Premier Mortgage Group

RATES FLAT DESPITE POSITIVE ECONOMIC DATA

Mortgage interest rates were mostly flat again this past week despite generally positive economic data and supply pressure from Treasury debt auctions of $109 Billion.  Economic reports better than expected included the Case Shiller Home Price Index for June, August Consumer Confidence, June Durable Goods Orders, July New Home Sales, the second look at Q2 GDP, and the University of Michigan Consumer Sentiment Index.  July Durable Goods Orders jumped 4.9% on expectations that they would increase 3.2%.  This is the largest month over month increase since July 2007.  July New Home Sales jumped 9.6% on expectations that they would increase 1.5%.  This is the largest month over month increase since February of 2005.

The Dow Jones Industrial Average is currently at 9,533, up slightly on the week.  Crude oil spot prices are currently trading at just under $73 per barrel, down about $1 per barrel on the week.  The Dollar continued to weaken versus the Yen and Euro this past week.  Also of note, President Obama announced that he will re-appoint Federal Reserve Chairman Ben Bernanke to another four year term.

Next week look toward Tuesday’s ISM Manufacturing Index, Thursday’s weekly jobless claims, and Friday’s employment report for August as potential market moving events.

RATES FLAT ON MIXED ECONOMIC DATA

Mortgage interest rates were generally flat on the week on mixed economic data.  Intra-week volatility was high, though.  Economic reports better than expected included the August New York Empire State Manufacturing Index, the August Philadelphia Fed Business Index, and July Existing Home Sales.  Existing Home Sales increased 7.2% on expectations that they would increase 2.2%.  Sales are at their highest level since August of 2007.  July Leading Economic Indicators increased 0.6%, in line with expectations and the fourth month in a row that Leading Economic Indicators has shown improvement.  Economic reports weaker than expected included July Housing Starts, July Building Permits, and weekly jobless claims.  Also, the July Producer Price Index, a measure of wholesale prices, fell 0.9% on expectations that it would fall by 0.2%.  The core Producer Price Index, excluding the food and energy components, fell 0.1% on expectations that it would increase 0.1%.

The Dow Jones Industrial Average is currently at 9,493, up over 170 points on the week.  Crude oil futures are currently trading at almost $74 per barrel, up over $6 per barrel on the week.  The Dollar continued to weaken versus the Yen and has weakened versus the Euro on the week.

Next week look toward Tuesday’s Consumer Confidence Index, Wednesday’s Durable Goods Orders and New Home Sales, Thursday’s second look at Q2 GDP, and Friday’s Personal Income and Outlays as potential market moving events.

The jury is in: the popular media seems to all agree that Boulder and the Denver area are among the best places to live and invest right now. Here’s are some recent highlights:

1. BusinessWeek ranked Boulder #1 in their Strongest U.S. Housing Markets article. Fort Collins was also ranked #19. Factors included reliable government and university jobs, controlled development growth, and the steady stream of new CU students that don’t want to leave. Read more from BusinessWeek here.
2. Forbes ranked Denver #1 in their Best Cities to Buy a Home article. Factors included distribution of home sales across the metro area, change in cost per square foot, and number of home sales. Read more from Forbes here.
3. Money Magazine ranked Louisville #1 in their Best Small Towns to Live article. Superior was also ranked #13. Factors included proximity to recreation, great downtown cultural activities, and some of the lowest unemployment in the state. Read more from Money Magazine here.
4. Denver was named #1 most likely housing market to rebound by MSNBC Today Show’s regular real estate expert Barbara Corcoran. Factors included solid employment, the best park system in the U.S., an early high foreclosure rate, and our already-increasing property values. Watch the Today Show interview here.
5. US News ranked Fort Collins-Loveland #3 on their Top Housing Markets for the Next Ten Years. Factors include a leading position in traditional and alternative energy industries, population growth, and investments from private industry and the university. Read more from US News & World Report here.

And the statistics agree with the media. It’s not just the quality of life we enjoy, with our many sunny days and backyard mountain playground. It’s about employment, population migration, and real estate. Here are just a few details:

1. Colorado employment figures are doing comparatively well. Colorado unemployment has held the 7.5% range, and Boulder County 6.6% – painful, but good fortune compared to the 12% on both coasts and in the Rust belt. Colorado has lost a record number of jobs in this Great Recession, about 150,000, but the new high is only slightly above the prior – the Tech Bust of 2002. We recovered from that one in only two years, and housing was resilient that time just as now. (source: U.S. Dept of Labor)
2. Colorado is experiencing positive population growth. Perhaps the deepest Colorado economic strength: our quality of life attracts net migration of population to the state. Despite the recession, State Demographers expect a net gain of 56,000 move-ins this year, as a percentage the fifth-strongest state in the US, and double the rate during the Tech Bust. (source: CO State Demography Office)
3. Apartment vacancies aren’t as bad as previous recessions. Household stress shows in Boulder-Broomfield apartment vacancies, up to 7.2% in 2Q’09 from the 3.6% low in 3Q’07. In tough times, households grow in size, kids moving home or not moving out, or people banding together as roommates. The Tech Bust is again a reassuring benchmark: vacancy peaked at 12.2% in Q4’03 – two years after dot.coms bombed – and did not fall as low as today’s rate until Q4’05. (source: Denver Metro Apartment Assn.)

WHAT DOES THIS MEAN FOR ME?
Colorado is a great place to buy real estate, with one of the best outlooks in the U.S.! Surprisingly low recession-vacancy combined with in-bound migration and essentially no new construction at all – that’s exactly the kind of scarcity that results in price gains when demand returns in recovery.

RATES IMPROVE ON WEAKNESS IN STOCKS, ECONOMIC DATA

Mortgage interest rates improved this past week as the stock market gave up ground and economic data was generally weaker than expected.  The Dow Jones Industrial Average is currently at 9,256, down over 100 points on the week.  Economic data of note included July Retail Sales, down 0.1% on expectations that sales would be up 0.7%.  Excluding automobile sales, retail sales were down 0.6% on expectations that they would be up 0.1%.  Other economic data weaker than expected included June Wholesale Inventories, weekly jobless claims, June Business Inventories, and the University of Michigan Consumer Sentiment Index.  Also, Q2 productivity increased more than expected as unit labor costs fell to its lowest level in eight years.  July Industrial Production and Capacity Utilization as well as the July Consumer Price Index (CPI) were in line with expectations.

Crude oil futures are currently trading at just over $68 per barrel, down close to $3 per barrel on the week.  The Dollar has weakened versus both the Euro and Yen on the week.  The Fed left short term interest rates unchanged at its FOMC meeting and the markets absorbed $74 billion in new Treasury debt reasonably well.

Next week look toward Tuesday’s Housing Starts and Producer Price Index (PPI), Thursday’s weekly jobless claims, and Friday’s Existing Home Sales as potential market moving events.