News for Prescott AZ - AmericanTowns.com

Wednesday, February 24, 2010

Mortgage Market News for the week ending February 19, 2010

 

Fed Comments Push Mortgage Rates Higher

While investors began the week watching for fresh information about Greece and China, the Fed stole the spotlight on Wednesday with news that was unfavorable for mortgage markets, and mortgage rates ended the week moderately higher.

The Fed currently has significant influence on mortgage rates. Over the last year, the Fed pushed mortgage rates lower by purchasing over $1 trillion in mortgage-backed securities (MBS). Wednesday, the Fed's Plosser suggested that the Fed should begin selling those MBS "sooner rather than later." Later that day, the Fed released the detailed minutes from the January 27 Fed meeting. The minutes revealed that "several" Fed officials favored starting the sale of the Fed's MBS portfolio "in the near future." Investors were not expecting that Fed MBS sales would begin any time soon. Quite simply, adding to the supply of MBS being sold means that yields would need to move higher to attract buyers. Since mortgage rates are largely determined by MBS yields, mortgage rates rose after the news.

Thursday, the Fed announced an increase in the discount rate, the emergency rate at which banks borrow money from the Fed. The Fed made clear that this in no way reflected a change in broader monetary policy or its economic outlook. This was simply a return to more normal levels for one Fed tool now that the financial crisis has eased. As a result, there was very little impact on mortgage rates. According to Fed officials, a move to begin to tighten overall monetary policy, which almost certainly would cause a significant reaction, is still expected to be at least several months away. The inflation data released this week continued to show low levels of current inflation, providing little pressure for the Fed to rush to take action.

 

 

Also:

  • January Core CPI inflation increased at a tame 1.6% annual rate
  • January Housing Starts increased 3% to the highest level in six months
  • The Treasury will auction $118 billion in 2-yr, 5-yr, and 7-yr securities next week
  • The Fed purchased $11 billion in agency MBS, with about $55 billion more to go

 

 

 

 

 

 

This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates.  This post is for informational purpose only and is not guaranteed and does not render as legal advice.  Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney.  Please visit my website for contact information

http://bradbergamini.com

 

 

A leading indicator for home prices? Follow the rents!

 

The big question for home buyers and sellers today is: "Where are home prices headed?" People want to know if now is a good time to buy or sell, or if they should wait. We all need to stay on top of trends in real estate values -- so what's a good way to analyze the situation?

Yale economist Robert Shiller states it bluntly: "If you look at the trend in rents to see where housing prices are headed, you're looking at the right measure." Shiller is the co-developer of the S&P Case/Shiller Home Price Indices that monthly track residential real estate values nationally and in 20 metro areas.

Traditionally, people have been willing to pay a modest premium to own a home rather than rent it. Recent studies report that in 1999 rents averaged 87% of the after-tax mortgage payment for houses and condos of similar size in the same neighborhood.

When home prices took off, this percentage changed. By mid-2006, rents had fallen to less than 60% of after-tax mortgage payments. In some markets, owners were paying twice as much as renters for a similar property in the same neighborhood. In a few places, owner monthly payments were three times average rents.

The 87% ratio of rent to ownership cost for 1999 is a good benchmark because it stayed around that level throughout the 1990's and the steep rise in home prices hadn't really begun.

With that as our guide, we can conclude that home prices at last appear to be stabilizing. By the end of October 2009, rents on average were up to 83% of ownership costs!

Conditions vary from market to market, so check your own area. But with historically low mortgage rates, plus the homebuyer tax credit, this could be a great time to be buying or selling.... Have a great month!

 

Market update 2-24-2010

 

Happy Wednesday all! Well despite the news below things seem to be busy with most of you whom I have spoken with. It sounds like people are out looking and our season has yet to begin in Prescott. I always like to point out that most “news” is history so here is the “news” from January sales.

 

New Home Sales Plummeted 11% to annualized rate of 309,000 in January, the worst on record, and  erasing all gains made in the market during the past year as the economy recovers from recession. As a result, months of inventory increased to 9.1 months, the highest since last spring. Inventories  were  estimated at 234,000 homes for sale at the end of January, up from 233,000 in December.  The median price for a new home fell, year over year, in January by 2.4%, to $203,500 from $208,600 in January 2009. Regionally, January new-home sales dropped 35.1% in the Northeast, 11.9% in the West, and 9.5% in the South. Sales rose 2.1% in the Midwest.

Now there has been a lot of speculation on rates going up over the Spring. It still is a concern but here is a possible good sign.

 

Treasuries Gain as Bernanke Says Interest Rates Are Likely to Remain Low Treasuries rose as Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is in a “nascent” recovery that still requires low interest rates to encourage demand by consumers and businesses.

 

For those of you(like me) had no idea what “nascent” means, I looked it up! It means to recently come into existence. I really would be much more impressed with the DC crowd if they were more prone to touting their financial skills and understanding of the general market, rather than their vocabulary.

Kind of interesting as there is a lot of discussion in DC about the long term implication for workers skills and wages and how it is impacting long term unemployment. Perhaps if this whole “stimulus” thing doesn’t work out, Bernanke has a future teaching English literature.

 

I would prefer they understand that people need to be working to buy homes. No tax credits, or rebates will replace that fact.

Have a great week.

 

Dan Shaw

 

Peoples

 

928.710.9146 cell

480.248.1199 fax

dshaw@peoplesmortgage.com

 

Friday, February 19, 2010

News from Prescott YMCA

 

 

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Prescott YMCA

 

 

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Dear Brad,

Prescott YMCA News 


 

 

 

 

Best Wishes! The Prescott YMCA Friday is a weekly update sent to friends and members highlighting the events and activities happening at the Prescott YMCA.  Please send to us an updated e-mail address, friends as well, so we may supply you with all of the information needed for participating in everything the YMCA has to offer.

 Community Garden - Where Volunteers grow vegetables for personal and charitable purposes.  The Second Season planting is scheduled for March.  Look for free gardening classes. Please E-mail us or register with the Membership desk if you are interested in participating in gardening opportunities.

 Swim Lessons - Registration is going on now for March and April "Core" classes.  (Core means included with membership.)  All subsequent classes after April are "Non-Core" and require a fee.

 Aquatics Center -Remains open each evening until designated closing times. If there are no participants, the pool will close at 8:30 pm. 

 Summer Program Registration - Begins April 17th for camps and summer activities.  YMCA Members have priority sign-up opportunities.

 Possible Friday Childcare - For children who have Fridays off- Any Interest?

 Parent Appreciation Night: February 19th - A free evening of Childcare for Families enrolled in YMCA Childcare.  Sign up now!

 No School: PUSD Holiday on Monday February 15th. - Full Day Holiday Camp available.

 Beginning Scuba Class - PADI Scuba classes offered each month.  Please see the schedule at the Y or go online to prescottymca.org.

 Annual Meeting-- A requirement for all YMCAs is scheduled for 10:00 am, February 24, 2010.  Ballots for new Board Members Candidates: Cele Hancock, Michelle Falaick & Dr. Richard Jirsa will be voted for membership. Join us for coffee and to discuss the Y.

Sports-- Youth Volleyball League, coed ages 9-16. Registration going on now. Youth Basketball League "A" division tournament, March 1-10. Spring Break activities, 1:00-2:30pm 

Parking - The Y asks high school students attending high school classes to please avoid parking in the YMCA parking lots.  This is to ensure that our participating members may find easy parking.

 Turbo Kick Class: Sunday, February 14, 3:00 pm - Join Felicia for Turbo Kick, bring a friend. The class is free and open to the public.      

 

 

 

In This Issue

Prescott YMCA News

 

Quick Links

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Prescott YMCA | 750 Whipple Street | Prescott | AZ | 86301

Fed Raises Interest Rate Charged to Banks

This changes everything… and soon.. this is the event that all of us real estate sales persons have been dreading.

 

 

February 18, 2010

News Alert: Federal Reserve Raises Interest Rate Charged to Banks, In First Move Since 2008

The Federal Reserve, taking its first step to return lending to normal after more than two years of extraordinary actions to prop up the economy, on Thursday raised its discount rate -- the interest rate it charges on emergency loans to banks -- by one-quarter percentage point.
The increase, to 0.75 percent from 0.50 percent, takes effect on Friday.
Officials said the move was not meant to be a broad tightening of credit. Rather, they said, it was intended to discourage emergency borrowing when other financing is available to banks.
The discount rate had been at 0.50 percent since December 2008.

[Source: New York Times]

 

 

Friday, February 12, 2010

Mortgage Market update for Valentine's Day

 

Good Morning. Wow what a beautiful day in Prescott yesterday and we are looking forward to a nice weekend as well. Find your valentine and get them outside for some fun and sun!

I wandered downtown last night and listened to my new favorite, open mic nights”. They have them at various locations around town. It never ceases to amaze me the talent that we have locally. What fun.

For those of you who know me well, you know that I am very passionate about my mountain biking. It is my source of unwinding and I love it. I meet people and get to know them better like Rob Israel, who rides way too fast for me! Dang young guys!

So you ask, what does this have to do with real estate. Well just like open mic nights, we are not aware of the many things going on in our community that are helping build the future. Please read the article below….

 

The International Mountain Biking Association (IMBA) is interested in working with local cyclists to make Prescott a Mountain Biking Ride Center. 

WHY: Prescott has a phenomenal network of single track trails and is starting to get noticed as a ride destination. 

SO WHY DO WE NEED IMBA? IMBA has compiled the research to show city leaders just how much economic growth can be stimulated by mountain bikers when they come to town. (Money talks especially during an economic down turn.) 

Prescott Cycling Club Inc., Raven Singletrack Inc., City of Prescott Parks and Recreation, The National Forest Service, Prescott Alternative Transportation, local cycling advocates, and representatives of the Chamber of Commerce are interested in working together to make this happen.

WHEN DID THIS BEGIN? IMBA came to town on Saturday, January 23, 2010. They explained how IMBA could help Prescott become a ride center and the economic benefits for the whole community. More than 60 local mountain bike riders attended along with Council members Lora Lopas & Tammy Linn and Mayor Marlin Kuykendall. 

WHERE EVOLVED FROM THIS MEETING? A steering committee has been formed for the purpose of establishing a Prescott mountain biking coalition to work with IMBA and local leaders. 

PRESCOTT CYCLING CLUB IS INVOLVED -- The current leadership is part of the steering committee and will keep PCC membership informed of progress. Please connect your current PCC Board with questions or suggestions and let us know if you’d like to get involved.

 

This was from a recent email I received. Mountain biking is a huge growing sport with all ages. I was recently at Red Rock in Vegas and there were hundreds of bike riders in the park! Prescott is an undiscovered bike riding Mecca. Now I have to admit, I prefer wide open trails with fewer people and that is why I live in Prescott. However, this is good for our economy and home sales. One of my best friends actually owns a home here just so he and his valentine, can ride their bikes! I am serious! I have done loans for people who were buying second homes for that reason as well.

 

On other fronts this is an interesting article below. It very lightly touches on the subject of rising rates and some of the causes that are going to very soon set them in action.

 

 

Fannie and Freddie  will ramp up their purchases of some $200 billion in delinquent home loans that they guarantee.  Fannie and Freddie's move to accelerate bad-loan purchases will flood investors with cash at a time that the government is looking to investors to pick up the pace of their acquisitions of newly issued mortgage-backed securities. For more than one year, the Federal Reserve has been propping up the housing market by being the primary purchaser of those bonds. But the Fed is set to wind down that $1.25 trillion program, which has helped keep mortgage rates at near-record lows.   Many of those investors will look to plow that money back into the mortgage market.  Fannie Mae and Freddie Mac’s plan to step up purchases of delinquent loans may boost prepayments on their securities to rates that in some cases would erase all of the debt within a year. After the buyouts are completed, prepayments on Fannie Mae and Freddie Mac securities would be easier to predict, making the bonds less risky, because the debt would have “limited delinquencies” and “limited rate refinancing risk.

 

Some of you may remember my preaching from last year that we must get private money back into mortgage securities. The dilemma is how to do that. How do we get someon with money to invest, to take a risk in buying mortgages? The answer is to offer them a higher return to entice them. This will drive rates for a while in our future.

I hope you enjoy your weekend. It could be busy for you as this is a holiday weekend. Happy Valentine’s day to you all!

 

Dan Shaw

 

Peoples

 

928.710.9146 cell

480.248.1199 fax

dshaw@peoplesmortgage.com

www.pinecountrymortgage.com

This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates.  This post is for informational purpose only and is not guaranteed and does not render as legal advice.  Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney.  Please visit my website for contact information

http://bradbergamini.com

 

 

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