Consumer confidence slides

Consumer confidence dropped a point in January in Florida from 76 to 75. In the U.S., consumer confidence was the lowest level in more than a year dropping 8.1 points to 58.6.  Rising Social Security taxes, and delay in handling fiscal issues by our government were cited as reasons. Consumer confidence has been flat since November. Consumer confidence is an important indicator as to people's willingness to support the economic recovery if they have long term confidence in it.

Home prices jump in November

In Tampa Bay and around the country, home prices increased compared to a year ago. According to a Case-Schiller report, home values were up +5.5% in their 20 city home index model. The was the largest gain in six years. Phoenix lead with homes increasing +23%, followed by San Francisco at 12.7%.  Detroit grew 11.9% and Tampa enjoyed a 6.8% bump.

Pending home sales drop[ -4.3% in December

Low homes inventory are being blamed for pending home sale volume dropping by -4.3% in December vs the record showing in November which was at a  2 1/2 year high. The good news is that this rate in December was still +8.9% over December 2011.

Economists remain optimistic

A survey of the membership of the National Association for Business Economists shows that 50% now believe we are headed to stronger growth... +2 - 4 %  increase in GDP, than previously anticipated. This is up from 36% from the level of respondents feeling this way 3 months ago.

Jobless claims lowest in 5 years

The number of people seeking unemployment aid fell last to the lowest level in 5 years. The Labor Department reported benefit applications dropped by 5,000 to 330,000. the lowest point since January 2008. The four week average fell to 351,750, also the lowest in nearly 5 years. Employers added an average of 153,000 job a month last year pushing the unemployment rate down .7 percentage points to 7.8 percent. It was noted the recovering housing market is having a significant impact fueling these positive results.

Interest rates creep up slightly

Last week the interest rate on a 30 year fixed mortgage rose slightly to 3.42%, up from 3.36% the week before. A 15 year mortgage rose to 2.71% up from 2.66%. In November, interest rates got down to 3.31%...the lowest level in records dating back to 1971.

U.S. home sales hit 5 year high in 2012

The National Association of Realtors is reporting that 2012 saw the largest increase in existing home sales in 5 years. In Florida, the year over year increase in December was +16%.The median price in Florida increased to $154,000, a +14.1% increase over 2011. Total sales rose to 4.65 million homes, +9.2% higher than 2011, the most since 2007. Slowing down the housing recovery in the lack of inventory. There were 1.82 million homes listed in December, the lowest in 12 years.

New York apartments...400 square feet to large

New York is known for its small apartments. The City has now asked architects to see if they can design space as small as 250 sf for apartment dwellers. Population growth and climbing rents, these may be needed to house people affordably in the future. San Francisco recently approved apartments as small as 220 sf.  In 1987, New York passed a requirement that apartments be a minimum of 400 sf.

Foreclosure "dual tracking" ended

The governments consumer watchdog has directed mortgage companies they must provide clearer monthly statements, warn borrowers before interest rate hikes, and assist the consumer in trying to avoid foreclosure. The Consumer Protection Finance agency has stopped the practice of "dual tracking". Dual tracking is continuing to push a consumer into foreclosure while at the same time the consumer is negotiating to lower their monthly payments as a measure to keep their home. The new directives will apply fairer and more effective guidelines for borrowers.

Construction jumps

The Commerce Department announced work on new homes in December was at its fastest pace in
4 1/2 years. The seasonally adjusted annual rate was 954,000, +12.1% higher than November's rate, and nearly double the low point of the recession in April 2009. 

Highest rise in home prices in 6 years

Real estate data agency, CoreLogic reported home prices increased +7.5% in 2012, the biggest increase in 6 years. Lower inventories, less distressed homes available, and more demand were credited for the increase.

Pick up- trucks and home sales go hand in hand

Ford's chief economist, Ellen Hughes-Cromwick sees rising U.S, housing prices, new home sales, and stronger sales will lead to more hiring to keep up. The same article noted that rising home sales have always followed with an increase in pickup truck sales. The housing turnaround is very good news for the auto companies with strong pickup truck divisions.

Wells Fargo earnings improve

Friday, Wells Fargo, the nation's largest mortgage lender reported a +25% earnings increase for the 4th quarter of 2011. This beat what analysts were predicting

New rules to curtail risky mortgages

Thursday, the Consumer Financial Protection Bureau announced it would impose new restrictions on lenders. The goal is to prevent defaults in the future. The changes include banning "interest only" and
"no documentation" loans. These type of loans inflated the housing bubble. Other modifications included setting 43% as the debt ceiling of a person's annual income.Teaser rates, and balloon mortgages were also addressed. The overall purpose of these actions was to protect consumers, while at the same time, giving banks legal assurance they need to increase lending.

Gas prices to fall in 2013?

Forecasters are estimating the average price of a gallon of gas will fall to $3.44 this year which is 5% below the average cost per gallon in 2012. It is believed that lower U.S. demand, and adequate supplies will cause this to happen.

Bank of America to pay $10.3 billion

Fannie Mae will receive $10.3 billion to settle claims relating to the mortgage backed investments that soured during the housing crash. These developed from the acquisition of Countrywide who
BOA took over. In a separate settlement, it was announced 10 major banks and mortgage companies will pay $8.5 billion covering 3.8 million people in foreclosure in 2009 and 2010.

Unemployment rate remains 7.8%

The Department of Labor reported on Friday the unemployment rate for November remained at 7.8% not reaching the previously reported 7.7% level. In 2012, employers added 1.84 million new jobs, averaging 153,000 new jobs a month.

Fiscal cliff agreement won't help economy short term

Economists agree the passing of the fiscal cliff legislation will not fuel stronger growth for the economy. They see the impending fight over the debt sealing, squabbling politicians, and the lack of spending cuts will keep business cautious about hiring and expansion. Economists are hoping these issues are resolved early enough so growth will pick up in the second quarter of 2013.

Interest rate approaching record lows

Last week the average rate for a 30 year fixed rate mortgage dropped to 3.34% approaching the all time low of 3.31% reached in November. The 15 year rate was down to 2.64% from 2.65% a week earlier.

215,000 jobs added in December

Payroll processor, ADP reported that 215,000 new jobs were added in December surpassing the
148,000 added in November. This was helped by a surge in new construction jobs, many of which came about as the rebuilding for Superstorm Sandy begins.

Auto industry looking for 15 million units in 2013

The auto industry sees the opportunity to sell 15 million new vehicles in 2013. Analysts estimate sales reached 14.5 million units in 2012. Pre-recession levels were at 17 million units.We may see as many as 43 new models introduced this year, up 50% from 2012. Polk research firm predicts auto sales will continue to lead the recovery in 2013.

Stocks soar with "cliff" vote

The DOW rose 300 points on the passage of the fiscal cliff legislation. It is now just 5% below its record high close in October 2007. Typically, the Dow rises about 90 points on the first day of a new year. Wednesday's gain was 3 times the historical average.