Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

Home Prices On The Rise, Says The October Home Price Index Report

Posted: 30 Dec 2009 06:45 AM PST

Home Price Index April 2007 to October 2009

More positive signals from housing -- home values are still on the rise.

According to the Federal Housing Finance Agency, after posting its first quarterly increase since 2007 this past September, the Home Price Index rose by another 0.6 percent in October.

Prices are up in 4 of the last six months.

But before we take the stats to the proverbial bank, it's important that we recognize the Home Price Index for its shortcomings.

  1. HPI only accounts for homes with mortgages backed by Fannie Mae or Freddie Mac
  2. HPI only accounts for re-sold homes -- newly-built homes are excluded
  3. HPI aggregates national data whereas real estate markets are local phenomena

On a broad scale, the Home Price Index can be useful, but it doesn't specifically apply to any specific U.S. market. For that, analysts tend to turn to the Case-Shiller Index, a privately-produced report that assesses home values in 20 cities nationwide.

The good news for home sellers is that Case-Shiller's most recent report corroborates the government's conclusion -- home values are creeping back.

Home buyers should pay attention. When public and private sector data is in accord, markets tend to go along and, looking back, housing likely bottomed in February 2009. Since then, home sales are up, home supplies are down, and values have increased in most U.S. markets. Furthermore, so long as mortgage rates remain low and government stimulus is in place, the trend should continue through at least the first quarter of 2010.

If you're on the fence about buying a home right now, or wondering about timing, consider your options vis-a-vis today's market. Into the new year, homes won't likely be as cheap to buy, nor to finance.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

Moving To A New City? Check The Local Cost Of Living First.

Posted: 29 Dec 2009 06:45 AM PST

New town, new costs. Try a Cost of Living Calculator.It's not only the real estate markets that differ from town to town -- the Cost of Living does, too.

Insurance costs, tax bills and just plain, day-to-day living will dent a household budget differently depending on where that household is. It can be a nerve-wracking fact for families moving across state borders.

As an aid for the budget-aware, Bankrate.com keeps a Cost of Living Comparison Calculator on its website. The calculator asks 3 questions: (1) Where do you live now, (2) To where you are moving, and (3) What is your salary. It then spits out a detailed, 58-item cost comparison list between the two cities.

Some of the key costs compared include:

  • Everyday groceries
  • Energy bills
  • Routine healthcare
  • Home ownership
  • Clothes
  • Sporting goods

The Cost of Living Comparison Calculator is thorough, with data culled from the ACCRA. You'll be surprised at how granular the list can get. On the ACCRA website, you can buy a similar report for $5.

On the Bankrate.com site, the data is free.


Credit scores and what influences them, according to Fair Isaac

Credit scores and what influences them, according to Fair Isaac

 Liz Pulliam Weston was able to crack open Fair Isaac a bit and got them to reveal a little bit more on their scoring model.

Effect on a 680 scoreEffect on a 780 score
Maxed-out card
-10 to -30
-25 to -45
30-day late payment
-60 to -80
-90 to -110
Debt settlement
-45 to -65
-105 to -125
-85 to -105
-140 to -160
-130 to -150
-220 to -240
The "damage points" information, as revealed here, will be made available through FICO at its myFICO.com Web site starting this weekend.
Besides giving out how much your score will DROP, there is still not much know about how the starting score is calculated. The statistical model (aka FICO Score) used by all three credit bureaus and in some form or other by all banking institutions was developed by Fair Isaac. This scoring model did not start out to be the industry standard, but since it was the most complete model used available at the time when the banking industry was interested in such information, it became an integral part of the credit granting process. The model took years to develop and Fair Isaac has all kinds of empirical data to back up the accuracy of their model. The lending industry, who finds comfort in numbers anyway, gets a warm, fuzzy feeling of fairness: since most everyone uses it, it gives the impression of everyone being measured by the same yardstick.
Why WHY WHY  doesn't Fair Isaac tell anyone exactly what goes into the model?
The company maintains that their model is a proprietary system, and it is protecting itself - if it gave away the product, how would Fair Isaac make money? I can see their point, to a certain extent, but many (if not most) American and Canadian consumers are at the mercy of this statistical model. Most people don't realize that the credit scoring model is a product being sold to lending institutions and, of course, the credit bureaus.
Aside from the fact that the mystery of the model is a big source of unfairness, is the model itself unbiased? At CreditInfoCenter, we get lots of questions about this, like "how do you raise your credit score?" What we found out is that lots of what goes into the score calculation is beyond the control of the consumer. Therefore, many people with a low credit score may be able to do nothing about it.

OK, let's get right down to the actual numbers. While we can't give you the whole math model, we can sure give you a piece of it.

At the credit scoring conference held by the FTC in July 1999, Fair Isaac gave the opening presentation and went over in detail some of the things used in calculating your score. The information I am giving out is based on the huge slide presentation given out by Fair Isaac at the July meeting.
Factors used to score you, in order of importance (information marked with a * is obtained from an application, not considered in a credit bureau score):
  1. Major derogatory items on your report (bankruptcy, collections, foreclosure, slowpays)
  2. Time at present job
  3. Occupation (Professionals are given heavy weight)*
  4. Time at present address
  5. Ratio of balances to available credit lines (the lower the better)
  6. Are you a homeowner? (if you are, this is heavily weighted)*
  7. Number of recent inquiries
  8. Age (50+ is the best)
  9. Number of credit lines on your report
  10. Years you have had a credit in the credit bureau database

So is this fair? Have you noticed that only two of the above items are entirely within your control? And what if you don't care for a professional (whatever that means) occupation?

According to the above scoring model, to get the highest score, you would have to: a) be at your job for a long time, b) be in a a professional occupation (like lawyer, doctor, banker, corporate officer, etc. - does webmaster count?), c) have lived in the same home (that you own, of course) for over 10 years, d) have had credit and loans for many years, e) be at least 50 years old, f) have almost no debt, g)and not have applied for any new loans for the last two years. Oh yeah, and h) have perfect credit.

Here are some of the actual numbers used to calculate your credit, but Fair Isaac says it isn't the whole model (which I do believe.)
Own/Rent Own Rent Other No Info        
25 15 10 17        
Years at
<.5 .5-2.49 2.5-6.49 6.5-10.49 >10.49 No Info    
12 10 15 19 23 13    
Occupation Professional Semi-Prof Manager Office Blue Collar Retired Other No Info
50 44 31 28 25 31 22 27
Years on job <.5 .5-1.49 1.5-2.49 2.5-5.49 5.5-12.49 12.5 Retired No Info
2 8 19 25 30 39 43 20
Department Store/
Major Credit Cards
None Dept St Maj CC Both No answer No Info    
0 11 16 27 10 12    
Checking Savings Check & Sav Other No Info      
5 10 20 11 9      
Debt Ratios * <15 15-25 26-35 36-49 50+ No Info    
22 15 12 5 0 13    
Num Inquiries 0 1 2 3 4 5-9 No Record  
3 11 3 -7 -7 -20 0  
Years in File <.5 1-2 3-4 5-7 8+      
0 5 15 30 40      
Number of
Revolving Trades
0 1-2 3-5 6+        
5 12 8 -4        
0-15% 16-30% 31-40% 41-50% >50%      
15 5 -3 -10 -18      
Worst Credit
No Record Any Derog Any Slow 1 Satisf
2 Satisf
3 Satisf
0 -29 -14 17 24 29    

Bank reference
Whether or not you have a savings and checking account. How would the Fair Isaac model know about your income? The only place would be off an application.
Debt Ratios
Ratios of monthly credit obligations (credit cards, mortgages, car loans (not food, insurance, utilities) over monthly gross (before taxes) Income. Example: Your credit card bills, and car loans total $1,000/month. Your monthly gross income is $4,000/month. Your debt ratios would be 25% or 25. How would the Fair Isaac model know about your income? The only place would be off an application.

% Balances Available
This refers to amount of available credit you have left on revolving credit, like credit cards. It is calculated by dividing your total credit used (over all of your cards) by the total credit limits (over al of your cards) you have. So if you have a total unused credit card limit of $10,000 and you have used $2,000 worth of this available credit, you have used 20% of your available credit.
Years in File
Number of years you have been in the credit bureaus files, approximately the same amount of time you have credit (though of course, not necessarily).
Here is the entire Fair Isaac presentation on the FTC web site.

Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

What's Ahead For Mortgage Rates This Week : December 28, 2009

Posted: 28 Dec 2009 06:45 AM PST

Vacation weeks can lead to mortgage market volatilityMortgage markets made a 4-day losing streak last week on thin holiday volume and overall economic optimism. It was awful news for rate shoppers because mortgage rates were higher every day last week.

The holiday-shortened week marked the third out of 4 during which rates worsened and last week's action happened to be especially harsh. Monday's action was the worst for rates since July, for example.

Tuesday's was only slightly less worse.

Today, conforming, 30-year fixed mortgage rates have reached at a 15-week high -- well off the lows set in early-December.

Normally, when mortgage markets worsen this badly, this quickly, it's because of strong economic data, or growing inflationary expectations. Last week saw neither.

Furthermore, consumer confidence didn't rise as planned.

And yet -- stock markets gained. All 10 sectors improved and they did so at the expense of mortgage bonds.

This week is again holiday-shortened so expect the same low-volume, high-volatility trading as last week. There's few data releases save for Tuesday's Case-Shiller Index. Therefore, watch for momentum trading in either direction.

Markets close early Thursday and re-open Monday, January 4, 2010. If you need to lock a rate, make sure of your loan officer's hours.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

There's A Very Good Reason Why The New Home Sales Data Plunged In November

Posted: 24 Dec 2009 06:45 AM PST

New Home Sales Nov 2008-Nov 2009One day after November's Existing Home Sales report blew away estimates, the Census Bureau's related New Homes Sales report failed to impress.

A "new home" is a home that is newly-constructed; not bought as a resale.

In a lackluster showing, New Home Sales dropped 11 percent in November, falling to the lowest levels since April. Furthermore, the all-important "months of supply" climbed by a half-month to 7.9.

The press pounced on the figures and if you only read the headlines, you'd think that housing had cratered. Some of the angles were quite bold, even:

  • Weak U.S. Home Sales Show Recovery's Shakiness (Reuters)
  • New Home Sales Plunge In November (CNNMoney.com)
  • Housing Forecast : Off Life Support, Still In Critical Care (CBS News)

These headlines, although technically accurate, only tell half the story, however. The other half relates to November 30's role as the original First-Time Home Buyer Tax Credit ending date.

See, different from home resales, when a contract is written on a newly-built home, the home is rarely finished. According to the Census Bureau, just 1 in 4 new homes are sold "move-in ready". The other 3 of 4 are in various stages of construction when a buyer signs on the dotted line.

Some have yet to break ground, even.

Regardless, it's at this date of signing that the Census Bureau counts the home as "sold" -- not at the actual closing. This is the main driver of the November New Home Sales data dip.

First-time home buyers would have risked up to $8,000 in federal tax credits if they bought a newly-built home and it wasn't ready for move-in by November 30, 2009. And it wasn't until November 5 that the credit was officially extended.

Suddenly, first-timers representing more than half of last month's Existing Home Sales isn't so shocking. Buying new carried a lot risk.

There's always more to the story than the headline. Sometimes, you have to dig deeper. Looking back over 10 months, the housing market is on a steady course of improvement. November's New Home Sales data -- although weak -- is not terrible.

Despite what the papers might say.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

Home Inventories Plummet, Foreshadowing Higher Prices By Spring 2010

Posted: 23 Dec 2009 06:45 AM PST

Existing Home Sales Nov 2008-Nov 2009Home resales are soaring.

For the 4th consecutive month, the Existing Home Sales report revealed what today's buyers and sellers already know -- there's a lot of buyer activity right now.

Existing Home Sales surged 7-plus percent in November, posting its largest number of recorded sales in 33 months. Sales volume is up 44% higher versus last year.

It's another example of the housing market in recovery.

There were other interesting statistics buried in the November data, too. According to the National Association of Realtors:

  1. 51 percent of home buyers were first-timers
  2. Distressed properties accounted for one-third of all sales
  3. The median home sale price rose slightly

But of all the stats from the November Existing Home Sales report, perhaps the most important one is the one showing home supplies falling to 6.5 months. It's nearly half of the home supply available last November.

The rapid run-off of inventory throughout 2009 is more than a trend at this point and suggests higher home valuations in 2010. Especially because mortgage rates are low, tax credits are available, and the press is giving housing positive coverage.

You shouldn't feel rushed to buy, but you probably don't wait too long, either. The best deals of 2010 may be gone before that Spring Buying Season even starts.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

When It's A Holiday Week, Mortgage Rate Shoppers Should Be Extra Vigilant

Posted: 22 Dec 2009 06:45 AM PST

Vacation weeks can lead to mortgage market volatility

Mortgage pricing worsened Monday, driving mortgage rates to their highest levels since October.

The day's action was drastic, too.

Some banks issued as many as 3 rate sheets Monday -- each worse than the preceding and one reason why rates got so bad, so quickly, is because this week marks the beginning of mini-Vacation Season on Wall Street.

Between now and January 4, 2010, be prepared for big swings in pricing from day-to-day. Shopping for a mortgage could be a challenge.

The relationship between vacation days and mortgage rate volatility is rooted in how mortgage rates are "made".

  1. Conforming mortgage rates are based on the price of mortgage-backed bonds, a security that is sold on Wall Street
  2. Mortgage-backed bonds can't sell without a bond buyer and a bond seller agreeing to a specific sale price

So, during vacation week, when the total number of market participants are less, there are fewer opportunities for buyers and sellers to meet at a specific price. As a result, bond prices rise and fall with a higher velocity than on a "normal" day. Rallies and momentum plays are exaggerated, too.

Now, mortgage market action like this can work in your favor, or it could work out of your favor. Unfortunately, on Monday, rates moved out of favor.

This rest of this week is stacked with market-moving economic data. The data could be better-than-expected, or worse-than-expected. Either way, markets will react a little more feverishly than normal. Therefore, if you have a chance to lock a favorable rate, consider taking it.

Before long, the rate could be gone.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

What's Ahead For Mortgage Rates This Week : December 21, 2009

Posted: 21 Dec 2009 06:45 AM PST

Fed Funds Rate (Dec 2006 - Dec 2009)Mortgage markets improved last week as pricing followed a roller coaster-like pattern. After touching a 6-week high Tuesday, rates rallied to weekly lows Thursday, and then jumped back higher Friday.

Despite the improvement last week overall, mortgage pricing remains significantly worse from the all-time lows set in late-November.

Oddly, last week's most prominent mortgage-related story wasn't the most influential one.

On Wednesday, the Federal Open Market Committee adjourned from a two-day meeting. It voted to leave the Fed Funds Rate unchanged from its current target zone of 0.000-0.250 percent. This wasn't news, per se -- markets expected the "no change" vote.

However, in its accompanying press release, the Fed appeared more rosy in its economic outlook, citing improving labor markets and low levels of inflation. Results like this are a mixed bag for rate shoppers, but is generally welcomed as good news.

Rates were unchanged after the FOMC release.

The bigger story last week comes from Greece.

Concerns for the country's debt burden have been in play for weeks, but last week, Standard & Poor's officially downgraded Greece's debt rating. The move triggered concerns regarding broader Eurozone debt, especially considering the recent issues in Dubai.

U.S. mortgage markets benefitted from Greece's troubles as "safe haven" attracted investors, driving down rates Thursday afternoon.

Debt concerns should remain in focus this week. Furthermore, there's a bevy of domestic data that could swing rates in either direction, too. Most notably, watch for Tuesday's housing data, Wednesday's inflation data, and Thursday's consumer confidence data. Each can be a powerful influence on rates.

There will be less volume on Wall Street because of Christmas and less volume tends to spur mortgage rate volatility. Be wary of swings in either direction.

Markets close early Thursday and will be closed Friday.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

Housing Starts Jump; Home Sellers Lament.

Posted: 18 Dec 2009 06:45 AM PST

Housing Starts Dec 2007-Nov 2009Housing Starts jumped last month as builders got back to business. It's a telling sign for the economy, but bad news for next season's sellers.

With more homes coming online, home prices may be slow to rise nationwide.

A "Housing Start" is a privately-owned home on which construction has started. In November, starts rose by nearly 9 percent while remaining within the same tight range we've seen since June.

More interesting that Housing Starts, though, is the accompanying data for Housing Permits. After a 5-month plateau, Housing Permits finally broke through, posting its largest number in 12 months.

This, too, bodes poorly for sellers.

Housing permits are precursors to housing starts so because the number of permits are higher today, we expect that the number of starts will be higher just a few months from now.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.

More permits means more starts which, in turn, leads to a larger home inventory. And when home supplies grow faster than the home demand, prices fall.

Throughout the early part of 2010, low mortgage rates and federal tax credits should help hold demand high but if builders flood the market with new, quality product, sellers may find that they've lost some of their leverage.

For home buyers, the rise in starts is welcomed.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

A Simple Explanation Of The Federal Reserve Statement (December 16, 2009 Edition)

Posted: 16 Dec 2009 12:39 PM PST

Explaining the FOMC press release December 16, 2009The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy "has continued to pick up", that the jobs markets is getting better, and that housing market has shown "some signs of improvement" lately.

It's the fourth straight statement in which the Fed speaks optimistically about the U.S. economy -- a signal that the worst of the recession is likely behind us.

The economy isn't without threats, however, and the Fed identified several, including:

  1. Tight credit conditions for consumers
  2. Reluctancy of businesses to hire new workers
  3. Lower overall housing wealth

The message's overall tone remained positive, however and inflation appears to be held in check.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period" and to honor its $1.25 trillion commitment to the mortgage bond market. That plan -- due to expire at the end of March 2010 -- should be noted by today's homebuyers. Fed insiders estimate that the program suppressed rates by 1 percent through 2009.

Mortgage market reaction to the Fed press release is negative. Mortgage rates are rising this afternoon.

The FOMC's next scheduled meeting is January 26-27, 2010.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

Fannie Mae Gets Tough(er) On Borrowers. Again.

Posted: 16 Dec 2009 06:45 AM PST

Being approved for a mortgage is getting tougherFannie Mae raised the bar for mortgage applicants this past weekend. Getting approved for a home loan just got harder.

In its official announcement, Fannie Mae says the updates minimize long-term lending risks. If that's the case, this won't be the last guideline change Fannie Mae makes -- especially with loans defaulting at an above-normal clip.

The immediate changes are major. The first pertains to credit scores.

Effective December 13, 2009, the bulk of Fannie Mae's loans require a 620 credit score minimum. There are very few exceptions.

A second relates to loans with private mortgage insurance.

Homeowners whose loan-to-value exceeds 80 percent now have a choice:

  1. Pay higher mortgage insurance premiums month-after-month
  2. Pay a one-time fee paid at closing to compensate for higher risk

Both options result in higher consumer loan costs.

A third change concerns maximum debt-to-income ratio. Fannie Mae will no longer approve loans with debt ratios exceeding 45 percent except with very strong assets and very high credit scores.

In no case whatsoever may debt-to-income exceed 50 percent.

There are other changes, too, including the elimination of seldom-used mortgage products and additional risk-based fees for "expanded level" mortgage approvals. These updates affect just a small part of the population.

So, home prices are rebounding, mortgage rates are low, and -- for 5 more months at least -- there's a federal tax credit for qualified buyers. You don't have to buy a home now, but with mortgage guidelines sure to tighten in 2010, now may be a better time than later.

The best "deal" won't matter if you can't get qualified on your mortgage.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

The Federal Reserve's Relationship To Mortgage Rates

Posted: 15 Dec 2009 06:45 AM PST

Interest rate spread between the 30-year fixed rate mortgage and Fed Funds Rate (2000-2009)The Federal Open Market Committee meets today for the last time in 2009. It's a 2-day meeting and the Fed is expected to leave the Fed Funds Rate near 0.000 percent.

But that doesn't mean mortgage rates won't change.

See, a major misperception among the public is that the Federal Reserve sets mortgage rates. That's false. Mortgage rates are based on the price of mortgage-backed bonds.

As an example, since 2000, the Fed Funds Rate and the 30-year fixed rate mortgage have been within 1 percent of each other at times, and as far apart as 5 percent at others.

If there was a direct relationship between the two, such a spread would be impossible.

The Federal Reserve doesn't set mortgage rates. Wall Street does. However, whenever the Fed adjourns from its meetings, mortgage rates are susceptible to change.

For home buyers and rate shoppers, this week's Fed meeting takes on added significance.

Over the last half-year, the Fed has used its post-meeting press releases to acknowledge an improving economy in which growth is tempered by job loss and tepid spending. In November, though, net job gains nearly went positive and Retail Sales data proved strong.

If the Fed gets more positive in its message tomorrow, mortgage rates will suffer. This is because Wall Street will use the Fed's position on the economy as a reason to buy stocks. Some of the cash to fuel those buys will come from the mortgage bond market.

As extra bond supply hits Wall Street, mortgage rates go up.

Similarly, if the Fed's message goes negative on the economy, investors are expected to sell their stock positions in favor of buying bonds. This makes rates go down.

So, the Federal Reserve doesn't make mortgage rates, but it does exert an influence on them. In other words, rate shoppers would be wise to watch for the FOMC's 2:15 PM adjournment. Even though the Fed Funds Rate is expected to remain unchanged, mortgage rates certainly are not.

What's Ahead For Mortgage Rates This Week : December 14, 2009

Posted: 14 Dec 2009 06:45 AM PST

The FOMC meets this week -- mortgage rates will be volatileMortgage markets worsened for a second consecutive week last week amid debt default concerns and stronger-than-expected economic data. Dollars left the bond market and mortgage rates suffered.

After re-reaching an all-time low December 1, mortgage rates have since rolled back to mid-November levels.

Rates are still low right now. Just not as low.

And meanwhile, last week's big story -- the one that should concern mortgage applicants between now and early-2010 -- is the story of Retail Sales.

Last week, a government report showed that American consumers are spending more this holiday season than was expected. The Retail Sales data implies that consumers are feeling more confident in themselves, and in the economy overall.

This is one of the last remaining pieces in the economic recovery puzzle. Job growth, of course, is another, and both will be in focus this week as the Federal Open Market Committee meets for its final 2-day meeting of the year.

The FOMC isn't expected to raise the Fed Funds Rate from its current "target range" near 0.000%, but when the FOMC adjourns at 2:15 PM Wednesday, its press release will dominate the news.

Specifically, watch for verbiage on the expected economic growth for 2010 because no matter what the Fed says, mortgage rates will be in flux. As one example:

  • If the Fed says inflation is under control, mortgage rates should fall
  • If the Fed says inflation pressures are growing, mortgage rates should rise

There's other news this week, too, including PPI and CPI -- 2 popular inflation gauges, plus some housing data, too.

If you need to lock a rate this week, it may be safer to lock prior to the FOMC's adjournment. Given the recent strength in Retail Sales and the reports of "crowded malls" this past weekend, the Fed may choose to revise its growth estimates for the economy -- a move that would be awful for mortgage rates.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

Strong Retail Sales Data Could Lead To Higher Mortgage Rates In January

Posted: 11 Dec 2009 07:30 AM PST

Retail Sales Data November 2009If you wonder what mortgage rates and home affordability will look like next year, today's Retail Sales data may hold your answer.

Versus October, November's ex-auto sales were up by more than 1 percent. Analysts expected the increase, but not an increase of this magnitude.

"Ex-auto" means that motor vehicles and parts are excluded from the data.

Home values are increasing in many parts of the country and household net worths are rising, too. Therefore, we can infer from the Retail Sales report that U.S. consumers are starting to feel better about their individual finances, and about the economy overall.

To homebuyers and rate shoppers, strong Retail Sales data may foreshadow higher rates for mortgages ahead. This is because sales data is a by-product of consumer spending and consumer spending accounts for more than two-thirds of the economy.

As spending increases, the economy tends to expand, drawing investment dollars into stock markets and away from bond markets -- including mortgage-backed bonds, the basis for conforming mortgage rates.

Less bond demand leads to higher rates and, therefore, lower levels of home affordability.

Despite the Holiday Season momentum, however, 2009 will likely mark just the second time that Retail Sales data fell year-over-year since the government started tracking it 40 years ago. The other year was 2008.

But, if November's Retail Sales is a reliable indicator of consumer sentiment overall, we should expect 2010 to rebound strongly. And when it does, mortgage rates should suffer.

The housing market is recovering, mortgage rates are still near all-time lows, and the government is offering an $8,000 tax credit to qualified buyers through April 30, 2010. If you plan to buy a home next spring, you may want to consider moving up your timeframe. Waiting may be costly.


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Latest From : Atlanta RE 5 by 5

Foreclosure Activity Falls For The 4th Straight Month

Posted: 10 Dec 2009 07:15 AM PST

Foreclosures concentrate in 4 states (November 2009)Since peaking in July 2009, national foreclosure activity has dropped through 4 consecutive months.

On a month-to-month basis, November's foreclosure activity fell another 8 percent.

However, national foreclosure activity continues to be dominated by a minority of states.

As reported by RealtyTrac.com, more than half of November's foreclosure-related activity sourced from just 4 states:

  1. California
  2. Florida
  3. Illinois
  4. Michigan

These are the same 4 states that topped October's foreclosure activity despite three of them posting month-to-month declines last month.

The remaining Top 10 states in terms of total foreclosure activity include Arizona, Texas, Ohio, Georgia, Nevada and New Jersey.

If you've been actively looking at REO lately, you've likely noticed that true bargains are harder to find. This is because buyers of all types -- first-timers, move-ups, and investors -- are purchasing bank-owned homes aggressively and getting better at identifying the "best ones".

But just because supplies are dwindling doesn't mean you should just jump in. Buying foreclosures isn't for everyone for two very strong reasons:

  1. Homes are often sold as-is and may have "issues"
  2. The closing process can be unpredictable

Therefore, if you're thinking of buying a foreclosed home, be sure to talk with your real estate agent about potential problems before going under contract. Better too soon than too late.

There are still good deals in the foreclosure market, but based on November's data, they may not last through the winter. "Distressed home" sales now account for 30 percent of home resale activity.


Latest From : Atlanta RE 5 by 5

Latest From : Atlanta RE 5 by 5

How To Trim Your Utility Bills Without Inconveniencing Yourself

Posted: 09 Dec 2009 06:45 AM PST

The average family spends $2,200 per year in electric bills and the average home is responsible for twice the amount of greenhouse gases than the average automobile.

Whether you want to save money or save the environment, this 5-minute piece from the NBC Today Show is for you. In it, you'll learn that just by being aware of your energy consumption, you can reduce it by up to 15 percent.

The piece centers on a device called a Power Monitor which retails from $30 to $100, depending on the model. It measures the actual cost of using an appliance, or using a light, or charging a laptop, or any other household energy use.

Among the cost findings:

  • A plugged-in phone charger no phone attached costs $0.10 per hour
  • Cooking with a microwave costs $0.88 per hour
  • Big screen TVs cost $0.06 per hour to operate

Obviously, turning off lights when rooms aren't in use saves money, too.

By making small changes -- most of which aren't inconvenient -- the average family can drop its energy bill by hundreds of dollars each year.