BY FRED ARNOLD
Once again, terror has gripped the nation with the unforeseen and unprecedented bombing attack at the Boston Marathon. The victims and their families remain in our thoughts and prayers, as I am sure they do in yours as well. As a word of caution, if you plan to donate to any type of charity or support group for the victims, make sure it is a reputable one. Unfortunately, before all of the victims had been treated or hospitalized, some individuals had launched fake charity donation websites to collect money for victims.
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The stock market on Monday plunged 266 points in response to the terror attack as well as the slowing financial growth-taking place in China. It was reported that the Chinese economy grew only 7.7% in the first quarter when analysts were expecting 8%. The report and the market reaction demonstrate a clear difference between the Chinese market and the U.S. In the United States, we would be happy with growth of just 3%, however in China less than 8% is considered poor.
Real Estate Reports
Real estate market reports continue to indicate housing is improving. Housing starts in March jumped 7.0% after the previous month’s 7.3% jump. There is a difference in the report this month in that the increase came from multifamily construction, which jumped 31.1%. The demand for apartments throughout the country continues to rise and builders are doing what they can to meet the demand. Single-family starts declined 4.8% after rising 5.5% in February. I personally am not too concerned about the one-month drop in single-family housing as it is not uncommon to see these reports move back and forth between single and multifamily construction month to month.
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Inflation in the U.S. is becoming dangerously low. The Consumer Price Index showed a decline of 0.2% indicating that consumers are still very frugal in their purchasing habits. Even some of the Fed members are now beginning to express concern that inflation may be too low and that if it does not increase we could start seeing deflation take place in the U.S. (Deflation is a pre-curser to heading back into a recession) However, most economic experts believe that slow growth will continue in the United States and that the likely hood of going back into a recession is low especially since housing continues to improve. (What I don’t quite understated is why they exclude energy & food prices as part of the overall inflation. I’m sure you’re experiencing the increased cost to fill your tank & refrigerator as I am. I believe there is more inflation then they show.)
Once again rates are at a near record low which is helping those that can refinance to a lower monthly payment and helping people to buy a home with lower monthly payments. Thus putting more money back into the economy.
The economic reports on tap for next week are:
Monday April 22nd 2013 Existing Home Sales
Tuesday April 23rd 2013 New Home Sales
Wednesday April 24th 2013 MBA Applications
Thursday April 25th 2013 First Time Jobless Claims
Friday April 26th 2013 GDP and Consumer Sentiment
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can, 661-505-4300.