Home Prices Rise, Sales Decline in February

U.S. home prices continued rising in January. Tampa saw an +8.9% increase over 2012. Prices rose in 11 cities studied with Phoenix leading the way at +23.2%. San Francisco weighed in at +17.5% and Las Vegas at +15.3%. The S&P/Case Schiller 20 city home price index showed home prices remain 29% below August 2006 prices ( height of market ) but have moved back equal to 2003
pricing levels. February sales dropped back to seasonally adjusted 411,000 units from January's
431,000 pace (-4.6%). However, February sales were still +12.3% higher than February 2012. The median price of a home in February as $246,800, up 2.9% from a year ago. Severe weather affected sales in the Northeast ( -13.3%), but grew well in the Midwest (+13.7%).Sales were down -9.7% in
the South and -3.1% in the West.

More students work their way through college

Twenty percent (20%) of all college students must work full time ( 35hrs ) to get through college. Nationally, the average student debt is $26,000 for students attending a public four year college. Public college tuition averages $17,860 a year, with private colleges costing $40,000 or more. It has been long held that some work ( 10 -15 hrs weekly ) actually helped students do better in class. There is a problem with this in that many of today's students do not fit this profile. However, over 70% of all part time students hold jobs working in excess of 20 hours a week. The National Center for Education Statistics report 40% of all full college students hold regular jobs. Sixty ( 60%) work more than 20 hours a week. Currently, there are over 2 million college applicants waiting for aid.

                                              Source: The Kansas City Star, Eric Adler, Ann Mara Rose Williams 

Mortgage rates fell last week

The average interest rate for a 30 year fixed rate Freddie Mac loan dropped to 3.54% last week from 3.63% the previous week.

Rate of home sales reaches 3 year high

February sales of existing homes rose the fastest they have in 3 years. The seasonally adjusted rate for January sale projects to 4.98 million units annually. The gain continued in February with a 10.2% pace higher than last year. The median price of homes rose 11.6% to $173,600 from 2011. The rate of homes being placed on the market for sale during this period increased 10% , the first monthly gain since April. However, the home inventories are still down 19% versus a year ago, even with the 10% gain. The inventory squeeze had held sales back in many markets.

New home builders confidence drops

The combination of increased demand, and low supply of existing homes is motivating builders to get new homes ready faster. Builders confidence has fallen due to demand exceeding supply for newly constructed homes, finding good land sites on which to build, price increases in building materials, and the difficulty of getting enough skilled labor. The improving job market, low mortgage rates, and rising home values fueled the existing home sales market to a 16% increase in January. Even with all these challenges, builders have started work on more homes last year consistent with the 2008 numbers.

House flippers are back

The strengthening real estate market has flipper coming back in as home prices increase. Today's investors are more cautious than the speculators in the run up period of 2005-2007. Today's investor is looking to add value and resell at a reasonable return. One school of thought is to now have more than 65% of expected sales price invested in a flip candidate. You must also be able to carry the property in case it takes time to resell it. One of the real challenges in today's market is getting to a listed property before one of the large investment companies find it. The low inventory situation makes this a real challenge and adds to upwards price pressure as bidding takes place on very desirable properties.

Auto sales stay strong

The rise in auto manufacturing to meet sales demand was a key player in boosting manufacturing output +.8 percent in February. It has actually dropped -.3 percent in January.

Jobless aid applications reach 5 year low

The job market continues to strengthen as last week saw the lowest number of jobless aid applications in 5 years. The Labor Department reported jobless applications fell by 10,000 to
a seasonally adjusted rate of 332,000. The number of applications for benefits has dropped five times in the past 6 months indicating a stronger job market is emerging. Of interest, the highest point reached for applications was March 2009 at 667,000.

58 gallons a year in water tops soda

America's love affair with soda has been waning. Since 1998, soda consumption has dropped from 54 gallons a year to 445 in 2012. At the same time, water consumption has increased from 43 gallons of water to the current 58 gallons... a 38% increase. Interestingly, bottled water now accounts for about
21 of the 58 gallons consumed each year.

Homes and stocks rebuild wealth for Americans

The surging home recovery, the record DOW averages, have both worked to restore $16 trillion of wealth for Americans lost to the recession. Showing more confidence in their financial future, consumer borrowing rose $16.2 billion in January from December, now reaching a total of $2.8 trillion...the highest level on record.

Tourists spent record $71.6 billion in Florida

Tourists income reached a record of $71.6 billion for Florida in 2011. This was larger than the previous record in 2011 of $67.2 billion in 2011.

Home prices up again in January

Home prices increase +9.6% over 2012 in January according to a report released by CoreLogic.  This is up from the 8.3% increase in December. This is the biggest annual gain since April 2006.

Fannie and Freddie linked with new securities idea

The Associate Press reports that Edward DeMarco, acting director of the Federal Housing Finance Agency, has put forth a plan to create a new agency to lessen the government's role in the mortgage industry. DeMarco has proposed a new agency, as a combination of Freddie and Fannie, which would be able to sell financial instruments, or act as a restructuring tool for the mortgage market. Fannie and Freddie guarantee about half of all home loans totaling 31 million homes, with $5 billion of exposure. Of the $170 billion given them in aid during 2008, the agencies have paid back $52.3 billion. Initially, the new agency would be jointly owned by Freddie and Fannie.

Car sales jump 4% in January

Americans are buying new cars and trucks in spite of higher gas prices and worries about the dysfunctional economy. New car and truck sales were up 4% in January to an annul rate for 15.4 million units. The peak year was 2005 when 17 million units sold, but this is well ahead of the numbers we saw at the bottom of the recession at 10 million in 2009. American manufacturers have been  enjoying a boost created by the earthquake affecting  Japan in 2011. Japanese manufacturers  are expected to be back in the market in 2013, in strong presence,  which may cut into the double digit growth U.S. car makers were realizing last year.

Freddie Mac making money

Freddie Mac earned more than $4.5 billion in the last quarter of 2012. This was its 5th consecutive quarter of profitability. Freddie paid a dividend of $1.8 billion to the U.S. Treasury and did not ask for any federal aid.

Deliquent student loans affecting mortgages

The Federal Reserve Bank of New York reports that 31% of all student loans were more than 90 days deliquent at the end of 2012. That is up from 25% at the end of 2008. This could limit the borrowing of these late payers with respect to mortgages and other lines of credit in the future.