BY FRED ARNOLD
Mortgage rates after weeks of slowly rising have returned to lower levels that we experienced 2 weeks ago. The cause for the interest rate decline is the emerging concern about Europe’s financial instability and how it may impact the United States. The biggest issue in Europe has been the banking crisis in Cyprus that has had their banks closed for over a week. (Can you imagine what would happen in the U.S. if the banks closed down for a week and you could only access your money through an ATM?)
The stock market after initial negative reaction to the Cyprus banking crisis has now returned to its positive direction now that they seem to have a plan in place to assist in the financial recovery and stabilization of the Cyprus banking system.
It may sound like a broken record when it comes to writing about real estate. For months now, I have had the pleasure of writing about the improving real estate market, and this week is no exception. This week we had three significant housing reports released and for the most part, they continue to reinforce the trend of moderate to strong housing growth.
The highlight of all the reports was the Case-Shiller Home Value Index, which showed that home prices are continuing to increase, however the real story is that they are increasing at a faster pace. Prices were reported to have risen 1% in February, which is on top of January’s 0.9% and December’s 0.6% increases.
Additionally, home values are up 8.1% from the same time last year. The increase in home prices is actually less surprising than the rate in which they are increasing. If you look back at the last 5 months of home prices compared to a year ago, reports show that values were up 6.9% in January, 5.5% in December, 4.2% in November, 2.9% in October and 2% in September. The pace in which values are increasing is blowing through virtually every economic forecast and there does not seem to be any end in sight to this trend.
The main cause of the rapid increases is that employment in the country is improving which means more people are feeling confident in making a home purchase. When you combine that with limited inventory, the result is rapid increases in home prices. Although it is likely more homes will come on the market for the typical Spring market surge, the expected rise in inventory will not likely impact the rapid rise in values. The amount of pent up demand of buyers in the market today will rapidly absorb the homes that come on the market.
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Market moving reports for next week are:
•Monday April 1st – ISM Manufacturing Index
•Tuesday April 2nd – Factory Orders
•Wednesday April 3rd – MBA Applications and ADP Employment Report
•Thursday April 4th – First Time Jobless Claims and GDP
•Friday April 5th – National Employment Situation
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.