Monthly Archives: February 2011

January Existing Home Sales

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NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: January Existing Home Sales
KEY DATA: Sales: up 2.7%; 1-Family: +2.4%; Condos: +4.7%; Median Prices: -3.7%

IN A NUTSHELL: “Distressed homes are being recycled and while that may be bad for prices it is good for the housing market.”

WHAT IT MEANS: The housing market is slowly coming back, powered by rising distressed homes demand. Existing home sales improved solidly in January to the highest level in eight months. In the spring, sales were boosted by incentives but now they are being driven by sales to investors. Regionally, only the Northeast posted a decline while the West led the way with a nearly 8% increase. The National Association of Realtors noted that all cash purchases and investor demand has been rising consistently and is beginning to make a dent in the inventory, which is falling sharply. But there is no such thing as a free home and with distressed properties accounting for such a large share of the demand, it is not surprising that prices continue to decline. In January, they were the lowest in almost nine years.

MARKETS AND FED POLICY IMPLICATIONS: This was a good report as sales are steadily rising and inventory is thinning. We have to be cautious about prices, though. Yes, they look abysmal but with so much of the market being driven by distress sales, it is not clear what has happened to the price of “normal” properties. I suspect in those cases, the price declines are limited and in those areas where foreclosures have been modest, they could even be rising. Don’t be surprised if housing adds to growth all this year, though with the pace of sales and construction so low, not a lot of jobs will accompany those gains. Meanwhile, back in the Middle East, turmoil continues and until we get some idea when it will end and what the implications are for oil and other commodities, investors are likely to remain on edge.

Re/Max Connection Realtors disclaimer:
Re/Max Connection Realtors are not licensed financial advisiors, and are not providing any financial advise, you should consult with a licensed financial advisior prior to making any financial decisions. Re/Max Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
Re/Max Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

Calculating Your Monthly Mortgage Payments

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Calculating Your Monthly Mortgage Payments

One of the most important factors to consider when buying a new home is affordability. As a general rule, mortgage payments should not exceed 25-30 percent of your monthly take-home pay. The best way to know what you can afford is to determine the possible payment range by comparing the price of the home with other essential ingredients.

Figure Out How Much You Want To Borrow

Your first step to calculating your monthly mortgage payment is knowing how much you want to borrow. This can be determined by subtracting your down payment amount from the purchase price of the home, which will give you the amount that you will need to request from a lender.

Know Your Rates

The next step is to determine the current interest rates for the purchase of a home. Rates vary and may change often, so check with your lender for current rates. It’s worth noting that the interest rates you receive will, in part, be based on your credit history. This means that knowing your FICO score and credit rating will give you a good idea as to how your interest rates will be calculated.

Choose Your Loan Term

Your monthly mortgage payments will be determined by a number of factors, including the term of your loan. If you were to borrow $250,000, your monthly payments would be less with a 30-year mortgage than with a 15-year mortgage. The reason is because it would take larger monthly payments to get the loan paid off quicker, which is why you will need to select a loan term before calculating your payments.

Additional Costs To Consider

Your total mortgage payment will include taxes, homeowner’s insurance and possibly even private mortgage insurance (PMI) if you provide less than 20 percent down and your loan requires it.

Just The Facts & Figures

Now that you know how much you need to borrow, have chosen your loan term and are familiar with the current interest rates, it’s time to calculate your payment. Most lenders offer a mortgage calculator on their Web site or you can get an estimate by speaking with your lender.

If you still need help in calculating your potential monthly mortgage payments, don’t hesitate to ask your REALTOR®, mortgage broker or lender.

Re/Max Connection Realtors disclaimer:
Re/Max Connection Realtors are not licensed financial advisiors, and are not providing any financial advise, you should consult with a licensed financial advisior prior to making any financial decisions. Re/Max Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
Re/Max Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

January Housing Starts and Permits

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NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: January Housing Starts and Permits
KEY DATA: Starts: +14.6%; 1-Family: -1.0%; Permits: -10.4%; 1-Family: -4.8%

IN A NUTSHELL: “If you can’t buy a house you have to rent so builders may now be putting up apartments instead.”

WHAT IT MEANS: With housing finally starting to add to rather than subtract from economic growth, it would be nice if we saw signs that it would continue. That just might be the case. New housing starts soared in January, which is good news. However, all the gain was in multi-family construction as single-family activity eased back. The stand alone home weakness is not a surprise given the massive excesses of the last decade, coupled with tight credit standards and the overhang of foreclosures. Those factors will continue to keep single-family building to a minimum. What is nice to see is that developers seem to be picking up the slack by putting up rental and condo units instead, a trend that is likely to continue. While permits fell sharply, they were artificially bloated in December by regulatory changes in some states. That they still were above the levels posted in the fall seems to point to a steady improvement in residential construction. Builders are keeping supply under control as homes under construction were flat. On a regional basis, the only “weak” area was the West. However, the level was still quite decent and it was down because of a December’s 40% jump. These data are volatile so some reduction after such a large increase is not anything to be worried about.

MARKETS AND FED POLICY IMPLICATIONS: Housing is the beast that devoured the economy and it is one of the missing links that is causing the recovery to be so sluggish. If there any hope for housing construction it is not in homeownership but in rentals. That trend is happening to some extent as investors are turning the distressed houses in rental units. The surge in multi-family activity, which really started in the second half of last year, is an indication that builders may be looking toward the rental portion of the market, not just condos, as the way to stay in business. That said, it is always dangerous to make any assumptions about construction based on winter data. Given the seasonal adjustment factors, it doesn’t take a lot of new activity to create large percentage swings in activity. So think of the rise in multi-family construction as a possible beginning of a trend but don’t assume it is written in stone. Regardless, this report is neither fish nor fowl for investors and with wholesale prices soaring, the markets will likely focus more on inflation than housing. The Fed member may also have to do some soul searching about where inflation may be heading.

Re/Max Connection Realtors are not licensed financial advisiors, and are not providing any financial advise, you should consult with a licensed financial advisior prior to making any financial decisions. Re/Max Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
Re/Max Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

Tips On Saving Energy & Money At Home

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Tips On Saving Energy & Money At Home

When you save on energy, you also save money. As a homeowner, there are a number of ways that you can do both and still have the energy to enjoy your everyday life.

The Buzz On Bulbs

One of the most obvious ways to save energy in your home is to turn off the television when nobody is watching or when the room is empty. Additionally, avoid leaving lights on that aren’t necessary. Speaking of lights, your choice of light bulbs may also have an impact on your energy bill as certain types require more electricity than others resulting in higher energy costs.

Keep It Cool

During the warm spring and summer months, it’s best to keep all appliances that give off a lot of heat away from the thermostat. Otherwise, your home may appear hotter than it actually is and the air conditioner will then be made to work harder. This, in turn, equals more energy being used and more money being spent on energy costs.

Speaking of heat, it’s a good idea to avoid excessive use of the oven when it’s hot outside. During the warm weather months, the oven can quickly cause your home’s interior to heat up. This means the air conditioner will once again be working harder to cool your home’s interior, which increases your energy consumption. One popular alternative is to use the microwave.

Shop Smart

Whether you have outdated appliances or are simply looking to furnish a new home, it’s a good idea to keep energy efficiency in mind while shopping for new models. Although energy-efficient appliances may be more expensive, they can save you money in the long run by cutting your energy costs every month.

Heating & Cooling

If you want to save a substantial amount of money, take a close look at your heating and cooling costs, which often make up over 50 percent of a family’s energy bill. When it comes to heating or cooling, make sure that the thermostat is adjusted at night and when the home is empty. Otherwise, you are simply wasting energy. Make sure that filters for both heating and cooling units are replaced regularly.

Sun Sense

In the summer, leave your curtains and/or blinds closed in order to minimize the sun’s heat from entering your home as this could cause your air conditioner to work harder. After all, your air conditioner is designed to cool your home and the sun’s heat only makes the temperature rise. In the winter, however, open your curtains in order to get the most out of the sun’s warm rays.

Re/Max Connection Realtors are not licensed financial advisiors, and are not providing any financial advise, you should consult with a licensed financial advisior prior to making any financial decisions. Re/Max Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

Re/Max Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

December Income and Spending

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NAROFF ECONOMIC ADVISORS, Inc.

Joel L. Naroff

President and Chief Economist

 

INDICATOR: December Income and Spending

KEY DATA: Consumption: +0.7%; Disposable Personal Income: +0.4%

 IN A NUTSHELL:   “Households open their wallets wide in December.” 

WHAT IT MEANS:   All the stories about a strong holiday shopping season turned out to be correct.  Consumers threw caution to the wind (okay, maybe that’s a little over the top) and bought all sorts of goods and services in December.  Yes, they purchased a ton of durable goods led a strong rise in vehicle sales, but it was not just new shiny electrical Volts.  Critically, purchases of services, which constitute about seventy percent of spending, are starting to come back.  People are buying the little things that make them happy and that points to rising confidence a better future spending ahead.  The outflow from wallets, though, was not matched by an inflow of income.  Disposable personal income, the money left after the government puts its hand into everyone’s pockets, rose nicely but not nearly as fast as consumption.  Wages and salaries increased somewhat faster than in November but not at a really strong pace.  Indeed, interest and dividend income gains outpaced increases in workers’ pay.   The savings rate eased back but still remained above five percent. 

 MARKETS AND FED POLICY IMPLICATIONS: This was a solid report that fills in the details of Friday’s GDP report.  We knew then that consumption was strong and helped power the quite decent 3.2% overall gain.  The question is: where do we go from here?  With energy costs surging and the depressingly cold and snowy winter possibly keeping people indoors, we could see a slowdown in demand.  In addition, we really do need greater increases in wages and salaries if consumers will keep going back to the malls and showrooms.  It is likely that the savings rate will fall some more but there is only so much of future consumption growth that can be funded out of savings given the cautious nature of households.  Thus, it is still all about jobs since more employees means more income and more spending.  While investors should like this report, it was not really a great surprise.  More importantly, international concerns will likely play a major role in short-term market behavior.  As for the Fed, the decent fourth quarter growth rate is not strong enough to lead to significant declines in the unemployment rate and thus I don’t expect any change in attitude for a while.

Re/Max Connection Realtors disclaimer:
Re/Max Connection Realtors are not licensed financial advisors, and are not providing any financial advise, you should consult with a licensed financial advisor prior to making any financial decisions. Re/Max Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
Re/Max Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com