RISMEDIA, February 28, 2011—Continued improvements in economic activity driven by strong growth in consumer spending are moving the economy beyond the recovery phase and into a period of expansion, according to the February 2011 Economic Outlook released by Fannie Mae’s Economics & Mortgage Market Analysis Group. For 2011, economic growth is projected to accelerate to 3.7%, up from 2.8% economic growth in 2010.
Housing has yet to see robust movement and continues to lag the rest of the economy, according to the group. On the upside, the excess supply of housing appears to have peaked. In addition, the rental vacancy rate fell, indicating the excess supply of housing is being worked off slowly—a trend necessary for housing to return to stability. The downward trend in the rental vacancy rate is consistent with the downward trend in the homeownership rate, which implies a rising share of households have chosen renting over owning. The homeownership rate fell to 66.5% in the fourth quarter of 2010, down from a peak of 69.2% in late 2004.
“We have confidence that the economy is on stronger legs with a sustainable growth path. Our projected annual growth rate for 2011 is nearly a full percent higher than the annual growth rate for 2010, which is a significant event,” said Fannie Mae Chief Economist Doug Duncan. “Economic cross currents such as the lack of sustained strong job growth, state and local fiscal issues and geo-political uncertainty in the Middle East present downside risks. Nevertheless, the positives outweigh the negatives.”
For more information, visit http://www.fanniemae.com.
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Economy Embarking on Period of Expansion, According to Fannie Mae’s Economic & Mortgage Market Analysis Group Print This Post
RISMEDIA, January 3, 2011—Pending home sales rose again in November 2010, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the National Association of REALTORS®. The Pending Home Sales Index, a forward-looking indicator, rose 3.5% to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0% below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. Print This Post
RISMEDIA, December 28, 2010—Improvements in consumer spending and consumer confidence, increased demand for goods and services, and falling unemployment claims are all positive factors for a brighter outlook as we move into 2011, according to the December 2010 Economic Outlook released today by Fannie Mae’s (OTC Bulletin Board: FNMA) Economics & Mortgage Market Analysis Group. Downside risks still exist, however, including a weaker than expected employment report, the ongoing economic turmoil in Europe, and potential inflation problems in China.
For 2011, forecasted growth was upgraded from 2.9 percent to 3.4 percent based on the positives in the recent reports. The forecast anticipates improving labor market conditions, despite the huge disappointment from the November employment report. The housing recovery should gain momentum going into 2011 if the expected stronger labor market materializes. Print This Post
by The KCM Crew on December 20, 2010
Banks and the government have struggled to get the current foreclosure situation under control. The modification programs have helped many families avoid foreclosure. However, the number is but a small percentage of those incapable or unwilling to pay their mortgage. This has resulted in an ever increasing number of bank owned foreclosures (REOs).
The banks are in a difficult situation. If they release this inventory of discounted properties to the market too quickly, it could crush prices causing even more foreclosures. If they release it too slowly, any housing recovery would be further delayed. Imagine a dam, and look at the foreclosures as water behind the dam. The banks needed to find the perfect amount of water they could release to feed the river below but not flood the valley.
This past summer banks finally found that perfect number – not too many, not too few – that the market could handle. Being confident that they had a handle on the challenge, banks increased their repossessions of delinquent properties. Repossessions were up 49 % in August. September set an all-time record for reposed homes. However, in their haste to build that inventory, they got sloppy with their procedures.
When this was revealed, both private and government institutions mandated that the banks declare a moratorium on foreclosures until the irregularities were corrected.
In essence, they put a cork in the dam.
The banks have now revised their procedures and feel comfortable with the accuracy of their paperwork. They will begin to release foreclosures after the first of the year.
The cork is about to be removed.
What will this do to prices?
Both the Bank of America and Fannie Mae have projected that house prices will fall dramatically at the end of the first quarter of 2011 and then slowly move upward through the rest of the year. Why the dramatic drop in values after the start of the year? Perhaps the people in control of the cork know exactly when it will be removed and realize the short term implications.
There is currently a window of opportunity to sell your home before the discounted properties again re-enter the market and put downward pressure on prices. If you plan to sell within the next year, now might be the time. Print This Post
By Don Lee and Tom Petruno
RISMEDIA, December 16, 2010—(MCT)—The Federal Reserve, saying that the economic recovery was not strong enough to bring down unemployment, vowed to stick with its controversial bond-buying program to spur growth and to hold short-term interest rates at near zero for the foreseeable future.
In their last scheduled meeting of the year, Fed monetary policymakers gave a cautious assessment of the recovery even as more private economists raised their growth projections after a strong retail sales report.
With the notable exception of the November jobs report, economic data generally have been looking better in recent weeks. And with the compromise tax deal moving through Congress with its billions of dollars in new stimulus in the form of lower taxes, many analysts see the pace of economic growth accelerating next year.
With the combination of the Fed’s stimulus and the tax-cut package, the government is pulling out all the stops “to get growth,” said Charles Comiskey, head of Treasury trading at Scotia Capital in New York. (More …) Print This Post
58 Percent of Americans Expect Housing Market to Recover after 2012, According to Trulia and RealtyTrac
RISMEDIA, December 9, 2010—Trulia.com, a top site for home buyers, sellers and renters, and RealtyTrac, a leading online marketplace for foreclosure properties released the latest results of an ongoing survey tracking home buyers’ attitudes toward foreclosed homes. Results of the survey conducted online from November 2-4, 2010 by Harris Interactive on behalf on Trulia and RealtyTrac showed that Americans continue to grapple with uncertainty about the housing market, with 58% of U.S. adults expecting recovery to take at least another two years.
As a result of the recent robo-signing debacle, half of U.S. adults expressed that they now have less faith in mortgage lenders, banks and the government. Another 35% believe the robo-signing issue will delay the housing market’s recovery, while only 6% of U.S. adults think the robo-signing issue will have no effect on the recovery of the housing market. (More …) Print This Post
PHOENIX – Nov. 15, 2010 – The pace of the national recovery is moderating and the lift spurred by nearly $800 billion in federal stimulus spending is fading, but there are several promising signs that growth will continue, including in Florida, a leading national fiscal analyst told reporters Friday morning.
Moody’s Analytics economist Chris Lafakis said the Federal Reserve will remain aggressive, with a quantitative easing plan that he equated to “basically flooding the global monetary system.” Lafakis predicted the strategy would lift asset prices, reduce corporate borrowing costs, and increase the willingness of consumers to spend.
Lafakis predicted substantial growth in Florida’s economy, mentioning that the Miami, Orlando and Tampa areas are expected to recover “quite significantly” due to a rebound in population growth and an increased willingness of people to travel to Florida for vacations. “The story of pent-up demand is true in no place more so than Florida,” he said. Print This Post
By Tom Petruno
RISMEDIA, November 8, 2010—(MCT)—The Federal Reserve has announced a new “quantitative easing” plan aimed at bolstering the economy. So what’s quantitative easing? The term is a mouthful, but is simple in execution: The central bank plans to boost its purchases of U.S. Treasury bonds in the open market, hoping to push longer-term interest rates lower, or at least keep them from rising significantly.
The Fed has already “eased” its monetary policy—tried to get more money into the economy—by slashing short-term interest rates. (Raising rates is known as tightening).
But short-term rates are already near zero. So the Fed now is focused on longer-term rates.
The “quantitative” refers to a specific quantity of money—in this case, $600 billion, which is the sum of Treasury debt the Fed said it would buy by next June, on top of about $300 billion of purchases already planned. (More …) Print This Post
by The KCM Crew on November 2, 2010
Almost every mortgage expert predicted that interest rates would skyrocket earlier this year as the Fed backed out of purchasing mortgage-backed-securities. They were wrong and most have refrained from making any new projections ever since. Last week, our own friend and adviser, Dean Hartman, said they may go lower. This week, Market Watch reported on the Mortgage Brokers’ Association’s (MBA) projections:
Mortgage rates may be as low as they’ll get — rates are on course to rise, slowly moving toward 5% by the end of next year, according to the Mortgage Bankers Association’s economic forecast.
It seems that the MBA is in line with the projections of the National Association of Realtors who also believes that rates will increase over the next several quarters. Here are the comparative projections:
If you are thinking about buying a home but are waiting for prices to soften further, be careful that the ‘cost’ of the house isn’t heading upward because of interest rates. Print This Post
by The KCM Crew on October 29, 2010
This is a question anyone thinking about selling must ask. Should they sell now or should they wait for the spring? Most years that would be an interesting question. There is a belief that many buyers come out in the spring and, with that increase in demand for housing, prices may appreciate. This year is unlike any year in recent memory. Most experts believe there will be continuing depreciation of home values throughout the next 18 months.
As we posted on recently, there may be a window of opportunity throughout the rest of 2010 as the banks try to straighten out the paperwork on thousands of foreclosures. Once that paperwork is corrected, the flow of distressed properties coming to the market at discounted prices will begin again.
This was mentioned in the latest Home Price Expectation Survey. Robert Shiller, MacroMarkets co-founder and chief economist said this:
“Over the past month, the average projection for 2010 nationwide home price performance improved slightly among our experts, but for each year thereafter it deteriorated. One plausible explanation for this month’s more negative overall sentiment is recent news concerning foreclosure processing questions and the related possibility of extending the supply pipeline.” (More …)