Monday, March 26, 2012

Market Update

I want to thank Josh Hay at US Bank for sending this update.

Mortgage bond prices finished the week higher helping mortgage interest rates improve. Rates were positive Monday morning but quickly whipsawed higher Monday afternoon and Tuesday morning. Trading swung back positive again Wednesday and Thursday following weaker than expected existing home sales data and reports that Chinese manufacturing weakened.
Oil prices bounced around initially falling on consumption worries tied to the Chinese weakness, which eased some of the recent inflation fears. Prices spiked a bit higher Friday afternoon following reports that Iranian oil exports fell. Mortgage interest rates finished the week better by about 1/4 to 3/8 of a discount point despite the tremendous volatility.
Date and Time
Consumer ConfidenceTuesday,
March 27,
10:00 am, et
70.5Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
Treasury Auctions BeginTuesday,
March 27,
1:15 pm, et
NoneImportant. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday.
Durable Goods OrdersWednesday,
March 28,
8:30 am, et
Up 2.2%Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
Weekly Jobless ClaimsThursday,
March 29,
8:30 am, et
352kImportant. An indication of employment. Higher claims may result in lower rates.
Q4 GDP Third EstimateThursday,
March 29,
8:30 am, et
Up 3%Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Personal Income and OutlaysFriday,
March 30,
8:30 am, et
Up 0.3,
Up 0.4%
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.
PCE Core InflationFriday,
March 30,
8:30 am, et
Up 0.1%Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
U of Michigan Consumer SentimentFriday,
March 30,
10:00 am, et
74Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
The personal income and outlays release is a monthly report issued by the Bureau of Economic Analysis (BEA). The data is important because it is thought to provide a solid indication of future consumer demand. The personal income component is primarily a measure of wages and salaries. The outlays component is primarily a measure of spending on goods and services. Together the figures provide analysts valuable insight into consumer economic standing and consumption.
The prior release showed an income increase but not as much as analysts expected. Generally stagnant wages coupled with tighter borrowing restrictions make it difficult for consumers to spend money. It is important to note that no single economic indicator can consistently predict the future of the economy. However, the personal income and outlays report is a closely watched release. The consumer remains a vital component of the US economy.
The data this week has the potential to cause mortgage interest rate volatility. Now is a great time to take advantage of low rates.
RATE LINK is provided by Market Information for Mortgage Professionals. Copyright 2012. All Rights Reserved. Mortgage Market Information Services, Inc. The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

Wednesday, March 7, 2012

Appraisal Education

    During a recent national USPAP class, the main topic covered the up and coming changes over the next several years.  One of the topics was the changes to the requirements for entry into the industry.  These changes will raise the minimum of having a bachelor’s degree in order to become an appraiser.  With that, why don’t we discuss education for a little bit.
    Education is not most people’s strong suite, but it should be taken seriously.  Some degree of formal education should be attained by most people so that at the very least prove they can stick with something; higher education is also becoming a sought after quality in most employers. Learning can also be done outside of the formal arena.  By keeping our eyes open, our minds clear, and our ears attentive, we can learn from everyday life around us.  We can learn from differing people, situations, and places. 

    When you pursue a higher education, you should do your best, and finish what you start.  Many students nowadays just show up or even worse expect to just get by.  This is counter-productive to learning in the first place.  We should always be willing to learn something new, but if what we are learning isn’t productive to us, then we should be willing to let it go.  Most higher education will tell you that one of the areas that you will develop will be in your critical thinking.  Middle age adults have a different point of view when they are asked to critically analyze something as opposed to young adults right out of high school.  Older folks for the most part already have several beliefs and convictions that are a part of their lives, making them set in their ways.  Although they are set, they can still learn and further themselves.

    Lastly, education should not be feared, because it can actually be fun.  If someone has told themselves for years that they are not good readers, writers, or poor mathematicians, then they are only a decision away from changing those old thoughts.  Classrooms at the Radcliff campus of McKendree University have a very high ratio of older students that have put their learning phobias aside and are back in front of the teachers. 
In conclusion, higher education is becoming more of a priority in today’s society.  It is something that should be pursued as long as we live, and it should be taken seriously.  Besides, you just might like what you learn!


Saturday, March 3, 2012

The Principles of Anticipation & Change

    I was driving by a section of previously unused property one day.  I drove past it again several weeks later when I had noticed that the trees had been cleared and a construction company was digging a basement.  How many times do we wonder why investors and builders will spend large amounts of money for something that may not take off?  The answer is the principle of anticipation.
     The principle of anticipation states that, “Value is created by the anticipation of benefits to be derived in the future” (Appraisal Institute, 2001. p.34).  Investors and builders will develop a piece of property to its highest and best use when they are convinced that they will be able to recoup their investment plus a profit margin. 
    Another principle that goes in hand with anticipation is change.  Change is, “The result of the cause and effect relationship among the forces that influence real property value” (Appraisal Institute, 2001, p.35).   There is one aspect that you can bet on in Real Estate and be right 100% of the time: the market is going to change.  Change usually happens over long periods of time unless a large market event comes along.  Here in Kentucky, we have seen change happen very slowly.  Our markets for the most part do not see large amount of appreciation, so when the market turned south, we did not see the levels of depreciation that other states had seen.  The problem with change is that it happens very slowly, and unless you are aware that it is happening, you might miss the change.  Have you ever heard this, “I thought real estate was a safe investment, what do you mean my property has depreciated?” 
    In closing, if the real estate market is to recover, one of the ideas that has to get back into the minds of buyers across the country is that real estate will appreciate.  This will legitimize the principle of anticipation and ultimately produce change. 

1. Appraisal Institute. (2001). The Appraisal of Real Estate
      (12th ed). Chicago, IL, Author