 20% or less negative equity.  The gap between Southern Nevada and the rest of the nation is closing with regards to 90 day delinquencies, with Southern Nevada at about 14.5%, while the rest of the nation is hovering around 8.9%.  It certainly appears that the ascension to the surface from the abyss is well underway for Las Vegas home owners.

http://www.lvrj.com/business/las-vegas-homeowners-regaining-property-values-192231891.html

Have a great week!  For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html

Up...The sequel

Financial Markets

The bond market (where mortgage backed securities are traded) rallied ever so slightly Friday, as investors once again deemed US debt safer than European bond instruments.  The Dow Jones also ended higher which bucked the typical trend where the bond market and stock market trade in opposite directions.  Over the past month however, the stock market is up over 600 points, and mortgage backed securities are worse by 100 bps, which loosely translates into 1/4 % in rate or $2,000 in closing costs on a $200,000 loan. 

Southern Nevada Real Estate Related Data

Nevada ranked 2^nd in the nation for home value appreciation in December, experiencing a 15.3% increase in median priced home from December 2011….Nationwide, housing is up 8.3%.  The construction sector has added 98,000 jobs over the past 4 months, and the economy as a whole is starting to feel the positive effects of a recovering housing market.  Another article below discusses January 2013 numbers and points towards a 27% increase in the median priced home from January 2012….As the funny looking great Yankee catcher once said…”It’s Déjà vu all over again”….

http://www.lvrj.com/business/nevada-leads-u-s-in-spiking-home-prices-189970081.html

http://www.lvrj.com/business/las-vegas-home-prices-jump-27-percent-in-january-190365191.html

Wet and Wild is a few months away from opening!  To my knowledge, this has nothing to do with Southern Nevada’s real estate market or local economy, aside from maybe the few hundred part time jobs it brings, but pretty awesome nonetheless!

http://wetnwildlasvegas.com/

Have a great week!  For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html

Latest Debate in DC and its affect on Mortgage Rates

“The ultimate measure of a man is not where he stands in moments of comfort and convenience but where he stands at times of challenge and controversy”.  –Martin Luther King

Financial Markets

Earnings Season is among us and is the driving force behind the recent bull market trend in the stock market.  The Dow ended the day at 13,649 as many of the blue-chip companies reported earnings that met or exceeded forecaster expectations.  Applying additional pressure on mortgage back securities is the debate on whether or not to raise the debt ceiling.  The most-simple explanation, an indication of elevated risk that the U.S. could default on its debt would have an adverse impact on mortgage-backed securities, which sends mortgage rates to the consumer upward.  With that, the price of mortgage rates worsened by about 25 bps over the past week.  This means that if you were paying say 1 percent of the loan amount to get an interest rate of say 3.5%, today you would pay 1.25% of the loan amount for the same interest rate. 

Southern Nevada Real Estate Related Data

“Shadow Inventory” is a key phrase that we all struggle to wrap our arms around for 2013, in terms of defining it and in terms of how much of it truly exists.  The Shadow Inventory has a direct and significant impact on business plans for the entire real estate community yet industry experts seem to have a difficult time agreeing on what the future holds for Southern Nevada.  Below is an article from the RJ with helpful data as it relates to Shadow Inventory in Southern Nevada.  A potential catalyst to the level at which shadow inventory would be released to the market is the anticipated modification of Assembly B ill 284, which would enable banks to foreclose on delinquent home owners quicker and easier. 

http://www.lvrj.com/business/valley-s-shadow-inventory-smaller-than-forecast-187646321.html

Below, a great article about the ripple effect benefits of what a newly built home provides to the local economy.  Statistics that caught my eye…”For every 3,700 single-family homes built creates 6,384 temporary jobs…which go on to create an additional 3,860 permanent jobs”.  The revenue a new home brings in to local governments is also a noticeable benefit, particularly when in the midst of significant budgeting challenges. 

http://www.lvrj.com/business/analyst-housing-recovery-to-continue-unless-government-screws-it-up-187218551.html

Have a great week!  For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html

What does avoiding the Fiscal Cliff mean for me?

I want to wish you a Happy New Year’s and looking forward to working with you in 2013! 

Financial Markets

The latest and greatest played out economic term, “Financial Cliff”, for the most part came to a conclusion this past week and had a dramatic affect on the markets.  The Dow Jones skyrocketed 400 points on the news that President Obama signed the bill to raise taxes and cut spending. (401k’s win!).  As is often the case when stocks rally, the bond market had a miserable day, and selling pressure sent the FNMA 3.0 coupon (bond most directly related to 30 yr fixed mortgage) down 100 bps.  This essentially equates to a .125% to .25% move in interest rates for 30 yr fixed mortgages. (borrowers lose!)

Much of the tax increases apply to those making $400,000 or $450,000 for married couples.  The tax rate increases from 35% to 39.6% and capital gains increases from 15% to 20%.  However, buried in the bill are limits on tax deductions for those making more than $250,000.  Social security withholdings goes back up to 6.2% (of the first $112,500) AND Medicare Tax goes from 1.45% to 2.35%, again, only applying to married couples making over $250,000 or $200,000 for singles…I guess it’s time to get on match.com….

As most of you I am sure have heard, included in the bill is the extension of the mortgage debt relief act. 

Southern Nevada Real Estate Related Data

Nearly 4,000 home sales transpired for the month of November, and new home builders accounted for nearly 15% of the sales. (596). Developers also pulled 478 permits for the month, nearly twice as many as November 2011.  The median priced home approached $133,000, up from $114,000 this time last year (17%). 

http://www.lasvegassun.com/news/2012/dec/26/las-vegas-housing-market-continues-upward-trend/

Have a great week!  For more real estate financing information, please visit my website: http://www.matthewtmaltese.com/home.html