Interest rates soar last week

U.S. mortgage  rates jumped to 4.46% according to Freddie Mac. That is the highest  jump in 2 years and almost a point higher than last month. Rising rates could price some people out of the market.

Unemployment benefit filings drop last week

The number of people filing for unemployment benefits dropped to 346,000 last week, down from 355,000 a week ago.

New home sales best in 6 years

The National Association of Realtors reported orders for new homes sales rose +6,7% in May. This was +12.1% than last year and the highest level in 6 years.

Renewable energy moving into #2 position by 2016

Emerging third world countries are building more wind, solar, and hydroelectric plants. It is estimated by 2016, these alternative energy sources will surpass natural gas as the second largest source of electricity. Coal continues to be the largest fuel for electric generation.

Stock market rallies

News that the economy grew at a slower pace than reported did not dampen enthusiasm on the stock market on Wednesday. The Dow jumped 149.83 reaching 14,910.14. All sectors increased being lead by health care and utilities. This was the second consecutive day of increases.

Ist Quarter growth lower than reported

The Bureau of Economic Analysis reported Wednesday that real economic growth was and anemic
1.8% not the 2.4% reported by the federal government. Consumer spending was lower at 2.6% growth from the previously reported at 3.4%. New tax withholding this year are credited with some of this lower spending. Consumer spending makes up 2/3 of the GDP.  Business investment grew at just .4% in the first quarter contributing almost nothing to growth.

Interest rates jump more than quarter point

Those below 4% interest rates have left the scene. Last week, 30 year fixed rate mortgages were seeing rates between 4.625% and 4.75%. These are some of the largest increases in interest rates ever recorded. This is the current picture:

  

                                           30 year fixed = 4.625%

                                           FHA/VA        =  4.25%

                                           15 year fixed  = 3.625%

Rates may vary regionally and through competition.

Where are interest rates headed short term?

There is no unanimous agreement on where short term interest rates are headed. Spokesman for the industry predict they might go up, while others see them remaining steady, and a few even see them going lower. We have been in a period of historically low rates. If you have been sitting on the fence about a purchase or refinancing a mortgage, now may be the time to act.

Interest rates to rise per Bernake

Chairman  Ben Bernanke informed the country to look forward to higher interest rates. Last week,
30 year fixed mortgages rose to 3.98% from a low of 3.31%. This is the highest rate in a year.

Unemployment applications rise last week

Last, 18000 more people applied for unemployment benefits than the week before. The annualized rate was 354,000. This level is consistent with continued job growth.

Pinellas County sales strong in May...+22.8%

Pinellas County is enjoying a robust market. Sales in May up +22.8% over last year, listings up +16.6%, average sales price up +7.9%, and sales occurring at 94.5% of list price. Inventory is down by -12.7% to less than 4.5 months supply. With distressed homes removed,  the figure is closer to 2 months supply.

Home builders bullish

Home builders are the most confident they have been in 7 years with respect to new construction sales. The National Association of Home Builders/ Wells Fargo builder sentiment index spiked to
52 percent from 44 last month. The index hasn't been this high since April 2006.

57 Million visit Orlando in 2012

The number of visitors to Orlando reached an all time high in 2012. Over 57 million visited. Of note, Visit Orlando officials claimed at least 4.1 of the visitors were international travelers. Visitation dropped to a low of  46.6 million in 2009, and this year the record surpassed 2011 which had 55.2 million visitors.

Retail spending up in May

People spent more in stores, for cars, home improvements, sporting goods, etc. in May. Sales increased +.6%, up  +.1% from April. This is the best pace since February.

Unemployment benefit seekers lower

People applying for unemployment benefits dropped by -12,000 last week to 334,000. This continues to suggest job growth continues.

CEO's see slow economic recovery continuing

About 1/3 ( 32%) of the CEO's heading up American companies expect to hire more people in the next 6 months. Over 78% said they expected an increase in sales. These CEO's are members of the Business Roundtable group. Recovery is expected to hover around +2.2% growth ( now +2.1% ), well below the +3.5 to 4.0% needed to obtain a robust economy. Consumers continuing to spend in light of the rise in Social Security taxes has helped keep the modest recovery going.

Housing market still precarious

It was reported this week by CoreLogic, a real estate research firm, that the Tampa Bay area is near the top of the largest 25 metropolitan areas in underwater mortgages ( the property is worth less than the value of the mortgage ). Over 41.1% of all mortgages in the Tampa area are upside down. This is an improvement against the last quarter's 44.4%. There are 255,925 upside down mortgages in the Tampa area. Nationally, 19.8% of mortgages were upside down in the first quarter, as opposed to 21.7% in the 4th quarter of 2012. The rise of institutional investors seeking rental properties seems to have banks releasing more distressed properties to meet the new demand. Some refinancing programs the government's HARP program are helping upside down owners to lower their payments and keep their homes. The real estate market continues moving ahead as these items sort themselves out.

Corporate buying spree... a challenge in the housing market

Would-be homeowners are facing even more challenges than  low inventories and rising prices. Corporate investors are gobbling up homes in the $150-$300,000 range to convert into rentals. The corporate buyers represent large hedge funds and institutional buyers who are paying good prices, in cash, and closing in as little as 20 days. Many times, the home is purchased by an investor before it even gets listed for sale. This market pressure, along with low inventories, is causing home prices to accelerate quickly. Some speculate this activity by these cash laden investment companies could cause a new real estate "bubble". The growing rental market is creating this appetite for homes. Blackstone Group, a private equity firm, is reported to own 29,000 homes nationally. MLS data for Tampa suggests they own 928 homes in the Tampa area, worth $131 million.

More people quitting their jobs

An increasing sign of confidence the job market is improving is found in the number of people quitting their current job. The labor Department reported this week that the number of people quitting their jobs in April rose +7.2% to 2.25 million. Most people quit their jobs when they feel they can find a new job quickly. The job market is far from healthy, but it is slowly recovering.

Housing discrimination diminshed

The Housing and Urban Development agency sent out people to test for discrimination in the housing market. It was found out that minorities have more access to homes, and neighborhoods, than was the case when a similar 1977 study reported blatant discrimination and door slamming in the faces of minorities. More than 8 million tests, in 28 metropolitan areas confirmed these results.

Florida economy strengthening

Florida’s economy is growing at a faster rate.  Florida’s gross domestic product grew at 2.4 percent in 2012, a marked improvement from 2011.  Experts predict 2013 figures will be much stronger after the state’s impressive job creation so far this year.

 

Florida consumer confidence hits post-recession high.  Floridians’ consumer confidence rose another 2 points in May to 81—a third straight month of increases for a post-recession high, according to a University of Florida survey.

 

Floridians’ trust in the national economy over the next 5 years surged, rising 8 points to 85.

 

Applications for building permits rose nationally in April to the highest level in nearly 5 years. 

 

New home sales up near record: 2.3% in April.  Sales of new U.S. homes rose in April to the second highest level since the summer of 2008, while the median price for a new home hit a record high.

 

Total existing-home sales are expected to rise just over 7 percent to about 5 million this year in the U.S., according to NAR Chief Economist Lawrence Yun.

 

U.S. home prices jumped in April by most in 7 years.  U.S. home prices increased 12.1 percent in April from a year earlier—the biggest gain since February 2006.

 

The 20-city Standard & Poor/Case-Shiller home price index considers two Florida cities for its results – Miami and Tampa.  In Tampa, S&P/Case-Shiller found an 11.8 percent year-over-year price rise.

 

Statewide, home sale prices improved again by $5,000 to a median price of $165,000.

 

“Rising home prices may begin to alleviate a lack of housing inventory….by encouraging more homeowners to put their properties on the market,” said Maninder Sibia, an economist with Economist Advisory Service.

 

Reported in weekly Prudential Tropical Report by Dewey and Allen, owners.

Wealthy go frugal

Wealthy folks are shunning more expensive discretionary items. A Luxury Institute survey suggest wealthy people will rein in spending on luxury things and seek experiences that create more personal satisfaction. These experiences include travel and dining. People are taking exception to the high price tags on designer items. In a study of 500 pentamillionaires, ( net worth exceeding $5 million), 80% ( 4 out of 5 ) say that pricey designer items have lost their attraction.

Employers create +175,000 new jobs in May

Employers added 175,000 new jobs in May. This was not enough to keep the unemployment rate from rising to 7.6% from 7.5% in April. The stock market took this as a good sign and rose over 207 points on Friday, 6/7.  Employers have added an average of 155,000 jobs each month over the past 3 months. This is continuing evidence the economy is in recovery mode.

Twinky nightmare almost over

Publix Supermarkets has announced it will begin selling Twinkies again as of July 15th. Twinkies disappeared last year when Hostess Brands went out of business. Flowers Foods bought the rights to Wonder Bread, Cup Cakes, Ho Hos, and Ding Dongs. They look to resume production on those brands in late summer. Twinkies left over from last year are fetching between $6 and $11 on Ebay for an 8 pack.

Stock market "uneasy" with economy

Weak economic signals have fueled a drop of -217 points on Wednesday. Mortgage applications dropped -11.5% last week, weak hiring reports in private companies, and sluggish orders to U.S.  factories. The DOW closed at 14,960...the first time below 15,000 since May 6th. There has been a lot of talk lately that the stock market is due for a "correction" following this sustained run to 15,000+.

Tampa home prices up +10.4% in April

The CoreLogic real estate firm reported housing prices in the Tampa area increase +10.4% in April vs. April 2012.  Nationally, prices increased +12.1%. Los Angeles and Phoenix saw gains exceeding +19.2%. These are the biggest gains since February 2006.

Auto sales bounce back in May

After a slightly disappointing April, auto sale bounced back increasing +7% over May 2012. Nissan lead the way with 114,000 units, up +25% vs. May 2012. Altima sales rose 41% and the new Pathfinder volume quadrupled. Toyota sales increased +2.5% to 208,000 units. The housing recovery is creating heavy demand for pick ups. Ford reported their F series pickups hit 71,604 units, the highest levels since March 2007. Dodge Ram sales increased +22%. Analysts expect June sales to hit 1.4 million units reaching an annualized rate of 15.5 million.

Tampa loves small business

Tampa ranks 9th in the country as a good place to locate a small business. CardHub.com  released a study on 6/3 of 30 metropolitan areas ranking 10 factors. These included things like the number of small businesses per capita, unemployment rate, variety of small businesses, and cost of living. Miami and Orlando ranked 11th and 12th respectively. The three worst places were Sacramento and Riverside California and Detroit