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Interest
Rates Break Through Stubborn Barrier: There are growing concerns in the
financial markets that a global recession may be coming soon. There is slowing
in Asia and Europe cannot seem to stimulate their markets enough to produce
growth. Up until now the US economy has shown resilience but a disappointing
jobs number on Friday created some concern. This caused stock markets to move
down to recent low points and mortgage bond markets to break through the 200
day moving average that has been the cap on better rates for months. On Friday
the bond markets moved close to the best levels for all of 2015. That price
point will likely be the next barrier that will cap rate improvements. For now
it appears we moved a notch lower in rate pricing and will be here as long as
concerns remain and stocks languish.
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Industry News
"It's raining. It's pouring." The weather
across much of the country wasn't the only soggy news in recent days, as
September's Jobs Report was an unexpected stinker.
 A disappointing 142,000 new jobs were
created in September, well below the 205,000 expected. The numbers for July
and August also were revised sharply lower, indicating this summer's
performance was worse than originally thought. Average hourly earnings were down from the previous month, while the Labor Force Participation Rate (LFPR) also fell to 62.4 percent, the lowest since October 1977. This was due to 350,000 Americans dropping out of the labor force the month before. The LFPR measures the proportion of working-age Americans who have a job or are looking for one, and it should be moving higher in a recovery. Analysts credit slowing global economies for the negative undercurrent here at home. U.S. factories are being hit especially hard, eliminating 9,000 jobs in September and 18,000 in August, according to the Labor Department. If there is a bright side to the report, it's that the Unemployment Rate held steady at 5.1 percent. Also the U6 number, which includes anyone who wants a full-time job but can't find one, fell to 10 percent, the lowest since June 2008. The disappointing report did help Mortgage Bonds improve, which in turn benefitted home loan rates. In housing news, home prices continued to rise in July. The S&P/Case-Shiller Home Price Index showed a 5 percent annual gain, which was in line with expectations. The index has risen at a rate of 4 percent or higher since September 2012. Overall, home prices continue to appreciate at normal levels. The Federal Reserve will need to see strong, sustainable growth in the labor market and elsewhere before any decision is made to raise its benchmark Fed Funds Rate, which is the rate banks use when lending money to each other overnight. Many analysts believe an increase is off the table now until spring. Despite the recent volatility in the markets, home loan rates remain attractive and near historic lows. If I can answer any questions at all for you or your clients, please get in touch!
What Is Going On In The Economy: Economic
Conditions in the United States continue to modestly positive. There are
positive and negative readings and trends that continue to cause analysts to
say the recovery is not a strong one. Employment numbers continue to improve
as unemployment rates drop but we have the worst labor participation rates
since 1977. Labor participation rates are just under 63%. Ex Regan
Administration financial advisor David Stockman says that is closer to the
real unemployment rate in the US. While there is job growth there has been a
huge loss in high wage jobs and wage increases are very low. Inflation
remains low and dropping oil prices are helping households but there is also
a concern that dropping commodity prices are a sign of a looming economic
slowdown. A slowdown in national housing numbers in August was not
significant in most markets and our local markets seem to be holding up well.
At least we have a growing economy. Recent GDP numbers were strong contrasted
with slowing economies around the globe. Supposedly China continues to grow but
no one really knows if their data is real. It is agreed that China’s growth
is slowing and Asia is experiencing it as a result. Japan continues to
languish as their attempted stimulus by printing money is not working. Europe
is in the same condition as Japan. One of the issues facing Japan and Europe
is no population growth. The welfare state model does not work in a shrinking
population. We face the same issue here. There are many proposed solutions to
a tepid recovery: reduce taxes on companies that are holding dollars
overseas. It is said there is $ 2 Trillion waiting to come here which would
need to go in to the economy to some degree. Eliminate some of the most
onerous rules of Dodd Frank. Lower corporate tax rates to a level consistent
with the rest of the developed world to prevent companies from leaving the
US. Close tax loopholes that make it too easy for the most creative minds in
business to make money with paper trades so they have incentives to create
businesses that employ people. Deal with unfavorable aspects of our unequal
trade relations with other companies, especially China. For now it seems we
are in a correction in the stock markets but are not facing a dramatic
slowdown such as we had in 2008. In order to have robust growth some things
need to change.
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Real Estate Miscellaneous Stats
National Real Estate Markets Cool in August: Tight supply
continues to drive market conditions as US home sales slowed in August after
experiencing a 6.2% increase this year. Existing home sales fell 4.8% from the
previous month nationally, the NAR reports. They expect sales to be flat
through the rest of the year. There are continued signs of normalizing as first
time buyers moved from 28 to 32% of all buyers. Foreclosures and Short Sales
are at the lowest levels in 7 years. New home sales were up 5.7% to their
highest levels in 7 years after being up 12% in July. Builder confidence is at
7 year highs.
New American Funding Recognized By INC Magazine: New American has
announced that it is again included in the Inc 5000. This is the list of the
5000 fastest growing companies in the US. New American Funding has reached this
list the last 3 out of 4 years. This last year they grew 350% placing them 199th
in the list of 5000. “We’re all about doing things better
today than we did yesterday, and we’re focused on the experience of doing
business with New American Funding,” said Rick Arvielo, CEO of New American
Funding. “We’re consistent about asking our clients, partners, and employees
for feedback about us. Then we do more of what they like and less of what they
don’t, it’s how we remove inefficiencies and stay current with our markets. We
couldn’t be happier with the results.”
Local Real Estate Markets Look Strong for August: Our markets still
show resilience in the face of tight market conditions. We are starting to see
people look for alternatives to high priced central markets with condos and
outlying areas of the counties showing strong growth. For new households
looking to live in the city researchers say a majority will rent instead of
looking to buy. Condo construction is drying up in favor of apartment
construction. Here are the numbers: Seattle closed sales up 1.3% from last
year, Eastside up 5.6%, North King up 8.5%, Southeast King up 11.1% and Southwest
King up 16.5%. Price increases continue to be high with Seattle up 15%,
Eastside up 11.1%, North King up 10.3%, Southwest King up 14% and Southeast
King up 12.9%. Snohomish County prices are up 11%.
Snoqualmie
Pass Real Estate, Snoqualmie Pass Properties, Snoqualmie Pass Homes, Snoqualmie
Pass Lots, North Bend Real Estate, Snoqualmie Real
Estate, Carnation Real Estate, Suncadia Real
Estate, Easton Real Estate, http://www.snoqualmiepassliving.com
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