The Oil Dilemma
If you read the analyst's projections, you get the impression that the price of oil should be falling because there is excess supply on the horizon. Demand is slowing in developed countries such as ours and new technology is helping us find oil where we have never gone before. "Tightening fuel efficiency standards for automobiles and changing consumer preferences look set to send U.S. gasoline demand back on the declining course on which it embarked in 2007," the Paris-based International Energy Agency said in its latest forecast published recently. Of course, this report can't predict political and other turmoil that occurs around the world.
The conflict in Iraq has contributed to a spike in oil prices and because it heated up as the summer driving season was getting underway, there is a concern that gas prices will also spike. Gas price increases can affect consumer spending and with the economy recovering from the winter slowdown, the timing for price increases is not great. Although we are not sure that there is ever a good time for higher energy prices. Any data which could lead to a long-term increase in inflationary expectations can affect interest rates as well. In this case, the "long-term" projections from the International Energy Agency represent good news. In the short run we will always have to deal with interruptions in supply. Some of these may be caused by natural disasters which are never predictable. Remember, we are about to enter hurricane season.
This week we will get a reading which will tell us how well we are recovering from the cold winter. The employment report is released early because of the 4th of July Holiday. We have some momentum in the employment sector and most are expecting this good news to continue at least moderately. Any surprise to the upside or downside could affect the stock and bond markets and thus the economy. What is interesting is the fact that this report will be released right before the holiday weekend. The markets are typically quiet during this summer holiday period but this week could be an exception.
If you read the analyst's projections, you get the impression that the price of oil should be falling because there is excess supply on the horizon. Demand is slowing in developed countries such as ours and new technology is helping us find oil where we have never gone before. "Tightening fuel efficiency standards for automobiles and changing consumer preferences look set to send U.S. gasoline demand back on the declining course on which it embarked in 2007," the Paris-based International Energy Agency said in its latest forecast published recently. Of course, this report can't predict political and other turmoil that occurs around the world.
The conflict in Iraq has contributed to a spike in oil prices and because it heated up as the summer driving season was getting underway, there is a concern that gas prices will also spike. Gas price increases can affect consumer spending and with the economy recovering from the winter slowdown, the timing for price increases is not great. Although we are not sure that there is ever a good time for higher energy prices. Any data which could lead to a long-term increase in inflationary expectations can affect interest rates as well. In this case, the "long-term" projections from the International Energy Agency represent good news. In the short run we will always have to deal with interruptions in supply. Some of these may be caused by natural disasters which are never predictable. Remember, we are about to enter hurricane season.
This week we will get a reading which will tell us how well we are recovering from the cold winter. The employment report is released early because of the 4th of July Holiday. We have some momentum in the employment sector and most are expecting this good news to continue at least moderately. Any surprise to the upside or downside could affect the stock and bond markets and thus the economy. What is interesting is the fact that this report will be released right before the holiday weekend. The markets are typically quiet during this summer holiday period but this week could be an exception.
Of the 16.4 million active-duty
service members and military veterans with home loans, less than 12% have a
loan guaranteed by the Department of Veterans Affairs. Some blame this low
participation rate on a lack of promotion for the VA home loan program, which
was created in 1944. Many loan officers don't even ask potential clients if
they are veterans. And many veterans don’t know enough about the program to ask
for a VA loan. Others blame lenders and real estate agents who have preferred
the loan products guaranteed or purchased by Fannie Mae, Freddie Mac and the
Federal Housing Administration. But things are looking up for VA lending as
specialists in the product redouble their efforts to get the word out and other
low-down-payment products grow more expensive. A sharp increase in Federal Housing
Administration insurance premiums is making VA more competitive, according to
Megan Booth, senior policy representative at the National Association of
Realtors. "There is not a Realtor alive today that thinks FHA is a better
deal" for veterans, Booth said. "That is helping the VA grow and it
will continue to help the VA grow." VA lenders originated a record 629,300
single-family loans in fiscal 2013, which ended Sept. 30. So far, VA
endorsements have held up well this fiscal year and 63% of VA loans are going
to homebuyers rather than for refinancing, according to agency officials. The
Veterans Association of Real Estate Professionals, a trade group launched in
2011 to promote the VA program, held its first Washington conference recently.
"There are a lot of misconceptions about the VA home loan program among
real estate, lending and housing professionals," says Son Nguyen, the
group's co-founder and president. "We want to change that through
education and outreach." VA officials told the conference they will be
issuing a proposal soon that will clarify the agency's rules on negotiating
fees with sellers. VA rules currently limit the amount veterans can be charged
for closing costs and fees for termite and other inspections. Real estate
agents have been pressing VA for a clarification because veterans are often
disadvantaged when competing with non-veterans to buy a house, particularly
when there are multiple bidders. Source: National Mortgage News Note:
We are dedicated to making sure that veterans are aware of their VA loan
benefits.
Home owners are
remodeling their homes to increase the value, but they also are showing more
desire to stay and enjoy their remodels before they move on. Fifty-three
percent of U.S. home owners say they are remodeling to increase the resale
value of their home, but they have no plans to move in the next five years,
according to a new Houzz & Home survey of more than 135,000
respondents. Sixteen percent of remodelers say they plan to sell their home in
the next two years. One in five — or 22 percent — of the remodelers surveyed
say they feel home prices are rising too quickly to consider moving yet.
Twenty-four percent of respondents say they would prefer to move, but
remodeling their home makes more economic sense. The Millennial generation of
home owners seem to be the most apt to move within the next five years,
according to the survey. Thirty-six percent of them say they are remodeling to
increase their home’s value with the intent to move to their next home soon.
Overall, the most popular renovation projects are bathroom remodels or
additions and kitchen remodels. Home owners continue to devote the highest
share of dollars to kitchen remodels, spending an average of $26,172. That can
vary drastically by region, however. Home owners in the Northeast and West tend
to spend the most on their renovation projects at an average of $32,155 and
$29,411, respectively, on their kitchens (compared to $23,946 in the Midwest
and $21,894 in the South), according to the survey. The most popular
replacement projects are flooring/paneling/ceiling, followed by windows/doors
and roofing. Source: Houzz
After a sluggish
start to 2014, new-home sales posted a strong rebound in May. Sales of newly
built single-family homes soared to the highest rate since May 2008, jumping
18.6 percent last month, according to data released June 24 by the U.S.
Department of Housing and Urban Development and the U.S. Census Bureau."
This increase is a welcome sign after a slow start to 2014," says David
Crowe, chief economist of the National Association of Home Builders. "As
job creation continues, we can expect further release of pent-up demand and
continued gradual growth in the housing recovery. Across the country, regions
posted big gains in new-home sales, with the Northeast leading the pack. Sales
of new-homes jumped 54.5 percent in the Northeast, 34 percent in the West, 14.2
percent in the South, and 1.4 percent in the Midwest. Inventory levels mostly
stayed flat, as builders continue to be cautious about overbuilding. The
inventory of new homes for sale held steady at 189,000 units in May,
representing a 4.5-month supply at the current sales pace. Source: National
Association of Home Builders
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