23. May 2008 by Ana Connell.

• Leading Indicators, inched up .1% trying to suggest that the economy will not officially dip into a recession.(Monday)
• Producer Price Index .2% increase seems tame following the 1.1% surge last month. (Tuesday)
• FOMC Meeting Minutes the Fed lowered it’s forecast for economic growth and indicated that it was pausing in it’s interest rate strategy for a while. They believe that while growth is contracting in the first half of 2008 it will rebound in the latter half of the year.(Wednesday)
• Jobless Claims came in at 365K which seems to suggest a stabilization in the jobs market.(Thursday)
• Exisiting Home Sales dropped by 1% in April and inventories rose from a supply of 10 months to 11.2 months.(Friday)

• Bonds…2 year 2.45%, 5 yr. 3.15% and the 10 yr. 3.85%….so far as market has not closed on the day yet, but will close early for the Memorial Day Holiday.
• Crude oil has been the big story this week hitting record highs, right now it’s sitting at $132.82 per barrel, below the record of $135 it hit yesterday.

Of note this past week:

Oil, again, is dominating the markets and not in a good way.  The Dow is sitting at 12517, down 108 points on the day so far and down over 500 points on the week if this continues.  The negative fallout is hitting Europe as those markets are feeling the pain with their main concern being that oil prices are showing little signs of retreating.

Have a great Memorial Day Weekend!

The Economic Week Ahead( I will be dark for 2 weeks so I’ve included upcoming events for those weeks, commentary to follow when I get back):

• Memorial Day Holiday!(Monday)
• Consumer Confidence , New Homes Sales(Tuesday)
• Durable Goods Orders, MBA Purchase Applications(Wednesday)
• Jobless Claims , Help Wanted Index, GDP(Thursday)
• Consumer Sentiment, Personal Income and Outlays , NAPM Chicago Index (Friday)

The Economic Week Ahead For June 2nd:

• ISM Manufacturing Index , (Monday)
• Motor Vehicle Sales, Factory Orders(Tuesday)
• Challenger Job Cut Report, MBA Purchase Applications(Wednesday)
• Jobless Claims , Monster Employment Index, Chain Store Sales,BOE Announcement- Bank of England Monetary Policy, ECB Announcement- Interest Rate policy issued by European Central Bank
  (Thursday)
• Consumer Credit, Employment Situation(Friday)

Have a great week!

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23. May 2008 by Ana Connell.

Here is the report for April and as you can see sales can vary greatly by area. One thing is clear, however, money is still tight and sales are down. Latest forecasts have the turnaround starting later this year and into 2009. The recovery does hinge on access to loans and in many cases buyers are not qualifying under the current banking standards. A record 62% of banks reported tighter lending standards for prime mortgages and 72% have tighted subprime mortgage requirements(no surprise here).

Fixed mortgage rates are expected to rise to 6.2% later this year and 6.3% for 2009.

To keep things in perspective…..home prices in Los Angeles/Long Beach/Orange County areas increased 6.2% over the last 5 years.  This statistic oversimplifies some aspects of this market, but it is clear that some areas are still doing well relative to prices just 5 years ago.

Is it time to buy?  Maybe …..market upturns can be hard to predict and rising prices can catch most buyers off guard.   Do your homework and start your shopping today so you know if you are getting a well priced home.  Overall trends can underscore the bargains that are out there today.

City #Sold 2008 / 2007 %Chg
Burbank                             56         $521,500/ $634,000         -17.74%

Glendale                            56         $552,500/ $605,000         - 8.68%

Canoga Park                     30        $447,500/ $550,000          -18.64%

Montrose                              4        $417,750/ $575,000           -27.35%

North Hollywood             58        $385,000/$565,750           -31.95%

Sherman Oaks                 41        $760,000/ $761,759            - .23%

Studio City                        31        $800,000/ $899,000          -11.01%

Valley Village                  11        $583,500/ $727,000            -19.74%

Tujunga                             14        $498,000/ $564,500           -11.78%

Agoura Hills                     21       $450,000/ $650,000          -30.77%

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19. May 2008 by Ana Connell.

• Retail Sales - down .2%, less autos it was up .5% which was unexpected. Business Inventories- up .1% reflecting that fact that most businesses are trying to keep inventories low during the slow down. (Tuesday)

• Consumer Price Index - up .2% which was much better than expected, energy came in almost flat which is a mystery to me! (Wednesday)

• Jobless Claims -371,000 reflecting poor conditions in the labor arena.
• Industrial Production,-down .7%, worse than expected and again pointing to more widespread weakness in manufacturing.
• Philidelphia Fed Survey-continues to show weakness in manufacturing and came in down 15.6%.
• Empire State Manufacturing Survey-down 3.2%
• Housing Market Index-came in at 19 with the component for buyer traffic being very weak in May.(Thursday)

• Housing Starts- at 1.032M reflected an increase of 8.2% in May.
• Consumer Sentiment fell from 62.6 in April to 59.5 in May, lowest level in 28 years. Not surprising as inflation continues to be a top concern for consumers and rising gasoline and food prices are hurting wallets everywhere.(Friday)

• Bonds…2 year 2.45%, 5 yr. 3.11% and the 10 yr. 3.85%.
• Crude oil had a high of $127.82 and closed at $126.29 per barrel. President Bush’s visit to Saudi Arabia yielded a token increase in production of 300,000 barrels, not enough to make a meaningful difference.

Of note this past week:

Housing starts had a very unexpected increase of 8.2% which appears to have come from multi-family dwellings, apartment buildings etc. which jumped by 40.5%! Single family home starts were at their lowest level since 1991, down 1.7%, reflecting twelve months of declining numbers. Right now weakness among homebuilders shows no signs of an immediate turn around. The CEO of Toll Brothers said this week that buyer traffic is the worst they’ve ever seen.

Clearly the devil is in the details, but the continuing tight money situation is not helping as buyers are struggling to obtain loans. Add the lightness of wallets due to gas and food prices and it’s no surprise that buyers may be more hesitant to commit to a mortgage. At the same time I’m seeing a clear hesitancy among buyers who think prices will go lower yet. This may be a mistake as all markets behave differently and more importantly many price points are behaving differently based on inventory levels and available buyers for those properties. I’m still of the opinion that if you find your dream home and it’s adequately priced for this market, buy it, because we really don’t know when prices will start to go back up and this may be a missed opportunity for many hoping to get into their first home.

Dow closed down 6 points for the day, at 12987.  At one point it was down 100 due to oil prices but the bulls managed to climb back.

The Economic Week Ahead:

• Leading Indicators,(Monday)
• Producer Price Index (Tuesday)
• FOMC Meeting Minutes (Wednesday)
• Jobless Claims (Thursday)
• Exisiting Home Sales(Friday)

Have a great week!

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12. May 2008 by Ana Connell.

• Pending Homes Index fell 1% in March and is looking to be coming in at 20% year over year declines.   Again the real story is when you look at specific markets.  For example the Northeast did better, up 12.5%, so these numbers are somewhat meaningless unless you are looking for an overall trend, which currently is still down.  Individual neighborhoods can be an entirely different story depending on where you are looking and at what price range.  Tight money is still in play which means buyers are still finding it difficult to obtain loans.(Wednesday)

• Jobless Claims, came in at 365,000, lower than last week.  Chain Store Sales reported the best numbers since January, good news for retailers.
• Bank of England (BOE) Announcement, as expected came in at maintaining it’s key rate at 5%.  The message here is that it still sees inflation as a real threat.

• International Trade -The US trade balance shrank, which is good news for the dollar.  Only bad news here is that less imports points to a weak economy.(Friday)

• Bonds…2 year 2.22%, 5 yr. 2.95% and the 10 yr. 3.76%.
• Crude oil finished at $125.96 per barrel, and some are now predicting $200 per barrel by Christmas.

Of note this past week:

Dow closed down 121 points for the day, down 312 points for the week.  Oil was to blame and will continue to put a huge damper on the markets.  There are some important reports coming out this week, but all eyes seem to be on oil.
The Economic Week Ahead:

• Retail Sales , Business Inventories, (Tuesday)

• Consumer Price Index , (Wednesday)

• Jobless Claims , Industrial Production, Philidelphia Fed Survey, Empire State Manufacturing Survey, Housing Market Index(Thursday)

• Housing Starts, Consumer Sentiment(Friday)

Have a great week!

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3. May 2008 by Ana Connell.

• Consumer Confidence fell from 65.9 to 62.3, lowest level since early 90’s.(Tuesday)

• FOMC Announcement-Fed lowered interest rates by .25%, to 2%. ,
• NAPM Chicago Index came in at 48.3. The report also showed that increasing costs of raw materials continues to be a problem. MBA Purchase Applications fell 4.8%.
• GDP came in at an annualized rate of 2.6% barely keeping us out of the official recessiondefinition.
• Employment Cost Index rose .7% in the 1st quarter, meaning real wages are not rising very much.(Wednesday)

• Jobless Claims, came in at 380,000, jumping by 35,000.
• ISM Manufacturing Index steady at 48.6 pointing to a slight contraction in business conditions.
• Personal Income and Outlays Personal income came in at .3% and consumer spending at .4%(Thursday)

• Employment Situation-The unemployment rate fell from 5.1 to 5.0%.(non-farm payrolls)(Friday)

• Bonds…2 year 2.45%, 5 yr. 3.17% and the 10 yr. 3.86%.
• Crude oil finished at $116.32 per barrel, despite some strength in the dollar.

Of note this week:

The Dow finished the day up 48 points to close above 13,000 to 13,058. The S&P 500 closed up 5 points, near a 4 month high at 1414 and the Nasdaq closed lower by 8 points to 2477.

The Fed lowered the Fed Funds rate by 25 basis points to 2% and gave every indication that it’s done lowering rates for a while. This rate decrease represents the 7th consecutive rate deduction. Inflation and the strength of the dollar will be top on the Fed’s list for a while.

On the mortgage side rates are holding steady as is the London Interbank or Libor rate. Good news for those people with adjustable rate mortgages, as you can see above interest rates remained virtually unchanged from last week’s numbers.

Interesting interview with home builder Eli Broad who believes it will take 3 more years to deplete the current housing inventory and that home prices will fall another 20% before this is all over……..let’s hope he’s wrong!

Overall not a very exciting week after all!

The Economic Week Ahead:

• Pending Homes Index,(Wednesday)

• Jobless Claims , Chain Store Sales, Bank of England (BOE) Announcement(Thursday)

• International Trade(Friday)

Have a great weekend!

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