Virginia Beach Mortgage Market Recap-April 14
It was a slow week on the news front - a good thing, considering most of what constituted the news was less than encouraging. Pending home sales surprised to the downside, declining 1.9% month-over-month, prompting one notable economist to vent: ˜The next move in the index will be a further decline, as it becomes clear that the accelerating drop in prices means bargain-hunting is seriously premature. Maybe, maybe not. Yes, some Virginia Beach home prices have fallen, but the evidence is far from clear that the trend is gaining momentum.
The Federal Reserve continued its headline-hogging ways. The minutes from its Federal Open Market Committee meeting on March 18 revealed that several members saw a risk of a ˜prolonged and severe downturn and that there had been ˜little indication of stabilization in the U.S. housing market.
Despite the gloomy near-term outlook, Fed officials generally expect that lower interest rates and the governments $152 billion stimulus package will spur a recovery starting in the second half of the year. Fed policy makers next meet at the end of April; futures markets are split over whether officials will cut rates by a quarter-point or half-point.
Meanwhile, the average Virginia Beach home buyers are evidently feeling as dour as our average central banker. Americans confidence fell to a new low, dragged down by worries about mounting job losses, record home foreclosures and zooming energy prices. According to the RBC Cash Index, confidence dropped to 29.5 in April, down from 33.1 in March. Over the past year, consumer confidence has deteriorated significantly. Last April, confidence stood at 85.4.
Any good news? Yes, on the Virginia Beach mortgage front, where the prime 30-year fixed-rate mortgage dropped 16 basis points to 5.96%, according to the Bankrate.coms national survey of large lenders. Similar drops occurred in the 15-year fixed-rate and 5/1 adjustable-rate markets.
Economic
Indicator |
Release
Date and Time |
Consensus
Estimate |
Analysis |
|
Retail Sales
(March)
|
Mon. April 14,
8:00 am, et
|
0.4%
(Increase)
|
Important. The expected increase in retail sales suggests a growing economy. |
|
Business Inventories
(February)
|
Mon. April 14,
10:00 am, et
|
0.5%
(Increase)
|
Moderately Important. The expected increase offers little insight to business activity. |
|
Producer Price Index
(March)
|
Tues. April 15,
8:30 am, et
|
All Goods: 0.4% (Increase)
Core: 0.1% (Increase)
|
Very Important. Credit markets are concerned that the PPI numbers will post higher than consensus estimates. |
|
Housing Market Index
(April)
|
Tues. April 15,
1:00 pm, et
|
21
Index
|
Important. The index appears to have established a bottom. |
|
Mortgage Applications
|
Wed. April 16,
7:00 am, et
|
None
|
Important. Volatility remains high, but the longer-term trend remains positive. |
|
Consumer Price Index
(March)
|
Wed. April 16,
8:30 am, et
|
All Goods: 0.2% (Increase)
Core: 0.0%
|
Very Important. The CPI holding at the consensus estimates will alleviate inflation concerns. |
|
Housing Starts
(March)
|
Wed. April 16,
8:30 am, et
|
1.03 Million (Annualized) |
Important. Recent data suggest the market has formed a bottom. |
|
Industrial Production
(March)
|
Wed. April 16,
9:15 am, et
|
0.1%
(Decrease) |
Important. The trend portends stagnating manufacturing activity. |
|
Beige Book
(March)
|
Wed. April 16,
2:00 pm, et
|
None |
Moderately Important. No new information is expected after last weeks FOMC minutes. |
|
Leading Indicators
(March)
|
Thurs. April 17,
10:00 am, et
|
0.1%
(Decrease) |
Moderately Important. Indicators are expected to confirm previous data on the economy. |
|
FINALLY, SOMEONE GETS IT
These pages have stated repeatedly the benefits of an irrefutable law of economics: lower prices equate to increased demand. Finally, someone has picked up on the theme. Charles Wheelan, a University of Chicago economist and Yahoo Finance contributor, stated what weve known along: ˜Falling prices will help put the ˜market back in the real estate market; itll get us back to a point where sellers are asking prices that buyers are willing to pay.
Wheelan brought up another strong point in his missive, and thats setting expectations. Many of Virginia Beach home sellers are anchored to home prices and mortgage application processes in vogue four years ago. But thats not todays market, and no amount of wishing will turn back the clock. If buyers are only willing to pay $200,000 for a house bought for $250,000, the $50,000 difference is gone. Listing the house for $250,000 is a waste of time for everyone involved. Same can be said for applying for a subprime, non-verified loan.
This isnt to say that Virginia Beach home-price appreciation and more relaxed lending standards arent in the future; they very likely are. But if someone needs to sell a home or get a mortgage today, he has to play by todays rules. The sooner everyone realizes that fact, the sooner the housing market will begin its recovery.
Information provided by Fred Levine, Union Mortgage Group, (757) 287-0551.
For more information on Virginia Beach real estate, visit ButlerTeamHomes.com. Start your Virginia Beach home search here.
Also read: Virginia Beach Real Estate - Mortgage Market Recap
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