Market Update November

Dated: 11/16/2015

Views: 284

Danyal Erickson
Mortgage Loan Originator
NMLS# 1299942
1517 N. Ankeny Blvd, Ste. A
Ankeny, IA 50023
Cell: (515) 491-6861
Office: (515) 965-1707
Fax: (844) 289-7133
derickson@stearns.com
danyalshomeloans.com
For the week of November 16, 2015 – Vol. 13, Issue 46 

>> Market Update 

QUOTE OF THE WEEK... "If all the economists were laid end to end, they'd never reach a conclusion." --George Bernard Shaw, Irish playwright and critic

INFO THAT HITS US WHERE WE LIVE ... Economists do enjoy endless debates. Fueling these are speeches like the one given last week by New York Fed head William Dudley to the Economic Club of New York. He wouldn't address the "normalization" of interest rates--the rate hike, which is the #1 topic among economists. But he did tell them his thoughts on housing: "Housing fundamentals are solid....Decent payroll gains have supported household formation over the past year and mortgage rates remain low.... While the housing indicators will likely continue to be volatile on a month-to-month basis, I expect the gradual improvement in the housing sector to continue."
There certainly are good reasons for housing to improve. Start with rents. An industry source reports that in the last year, 88% of property managers raised their rents. And 68% expect they'll raise them again in 2016. Yet interest rates remain near historical lows, making home buying more affordable. A new report from a real estate listing site concludes that today's comparatively low monthly mortgage payments, along with those ever more expensive rents, make home ownership a relative bargain to potential buyers. That bargain is also a good investment, as the National Association of Realtors (NAR) reported single-family home prices increased in 87% of measured markets in Q3.
BUSINESS TIP OF THE WEEK... Create goals that motivate you and that are achievable. Always write them down, starting with "I will" or "I must," not "I'll try." Break big goals into smaller milestones. Check your progress often. 

>> Review of Last Week

A SPELL OF SELLING... After investors bought stocks enthusiastically and pushed market indexes up six weeks in a row, last week saw traders turn to selling for a spell. We certainly hope it's a short spell, sincestocks posted their worst weekly losses in months. The down feelings were inspired by soft GDP data from Europe, indicating economic growth there is way less than robust. Additionally, investors were concerned over weak economic data from China, slumping commodities, and the increasing likelihood of an interest rate hike from the Fed in December. None of this was helped by some weak Q3 corporate earnings reports and disappointing economic data.
One investor worry is that the improving jobs situation isn't morphing into strong consumer spending, something our economy sorely needs. Friday's Retail Sales report confirmed this, showing a far less than expected 0.1% gain for October. In harmony with that data, a couple of big department stores submitted disappointing earnings. We also had weaker-than-expected inflation at the wholesale level, as the Producer Price Index dropped 0.4% in October. The good thing about this is it may hold off a Fed rate hike. Good news came with University of Michigan Consumer Sentiment rising to 93.1 in November and Initial Unemployment Claims comfortably below 300,000 for yet another week.
The week ended with the Dow down 3.7%, to 17245; the S&P 500 down 3.6%, to 2023; and the Nasdaq down 4.3%, to 4928. 
With falling stocks, sinking crude oil prices, and weaker than expected economic data, bonds rallied nicely. The 30YR FNMA 4.0% bond we watch finished the week up .51, to $105.83. National average fixed mortgage rates trended higher in Freddie Mac's Primary Mortgage Market Survey for the week ending November 12. Pushing rates up were market expectations of a December Fed rate hike, fueled by the surprisingly strong October jobs data. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?... According to the National Association of Realtors (NAR), millennials are the largest share of home buyers. They make one out of three purchases (two out of three first-time purchases), yet only one out of three of them own homes. 

>> This Week’s Forecast

HOME BUILDING OFF, INFLATION ON, A PEEK AT THE LAST FED MEET... Back to the housing market this week, as we get Housing Starts expected to drop a bit in October, although Building Permitsshould be up, signaling optimism among builders. The Consumer Price Index (CPI) measure of inflation is also forecast to be up, which the Fed would be happy to see. We'll get FOMC Minutes from the last Fed meeting, which just may contain hints of what they'll do in December.
>> The Week’s Economic Indicator Calendar Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. 
Economic Calendar for the Week of Nov 16 – Nov 20
Th 
Nov 19 
 Date Time (ET) Release For Consensus Prior Impact
M
Nov 16
08:30 NY Empire Manufacturing Index Nov -6.0 -11.4 Moderate
Tu
Nov 17
08:30 Consumer Price Index (CPI) Oct 0.2% -0.2% HIGH
Tu
Nov 17
08:30 Core CPI Oct 0.2% 0.2% HIGH
Tu
Nov 17
09:15 Industrial Production Oct 0.1% -0.2% Moderate
Tu
Nov 17
09:15 Capacity Utilization Oct 77.5% 77.5% Moderate
W
Nov 18
08:30 Housing Starts Oct 1.173M 1.206M Moderate
W
Nov 18
08:30 Building Permits Oct 1.137M 1.103M Moderate
W
Nov 18
10:30 Crude Inventories 11/14 NA 4.22M Moderate
W
Nov 18
14:00 FOMC Minutes 10/28 NA NA HIGH
08:30 Initial Unemployment Claims 11/14 272K 276K Moderate
Th 
Nov 19
08:30 Continuing Unemployment Claims 11/7 2.164M 2.174M Moderate
Th 
Nov 19
08:30 Philadelphia Fed Index Nov -1.0 -4.5 HIGH
Th 
Nov 19
10:00 Leading Economic Indicators (LEI)  Oct 0.6% -0.2% Moderate
                                                                                                           

>> Federal Reserve Watch   

Forecasting Federal Reserve policy changes in coming months... Weak economic data has slightly shrunk the army of economists expecting the Fed to raise the Funds Rate in December and January, then leave it alone in March. But it's still an army. Note: In the lower chart, a 66% probability of change is only a 34% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%

After FOMC meeting on: Consensus
Dec 16 0.25%-0.50%
Jan 27 0.50%-0.75%
Mar 16 0.50%-0.75%

Probability of change from current policy: 
      82% 
After FOMC meeting on: Consensus
Dec 16       66%
Jan 27       70%
Mar 16
This e-mail is an advertisement for Danyal Erickson. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in this message is the property of Stearns Lending, LLC and cannot be reproduced for any use without prior written consent. This message is intended for business professionals only and is not intended for distribution to consumers or other third parties. The material does not represent the opinion of Stearns Lending, LLC. This is not a commitment to lend. Program restrictions apply. Stearns Lending, LLC offers many loan products. Stearns Lending, LLC is a California Limited Liability Company headquartered at 4 Hutton Centre Drive, 10th Floor, Santa Ana, California 92707. (800) 350-LEND (5363) Company NMLS# 1854 (www.nmlsconsumeraccess.org). Stearns Lending, LLC is licensed, registered, or exempt from licensing to conduct business in the following states which require license disclosure on advertising materials: Arizona Mortgage Banker License #0905413; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act RMLA# 4130495; Georgia Residential Mortgage Licensee #24066; Illinois Residential Mortgage Licensee #MB.6760686; Kansas Licensed Mortgage Company #MC.0025047; Massachusetts Mortgage Lender/Broker License #MC1854; Licensed by the Mississippi Department of Banking and Consumer Finance; Missouri Residential Mortgage Loan Broker License #12-2052; Licensed by the New Hampshire Banking Department; Licensed by the N.J. Department of Banking and Insurance; Rhode Island Licensed Lender; Registered under Texas SML Mortgage Banker Registration; Virginia State Corporation Commission Lender/Broker License #MC-2184; Washington Consumer Loan Company License #CL-1854. For State of Nevada residents Stearns Lending, LLC is a mortgage lender promoting the loan products or services contained in this article; the business phone number that Stearns Lending maintains on file with the State of Nevada Department of Business and Industry is (714) 513-7777. This information is accurate as of July 24, 2015. © 2015 Stearns Lending, LLC All Rights Reserved. 

 

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