The Federal Reserve’s Federal Open Market Committee (FOMC) voted to maintain the Federal Funds Rate within its current range of zero to 0.25 percent, and to continue its current stimulus program of purchasing $85 billion monthly in Treasury bonds and mortgage-backed securities (MBS).
Citing weather-related events such as Hurricane Sandy and drought in the Midwest, the committee said in its statement that information received since its December 2012 meeting “suggests that growth in economic activity has paused in recent months in large part because of weather-related disruptions and other transitory factors.”
Concerns over the then-looming fiscal cliff crisis may have also contributed to the economic contraction during the last quarter of 2012. Positive economic trends observed by the Fed included:
- Improved household spending
- Improving housing markets
- Growth in business fixed investments
The Fed initiated its third round of quantitative easing (QE3) in September as part of an ongoing effort to hold down interest rates and to encourage business spending. The benchmark Federal Funds Rate will remain between zero and.0.25 percent until the unemployment rate falls to 6.5 percent and provided that inflation remains stable.
The Fed Funds Rate has stayed near zero since December 2008.
The national unemployment rate was 7.8 percent in December, and Wall Street expects it to be 7.7 percent for January. The Department of Labor will release its monthly jobs report on Friday; this report includes the monthly unemployment rate. Inflation is expected to remain at or below the Fed’s target level of 2.0 percent or less for the medium-term.
While noting that “strains on global financial markets have eased somewhat,” the FOMC said that it “continues to see downside risks to the economic outlook.” Low overall interest rates and gradual inflation work in favor of home buyers as home prices and mortgage rates are likely to rise at a gradual pace.
Mortgage rates in South Orange County improved slightly after the FOMC release.
When preparing to sell a home, few things improve its curb appeal more than a fresh coat of exterior paint.
Many people are intimidated by the thought of painting their home’s exterior, and choose to hire a third-party to handle the work. But, you can do it yourself, with these easy steps.
First, before starting, you’ll want to inspect your home. Examine all walls, look under the eaves, and pay attention to door frames and windows. Be on the lookout for peeling paint, mildew and rough surfaces and make a note of them.
Next, gather the tools you’ll need to do the job. These include :
- A power washer
- A 2-3” inch putty knife
- A 2-3” inch pull scraper
- A wire brush
- A sander
- Chlorine bleach
Then, to create a clean surface on which to paint, power-wash the walls with plain water. Detergents are not needed, and may not work as well as plain water, anyway.
Follow-up your wash with the putty knife and wire brush to remove the remaining paint. Note where paint has peeled, blistered or wrinkled. Avoid gouging the surface by holding the putty knife perpendicular to the wall, and by using moderate force.
For areas that won’t easily clean, use your pull scraper. It’s used the same way as the putty knife, but it has a sharp blade attached that quickly works through old paint.
Next, sand your home’s exterior smooth using a piece of sandpaper wrapped around a sanding block. An electric sander may be more effective for large areas; it’ll save you time and energy.
If during the cleaning process, you find mildew, be sure to remove it. A simple mix of chlorine bleach will do the job. Mildew will show through the new coat(s) of paint, so be sure to be rid of it before beginning.
Lastly, with your home cleaned and primed for paint, wait for “good painting weather” and get started. Soon you’ll be ready to list your South Orange County home for sale.
The National Association of REALTORS® (NAR) reports that the Pending Home Sales Index fell 4.3 percent in December as compared to the month prior. The index now reads 101.7.
The Pending Home Sales Index measures the number of U.S. homes that have gone “into contract”, but have not yet closed. The report is based on data collected from local real estate associations, and from national brokers.
Despite December’s drop, however, the annual rate at which contracts for a home purchase were drawn increased 6.9 percent from one year ago, and marked the 20th consecutive month of annual purchase contract gains.
NAR reports that 80% of homes under contract are closed with 60 days, with the majority of the remained homes “sold” within months 3 and 4.
Analysts believe that December’s Pending Home Sales Index drop is not a result of a weakening housing market. Rather, it’s a function of a falling national home supply; in particular, a shortage of homes in the West Region offered a prices under $100,000.
The national housing inventory is currently at an 11-year low. However, regionally, results varied :
- Northwest : -5.4 percent from November; +8.4 percent from one year ago
- Midwest : +0.9 percent from November; +14.4 percent from one year ago
- South : -4.5 percent from November; +10.1 percent from one year ago
- West: -8.2 percent from November; -5.3 percent from one year ago
Although December’s Pending Home Sales Index dropped as compared to November, the year-to-year growth of pending home sales suggests a broader improvement in the U.S. housing market. Furthermore, the index is a strong indicator of existing home sales, which means that this season’s home sales should outpace those from 2012.
The Pending Home Sales Index is bench-marked to 100, the value from 2001, which was the index’s first year of existence. 2001 was considered a strong year for the housing market so last month’s 101.7 is considered a positive measure for the housing market.
Analysts project a strong Spring market in South Orange County and nationwide.
Mortgage rates rose last week as investors gained confidence in the global economy. China and Europe posted better-than-expected manufacturing rates, U.S. Jobless Claims fell for the second straight week, and the worst of the European debt crisis appears to have passed.
Last week’s economic news provided further evidence of a strengthening U.S. economy.
The National Association of REALTORS® released its Existing Home Sales report, which indicates that existing home sales improved by 13 percent on a year-over-year basis and are now at their highest point since 2007. The group expects sales of existing homes to increase by 9 percent in 2013.
The Commerce Department released its monthly New Home Sales report; while new home sales for December fell short of Wall Street’s expectations, sales of new homes are almost 20 percent higher than they were one year ago.
Growing demand for homes coupled with lower inventories of available homes suggests that the days of rock-bottom home prices and low mortgage rates are dwindling.
According to Freddie Mac, the average mortgage rate for a 30-year fixed rate loan was 3.42 percent with borrowers paying 0.7 percent in discount points plus closing costs. The average rate for a 15- year fixed rate mortgage was 2.71 percent with borrowers paying 0.7 percent in discount points plus closing costs.
While slight, the week-over-week increase in mortgage rates in South Orange County could become a trend.
Weekly Jobless Claims fell below Wall Street forecasts for the second week in a row. 330,000 new jobless claims were filed; far fewer new claims were filed than the 360,000 new jobless claims expected by investors. New jobless claims also fell below the prior week’s 335,000 new jobless claims. Fewer jobless claims are a sign of a stabilizing economy.
Mortgage rates typically rise as investors gain confidence in the economy and financial markets.
This week’s economic news calendar is jam-packed.
Investors await the outcome of the Federal Open Market Committee’s first scheduled meeting of 2013, treasury auctions are scheduled for Tuesday, Wednesday and Thursday, and the Pending Home Sales Index will be released.
Plus, the Department of Labor’s Non-farm Payrolls Report and Unemployment Report will be released Friday morning.
4 Easy-Living, Universal Design Tips for Any Home
By: John Riha Published: November 25, 2011
Here are some tips to get you started on incorporating universal design features in your home.
One of the basic principles of universal design, also called ageless design, is that it makes homes more practical and safer for everyone — not just the elderly or people with limited mobility.
These days, universal design features are an every day fact of life for many households, with architects and other professional designers adding universal design ideas as a matter of course.
You don’t have to be a pro designer to incorporate this smart thinking into your own home. If you’re remodeling or simply adding a few upgrades, be sure to keep universal design features in mind. There are lots of resources that’ll give you some great starting points.
As we remodeled our 1972 ranch-style house (we’re on the multi-year, budget-as-you-go plan), my wife and I incorporated several low-cost, easy-to-do UD features. A few of our favorites:
1. Switch out doorknobs for lever-style handles. Doorknobs require lots of dexterity and torque to open; with levers you simply press and go.
Makes sense for folks with arthritis, of course, but think about an emergency situation when everyone, including small kids, needs to exit fast: A lever handle is a safe, foolproof way to open a door.
A big plus: Levers are good-looking and can contribute to the value of your home. A standard interior passage door lever in a satin nickel finish costs about $20; you’ll pay $25 to $30 for a lockable lever set for your bath or bedroom. Replacing door hardware is an easy DIY job.
2. Replace toggle light switches with rocker-style switches. Rocker switches feature a big on/off plate that you can operate with a finger, a knuckle, or even your elbow when you’re laden with bags of groceries.
Rocker switches are sleek and good-looking, too. Ever notice how conventional toggle switches get dirt and grime embedded in them after a couple of years? No more! You’ll pay $2 for a single-pole rocker switch, up to $10 for multiple switch sets.
3. Anti-scald devices for your bathroom prevent water from reaching unsafe temps. An anti-scald shower head ($15) reduces water flow to a trickle if the water gets too hot. An anti-scald faucet device ($40) replaces your faucet aerator and also reduces hot water flow.
Anti-scald valves — also known as pressure-balancing valves — prevent changes in water pressure from creating sudden bursts of hot or cold water. An anti-scald valve ($100) installs on plumbing pipes inside your walls. If you don’t have DIY skills, you’ll pay a plumber $100 to $200 for installation.
4. Motion sensor light controls add light when you need it. They come in a variety of styles and simple technologies. I like the plug-in sensors ($10 to $15). You simply stick them into existing receptacles, then plug your table or floor lamps into them. When the sensor detects motion, it turns on the light.
They’re great for 2 a.m. snacking, or if your young kids are at that age when they migrate into your bed in the middle of the night. The lights turn off after about 10 minutes if no more motion is detected.
Home sales dropped last month, but not because demand was lacking. There are fewer homes for sale than at any time in the last 11 years.
According to the National Association of REALTORS®, Existing Home Sales for December 2012 fell to a seasonally-adjusted, annualized rate of 4.94 million homes from November’s tally of 4.99 million existing homes.
The Existing Home Sales report is based on the number of closings for previously-owned, single-family homes, townhomes, condominiums and co-ops. It’s estimated that existing homes account for 85 to 90 percent of all home sales nationwide.
2012 was a good year for housing. Sales of existing homes climbed 12.8 percent as compared to the December 2011 tally, which may be a strong indicator of future mortgage originations and short-term demand for home-related goods.
Based on preliminary sales figures, the number of home resales in 2012 grew 9.2 percent to 4.65 million homes as compared to 4.26 million homes sold during 2011. This marks the highest number of home resales sold in 5 years — a time which predates the recession of last decade.
In addition, the median price of a homes resale read $180,800 in December, which is a 11.5 percent increase as compared to December 2011, and the tenth consecutive month of year-over-year median price growth.
Not since November 2005 has the median home resale price climbed this quickly
Furthermore, the supply of existing homes fell to 4.4 months in December, down 0.4 months from November. At the current pace of sales, the national home resale inventory will be sold by June. This is an important statistic because home supply of less than 6.0-months is thought to represent a “seller’s market”.
There are also just 1.82 million existing homes for sale nationwide — the fewest since January 2001, and a 22 percent reduction from one year ago. With buyer demand high and home inventory down, home prices are likely to rise in South Orange County and nationwide throughout 2013.