>> Market UpdateQUOTE OF THE WEEK... "The principal thing in this world is to keep one's soul aloft."--Gustave Flaubert, French writerINFO THAT HITS US WHERE WE LIVE... It was difficult for some lofty souls to remain that way following last week's housing data. Existing Home Sales dipped 6.1% in November, to just below the 5 million unit annual rate, but this follows October's read, which was the highest level of the year. Sales are still 2.1% ahead of a year ago. Given the monthly volatility, it's important to look at the underlying trend, which is upward and improving. The market itself also improves. Non-cash sales, where the buyer takes out a mortgage, are 12.6% above last November. The median price is up 5.0% over last year, which should entice more sellers to list.Lofty souls were further challenged by November New Home Sales, down 1.6%, to a 438,000 annual rate. Inventories were up by 3,000 but remain low, giving builders plenty of room to grow. The median sale price for a new home is 1.4% ahead of a year ago and overall home prices are doing even better. The FHFA home price index for all homes financed with conforming mortgages, was up 0.6% for October and is up 4.5% compared to a year ago. The annual increase the year before was 8.1%, so gains have slowed a tad. Finally, the Mortgage Bankers Association reported purchase applications up 1% for the week ending December 19.BUSINESS TIP OF THE WEEK... Make listening your priority over talking. Try to get past clients' immediate needs and understand what they're really after. >> Review of Last WeekMORE HOLIDAY GIFTS... Santa hung around Wall Street for another week, doling out an even bigger pile of presents. These included new all-time highs for both the Dow Jones Industrial Average and the broadly-based S&P 500. Topping off the holiday festivities, the tech-heavy Nasdaq ended at its highest level since March 2000. Positive investor feelings have been going on for some time. The S&P 500 has ended up nine of the last ten weeks, while the Nasdaq finished ahead eight of the past ten weeks. But before we get too excited about this week's performance, it should be noted that volumes for all three indexes were the lowest for the year.The stock market may be a leading economic indicator, but most of the week's data didn't indicate any surge in the recovery. Personal Income, Core PCE Prices, and New and Existing Home Sales missed estimates. More disappointments came from December Michigan Consumer Sentiment and November Durable Goods Orders, excluding the transportation sector. Personal Spending did come in higher than expected and the GDP–3rd Estimate for Q3 was revised up, to a 5% growth rate, the best in 11 years. Some analysts observed that the GDP gain was based almost entirely on a hike in personal consumption spending on Obamacare.The week ended with the Dow UP 1.4%, to 18054; the S&P 500 UP 0.9%, to 2089; and the Nasdaq UP 0.9%, to 4807.As investors flocked to the stock market to pick out their holiday presents, bonds lost ground. The 30YR FNMA 4.0% bond we watch finished the week down .02, at $106.16. Freddie Mac's Primary Mortgage Market Survey for the week ended December 24 showed national average fixed mortgage rates slightly higher, yet still near 2014 lows. "A week of mixed economic releases" was given as the reason for this rate situation. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. DID YOU KNOW?... The Wall Street Journal reported that a trailer in Malibu, CA, once owned by Matthew McConaughey sold for more than $1 million. Interestingly, high-end manufactured homes are in demand all over, particularly among downsizing retirees. >> This Week’s Forecast CONSUMERS GAIN CONFIDENCE, MANUFACTURING SLOWS, PENDING HOME SALES REBOUND... The economic data closing out the year should paint the usual mixed picture. Consumer Confidence is expected to be markedly up in December, but manufacturing growth is forecast to slow. Both the Chicago PMI Midwestern measure and the nationwide ISM Index are forecast to dip a bit but show continued growth. Pending Home Sales are predicted to reverse course and edge up in November.The stock market is open on New Year's Eve, Wednesday, but the bond market closes early; both are closed New Year's Day.>> The Week’s Economic Indicator CalendarWeaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of Dec 29 – Jan 2 DateTime (ET)ReleaseForConsensusPriorImpactTuNov 3010:00Consumer ConfidenceDec94.288.7ModerateWDec 3108:30Initial Unemployment Claims12/27290K280KModerateWDec 3108:30Continuing Unemployment Claims12/222.370M2.403MModerateWDec 3109:45Chicago PMIDec60.060.8HIGHWDec 3110:00Pending Home SalesNov1.0%–1.1%ModerateWDec 2410:30Crude Inventories12/27NA7.267MModerateFJan 210:00ISM IndexDec57.758.7HIGH >> Federal Reserve Watch Forecasting Federal Reserve policy changes in coming months...Most economists believe the Fed will begin raising the Funds Rate in 2015. But estimates of exactly when that will happen vary widely, from March to the end of the year. A few observers even think the rate won't be touched until 2016! Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.Current Fed Funds Rate: 0%–0.25%After FOMC meeting on:Consensus Jan 280%–0.25%Mar 180%–0.25%Apr 290%–0.25%Probability of change from current policy:After FOMC meeting on:Consensus Jan 28 Mar 18 Apr 29
Author:Ralph and Karen Chiodo Phone: 610-517-4117 Dated: December 29th 2014 Views: 552 About Ralph and Karen: THE CHIODO TEAM - Ralph Chiodo Broker / Owner 610-792-4800 x 111
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