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CHARLOTTE METRO REAL ESTATE TRENDS AND STATS

Market Comment - Week of October 19th, 2009

October 19th, 2009 4:45 PM

Mortgage bond prices fell sharply last week driving mortgage rates higher. Rates were under pressure from better than expected economic news and rising stocks. Retail sales, weekly jobless claims, and industrial production data were all better than expected. The improved economic outlook had investors flocking to buy stocks, which helped the Dow Jones index to close over 10,000.

For the week, interest rates rose nearly 7/8 of a discount point.

The producer price index data to be released Tuesday will be the most important data this week. Any signs of inflation will generally not bode well for mortgage bonds. The Fed "Beige Book" will factor into trading this week. Stock strength and dollar valuation will play a pivotal role in mortgage interest rates as well.

Economic Factors
Economic Indicator	Release Date Time	Consensus Estimate	Analysis
Housing Starts	Tuesday, Oct. 20, 2009	Up 1.5%	Important. A measure of housing sector strength. Weakness may lead to lower rates.
Producer Price Index	Tuesday, Oct. 20, 2009	Up 0.1%, Core up 0.1%	Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.
Fed "Beige Book"	Wednesday, Oct. 21, 2009	None	Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Leading Economic Indicators	Thursday, Oct. 22, 2009	Up 0.8%	Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Existing Home Sales	Friday, Oct. 23, 2009	Up 5.5%	Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.

Housing Starts

Housing starts data is a leading indicator of the state of our economy. This report, provided by the Bureau of the Census, takes into account data from both single-family homes and multi-family dwellings. Building permits are also released with the housing starts data. By knowing the number of permits issued monthly, analysts can attempt to estimate for the upcoming months. Normally, starts are 10% higher than permits since all locations are not required to have a building permit.

Housing starts and permits give a warning of future economic activity. In effect, a rise in housing starts can lead to a fall in the bond market and vice versa. Consumers tend to hold off on the purchase of new homes, new cars, and other big-ticket items if they are worried about the future of the economy. Housing is an important part of our economy. Continued declines in housing starts can lead to continued economic slowdown and essentially a deeper recession. On the other hand, increases in housing starts could signal a possible reversal.

From the opposite perspective, changes in interest rates often lead to changes in housing starts. High interest rates can cause a significant decline in home sales, which can lead to a drop in housing starts. Just the opposite happens when rates drop and is one of the additional reasons the Fed is trying to keep rates low. Low mortgage rates affect both home sales and housing starts. The housing market across the country is a vital component in sustaining the economy. For some time homeowners generally saw an increase in the value of their homes. Unfortunately now that has all changed. The softening of the housing market tied to credit concerns continues to have many worried. Most economists believe more pain is headed our way from the housing sector.

There is still uncertainty regarding the future state of the economy. Mortgage bonds have been volatile and improvements are not a given despite the recent Fed efforts to purchase mortgage bonds. The good news is that mortgage interest rates remain historically low. Be cautious.

Posted by Philip Jernigan, SRA on October 19th, 2009 4:45 PMPost a Comment (0)

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Poll ranks North Carolina as sixth most popular state

October 7th, 2009 4:51 PM

Triangle Business Journal - by James Gallagher

The Tar Heel State is one of the most attractive in the nation, according to a new poll.

North Carolina tied with Arizona and Washington as the sixth most popular states in the nation when it comes to where people want to live, according to a Harris Interactive poll.

“The most popular states and cities where large numbers of people would like to live tend to attract tourists and business,” according to a Harris news release. “They are places where people like to take vacations and where companies like to have their offices and factories.”

Coastal states tend to dominate the list. California ranked No. 1 for the sixth year in a row as the place Americans would like to live. Florida came in second and Hawaii, third.

Despite North Carolina’s popularity, no cities within the state made the list of cities people would most like to live in or near. Among cities, New York City took the top spot in the poll, followed by Denver and San Francisco.

The other most popular states were: Texas (No. 4), Colorado (No. 5), Tennessee (No. 9), Oregon (No. 10), New York (No. 11), South Carolina and Massachusetts (both No. 12), Georgia (No. 14), and Montana (No. 15).

The other cities in the top 15 are in order San Diego, Seattle, Chicago, Boston, Las Vegas, Washington, D.C., Dallas, Nashville, Atlanta, Orlando, and Los Angeles.

The poll of 2,498 U.S. adults was conducted Aug. 10-18.

Reporter e-mail: jgallagher@bizjournals.com

Posted by Philip Jernigan, SRA on October 7th, 2009 4:51 PMPost a Comment (0)

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