My recurring dream…and your market update!

Last night I had a dream, a recurring dream, that my purse was stolen. It’s a fear of mine and I know why. When I was young, about 12 or so, my family was at the beach. My mom buried her purse in the towels, but it was stolen. Her wedding ring was tucked into her wallet, so she wouldn’t lose it at the beach.

We searched for hours, looked in every dumpster and asked everyone in sight. It was traumatic for everyone.

She was beyond devastated, and to this day, will occasionally mention her wedding ring.

When I awoke to realize this was only a dream, I could feel my tense body relax. I only wish my mom’s experience was a dream too.

Onto the market update…

As expected, on Wednesday the Federal Open Market Committee announced that they are leaving interest rates where they are for now. In what is a rare occurrence, all 9 members voted to leave rates where they are. It has been a very long time since all the board members could be in agreement on monetary policy. The stock market had muted reaction to the Fed announcement.

The big question on investors’ minds these days is… “Is the bull run for stocks coming to an end?”

After week after week of new stock market records, the first half of the week saw the market tank by over 500 points in two days. The two main drivers for this change of fortune was some concern about future economic growth, and the bigger factor of JP Morgan Chase, Amazon, and Berkshire Hathaway getting into the healthcare business to reduce medical costs. This had almost every stock related to healthcare in some fashion take a nose dive.

Pending Home Sales and Overall Housing:

The tight supply of homes available for sale continues to restrict significant growth of pending home sales. December showed an expected increase of 0.5 percent, which although not a significant movement, does point to sales improvement in the coming months.

The South is the strongest region for property resales. Pending sales in this area increased 2.6 percent in December, and is higher from the same time last year by 4.0 percent. Sales in the West increased 1.5 percent, however unlike the South, sales compared to last year are down by 3.1 percent.

Until more sellers place their homes on the market, significant growth in this sector is unlikely. There continues to be very high demand for housing, however, with the recent increase in mortgage rates, home affordability has declined slightly. If interest rates continue to rise, it is likely we will see a decline in the number of buyers out searching for home for a brief period of time. Once people accept the new reality of slightly higher mortgage rates (which are still very low by historical standards) the buyers that took a pause on purchasing, will likely return.

The most recent Core-Logic housing data shows that prices continue to rise. The latest data is for November 2017. Home prices rose 0.7 percent from the prior month, and were higher by 6.4 percent from the same time last year. The next step is to see how higher rates might impact values.

Next week’s potential market moving reports are:

 

  • Monday February 5th – ISM Non-Manufacturing Index
  • Tuesday February 6th – JOLTS Report
  • Wednesday February 7th – MBA Applications, EIA Petroleum Status Report
  • Thursday February 8th – First Time Jobless Claims

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at 661-618-1789.