Mortgage Market Guide: Views You Can Use – Sep 2016 Issue
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Mortgage Market Guide: Views You Can Use – Sep 2016 Issue
|IN THIS ISSUE…|
|“Our house was our castle and our keep.” Madness. Americans keep New Home Sales humming with record-breaking numbers. We’ll crowd around for this story and more, including:
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|Housing Wins Gold|
|Housing and construction are important sectors because a robust housing market can have a cascade of positive effects through the entire economy. Here’s what’s happening.
New Home Sales surged to a nine-year high due to a strengthening job market and record-low home loan rates — rising an astounding 12.4 percent from June to July. The Northeast led the charge with a whopping 40 percent surge. Sales are also up 31.3 percent when compared to July of last year. The median sale price for a new home dipped 0.5 percent from a year ago to $294,600.
Sales of existing homes had the opposite result from June to July. The National Association of REALTORS® reported sales of Existing Homes declined due to higher prices and low inventories, which are currently at a 4.7-month supply (a six-month supply is considered normal). The median existing home price was up 5.3 percent from July 2015.
Housing Starts, which track new construction, hit the highest level in five months in July, rising 2.1 percent from June. This also marked the second highest Housing Starts rate since the recession. Multifamily units (including condos and townhomes) led the boost. Building Permits, a sign of future construction, fell slightly but were in line with expectations.
Consumers See Losses and Wins
Both consumer and wholesale inflation remained tame in July. The Consumer Price Index (CPI) was unchanged from June to July. Core CPI, which strips out volatile food and energy, increased just below expectations, rising 0.1 percent compared to June. The wholesale-measuring Producer Price Index (PPI) declined.
Besides being a gauge of price stability, inflation reduces the value of fixed investments, like Mortgage Bonds. This means tame inflation tends to be good news for home loan rates, since they are tied to Mortgage Bonds.
The bottom line is that home loan rates remain near historic lows. If you have any questions about housing or home loan rates, or if you’d like to discuss your unique situation, please call or email today.
|What to Watch: Retail Sales|
|After a strong showing in June, American consumers slowed spending on a variety of goods in July.
What is the Retail Sales report?
Produced by the Commerce Department, the report measures a sample of store receipts from businesses of all sizes. It is the timeliest indicator of broad consumer spending patterns, and usually the first picture of consumer spending for a given month.
What’s happened recently?
After the big gains seen in June, Retail Sales were flat in July, frustrating economists’ predictions for a modest 0.4 percent rise. Compared to July of last year, however, Retail Sales are up 2.3 percent.
What’s the bottom line?
Retail Sales were dragged down by lower sales for gasoline, sporting goods, food and beverages, and building materials. Since consumer spending makes up more than 70 percent of economic growth and is the single biggest driver of the economy, this report is one to watch for signs of potential inflation.
When economic reports, like the Retail Sales report, show positive momentum, investors could be tempted to move their money out of stable investments like Bonds and into riskier assets like Stocks to take advantage of gains. When money is shifted from Bonds to Stocks, the result can be a negative impact on home loan rates, since home loan rates are tied to Mortgage Bonds. Other factors can also influence the markets, from economic reports at home to uncertainty overseas, so it’s prudent to consider the big picture.
I’ll continue to monitor economic reports closely, but if you have any immediate questions, please call or email today.
|Sofa, So Good|
|The first word that comes to your mind when someone says “sofa” probably isn’t “investment.” But, since sofas can be expensive, you’ll want to make sure to get one that will last. If you’re in the market for a new sofa, or know someone who is, here are a few things you should know before you buy.
Frame: The strength of the couch frame is one of the most important features. Hard woods, like kiln-dried oak, ash and beech, are far more durable than softer woods, like pine, but more expensive too. Particleboard, plastic or metal frames tend to separate or bend. Plywood construction should be a minimum of 11 layers.
Frame test: Ask the salesperson to lift the front corner off the floor. If the other corner doesn’t lift too, the frame may be too weak to last.
Joinery: The way the couch is held together matters almost as much. A couch connected solely by nails, staples and glue won’t last long.
Joinery test: Ask your salesperson to provide manufacturer’s literature about joinery. Wooden dowels, double dowels, metal screws and brackets, or corner blocks are good watchwords to remember.
Springs: Serpentine springs (also called sinuous springs) provide a more resilient seat than mesh or webbing. Higher-end sofas often tout “eight-way hand-tied” springs. Just make sure to compare how each one feels through the fabric. Springs should be placed very closely together and be firm when pressed.
Spring test: Sit firmly on one corner and listen for creaking. This may mean springs are incorrectly installed.
Filling: Cushion filling can vary widely along with prices. Polyurethane foam is least expensive and comes in a range of firmness. High-resilient (HR) foam lasts longer. Goose- and duck-feather and goose down are considered premium fillings but will need daily fluffing and are roughly double the price of foam. Both polyester fiber and down-polyfiber blends are inexpensive, but aren’t as durable.
Filling test: Don’t be fooled by trademarked filler names, make sure to ask how the filling is constructed. If you opt for lower quality, make sure the cushions have a zipper for easy re-stuffing.
Fabric: Durable fabric is the icing on the cake. Cotton and linen are durable but more difficult to clean, even if they are stain resistant. Synthetic microfiber can mimic other fabrics and provide better stain resistance. Wool and leather are expensive, but always more durable, silk is fragile, and synthetic fiber blends tend to pill more quickly than natural fibers. Be wary of loose weaves, which tend to catch easily on clothing, and printed patterns, which tend to wear more quickly than woven-in patterns.
Fabric test: Ask for a large swatch of the fabric that you can bring home. See if the fabric easily snags and ensure you like the color in the room’s natural and artificial lighting.
Buying the best quality you can afford is a smart step. A little investigation will help you purchase a couch that gives years of enjoyment.
Sources: Good Housekeeping, About.com
|Q&A: Fool Me Twice|
|QUESTION: A company advertises a service to recover money lost to a scammer. Should I call?
ANSWER: No. The Federal Trade Commission recently warned of scammer’s attempts to bilk victims a second time by promising to recover money lost through a prize scheme, bogus product offers, and wire or check fraud. Some scammers even claim to represent government agencies. You can avoid these and similar cons when you:
Refuse to pay up front. If any business requires advance payment, you should be skeptical.
Refuse to give personal information, especially to an unknown or unexpected text, phone call or email.
Do your own investigation. Type the organization name or contact information into your favorite search engine to check for known scams with this format: “Business name complaint” or “Business name scam.”
Finally, if you think you’re being scammed or a scam is being perpetrated, report it to the FTC immediately.
The Christian Penner Mortgage Team, A Branch of
American Financial Network, Inc
CORP NMLS# 237341 ; Equal Opportunity Employer ; Equal Opportunity Lender American Financial Network, Inc. 10 Pointe Drive, Suite 330, Brea, CA 92821.
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