week in review

Financial Markets

The Dow Jones ended all five trading sessions up, and for the week the Dow ended up over 500 points, closing at 11,509.  US stocks appear to be the lesser of two evils as European debt issues continue to take center stage.  At the moment, US stocks appear to be the safer play with more upside than foreign markets, in the eyes of investors.

Mortgage rates lost nearly 100 bps for the week, and rates have begun to trend upward.  Inflation numbers released on Thursday came in hotter than expected.  As a reminder, a fixed rate of return investment, such as a mortgage-backed security, is not a prudent investment in the face of inflation.  Investors sell their position, which drives the yield (rate of return) up, which is essentially our client’s mortgage rate.  Mortgage rates will continue to climb as concerns of inflation continue to materialize, which is why I will continue to recommend locking in the interest rate early on in the transaction.

Southern Nevada Real Estate and Economy

The Brookings Institute released its 2^nd quarter Metro Monitor Economic Report this past week, and Las Vegas ranked among the highest metro areas for improvements in unemployment as well as Gross Metropolitan Product (like GDP but for the city) from 2^nd quarter of 2010 to 2^nd quarter of 2011.  Las Vegas improved its “MPD” by 1.1% and improved its unemployment rate by 1.5%...For anyone that played sports, “Most Improved” isn’t always the most admired award to win because it means you stunk at one point, but it is certainly another step in the right direction. 

Also, the report points out a glaring coincidence that markets with the most anemic economic conditions also have the hardest hit real estate markets. 

http://www.lasvegassun.com/news/2011/sep/14/brookings-las-vegas-slight-economic-job-growth-are/

week in review

We will be accepting loan applications for FHA loans up to $400,000 until September 16^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…

Financial Markets

The Dow Jones held its own all week, reaching 11,500, only to give all of its gains, and then some, back on Friday.  Investors sold stocks amid fears of Europe, and in particular Greece, defaulting on its debt.  The Dow dropped over 300 points for the day and landed at 10,992. 

Earlier in the day, President Obama initiated a proposal to help stimulate job growth.  The proposal would cost 447 billion.  Included in the proposal is a reemphasis for improvements to the “HARP” refinance program.  While no details have been given, the speculation is that Fannie Mae and Freddie Mac would enable refinances of its own portfolio without an appraisal.  This would be huge for Nevada, as so many Nevadans that could refinance from a credit standpoint, cannot because of the lack of equity in their homes.

Southern Nevada Real Estate and Economy

August home sales for Southern Nevada boasted another strong month.  4,693 sales took place, of which 987 of the sales were townhomes and condos.  The median priced home slumped slightly to $120,000, however, the 3,706 single family residence sales are up 17% from July 2011 and up 31% from the same month last year. 

http://www.lvrj.com/business/las-vegas-home-resales-surge-in-august-129453263.html

Below is an article in the RJ that discusses how the low real estate prices provoke companies to relocate to Southern Nevada. 

http://www.lvrj.com/business/cheap-homes-may-spur-companies-to-move-to-valley-129608588.html

week in review

I want to wish you and your family’s a relaxing and safe Labor Day weekend!  (ok…how about we settle for busy!)

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…

Financial Markets

The Dow Jones experienced more chop as it rose roughly 400 points by mid-week, only to give it all back on Friday, ending the week down 46 points at 11,240.  The catalyst for the drop was the August employment report, which showed a net 0 jobs gained for the month.  This adds to the fuel of the double-dip recession fire, and all eyes will be on President Obama and his upcoming speech on unemployment.  The unemployment rate held steady at 9.1%.  

Southern Nevada Real Estate and Economy

Below is an article ranking the top home builders in Southern Nevada for the 1^st half of this year.

1.      DR Horton 220 homes closed

2.      KB Homes 197 homes closed

3.      Richmond American Homes 143 homes closed

4.      Lennar 136 homes closed

5.      Harmony Homes (largest privately held builder) 127 homes closed

As a whole, the home building industry closed 1669 homes during the first 6 months of the year.  The median priced home was $197,903.  The top 3 master plan communities were:

1.      Mountain’s Edge (average priced home = $195,911)

2.      Providence (average priced home = $210,033)

3.      Summerlin (average priced home = $238,178)

http://www.vegasinc.com/news/2011/aug/29/dr-horton-kb-home-top-home-sales-list-first-six-mo/

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