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December 11, 2018


Mike Wright
NMLS# 234953  CalBRE# 01817982
714.240.4030

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Commentary
Year-End Blockbuster Report
  
The December Employment Situation report was a total blockbuster. The Bureau of Labor Statistics reported that 312,000 jobs were created during the month, the strongest showing since February 2017. Analysts had much lower expectations; the Econoday consensus of 180,000 was typical. There were also upward revisions to the previous two months' numbers including an additional 21,000 jobs added to the dismal November estimate of 155,000.
 
Construction was the big winner with 38,000 new jobs, which we can hope will translate into more new home construction, and wages rose 0.4% from November and 3.2% year over year, the best showing since last December and one of the highest of the recovery.
 
The unemployment rate ticked up from 3.7 to 3.9%, but this was also good news. It reflected an increase in those looking for work--that number climbed from 6.018 million to 6.294 million--many of whom were discouraged workers now returning to the hunt.
 
Fannie Mae Chief Economist Doug Duncan said the report "should help soothe fears of a marked slowdown in the economy." However, he also notes that it gives the Federal Reserve "more room to stick with its projected two rate hikes for this year."
    
Naughty & Nice
 
The stock market continued its volatility this week, but with nowhere near the wild swings it suffered over the holidays. The Dow has resumed an upward trend and at this very moment (subject of course to immediate change) has gained back about 400 points since January 1st. 
 
As Wall Street settles down, investors tend to stop worrying about safety and return to stocks. Consequently, yields on Treasury notes and bonds have started to inch back up, but mortgage rates have not followed suit. Freddie Mac says this week's 30-year fixed-rate mortgage hit a nine-month low. 
 
If you are in the market to buy a home, there is more good news in Black Knight's current Mortgage Monitor. While home prices are still rising, the company's Home Price Index is marking significantly smaller increases than this time last year. From annual growth of 6.7% in February, the rate of appreciation had dropped to 5.4% by October. 
 
Growth has slowed in 33 states and 71 metro areas, and nowhere is this slowdown more apparent than in the West, especially California. Over the same period, annual growth in the state moderated from 10% to 4.9%. For the first time since the recovery began, California has slower appreciation than the nation as a whole.
 
Key Indicators
Put whatever you want
ISM Non-Mfg Index Dec
57.6
[Prior 60.7]
 
JOLTs Nov
6.888M Job Openings
[Prior 7.131M rev]
 
Coming Indicators
 
Friday, January 11
CPI
 
Wednesday, January 16
Retail Sales
Housing Market Index
 
Thursday, January 17
Residential Construction
Put whatever you want
Gold (Monex)
$1,292.00/ounce up
 
Crude Oil (Brent)
$61.44/brl up
 
U.S. Dollar to...
Euro                      0.8670 down
Japanese Yen  108.0800 up
Chinese Yuan      6.7841 down
Canadian Dollar  1.3219 down
Mexican Peso    19.2370 down
 
6-mo T-Bill Yield    2.52%
Up 1 bp  
10-yr T-Note Yield 2.74%
Up 9 bps 
 
11th Dist Cost of Funds, 12/31
1.060 down 19 bps 
 
Freddie Mac 30-Year
Avg Rate 1/10
4.45% down 6 bps 
 
MBA - Mortgage Applications
Index Week ending 1/4
Overall           
Up 23.5%
[Prior week down 9.8%]
Purchase Money Loans
Up 17.0%
[Prior week down 8.0%]
Refinancing Loans
Up 35.0%
[Prior week down 12.0%]
 
Jobless Claims 1/5
216,000 new claims
[Prior week 233,000 rev]
4-week moving avg 221,750 up
 
Employment Situation Dec
312,000 New Jobs Created
[Prior 176,000 rev]
Unemployment Rate 3.9%
©Copyright 2019 by Right Side Marketing, 800-456-4395. Every effort has been made to verify the information herein, but it cannot be guaranteed, nor should it be used as a substitute for professional advice. Any opinions expressed herein are that of RSM only. RSM does not grant to you a license to any content, features or materials in this email. For further specifics, or to answer any questions, feel free to call.
 

2100 Main St, Suite 255, Huntington Beach, CA 92648

January 4, 2018


Mike Wright

NMLS# 234953  CalBRE# 01817982
714.240.4030

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Commentary

Insurance for Homebuyers

Insurance is a major part, and not an insignificant expense, of the home purchase experience. Hazard or homeowners' insurance may be the first type that comes to mind, but there are other insurance products that homebuyers may be required to purchase--FHA or private mortgage insurance, title insurance, and others that may be presented to homebuyers as an option; owner title insurance, credit insurance, home warranties, and insurance against specified hazards like earthquakes.

The most important thing to understand is that the required types and or levels of insurance have little to do with protecting homeowners or their homes; they are designed to protect the lenders' investments. There is nothing wrong with that--business is business--but homebuyers do need to be clear on that concept.

Surprising Surprise

A recent survey of consumers found that the cost that surprised homebuyers most frequently was for private mortgage insurance or PMI.

PMI--for loans purchased or guaranteed by Fannie Mae and Freddie Mac--and FHA insurance are not required for all loans, only for those with down payments of less than 20% of the mortgage amount. This insurance protects the lender in the event the homeowner defaults on the loan. PMI isn't a life-of-loan commitment (with the exception of most FHA insurance). It can be removed once the homeowner has sufficient equity in the home, either because the home's value has increased or by paying down the mortgage.

Another type of insurance that came as a big surprise to consumers was title insurance; especially because there are two types of policies--lender and homebuyer. The first, as the name implies, protects the lender and so is required and issued in the amount of the mortgage. The second protects the owner's interest and typically covers the entire home purchase price. An owner policy is optional, but most experts recommend buying it.

A title search is conducted prior to the closing (there will be a charge for doing this on the loan disclosure), but property records can extend back centuries and it is possible to miss a defect in the title. For example, generations ago someone may have been granted an easement on the land. That easement may be benign--maybe it allowed the town to run a water main across one corner of the lot--or it could be a big potential problem. For example, a utility company can, if they wish, build a transmission tower on what is now the patio or perhaps a deceased owner's long-lost heir turns up with a claim to your home. More common are old mortgages or mechanics liens that were never properly discharged. These problems are usually fixable, but at a price. Title insurance covers that cost.

Insurance is not anyone's favorite purchase. It isn't fun, doesn't taste good, or look pretty on the wall. Still there is a lot of truth in the old statement, "Better to have it and not need it--than to need it and not have it."

--------Real Estate Briefs--------

Going For the Green

The National Association of Home Builders (NAHB) found builders use an average of 10.2 different green products/practices in their new homes and nearly a quarter seek green certifications like Energy Star or LEED. Those builders who have their homes green certified are more likely to use more green products and practices, but not by the margins one might think. While those that tend toward certification use an average of 11.9, the 48% who say they never or almost never have their homes certified average 9.1. NAHB said this suggests many more builders could qualify for certification with relatively small tweaks to their current practices. NAHB Eye on Housing

No Place Like Home

Researchers found that pet ownership in a household is at its highest when the head of the home is in their 40s; and married adults are more likely to own a pet (57%) compared to their single counterparts (43%).
 
Homeowners are more likely than renters to have pets... a lot more likely. Again, it may not be that surprising as many rentals have pet restrictions--but homeowners are a full 20% more likely to own pets than renters. (57% compared to 37%). That's a significant gap and likely not a coincidence. According to a Realtor website report, 80% of recent homebuyers owned pets. 2017 Urban Institute's, American Housing Survey
 
©Copyright 2018 by Right Side Marketing, 800-456-4395. Every effort has been made to verify the information herein, but it cannot be guaranteed, nor should it be used as a substitute for professional advice. Any opinions expressed herein are that of RSM only. RSM does not grant to you a license to any content, features or materials in this email. For further specifics, or to answer any questions, feel free to call.
 

2100 Main St, Suite 255, Huntington Beach, CA 92648
December 2018


Mike Wright
NMLS# 234953  CalBRE# 01817982
714.240.4030

View our profile on LinkedIn  Like us on Facebook  Follow us on Twitter 
Commentary
Every Cloud Has... ~ Dec 14, 2018
  
November's Employment Situation Report from the Bureau of Labor Statistics (BLS) barely met expectations on many fronts. While the number of jobs created,155,000, was nothing to sneer at this late in the recovery and was certainly better than the 118,000 initially reported two months earlier, it was at the very bottom of what analysts had predicted (150,000 to 220,000). So were hourly earnings which came in with the same month-over-month and year-over-year gains as in October, 0.2% and 3.1% respectively.
    
...A Silver Lining
 
This subtle but undeniable slowing of economic growth is among the things that have worried the stock market and created its volatility, but there is a bright side to the recent numbers. Econoday said the employment report showed "sustainable non-inflationary strength" and noted that the core CPI rates were "consistent with the Fed's 2% policy goal." 
 
Tim Rood, Chairman of the Collingwood Group, told Fox Business News that he was encouraged on interest rates. The FOMC holds its December meeting next week, and while they are still signaling a hike, Rood says it appears Chair Jerome Powell "is hitting the pause button," in anticipation of changing business conditions in 2019.
 
Fed or no Fed, mortgage rates are already moving down. Freddie Mac's 30-year fixed rate dropped 12 basis points this week and is down 31 since November 15.
 
The company said that rates have either fallen or remained flat for the last five weeks and purchase applications have ticked up in response. "While the housing market softened in response to higher rates through most of this year, the combination of a low unemployment and recent downdraft in rates should support home sales heading into the early winter months."
 
As is our custom, we will be on hiatus for the next two weeks, to celebrate the Holidays with family. See you again in January.
 
Happy Holidays to you and your family!
 
Key Indicators
Put whatever you want
JOLTS Oct
7.079 Job Openings
[Prior 6.960 rev]
 
CPI November
Unchg MoM
Up 2.2% YoY
 
Coming Indicators
 
Friday, December 14
Retail Sales
 
Monday, December 17
Housing Market Index
 
Tuesday, December 18
FOMC Meeting Begins
Residential Construction
 
Wednesday, December 19
Existing Home Sales
 
Thursday, December 20
Leading Indicators
Put whatever you want
Gold (Monex)
$1,245.00/ounce up
 
Crude Oil (Brent)
$60.15/brl down
 
U.S. Dollar to...
Euro                      0.8787 down
Japanese Yen  113.4300 up
Chinese Yuan      6.8812 down
Canadian Dollar  1.3363 down
Mexican Peso    20.1570 down 
 
6-mo T-Bill Yield    2.56%
down 2 bp  
10-yr T-Note Yield 2.91%
Unchg 
 
11th Dist Cost of Funds, 11/30
1.079 up 6 bps 
 
Freddie Mac 30-Year
Avg Rate 12/13
4.63% down 12 bps 
 
MBA - Mortgage Applications
Index Week ending 12/07
Overall
Up 1.6% 
[Prior week up 2.0%]
Purchase Money Loans
Up 3.0%
[Prior week up 1.0%]
Refinancing Loans
Up 2.0%
[Prior week up 6.0%]
 
Jobless Claims 12/8
206,000 new claims
[Prior week 233,000 rev]
4-week moving avg 224,750 down
 
Employment Situation Nov
155,000 New Jobs
[Prior 237,000 rev]
Wages up 0.2% MoM, 3.1% YoY
Unemp 3.7% unchg
 
 
©Copyright 2018 by Right Side Marketing, 800-456-4395. Every effort has been made to verify the information herein, but it cannot be guaranteed, nor should it be used as a substitute for professional advice. Any opinions expressed herein are that of RSM only. RSM does not grant to you a license to any content, features or materials in this email. For further specifics, or to answer any questions, feel free to call.
 

2100 Main St, Suite 255, Huntington Beach, CA 92648

November 2018


Mike Wright
NMLS# 234953  CalBRE# 01817982
714.240.4030

View our profile on LinkedIn  Like us on Facebook  Follow us on Twitter 
Commentary
Releasing Some Pressure ~ Nov. 9, 2018
  
The Employment Situation report for October could be termed "outstanding"; 250,000 new jobs compared to a downwardly revised 118,000 in September. This was more than the most optimistic prediction by Econoday analysts who had expected a report somewhere in the 150,000 to 231,000 range. Their consensus was 190,000 new jobs.
 
The unemployment rate, which had surprised a lot of watchers by dropping 0.2% last month remained stable at 3.7% while the participation rate, bounced back up to 62.9% from 62.7%, a round trip it has made repeatedly for most of this calendar year.
 
Wages increased by 0.2% to hit an annual rate of 3.1%, a high for the post-recession expansion. The 0.2% monthly rate, however, represented a slowdown from the aggregate 1.0% increase over the prior three monthly reports. Econoday'scommentary notes that this could mean wage pressures and thus inflation risks may be less severe than they look. "The monthly slowing in wages removes at least some of the urgency felt by the hawks at the Federal Reserve who were voicing their views at the September FOMC that policy may, in a need to cool the economy and the labor market, have to rise beyond neutral and into the restrictive zone" (i.e. they need to raise rates more quickly.) Thus, even if the Fed doesn't raise rates this month (the November meeting is ongoing), Econoday feels the report strongly confirms expectations they will do so in December.  
    
No Equity? No Worry.
 
The Urban Institute (UI) recently pointed out that cash-out refinances now represented the same share of refinancing in the second quarter as they did just before the housing crash. Since those earlier loans both performed badly and led to a lot of the subsequent negative equity we should be concerned, right? Nope! UI says there are a stack of reasons why not.
 
1) Cash-outs historically increase when home prices and rates rise. Homeowners want to tap that equity and there is less reason for rate/term refinancing. Therefore cash-outs have a larger share of a smaller pie.
 
2) While the share matches that in 2008, it is actually not out-of-line with other periods of rising prices and rates.
 
3) Homeowners are conservative about the amounts they are withdrawing, an average of 21% of their equity compared to 31% pre-crisis. The total dollar volume also remains low.
 
4) While the cash out share is rising, other methods of extracting equity, use of HELOCs, second and reverse mortgages is not growing. Freddie Mac says some of the HELOC lending it sees is actually debt consolidation.
 
If you think you have equity that could be put to better use, call or email me.
 
Key Indicators
Put whatever you want
Factory Orders Sep
Up 0.7%
[Prior up 2.6% rev]
 
ISM Non-Mfg Index Oct
60.3
[Prior 61.6]
 
JOLTs Sep
7.009M job openings
[Prior 7.293M]
 
Coming Indicators
 
Wednesday, November 14
CPI
 
Thursday, November 15
Retail Sales
Put whatever you want
Gold (Monex)
$1,224.00/ounce up
 
Crude Oil (Brent)
$72.07/brl down
 
U.S. Dollar to...
Euro                      0.8752 down
Japanese Yen  113.6400 up
Chinese Yuan      6.9321 down
Canadian Dollar  1.3097 down
Mexican Peso    19.8460 down
 
6-mo T-Bill Yield    2.51%
Up 2 bps
10-yr T-Note Yield 3.22%
Up 7 bps
 
11th Dist Cost of Funds, 10/31
1.018 up 3 bps
 
Freddie Mac 30-Year
Avg Rate 11/8
4.94% up 11 bps
 
MBA - Mortgage Applications
Index Week ending 11/2
Overall
Down 4.0%
[Prior week down 2.5%]
Purchase Money Loans
Down 5.0%
[Prior week down 2.0%]
Refinancing Loans
Down 3.0%
[Prior week Down 4.0%]
 
Jobless Claims 11/3
214,000 new claims
[Prior week 215,000 rev]
4-week moving avg 213,750 Unchg
 
Employment Situation Oct
250,000 new jobs created
[Prior 118,000 rev]
Unemployment 3.7% unchg
 
 
©Copyright 2018 by Right Side Marketing, 800-456-4395. Every effort has been made to verify the information herein, but it cannot be guaranteed, nor should it be used as a substitute for professional advice. Any opinions expressed herein are that of RSM only. RSM does not grant to you a license to any content, features or materials in this email. For further specifics, or to answer any questions, feel free to call.
 

2100 Main St, Suite 255, Huntington Beach, CA 92648