The minutes of the Fed's April meeting gave no indication the central bankers were ready to start tightening policy any time soon. So economists expect the 0%-0.25% rate to be with us into next year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%-0.25% After FOMC meeting on: Consensus Jun 22 0%-0.25% Aug 9 0%-0.25% Sep 20 0%-0.25% Probability of change from current policy: After FOMC meeting on: Consensus Jun 22      <1% Aug 9      <1% Sep 20      <1% From my weekly enewsletter for real estate pros, INSIDE LENDING, for the week of May 23, 2011 05/23/2011

  Keep in mind that 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 Date Time (ET) Release For Consensus Prior Impact TuMay 24 10:00 New Home Sales Apr 300K 300K Moderate WMay 25 08:30 Durable Goods Apr -2.0% 4.1% Moderate WMay 25 10:30 Crude Inventories 5/21 NA -15K Moderate ThMay 26 08:30 Initial Unemployment Claims 5/21 400K 409K Moderate ThMay 26 08:30 Continuing Unemployment Claims 5/14 3.700M 3.711M Moderate ThMay 26 08:30 GDP - Second Est. Q1 2.0% 1.8% Moderate ThMay 26 08:30 GDP Deflator - Second Est. Q1 1.9% 1.9% Moderate FMay 27 08:30 Personal Income Apr 0.4% 0.5% Moderate FMay 27 08:30 Personal Spending Apr 0.5% 0.6% HIGH FMay 27 08:30 PCE Prices - Core Apr 0.2% 0.1%... 05/23/2011

05/23/2011

Bainbridge Island Real Estate Market Trends Bainbridge Island residential properties were selling for a April median price of $548,500, about 9% higher than in March and 1% lower than a year ago. The more stable three month moving average closed sale price rose 7% from last month to $518,542 and is 11% lower than a year ago. The Kitsap County 3 month moving average median price is about 5% lower than it was a year ago. The 3 month moving average for Bainbridge Island's number of closed sales is about the same as a year ago. The 3 month moving average of closed sales is down 13% Countywide from a year ago. The 3 month moving average number of Bainbridge pending sales in April was down 21% from a year ago. The number of active listings on Bainbridge (196) rose 18% from March and is about ... 05/19/2011

Tomorrow (Tuesday) we get a read on home building in April. Housing Starts are expected to be up a tad and Building Permits down just a smidge, indicating no major drop in activity a few months out. Thursday's Existing Home Sales are also forecast up for April, staying above the 5 million annual sales threshold. The health of manufacturing in May is projected to be down a bit in both the New York region's Empire Index and the Philadelphia Fed index. The Leading Economic Indicators (LEI) Index is expected to be flat for April. From my weekly enewsletter INSIDE LENDING, for real estate pros, May 16, 2011 05/16/2011

Mixed results in the bond market, with shorter dated maturities gaining slightly and longer ones losing a tad. Safe haven buys driven by continued Euro, Middle East and Japanese nuclear concerns were discouraged by inflation worries. The price of the FNMA 4.0% bond we watch ended the week down .10, closing at $100.04. Freddie Mac's national average rates for conforming mortgages fell once more and although some worry rates may head back up, they're now below levels of a year ago.  From my weekly enewsletter INSIDE LENDING, for real estate pros, May 16, 2011 05/16/2011

Like yesterday's fish, stocks didn't seem very appealing to investors who can't seem to stay confident in the economy, as the Dow and the S&P 500 dipped for another week. Sure, the tech-driven Nasdaq didn't drop, but ending flat clearly isn't very bullish. Commodities came back some and the dollar rallied. Problems included April Retail Sales which were up 0.5%, but the big gains were from service stations and supermarkets, reflecting rising gas and food prices. For consumers, inflation was up 0.4% in April and up 3.2% for the year. Weekly jobless claims were down by 44,000, but still firmly above the 400,000 level they were under up till a few weeks ago. But earnings for S&P 500 companies in the first quarter were up an encouraging 20% compared to last year. And the total return for th... 05/16/2011

Our resolution to succeed in the real estate market was given a bit of a boost with the National Association of Realtors (NAR) report that existing home sales were up 8.3% in the first quarter over the fourth quarter of last year. Plus, on a quarter-to-quarter basis, sales rose in every region of the country. Year-over-year, sales were virtually flat, slipping just 0.8% to a seasonally adjusted annual rate of 5.14 million homes.This was nonetheless balanced with some disappointing data. Year over year, existing home prices dropped 4.6% nationwide, to a median of $158,700. Median prices dropped year over year in 118 of 153 metro areas, but rose in 34 of them. This drop in median price came because more sales were in the lower end of the market. In spite of this lower price skew, first-ti... 05/16/2011

Fed Chairman Ben Bernanke maintains he sees nothing wrong with Fed policy, so some economists expect these 0%-0.25% rates to be with us until the middle of next year. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%-0.25% After FOMC meeting on: Consensus Jun 22 0%-0.25% Aug 9 0%-0.25% Sep 20 0%-0.25% Probability of change from current policy: After FOMC meeting on: Consensus Jun 22      <1% Aug 9      <1% Sep 20      <1% From my weekly enewsletter INSIDE LENDING, for real estate pros, May 16, 2011 05/16/2011

Remember: 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. Economic Calendar for the Week of May 16 - May 20  Date Time (ET) Release For Consensus Prior Impact               TuMay 17 08:30 Housing Starts Apr 565K 549K Moderate TuMay 17 08:30 Building Permits Apr 590K 594K Moderate TuMay 17 09:15 Industrial Production Apr 0.5% 0.8% Moderate TuMay 17 09:15 Capacity Utilization Apr 77.7% 77.4% Moderate WMay 18 10:30 Crude Inventories 5/14 NA 3.781M Moderate ThMay 19 08:30 Initial Unemployment Claims 5/14 420K 434K Moderate ThMay 19 08:30 Continuing Unemployment Claims 5/7 3.713M 3.756M Moderate ThMay 19 10:00 Existing Home Sales Apr 5.22M 5.10M Moderate ThMay 19 10:00 Philadelphia... 05/16/2011

05/16/2011

A customer called me this morning and said, "Look, I know you have told me you don't have a crystal ball for interest rates, but can you tell me, when rates do go up, based on a review of what has happened in the past, do they go up slowly a little bit at a time or can they jump up fast?" First, I do have a crystal ball, but it was shattered when the Federal Reserve started purchasing our own debt and mortgage bonds.  Second, history is only an indicator, but I did find the exercise of reviewing what has happened with the Prime Rate since the 1950s to be pretty fascinating. Many homeowners are concerned about what will happen with interest rates as many of them have fairly large balances on their home equity line of credit. When they are sitting at 3.25% and they are making an interest ... 05/13/2011

There is quite a buzz going around about a "new tax on all real estate sales" related to new health care legislation. Here are the facts: The new health care legislation includes a 3.8% Medicare tax that may apply to certain real estate transactions in certain very specific circumstances. Unfortunately, this has been misreported all over the internet in some alarming ways. Here is the fiction: "The new health care legislation imposes a 3.8% tax on all home sales.""If you sell your home for $400,000, you'll pay a $15,200 'sales tax.'""Middle-income people will pay the full tax even if they're only 'rich' the day they sell their home." Please note: Every one of the above statements is COMPLETELY FALSE. What the Law Really Says One of the provisions of the Patient Protection Affordable Car... 05/13/2011

For those of us with a strong will to succeed in this housing recovery, the way appears to be by focusing on the extraordinary affordability of today's residential market. Part of this affordability lies in the fact that mortgage rates fell again for the third week in a row, according to Freddie Mac's weekly survey of national average rates for conforming mortgages. This drop took them to their lowest point of the year. The Mortgage Bankers Association (MBA) weekly survey reported demand for purchase loans was UP a seasonally adjusted 0.3% from the prior week.The National Association of Realtors (NAR) released another annual forecast, this one predicting a 1.8% drop in the medium price of existing homes this year. Sales of existing homes, however, are expected to grow almost 8%, which s... 05/09/2011

INFLATION, CONSUMER FEELINGS, CONSUMER SPENDING... This is the week for looking at inflation once again. Thursday's Producer Price Index shows us how prices are doing at the wholesale level. The overall headline number will continue just shy of 1% with the core number holding at 0.3%. How much of this price increase gets passed on to the consumer will be told by Friday's Consumer Price Index. The Fed focuses on Core CPI, which excludes food and energy and is expected to rise to 0.2%. We'll see how much consumers are spending with Thursday's Retail Sales for April which should show continued growth, although at a slower rate when they take out car sales. Consumer feelings will be felt Friday with the University of Michigan Sentiment Index,  forecast to be down slightly for May.  From my ... 05/09/2011

Last week bond prices moved higher, with safe haven buying from investors concerned over Greece's threats to leave the EU and those plummeting commodities prices. The price of the FNMA 4.0% bond we watch ended the week UP .97, the same amount as last week, closing at $100.14. Higher mortgage bond prices signal lower mortgage rates and national average rates for conforming mortgages fell again, as covered above.  All eyes continue to be on Europe and Greece is not alone as economists are looking for another shoe to fall. From my weekly enewsletter INSIDE LENDING, for real estate pros, May 9, 2011 05/09/2011

Wall Street gave investors a wild ride, in a week that began with the death of Osama bin Laden and ended on a mixed April jobs report. The net result was that after two weeks of gains, all three major stock indexes slid a bit. Commodities also took a hit, with crude oil prices off almost 15% for the week. This is good for consumers, who should get lower gas prices, and good for the rest of the economy, as it starts seeing some of that money which had been going into our tanks. ISM Manufacturing and Services were down for the month, though still indicating growth. Q1 Productivity was up, but lower than the prior quarter.The April Employment Report held a few surprises. Overall payrolls, expected to increase by 183,000, came in at 244,000 new jobs. The private sector had the best gain in ... 05/09/2011

While Crude Oil is trading north of $100 today, last week's 15% decline was the first time that Crude has been under $100 a barrel for two months. Bloomberg notes that this weekly decline was the biggest one seen since 2008. Unfortunately the price drop may be short-lived, according to reports today from the business news service: "Futures climbed as much as 4.4 percent, snapping a five-day losing streak, after a report today showed German exports surged to a record in March and the U.S. Labor Department said last week that payrolls expanded. Prices also advanced on concern that a rising Mississippi River will flood Louisiana refineries." See complete story at http://tinyurl.com/5tgryeu. At least locally, gas in nearby Suquamish fell yesterday from $4.02 for unleaded to $3.97.  Check ou... 05/09/2011

Forecasting Federal Reserve policy changes in coming months...Even though more economists are talking about the need for the Fed to raise the Funds rate to curb inflation, virtually none believe Chairman Bernanke will listen to them any time soon. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same. Current Fed Funds Rate: 0%-0.25% After FOMC meeting on: Consensus Jun 22 0%-0.25% Aug 9 0%-0.25% Sep 20 0%-0.25% Probability of change from current policy: After FOMC meeting on: Consensus Jun 22      <1% Aug 9      <1% Sep 20      <1% From my weekly enewsletter INSIDE LENDING, for real estate pros, May 9, 2011 05/09/2011

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. Economic Calendar for the Week of May 9 - May 13  Date Time (ET) Release For Consensus Prior Impact WMay 11 08:30 Trade Balance Mar -$46.3B -$45.8B Moderate WMay 11 10:30 Crude Inventories 5/7 NA 3.421M Moderate ThMay 12 08:30 Initial Unemployment Claims 5/7 445K 474K Moderate ThMay 12 08:30 Continuing Unemployment Claims 4/30 0M 3.733M Moderate ThMay 12 08:30 Producer Price Index (PPI) Apr 0.9% 0.7% Moderate ThMay 12 08:30 Core PPI Apr 0.3% 0.3% Moderate ThMay 12 08:30 Retail Sales Apr 0.7% 0.4% HIGH ThMay 12 08:30 Retail Sales ex-autos Apr 0.6% 0.8% HIGH ThMay 12 10:00 Business Inventories Mar 0.8% 0.5% Moderate FMay 13 08:30 C... 05/09/2011