It’s been quite some time since my last “Week in Review”…As you can see, my team and I transitioned to a new mortgage company.  I am excited to share with you the phenomenal features about the new company, but I am more of a “proof is in the pudding” kind of a guy so in the upcoming weeks I will provide data with average # of days to docs, and unique circumstances that we have successfully secured financing.   Now that the transition is complete and I have my first month with First Cal in the rear view mirror, I am energized to get back to what I enjoy most and do best, helping home owners secure financing.  

Financial Markets

Friday was a dismal day for the stock market as the Dow Jones shed 300 points on a number of economic reports that failed to satisfy investors.  National unemployment inched up from 8% to 8.2%.  Roughly 69,000 jobs were created but the general consensus is that you need roughly 150,000 jobs to be created on a monthly basis to simply keep pace with population growth.  Consumer confidence dipped and of course, the European Union is been unable to right the debt-crisis ship, which compounded investor confidence in stocks.  The silver lining, as many of you know, is very low mortgage rates.  In many instances, 30 yr fixed mortgages are below 4%. 

Southern Nevada Real Estate Related Data

We all know “the sitch” (Jersey Shore reference).  Inventory down…prices up…(so simple a caveman gets it).  So who reaps the benefits of Bill 284?  Home builders for starters…347 new home sales were recorded in April, a 34% improvement from April 2011.  Year to date, new home closings reached 1,220, up 20% Median prices are up 6% from a year ago as well. 

http://www.lvrj.com/business/new-homes-sales-jump-34-5-percent-in-april-153201195.html

Who else benefits from Bill 284?  Sellers engaged in a short sale transaction.  The estimated timeframe for the bank to foreclose on a home owner has now doubled, (and may even triple but still don’t know the full affects of the Bill)  and clearly there is a financial benefit for the bank to agree to a short sale, more so now than ever before.  In April, 30% of the sales consisted of short sales for Southern Nevada. 

http://www.lvrj.com/business/short-sales-of-homes-increasing-across-u-s-156215715.html

First month with FirstCal Mortgage:

In my first month, I closed 10 transactions with the company and I have been over the moon with excitement on the consistency and speed of the fulfillment aspect of the transactions.  On average, it took 21.8 days to get docs out from the time the file was submitted to processing.  With two transactions, we had docs out in 13 days!  The average doesn’t strip out the days missed because the value did not come in and buyer and seller had to renegotiate. 

Inflation and the Tooth Fairy

Financial Markets

Stocks rallied Friday, as the Dow rose 156 points for the day, and ended at 12,862, which is the highest close since 2008.  The catalyst for the surge in stocks was January’s unemployment report.  Nearly a quarter of a million jobs were created in January (243,000 to be more accurate), blowing past estimates of 150,000.  Furthermore, November and December’s jobs reports were revised as 160,000 more jobs were created than initially thought.  The national unemployment rate dropped from 8.5% to 8.3%, in what has to be considered one of the more favorable job reports in several years.  It is a clear signal that the US economy is finally starting to gain momentum.

The bond market, and in particular, mortgage-backed securities are seeing an exodus of investors, as they look to seek juicer returns in stocks.  Mortgage rates have gone up by .25% in the past 10 days. 

Food for thought: My son is about to lose his tooth.  The going rate for an 8yr olds’ tooth appears to be $5.  I remembered growing up the Tooth Fairy slipped me a GW under my pillow ($1 bill) for losing my tooth.  My parents were over for dinner, so I asked them what they cashed in from the Tooth Fairy, answer was “25 cents”.  My grandmother was there as well, her answer….”A nickel”.  The trend…The amount multiplies by 4 to 5 every generation.  This means my grandkids will get $20 to $25 and my great grand kids, 50 years from now, will get $100 when they lose a tooth!  Wonder if I get my kids to reimburse me Tooth Fairy fees if my teeth start falling out when I get old…Who needs social security??      

Southern Nevada Real Estate and Economy

S/P Case-Shiller Home Price Index report was released along with predictions from a data contributor, Fiserv.  Fiserv predicted another double digit decline in home values for Las Vegas, but predicted that home values will have increased a little more than 5.5% from middle of 2011 to 2016. 

http://www.vegasinc.com/news/2012/jan/31/las-vegas-home-prices-sink-1997-level-standard-poo/

Food for thought: My son is about to lose his tooth.  The going rate for an 8yr olds’ tooth appears to be $5.  I remembered growing up the Tooth Fairy slipped me a GW under my pillow ($1 bill) for losing my tooth.  My parents were over for dinner, so I asked them what they cashed in from the Tooth Fairy, answer was “25 cents”.  My grandmother was there as well, her answer….”A nickel”.  The trend…The amount multiplies by 4 to 5 every generation.  This means my grandkids will get $20 to $25 and my great grand kids, 50 years from now, will get $100 when they lose a tooth!  Wonder if I get my kids to reimburse me Tooth Fairy fees if my teeth start falling out when I get old…Who needs social security??      

week in review

Primary Residential Mortgage is in the finishing stages of establishing a correspondent relationship with  PennyMac in hopes to offer financing for condo developments that might not otherwise fit agency guidelines.  We also now allow borrowers with VA loans to refinance without an appraisal if the current loan is serviced by Wells Fargo. 

Financial Markets

The Dow posted another strong week, rising nearly 2.5% and landing at 12,720.  Bank of America’s Q4 earnings surpassed expectations as losses for the banking behemoth were not as bad as forecasters anticipated.  National home sales for the year were tallied and reported at 4.26 million sales for 2011.  Economists agree that a healthy housing market should post roughly 6 million sales.  Approximately 33% of all sales nationwide were distressed sales. 

A tame Consumer Price Index report (0%) helped keep mortgage rates in check.  The Core Consumer Price Index, which excludes energy costs such as volatile oil prices, finished the year at 2.2%, which is within the Fed’s tolerance level.  The reading supports the Fed’s decision to leave rates where they are. 

Last, talks of a widespread principal write down for non-Fannie Mae and Freddie Mac loans might actually become a reality, according to the article below.  There are little details as to who would qualify.  It discusses that the settlement is tied to the “robo-signing scandal” many banks have been accused of participating in and that it would go towards roughly 1 million homeowners.

http://www.cnbc.com/id/46046377

Southern Nevada Real Estate and Economy

Larry Murphy held his crystal ball seminar this past week, and his crystal ball wasn’t as optimistic as in years past. He predicts an additional 10% decline in home values and an additional 100,000 homes to be foreclosed on in the next 4 years.  With that I decided to crunch numbers to see how an increase in rates + a decrease in loan amount would affect monthly payment.  Basically, a 10% decrease in loan amount is equivalent to about ½% increase in interest rate to offset the payment.  Meaning, if the price and thereby the loan amount drops by 10%, but mortgage rates go from say 4% to 4.5%, the monthly payment actually remains the same.

http://www.lvrj.com/business/another-rough-year-forecast-for-las-vegas-housing-137779633.html

week in review

Financial Markets

The Dow Jones had a relatively quiet week and ended up for the week slightly, but the big mover for mortgage interest rates had little to do with the European debt crisis or the beginning of earnings season.  The Guarantee-Fee, (aka the G-Fee) is a new fee that is charged by Fannie Mae and Freddie Mac to mortgage companies, for all conventional loans.  A recent bill passed by congress to extend payroll tax cuts included a provision that allowed the GSE’s (government sponsored entities, Fannie Mae and Freddie Mac) to increase fees in an effort to increase revenue.  This fee goes into effect April 1^st, but loans being locked today are being affected, so you will notice mortgage rates increased by .125% to .25%. 

Southern Nevada Real Estate and Economy

Southern Nevada set the record in home sales for 2011, with 48,186 sales for the year.  38,153 of the sales were single family residences while 10,073 of the sales were townhomes and condos.  Roughly 50% of the sales were sold to cash buyers.  Nearly 50% of the sales were bank-owned properties and another roughly 25% of the sales were short-sales.  2011 was not so kind to builders, as new home sales attributed to just under 4,000 for the year, this down from 39,000 new home sales in 2006. 

The inventory of homes on the MLS is falling and according to the article below, sits under 20,000 homes for sale, with a little over 45% of the homes classified as “contingent”, which is a positive sign for builders and equity sellers.  (Amazing to think that individuals selling a home in which they have equity, have their own category now…”equity sellers”…like unicorns…)

http://www.lvrj.com/business/home-sales-set-record-136998508.html

week in review

HARP 2.0, enabling home owner’s to refinance regardless of loan to value provided the loan is owned by Fannie Mae or Freddie Mac will not roll out now until the end of March.  Both agencies are still in the process of building their automated underwriting systems to support the guideline changes. 

Financial Markets

The Dow ended the week up roughly 150 points, ending at 12,359.  A stronger than expected unemployment report was released Friday, with over 200,000 private sector jobs created in December.  The national unemployment rate dropped to 8.5%, the U-6 report (underemployment, those that gave up looking for a job and part-time workers looking for full time employment) remains high, at 15.2%. 

Mortgage rates, which ordinarily would have risen off the news of a stronger than expected jobs report actually improved slightly Friday, as drama in Europe’s credit scene continued.  The latest, Hungary’s bonds were downgraded to “junk” status. 

Southern Nevada Real Estate and Economy

No articles of interest this week, but did a little research on the local unemployment numbers for the past 20 years.  In January 2008, with the housing market in free-fall, the unemployment rate still remained low, at roughly 5%.  In just 1 year, the unemployment rate sky-rocketed to 9.9%, basically doubling.  In the following 12 months, unemployment continued its unprecedented climb, reaching 14.7% in January 2010.  Unemployment rose 200% in 24 months…In the previous two recessions (1993 and 2000), unemployment recovered to its pre-unemployment rate in about same time it took to reach its peak.  That won’t happen in this recovery, but it is encouraging that a recovery in employment can happen quickly. 

http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=state:ST320000&fdim_y=seasonality:S&dl=en&hl=en&q=nevada+unemployment

week in review

I want to wish you all Happy New Year’s and all the best in 2012!  I want to sincerely thank you for the opportunity to work with you and your clients, and look forward to helping many more of your clients in the years to come. 

The numbers are in and our branch, in its first full year with Primary Residential Mortgage, we finished in the top 10 in units for 2012 out of over 300 branches nationwide!  We are extremely proud of this accomplishment.  On an individual note, I finished the year as the 5^th highest producing loan officer in the company, out of over 1,000 loan officers nationwide. 

I thank you again for your support and will continue to strive to make the home buying process a smooth and pleasant experience!

Financial Markets

The Dow ended the year at 12,217, up roughly 5 ½% for the year, a year in which the market experienced tremendous volatility and uncertainty.  For the quarter, the market was up nearly 12%, marking the highest quarterly gain in the stock market’s history. 

Mortgage rates continue to remain at historically low levels, as the ongoing crisis in Europe directed and continues to direct investors to the safe haven US bonds, despite US debt being downgraded for the first time in our nation’s history.  I suspect that the trend will continue as Europe continues to struggle with solutions to their own debt problems. 

So, my bold and gutsy prediction is that mortgage rates remain low in 2012 but rise by as much as ½ percent towards the latter part of the year.  30 year fixed would still remain below 5% and shouldn’t have a noticeable adverse effect on housing demand.

Southern Nevada Real Estate and Economy

Below is a link to the Las Vegas Sun where 10 economists give their forecasts for the local economy for 2012.  It is undisputed that our housing market can only recover as our local economy recovers, so it is critical to keep a watchful eye on local economic conditions.  The consensus is that the worst is behind us.  With unemployment now down to as low as 12.5%, (Still among the nation’s highest, but better than the 15% reached last year) being among the most critical of economic statistics.  All agree that our economy must diversify, and will be critical to a stabilized economy in the future. 

http://www.lasvegassun.com/news/2012/jan/01/economy-2012-forecast/

week in review

We hope to be releasing HARP’s newest refinance feature (abolishing Loan to value requirements on Fannie Mae loans taken out prior to May 31^st 2009) in the next 2 weeks. 

Financial Markets

The Dow Jones ended Friday up nearly 200 points and landed at 12,212.  This is a massive swing from two weeks ago, where the Dow nose-dived by about 1,000 points.  The latest surge resulted from news abroad and domestically.  The Eurozone announced that it was getting close to approving a plan that would solve the debt crisis. 

While here in the US, the Consumer Sentiment Report climbed to a 67.7 reading, marking the fourth consecutive month of increases.  What does this report represent and what does it signify?  To put simply, the better mood the average consumer is in about the economy, the more he/she spends.  The more the consumer spends, the more the economy grows…The more the economy grows the more companies hire, and ultimately drive down the unemployment rate. 

Southern Nevada Real Estate and Economy

Below is a link to an article in the Wall Street Journal that lists Las Vegas the #1 market to invest in real estate.  The formula not only calculates short term rate of return (the cash flow vs. expenses when renting it out) but also long term, in the form of appreciation.  This is a great reference, or tool to use for both investors and those looking to purchase a primary residence in my opinion. 

http://www.marketwatch.com/story/best-cities-to-invest-in-rental-homes-2011-07-11?link=MW_story_insert