South Orange County Blog from Bob Phillips

Mortgage Rates Higher On April’s 539,000 Jobs Lost

Posted in home affordability, mortgage rates, Real estate by southorangecounty on May 8, 2009

Non-Farm Payrolls for May 2007 to April 2009The economy shed 539,000 jobs in April, raising the 6-month total to nearly 4 million jobs lost.


And while the April data may look bad, it’s actually 10% better than what was expected.


As a result, it’s turning into a bad day to be shopping for mortgage rates.


After bottoming out early last week, conforming, 30-year fixed rate mortgages have risen in cost by as much as three-quarters of a percent. Today’s good-for-the-economy report may push costs higher still.


Now, it may seem odd to categorize 539-thousand lost jobs as “good-for-the-economy”, but it’s important to remember that on Wall Street, expectations are everything


Investors are constantly buying and selling securities based on what they think will happen in the future.  And, up until this morning, there was an expectation that 600-thousand jobs had been lost in April.


As it turns out — relative — the actual job loss data wasn’t so bad.


Now, markets are making adjustments and re-forming expectations of what’s ahead for the economy.  They’re preparing for things like higher levels of consumer spending in the months ahead, and fewer home foreclosures nationwide.  Both outcomes would help to spur the economy from recession. 


This helps explain the stock market’s early rally, too.


For now, mortgage markets remain sensitive to whiffs of an economic recovery.  In general, if there’s good news for the country, it going to be bad news for mortgage rates.


Mortgage rates are off slightly in advance of the weekend.

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Your Local Gas Station May Hold Clues To Tomorrow’s Mortgage Rates

Posted in home affordability, mortgage rates, Real estate, Refinances by southorangecounty on May 7, 2009

Gas prices are rising nationallyThe retail price of gasoline is rising nationwide, now up 30 percent since the New Year.


It’s a similar run-up to what we’ve seen for retail gas prices in each of the last 5 Spring Seasons.


For people trying to time the mortgage market’s bottom, clues about the future of mortgage rates may be at the local gas station.


Rising gas prices are indicative of the rising cost of energy and, indeed, crude oil is closing in on its 2009 highpoint.  As these energy costs grow, so do inflationary pressures on the U.S. economy.


Inflation, of course, is awful for mortgage rates. When it’s present, mortgage markets deteriorate and rates tend to rise — often sharply and with little advance warning.


So, for today’s homebuyers-in-process and would-be refinancers, prices at the pump may foreshadow bad news for the future of housing affordability.  Even a modest, quarter-percent increase would have a palpable effect on payments, adding $372 in annual costs to a $200,000 home loan.


Since last week, gas prices are already up by 10 cents per gallon.

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The Minimum Preparatory Steps When Co-Purchasing A Home With A Friend Or Family Member

Posted in home affordability, Real estate by southorangecounty on May 7, 2009

 

Both mortgage guidelines and the economy have tightened since 2006, bringing more attention to “joint homeowners” — non-spousal partners that buy and share a home as roommates.

The practice is not new, but, anecdotally, co-purchasing is becoming more common.

In the video above — filmed two years ago but still on-target today — real estate expert Barbara Corcoran provides good advice for co-purchasing partners.  Like any business relationship, it’s important to plan ahead.

  • Hire an attorney to draft contracts and agreements
  • Have a plan for when one or both parties wants to move or sell
  • Consider life insurance policies on each other

The over-riding theme for co-purchasing arrangements is to be prepared.  Done right, however, they can create two proud homeowners where there would have otherwise been none.

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Ceiling Fan Settings : Clockwise In Winter, Counter-Clockwise In Summer

Posted in home affordability, Home improvement, Real estate by southorangecounty on May 4, 2009

With the start of May comes warmer temperates. But just because the mercury’s rising doesn’t mean your energy bills have to. 


This quick Weather Channel video shows how a ceiling fan can cool a 78-degree room by up to 6 degrees and reduce the costs of running an HVAC unit.  The key is to have the fan’s blades rotating in the right direction.



  • When the heating system is on, blades should rotate clockwise
  • When the air conditioning is on, blades should rotate counter-clockwise


By changing a ceiling fan’s blade rotation, a homeowner can push heat back into circulation to warm a room, or create a downward draft to make a room feel cooler. 

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The Decline In Home Values Slowed In February, Says Case-Shiller. Probably in March and April, Too.

Posted in home affordability, Real estate by southorangecounty on May 1, 2009

Month-to-month home value changes according to the Case-Shiller Index, February 2009


The Case-Shiller Index is a popular reporting tool for the nation’s home prices.  Each month, researchers measure home values in 20 large cities, compile their findings, and then publish them to the public.


The Case-Shiller Index is not a perfect measurement by any means.  It gives more weight to expensive homes than inexpensive ones, for example, and its sample set includes just 37 states.  But that doesn’t diminish its importance to the housing sector. 


Because the Case-Shiller Index comes from the private sector, it’s an excellent counter for the U.S. government’s home value reporting tool — the House Price Index.


In this current market, the Case-Shiller Index tends to report housing in a more negative light than does the government.  This doesn’t make either method more accurate, it just provides a helpful point/counter-point. 


And that’s why February’s Case-Shiller Index is so important. 


Despite reporting falling values in each of its 20 tracked cities, the Case-Shiller Index showed values falling with a lesser speed and intensity than in months prior. 


It’s a small victory, but if the Case-Shiller Index shows that home prices are starting to mend, you have to pay attention — especially because the index is on a 2-month delay and doesn’t account for Spring Buyers or the $8,000 first-time homebuyer tax credit.


One month doesn’t make a trend, but if often-negative Case-Shiller Index turns in similar numbers for March, it could be the signal that housing has bottomed.

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