QUOTE OF THE WEEK… “High expectations are the key to everything.” –Sam Walton, founder of Walmart
INFO THAT HITS US WHERE WE LIVE… We all have high expectations for the housing market and it seems they’re being fulfilled. Real estate analytics firm CoreLogic reported home prices rose in 2013 at the fastest annual pace since 2005. In December, their Home Price Index was up 11% on an annual basis, the 22nd month in a row of year-over-year home price increases. Their CEO added: “The healthy and broad-based gains in home prices in 2013 help set the stage for the continued recovery in the housing sector in 2014. After six years of fits and starts, we can now see a clearer path to a durable recovery in single-family residential housing across most of the U.S.”
Also looking at 2014, a national real estate listing site estimates that home values will rise 4.8% overall through December 2014, although their analysts note that local market trends are expected to differ. The site’s chief economist elaborated: “…we expect more homes to be available this year, as more sellers enter the market and more homes get built, and a decline in investor competition should make for a more hospitable market for many buyers.” Even more optimistic, Standard & Poor’s 2014 housing outlook forecasts a 6% rise in the S&P Case-Shiller 20-City Home Price Index.
BUSINESS TIP OF THE WEEK… What you give is what you get. Successful networking goes two ways. Give your contacts more referrals and they’ll give you more referrals back.
>> Review of Last Week
DOWNBEAT JOBS, UPBEAT MARKETS… Wall Street investors took a disappointing jobs report in stride and finished the week with a two-day rally. The modest moves up broke a two-week losing streak for the Dow and a three-week dive for the S&P 500, while the tech-heavy Nasdaq enjoyed another upbeat week. Basically, investors ignored January’s disappointing gain of 113,000 jobs and looked to the more encouraging parts of the report. Chief among these was the dip in the unemployment rate to 6.6%, the lowest since October 2008, and this drop happened with more people joining the labor force.
Some observers also noted that throughout the recovery, we’ve had strong months andweak months, yet over the last 47 months, we’ve averaged more than 150,000 jobs a month. This is not the level we need, but at least it’s moving in the correct direction. The remaining data was mixed. The ISM Index showed manufacturing grew less than expected in January, while the December Trade Balance grew a little more. On the good side, ISM Services showed that sector growing stronger than expected and the preliminary Q4 Productivity reading also handily beat forecasts.
The week ended with the Dow up 0.6%, to 15794; the S&P 500 up 0.8%, to 1797; and the Nasdaq up 0.5%, to 4126.
Bond market performance was mixed, even after the employment report came in way weaker than expected. Some Treasuries enjoyed an uptick, but the FNMA 3.5% bond we watch finished the week down .01, to $101.17. National average fixed mortgage rates dropped for the fifth straight week, according to Freddie Mac’s Primary Mortgage Market Survey for the week ending February 6. Their chief economist put it to the lackluster economic data. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… Industry researchers report that total U.S. visits to real estate websites were up 25% from December to January, to 364.4 million.
>> This Week’s Forecast
RETAIL FLAT POST-HOLIDAYS, FACTORY PRODUCTION UP, CONSUMERS HANG IN…This week’s key economic report is January Retail Sales on Thursday. After the holidays, sales are forecast to come in flat overall, although up a tad if volatile automotive sales are excluded. Industrial Production is also predicted up a bit in January. We hope to see weekly Initial Unemployment Claims continuing to dropwhile University of Michigan Consumer Sentiment pretty much hangs in there.
>> The Week’s Economic Indicator Calendar
Weaker 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.