Behind Closed Doors

behind-closed-doors--large-msg-125148896839Many American’s get upset when government officials and politicians do things behind closed doors rather than open to public scrutiny. After all, we are a democratic society and we want open government–not back room deals. On the other hand, we have a feeling that the majority of the negotiations aimed at avoiding the fiscal cliff are really taking place behind closed doors while the politicians ramp up the public rhetoric so that their political bases are satisfied with their leaders’ positions. One should be looking not so much at what you see and hear in the media vs. what you can’t see and hear as easily. For that news you have to dig a bit deeper.

What we all should be looking for here is compromise. There is not a single side that will win the other side over. Each will have to contribute to the compromise with significant concessions. The true winner of the compromise will be America and especially the American economy. The latest employment report tells us that even though the numbers are improving, we still have a long way to go. The markets were relieved that Hurricane Sandy did not seem to have as great an impact on the report as expected. There is no denying the fact that we have come a long way from the depths of the recession and there is more work to be done. If our leaders start getting their work done behind closed doors, it certainly would help.
The Markets. Rates were again stable at record lows last week. Freddie Mac announced that for the week ending December 6, 30-year fixed rates rose slightly from 3.32% to 3.34%. The average for 15-year loans increased slightly as well to 2.67%. Adjustable rates were down with the average for one-year adjustables falling one tick to 2.55% and five-year adjustables decreasing to 2.69%. A year ago 30-year fixed rates were at 3.99%. Attributed to Frank Nothaft, Vice President and Chief Economist, Freddie Mac, “Rates were little changed and near record lows this week amid indicators of stronger economic growth and signs of tame inflation. Third quarter real GDP growth was revised from an initial report of 2.0 percent to 2.7 percent, nearly matching the market consensus forecast. Meanwhile, the 12-month growth rate of the core price index of consumer expenditures remained at 1.7 percent in October which is on the low end of the Federal Reserve’s projection range for this year. The housing market is aiding in this recovery. For instance, fixed residential investment added positive growth over the past six consecutive quarters and in the third quarter alone contributed 0.3 percentage points to real GDP growth. In addition, residential construction spending was up 3 percent between September and October. Finally, pending home sales saw a 5.2 percent increase in October to its highest reading since March 2007.”  Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages
Updated December 7, 2012

Daily   Value Monthly   Value
Dec   6 November
6-month   Treasury Security 0.14%  0.14%
1-year   Treasury Security 0.18%  0.18%
3-year   Treasury Security 0.32%  0.36%
5-year   Treasury Security 0.60%  0.67%
10-year   Treasury Security 1.59% 1.65%
12-month   LIBOR    0.864%   (Nov)
12-month   MTA    0.172%   (Nov)
11th   District Cost of Funds    1.011%   (Oct)
Prime   Rate    3.25%

Developers are hoping that a new FHA change that is friendlier toward allowing mixed-use developments will help to revive condo sales, The New York Times reports. In September, the FHA approved a rule change that permits government-insured mortgages for condos in mixed-use buildings containing commercial of up to 35 percent. That’s up from a previous 25 percent limit. But the FHA says it may even be willing to grant exceptions to projects that have as much as half of their space designated as commercial. “The new FHA ruling strengthens the attractiveness of condos as an option, because it increases the field of potential condo buyers,” Katharine Kelly, director of such a development in Atlanta, told The New York Times. The FHA insures mortgages and offers programs for first-time home buyers, which include low down payment requirements such as of 3.5 percent. The move has been viewed by some in the industry as a big step in helping to spread the development of mixed-use developments that both younger and older buyers have shown recent preferences for. “We’ve learned that this mixing of development makes for a better urban design, so towns and cities are designing codes to encourage it, and the market is showing interest,” says John K. McIlwain, a senior resident fellow at the Urban Land Institute. “We’re going to see a lot more mixed use, whether it’s in the urban central city or suburban town centers.” Also among some of its recent changes effective this September, the FHA has recently increased the number of units that investors can own in a development to 50 percent — that’s compared to 10 percent previously. However, the rest of the building must be owner-occupied. Source: The New York Times

More generations are sharing one roof, and households will likely only get bigger in the years ahead, surveys show. Nearly a third of home owners say they expect their adult children and aging parents to eventually move in with them, according to a new survey of more than 1,000 home owners conducted by homebuilder PulteGroup. One in seven of home owners surveyed say they already have an adult child or elderly parent living with them. Indeed, multigenerational households are at their highest level since the 1950s, according to Pew Research Center. The higher number of people living under one roof is prompting changes in home designs, builders say. For example, PulteGroup is experimenting with additional master suites in a home — one upstairs and one downstairs — to better accommodate elderly parents who are moving in. Source: USA Today

The economy got a little boost in October and November that was mostly attributed to an increase in home sales and consumer spending, according to the Federal Reserve’s Beige Book. Nine of the Fed’s 12 regional banking districts showed growth during the time period. However, the Northeast had notably slow economic growth, which was mostly attributed to the impact of Hurricane Sandy, which struck the region in October. Economic growth was notably slower in New York, Philadelphia, and Boston, which the Beige Book also noted had a slowdown in sales of single-family homes and condos. Meanwhile, a rise in home prices is helping to lift consumer confidence. The Beige Book notes that the housing market was showing considerable improvement in most areas, with one regional district noting that the Cleveland and Richmond areas were showing strength in sales among high-priced homes. Stronger sales were also reducing home inventories, according to Kansas City contacts. Economic growth improved in most parts of the country despite the looming “fiscal cliff” and fears of tax increases and spending cuts. Hiring increased in more than half of the districts, according to the Fed. Source: The Wall Street Journal

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