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QUOTE OF THE WEEK..."Opportunities? They're all around us...there is power lying latent everywhere waiting for the observant eye to discover it." --Orison Swett Marden
INFO THAT HITS US WHERE WE LIVE... It shouldn't take a particularly observant eye to see the historic affordability available to home buyers, thanks to current home prices and mortgage rates. The National Association of Realtors (NAR) Housing Affordability Index reached a 42-year high in January. An index of 100 represents a median-income family's ability to afford a median-priced, existing single-family home, with a 20% down payment and mortgage payments at 25% of gross income. January's record reading was 206.1!
Freddie Mac's chief economist commented, "the typical family had more than double the income needed to purchase a median-priced home in January." There's also talk about prices finally bottoming out. Data aggregator CoreLogic's National Home Price Index in January was at its lowest level since January 2003, and their chief economist noted prices are "not far from the bottom." Finally, the NAR forecasts existing home sales UP 6.8% for the year.
BUSINESS TIP OF THE WEEK... Pay attention to the little stresses in your work. They're usually easy to fix, but if you ignore them, you can wind up with a whole bunch that add up to one big stress.
>> Review of Last WeekDOW, OW! OTHER TWO, UP... Investors responded to the now usual combination of better and worse than expected economic news by sending the Dow down, but keeping the other two market indexes up for the week. Monday's ISM Non-Manufacturing showed slightly stronger than expected growth among service businesses. But our economy is now globally connected, so it wasn't good that China dropped its 2012 growth forecast to 7.5%, the lowest in eight years, and Eurozone Q4 GDP shrunk 0.3%. Meanwhile, our trade deficit ballooned in January to $52.6 billion.
There were enough negative vibes to dampen investor optimism over the February Employment Report's gain of 227,000 nonfarm jobs. The unemployment rate remains 8.3%, with almost 13 million out of work. There are 8.1 million "involuntary part-time workers" who want a full-time job but can't find one. And over half the increase in professional and business services jobs were in temporary help services. So the housing market still isn't seeing the jobs recovery it needs.
For the week, the Dow ended down 0.4%, at 12922; the S&P 500 closed UP 0.1%, to 1371; and the Nasdaq went UP 0.4%, to 2988.
Better than expected economic data, plus a Greek debt agreement, sent bond prices lower. But details of the Greek deal kept worries alive, sending investors back to the safety of bonds. The FNMA 3.5% bond we watch ended the week down .06, to $103.08. The national average rate for 15-year fixed mortgages hit a record low in Freddie Mac's weekly survey, while national average rates for all other mortgage types continued near record lows.
DID YOU KNOW?... A company's Market Capitalization is the value of all outstanding shares, calculated by multiplying the total number of shares by the current market price of one share.
>> This Week’s ForecastRETAIL SALES, THE FED AND INFLATION... Tuesday gives us Retail Sales for February, predicted to be flat, excluding auto sales, but up a bit when you include them. A few hours later that day, we'll have the FOMC Rate Decision from the Fed. No one expects them to touch the Funds Rate, but their Policy Statement will be scrutinized for its take on the economy.
The Fed keeps an eye on inflation, but we won't get those readings until Thursday's February wholesale PPI inflation and Friday's CPI consumer inflation. They're both forecast to be up overall, but the Core numbers, which exclude volatile food and energy prices, are what the Fed pays attention to. They should be up just a bit, but within Fed guidelines.
>> The Week’s Economic Indicator CalendarWeaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates. Economic Calendar for the Week of Mar 12 – Mar 16
Date Time (ET) Release For Consensus Prior Impact
Tu Mar 13 08:30 Retail Sales Feb 1.0% 0.4% HIGH
Tu Mar 13 08:30 Retail Sales ex-auto Feb 0.7% 0.7% HIGH
Tu Mar 13 10:00 Business Inventories Jan 0.6% 0.4% Moderate
Tu Mar 13 14:15 FOMC Rate Decision 03/13 0%-0.25% 0%-0.25% HIGH
W Mar 14 10:30 Crude Inventories 03/10 NA 0.832M Moderate
Th Mar 15 08:30 Initial Unemployment Claims 03/10 358K 362K Moderate
Th Mar 15 08:30 Continuing Unemployment Claims 03/03 3.415M 3.416M Moderate
Th Mar 15 08:30 Empire State Manufacturing Mar 15.0 19.5 Moderate
Th Mar 15 08:30 Producer Price Index (PPI) Feb 0.5% 0.1% Moderate
Th Mar 15 08:30 Core PPI Feb 0.2% 0.4% Moderate
Th Mar 15 10:00 Philadelphia Fed Manufacturing Mar 12.5 10.2 HIGH
F Mar 16 08:30 Consumer Price Index (CPI) Feb 0.4% 0.2% HIGH
F Mar 16 08:30 Core CPI Feb 0.2% 0.2% HIGH
F Mar 16 09:15 Industrial Production Feb 0.5% 0.0% Moderate
F Mar 16 09:15 Capacity Utilization Feb 78.8% 78.5% Moderate
F Mar 16 09:55 Univ. of Michigan Consumer Sentiment Mar 76.0 75.3 Moderate
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... No one living in the real world expects the Fed to raise the Funds Rate at this week's FOMC meeting. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
After FOMC meeting on: Consensus
Mar 13 0%–0.25%
Apr 25 0%–0.25%
Jun 20 0%–0.25%
Probability of change from current policy:
After FOMC meeting on: Consensus
Mar 13 <1%
Apr 25 <1%
Jun 20 <1%
>> Federal Reserve Watch
Forecasting Federal Reserve policy changes in coming months... No one living in the real world expects the Fed to raise the Funds Rate at this week's FOMC meeting. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.
Current Fed Funds Rate: 0%–0.25%
After FOMC meeting on:
Consensus
Mar 13
0%–0.25%
Apr 25
0%–0.25%
Jun 20
0%–0.25%
Probability of change from current policy:
After FOMC meeting on:
Consensus
Mar 13
<1%
Apr 25
<1%
Jun 20
<1%
This e-mail is an advertisement for Jean Hedges. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice, or a commitment to lend. Although the material is deemed to be accurate and reliable, there is no guarantee of its accuracy. The material contained in the newsletter is the property of PrimeLending, A PlainsCapital Company and cannot be reproduced for any use without prior written consent. It is designed for real estate and other financial professionals only. It is not intended for consumer distribution. The material does not represent the opinion of PrimeLending, A PlainsCapital Company. © 2012 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in the following states: AK, AR, CO, DE, FL, GA, HI, ID, IA, KS, KY, LA, MN, MS, MO, MT, NE, NV, NY, NC, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WV, WI, WY. Licensed by: AL State Banking Dept.- consumer credit lic no. MC21004; AZ Dept. of Financial Institutions- mortgage banker lic no. BK 0907334; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act- lender lic no. 4130996; CT Dept. of Banking- lender lic no. ML-13649; D.C. Dept. of Insurance, Securities and Banking- dual authority lic no. MLO13649; Illinois Residential Mortgage Licensee, IL Dept of Financial and Professional Regulation, - lender lic no. MB.6760635; IN Dept. of Financial Institutions- sub lien lender lic no. 11169; ME Dept. of Professional & Financial Regulation- supervised lender lic no. SLM8285; MD Dept. of Labor, Licensing & Regulation- lender lic no. 11058; Massachusetts Division of Banking– lender & broker license nos. MC5404, MC5406, MC5414, MC5450, MC5405; MI Dept. of Labor & Economic Growth- broker/lender lic nos. FR 0010163 and SR 0012527; Licensed by the New Hampshire Banking Department- lender lic no. 14553-MB; NJ Dept. of Banking and Insurance-lender lic no. 0803658; NM Regulation and Licensing Dept. Financial Institutions Division- lender license no. 01890; ND Dept. of Financial Institutions- money broker lic no. MB101786; RI Division of Banking- lender lic no. 20102678LL and broker lic no. 20102677LB; TX OCCC Reg. Loan License- lic no. 7293; VT Dept. of Banking, Insurance, Securities and Health Care Administration- lender lic no. 6127 and broker lic no. 0964MB; WA Dept. of Financial Institutions-consumer lender lic no. 520-CL-49075. PrimeLending, A PlainsCapital Company is an Equal Housing Opportunity Lender. NMLS #108440
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Warren Buffett, chairman and CEO of Berkshire Hathaway, is widely regarded as one of the world's most successful investors. He recently appeared live on CNBC's Squawk Box program, Monday, February 27, 2012, for his annual "Ask Warren" three-hour marathon. Among the many topics covered was the housing market. Here is Warren's latest advice on investing in that area. 
Big changes for FHA. FHA is tightening the noose on our first-time borrowers. As of April 1, not only is HUD increasing MI (mortgage insurance), they are capping collections at $1000. This will be a deal breaker for many of our buyers. Right now, the policy at Prime has been to allow collections if DU (automated underwriting) will accept them. We have gotten loans approved with $10,000 and even $20,000 in open collections. So this is a radical departure. If you have a borrower with an FHA approval, we would be happy to review it. If there are large collections, and we can get an FHA case number before April 1, your buyer can follow the current guidelines. The cutoff for a ratified contract would be approximately April 20th to guarantee a case number and fall under the old guidelines. As always we are here to be of service you and your buyers. Don’t hesitate to call us if you have any questions.
by Dallice Tylee