Merry Christmas & Happy New Year 2016!
As we’re saying goodbye to 2015, I must say, what a year it has been! Property values went up, yet keeping stable, new constructions are sky-rocketing, new developments popping up all across Las vegas valley… this has been a fantastic year in real estate!
Check out 2016 Market Trends Report Zillow
|For the week of December 21, 2015 – Vol. 13, Issue 51|
>> Market Update
QUOTE OF THE WEEK… “You only live once, but if you do it right, once is enough.” –Mae West, American actress, singer, playwright
INFO THAT HITS US WHERE WE LIVE …First, the good news, then the best news. The good news is that last week, for the first time since 2006, the Fed raised the Funds Rate. Yes, that’s good news. It means the nation’s central bank thinks the economy is now growing well enough to withstand a rate hike. And that’s good because the economy is the most important factor influencing home sales and prices: a growing economy means a healthy housing market. It’s also good the increase was just 25 basis points, a very small jump to 0.25%-0.50%. Freddie Mac’s chief economist said, “We take the Fed at its word that monetary tightening [meaning rate hikes] in 2016 will be gradual.”
Furthermore, interest rates for revolving credit, such as credit cards and home equity loans are tied to the Fed Funs Rate, but mortgage rates are not. They’re tied to bond yields, which is why every week we watch the 30 YR FNMA 4.0% bond. As its price goes up, its yield goes down, driving mortgage rates in the same direction. Freddie Mac’s economist feels, “Mortgage rates will tick higher but remain at historically low levels in 2016.” That said, it’s probably better for buyers and sellers to act sooner rather than later this year. The best news? Housing Starts shot up 10.5% in November to a 1.173 million annual rate and Building Permits soared 11.0%, to a 1.289 million annual rate.
BUSINESS TIP OF THE WEEK… This time of year, it’s good to remember that The Golden Rule is just as important in business as in our personal lives. Treating others as we wish to be treated is key to success in every endeavor.
>> Review of Last Week
A LITTLE OFF… Friday, the Dow fell 369 points, its largest one-day drop since September 1. Investors fretted over oil market weakness, with West Texas crude dropping to $34.73 per barrel (fill ‘er up!). They likewise worried about banks with exposure to energy companies, plus those pesky high-yield bonds. Friday was also one of Wall Street’s quarterly quadruple witching days when individual stock and index futures and options all expire, driving more selling and downward pressure on prices. Earlier in the week stocks soared on the news of the Fed rate hike, investors seeing it as a positive read on the economy, so the three major stock indexes wound up only a little off for the week.
Economically, things weren’t looking too bad. Inflation was unchanged in November according to the Consumer Price Index (CPI) and up just 0.2% by the Core CPI, which excludes food and energy prices. Inflation-adjusted real average hourly earnings gained 0.1% in November and 1.8% the past year. The New York Empire Manufacturing Index still showed contraction in December, though less than November. We did get the fantastic home building numbers reported above, but Industrial Production and factory Capacity Utilization were down for November, indicating manufacturing slowed overall. Nevertheless, weekly Initial Unemployment Claims remained well below 300,000.
The week ended with the Dow down 0.8%, to 17128; the S&P 500 down 0.3%, to 2005; and the Nasdaq down 0.2%, to 4923.
With flight to safety the theme, investor money flowed into the bond market at the end of the week, driving bond prices up for the most part, and stock prices down along with commodities. The 30YR FNMA 4.0% bond we watch finished the week down just .25, at $105.80. For the second week running, national average fixed mortgage rates edged a little higher according to Freddie Mac’s Primary Mortgage Market Survey for the week ending December 17. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… Following the implementation of TRID regulations at the start of October, the average time to close a mortgage loan hit 46 days that month, and reached 49 days in November.
>> This Week’s Forecast
EXISTING HOME SALES SLIP, NEW HOMES SALES GAIN, INFLATION IS TAME… Are you ready to switch from watching the Fed to watching the economy? So are we. This week, expect Existing Home Sales to slip a bit in November, while New Home Sales keep growing. We’ll get a Core PCE Prices inflation read predicted to be way below the Fed’s target range for a rate hike. Since they’ve already hiked the rate, they must not have meant what they said about their inflation target. Let’s not act surprised.
The stock and bond markets close early on Christmas Eve and are closed on Christmas.
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Call me when you looking to buy or sell, I’m always available and will work with you on Holidays too!
Tatiana Moody, your Las Vegas Realtor
Delivering Aggressive marketing, negotiations and results! firstname.lastname@example.org cell: 702-460-4702 Skype: tatianamoody