For many, the Holidays are a time for rest and to spend quality time with family. Of course, those who work in retail understand that the Holidays are the busiest time of the year and their Holiday becomes more compressed. This year, those who work in Congress are getting a taste of a compressed Holiday. Recesses scheduled the week before the Holiday week were called off as they worked towards a deal on the fiscal cliff. The markets became optimistic at the beginning of last week as there seemed to be movement towards a deal. By the end of the week, the optimism faded as Speaker Boehner could not even get his own “Plan B” past the House. This led to what we will call “Bad Friday” — at least for the stock markets.
The markets reacted to the lack of a deal just before the Holidays. Well, it looks as though leaders will be negotiating right through the Holidays and as we suspected all along, any deal will come about at the last second. While we are still optimistic that our leaders will do the right thing, we are cognizant of the fact that any deal which occurs could happen after January 1 or there may be a temporary “kick the can down the road” solution. What is being lost in all this is that we have had some good economic data released lately, especially in the housing sector. While a possible fiscal cliff settlement and stronger data represents good news, keep in mind that this news may be accompanied by higher interest rates and high oil prices. The standoff has contributed to holding rates and oil prices down at record lows for the past few months.
The Markets. Long-term fixed rates trended up as optimism increased for a deal on the budget. Freddie Mac announced that for the week ending December 20, 30-year fixed rates rose from 3.32% to 3.37%. The average for 15-year loans decreased slightly to 2.65%. Adjustable rates were mixed but steady with the average for one-year adjustables falling slightly to 2.52% and five-year adjustables increasing slightly to 2.71%. A year ago 30-year fixed rates were at 3.91%. Attributed to Frank Nothaft, Vice President and Chief Economist, Freddie Mac, “Rates on home loans were mixed this week following data reports on stable inflation and a thriving home construction market. The 12-month growth in the core consumer price index has remained between 1.9 and 2.1 percent for the past five consecutive months ending in November. Meanwhile, housing starts averaged the strongest three months in November since September 2008, and homebuilder confidence rose in December to its highest reading since April 2008.” 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 21, 2012
| Daily Value | Monthly Value | |
| Dec 20 | November | |
| 6-month Treasury Security | 0.10% | 0.14% |
| 1-year Treasury Security | 0.15% | 0.18% |
| 3-year Treasury Security | 0.39% | 0.36% |
| 5-year Treasury Security | 0.77% | 0.67% |
| 10-year Treasury Security | 1.81% | 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% |
Consumers are beginning to feel more positive about homeownership than they were even six months ago, a recent survey by Trulia revealed. In fact, one in four surveyed consumers marked an increased confidence and 31% of renters plan to purchase a home within the next two years. Millennials, consumers ages 18 to 34, are often the most skeptical, as they’ve grown up during the years of boom and bust. However, of the Millennials polled, 93% plan to buy a home at some point. Interestingly enough, 43% of young adults are already homeowners. “Millennials have been shaken, not scarred by the housing bust,” said Jed Kolko, Trulia’s Chief Economist. “Nearly all of them want to own a home someday if they’re not homeowners already. But many of them think today’s low prices and low rates will last. They may be in for sticker shock if the cost of homeownership has returned to normal levels by the time they’re ready to buy.” 2012 was the year of low housing inventory, down 43% compared to 2010, which created many limitations for potential homebuyers. But 22% of homeowners said they will certainly consider selling their home in 2013, paving the way for a broader inventory moving forward. Specifically, homeowners who bought their homes between 2010 and 2012 may consider selling as their home value most likely increased since the time of purchase, allowing them to sell at a profit. “2013 could be the year that inventory turns around, just as 2012 was the year that prices started recovering,” said Kolko. “Homebuyers need inventory to choose from, and with fewer foreclosures on the market, new inventory will come from new construction or homeowners wanting to sell. Rising prices will bring out more sellers, especially if price increases lift them back above water.” Source: Trulia
The U.S. Census Bureau announced that the nation’s overall mover rate increased from a record low of 11.6 percent in 2011 to 12.0 percent in 2012. About 36.5 million people 1 year and older moved, an increase from the 2011 estimate of 35.1 million. In 2012, the majority of people who lived at a different residence 1 year ago moved within the same county (64.4 percent). Among the 11.8 million intercounty movers — people who moved to another county, either within the same state or to a different state — the most common distance moved was less than 50 miles, with 40.2 percent. Therefore, even though they moved to a different county, the largest percentage did not move far from their previous place of residence. This information comes from Geographical Mobility: 2012, a collection of national- and regional-level tables from the Annual Social and Economic Supplement of the Current Population Survey. The tables describe the movement of people in the United States, including type of move, why they moved, distance moved and characteristics of those who moved one year earlier. “The overall mover rate for the nation has increased since a record low. However, compared to previous years, mobility is still low for even our most mobile age group (18 to 29 year olds),” said Alison Fields, chief of the Census Bureau’s Journey-to-Work and Migration Statistics Branch. “The statistics on migration come from two different surveys that, taken together, allow a clear and detailed picture of the movement of people in the U.S.” Source: PRNewswire
Green homes can net higher sales prices, according to a new study conducted by the University of California. Researchers analyzed 1.6 million home sales from 2007 to 2012 and found that green-certified, single-family homes sold for $34,800 more — or 9 percent more — than comparable non-green-certified homes in California. In California, cities that also had the most electric vehicles and most eco-conscious, the sales price of green homes was even higher. “We observed a phenomenon we’ve termed the ‘Prius effect’ — a positive correlation between the value of green home labels and environmental ideology, as measured by the rate of hybrid registrations,” co-author Nils Kok, visiting professor at the University of California, Berkeley, told USA Today. In those identified areas, residents may view green homes as “a point of pride or status symbol,” he added. Past studies that focused on the Seattle and Portland, Ore., markets have found similar results to this study, with green homes fetching more in home sales than comparable homes. Source: USA Today
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