Good Friday Short Update
Question of the week: No Question of the Week due to Good Friday
Answer: With many readers of the WR&MU having short day for Good Friday today and weekend Easter activities we have an abbreviated communication this week.
Tune in next week as we delve into appraisers and inspectors and the roles they play.
Have a question? Ask me!
Markets are closed today, but we have some important economic data this week that impacts rates. Retail sales for March had a very strong jump from February. With a 1.6% increase in retail sales, the highest monthly jump in 18 months, prospects for a potential recession later this year dim. The large increase in sales was pushed by new auto sales, which climbed 3.1% for the month and gas prices which were up 10% nationwide in March. Stripping autos and gas from the data and sales still recorded a very strong 0.9% increase for the month. Overall the news is interest rate unfriendly as consumer spending is 65-70% of our economy, stronger retail sales indicates a strong or strengthening economy which puts upward pressure on rates.
The California Association of Realtors released home sale data for March, and the data shows an apparent early start to the buying season locally. Statewide the median price for a single-family home was $565,880, which was up 5.9% from February and up 0.2% from March 2018. Total sales in the state were down 0.2% for the month and off 6.3% from 2018. In Los Angeles County the median price was down 2.9% for the month and 0.7% for the year at $525,520. The dip in prices and drop in rates created a large jump in sales as the number of units sold was up 36.3% from February, though down 6.3% of the number of sales in March 2018. Next door in Orange County the $809,500 median price was up 2.1% from February and down 1.8% from a year ago. Sales volume in the county was up 52% (not a typo fifty-two percent) from February and down 12.5% year over year. Overall, we see buyers coming to the Southern California market in a big way in March, and based on our activity in our office April and May numbers should be positive as well—though given the very strong increases in sales in March it will be challenging to match those numbers.
Rates for Friday April 19, 2019: The 30 year conforming rate is flat from last Friday and the high-balance rate (loans over $484,350) are up 0.125% from last week. The high-balance products have been interesting this year as they have changed independent of the conforming products due to market and regulatory forces. Fannie Mae and Freddie Mac have restrictions on what percentage of high-balance loans they sell in their pools, without going into the weeds it is generally around 10% of any given pool. If lenders are funding a large amount of high-balance loans they will push the high balance rates higher to slow the number of applications they get. In the past few weeks we have seen some odd pricing on high-balance mortgages, lenders have been getting more high-balance mortgages than they would like so they are trying to slow the flow. This week was one of those weeks, and since most pools are national in structure, a spike in sales in Southern California can skew the pool balance and an effort by lenders to slow their California high-balance volume.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS:
30 year conforming 4.00% Flat
30 year high-balance conforming 4.25 % Up 0.125%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
Last week in this section I wrote about how much I love the Masters, Sunday morning watching Tiger Woods’ comeback reinforced that feeling. Watching extremely high-level athletes compete under pressure has always fascinated me. Their ability to execute under extreme pressure within the contest, compounded by the large audience in the arena of play and television cameras all around them is wonderful to watch. Some say, “well they are just playing a game and get paid very well to play it.” True, both those games support hundreds of thousands of families around the country. Their own managers, coaches and agents, those who work at the venues, if a team sport the hundreds who work for the organization, local establishments that depend on fans buying food, drink, souvenirs and lodging, television and radio personnel from the voices we hear to those who spool out the cables and hook them up.
Sports in America are about a $100 billion industry. The value of franchises depends on the performance in thousands of split second moments by individuals. Who are just playing a game. Tiger was just playing a game last week that generated tens of millions of dollars circulating in the economy. So were the other players in the tournament, but he was the one who executed the shots that did not go in a pond, or rolled into the cup.
I for one am glad I do not have to perform my job with several cameras recording me every move and slow-motion replay allowing commentators to inform millions how I missed a decimal point or forgot a guideline I needed to go back and double check. But then again, when I make the phone and get to say, “Congratulations! We funded your loan and you are now homeowners!” it would be great to have it broadcast with in-depth analysis!
We start Spring Break in the Smith household this week with the thousands of other Long Beach Unified families. That means the end of the school year is about six weeks away!
Have a great week,
Dennis
Past Weekly Rate & Market Updates can be found on my blog page at my website www.DennisCSmith.com/my-blog
