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Benefits of a Slow Down
Right now the
markets are warily eyeing a possible slowdown in the economic recovery. While
we can't tell you if we are indeed in the middle of another pause, we can
tell you that we are already reaping some benefits of even the hint of a
pause. What are these benefits? Oil prices, interest rates and gold prices
have all fallen. It is easy to see the benefits of lower gas prices and rates
with regard to the economy. Lower gas prices give consumers more money to
spend. Lower rates encourage refinancing as well as home and automobile
purchases. The real estate and auto industries were already in recovery mode
before interest rates eased back. For example, in March nearly 1.5 million
cars and trucks were sold, a number not seen since May 2007. In addition,
housing starts broke the 1.0 million mark in March, the strongest performance
since June of 2008. On the other hand, why should we care that gold prices
are dropping?
Of the three,
the move in gold has been much steeper than oil or rates. When the financial
crisis hit five years ago, there was a threat that the financial system would
collapse and move us into a depression. Gold soared in response to this
threat. Even during the recovery -- every time we had a pause -- gold prices
stayed strong because there was a threat of a double dip recession. Today,
there is a possibility of a pause, but gold prices are weak. Is it because we
are no longer worried about our economy slipping back into recession or is it
because countries in trouble like Cyprus could be selling their stores of
gold? In either case, we can say that gold is falling back at a time in which
the economy continues to grow at a pace which will not ignite inflation. That
is the best type of growth possible. Lower energy prices, lower interest
rates and positive economic growth are a strong combination. Of course, we
all wish that the economic recovery would become even stronger. However,
there are benefits to a moderate recovery -- especially if it does not come
with the threat of a recession around the corner or inflation down the road.
 The Home Affordable Refinance Program — a government refinancing program for underwater home owners — will be expanded for another two years, the Federal Housing Finance Agency announced. HARP was originally set to expire Dec. 31, 2013, but will now be extended to the end of 2015. "More than 2 million home owners have refinanced through HARP, proving it a useful tool for reducing risk," says FHFA acting director Edward DeMarco. Home owners eligible to apply for refinancing under HARP must have a Fannie Mae- or Freddie Mac-backed mortgage that was guaranteed on or before May 31, 2009, must be current on their loan, and must have a current loan-to-value ratio more than 80 percent. Source: Chicago Tribune If you are interested in finding out whether you could benefit from a HARP refinance, which is designed for homeowners that are underwater on their home loans -- contact us. Home ownership and rental demand may both get an uptick as a large number of immigrants are expected to enter the United States and call it home by 2020, according to a new study sponsored by the Mortgage Bankers Association’s Research Institute for Housing America. The study makes projections to the year 2020 on the growth of U.S. home owner households headed by immigrants. The number of foreign-born home owners continues to grow bigger each decade, according to the report. For example, the number of foreign-born home owners rose 800,000 from 1980 to 1990; by 2.1 million from 1990 to 2000; and then by 2.4 million from 2000 to 2010. For the 2010 to 2020 period, researchers project that number to rise 2.8 million. The home ownership rate has particularly grown among the Hispanic immigrant population. In 1990, Hispanic immigrants had a 15 percent home ownership rate, which grew to nearly 53 percent in 2010. By 2020, Hispanics’ home ownership rate is expected to rise above 61 percent, according to researchers. The states with the greatest demand from the foreign-born on home ownership are California and New York. The report was prepared by Dowell Myers, professor of the Population Dynamics Research Group at the University of Southern California School of Policy, Planning and Development; and Senior Research Associate John Pitkin.“Immigrants are an important and growing source of demand that has bolstered housing markets in recent decades,” Myers said. “Growth in housing demand in recent decades has been more stable among foreign-born than native-born households. This is because increases in native-born demand have been subject to large swings in the size of cohorts reaching ages 25 to 34, the most common age of entry to the housing market. Rising numbers of foreign-born households are driven by the continued increases in homeownership rates achieved as immigrants settle longer in the United States,” Pitkin said." Source: The Mortgage Bankers Association
The number of
listings on the market increased 2.36 percent in March from the previous
month — possibly an indication that sellers are becoming more willing to put
their homes on the market as asking prices increase, according to housing
data from realtor.com. While the data shows a month-to-month inventory increase,
inventories are still down 15.22 percent compared to last year. The median
age of the inventory continues to drop year-over-year by 12.35 percent, the
amount of time homes are sitting on the market has fallen by 20 days since
February, according to realtor.com. The median age of inventory of for-sale
listings was 78 days in March. “The next three months will be significant in
determining the impact of the recovering housing market,” says Steve
Berkowitz, chief executive officer of Move Inc. Median list prices have
increased year-over-year in a greater number of the 146 markets realtor.com
tracks. Source: RIS Media
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