Reading Rates: MBA Application Survey – March 06 2013

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) declined 7 basis points to 3.58% since last week while the purchase application volume jumped a notable 15% and the refinance application volume also rose 15% over the same period.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

ADP National Employment Report: February 2013

Today, private staffing and business services firm ADP released the latest installment of their National Employment Report indicating that the situation for private employment in the U.S. improved in February as private employers added 198,000 jobs in the month bringing the total employment level 1.64% above the level seen in February 2012.

Perusing the rest of the data in the ADP dataset you can see the the economy is currently showing the most growth for small to mid-sized service providing jobs with goods-producing jobs remaining near trough levels.

Look for Friday’s BLS Employment Situation Report to likely show somewhat similar trends.

ISM Non-Manufacturing Report on Business: February 2013

Today, the Institute for Supply Management released their latest Non-Manufacturing Report on Business indicating that service related business activity continued to expand in February as assessments of service-sector related activity generally improved with the business activity component increasing slightly while the overall non-manufacturing index climbed to 56.0 from last months reading of 55.2.

At 56.9 the business activity index improved a slight 0.89% since January but remained 5.64% below the level seen a year earlier.

This month, service industry respondents are sounding very positive with all respondent quotes citing improving activity and "positive signs":


"Our business is beginning to turn up slightly." (Health Care & Social Assistance)

"Business seems to be improving; RFQ volume and orders also up." (Management of Companies & Support Services)

"Continuing to see slight uptrend in activity, primarily related to 1st quarter initiatives started." (Finance & Insurance)

"Construction market showing some positive signs." (Real Estate, Rental & Leasing)

"The economy continues to slowly pick up, perhaps at an even faster pace than had been previously projected. New housing permits and business licenses are at a multiyear high, although still lower than pre-recession." (Public Administration)

"February bouncing back to forecast levels, which was 11 percent over 2012." (Wholesale Trade)

"Business is picking up; more projects to bid and things are improving." (Construction)

The American People agree with George Orwell

This video presents what the American people consider to be the ideal wealth distribution.  At 2:47, the narrator notes that under this ideal distribution, "the wealthiest folks are about 10 to 20 times better off than the poorest Americans."

George Orwell in Why I Write:

2. Incomes. Limitation of incomes implies the fixing of a minimum wage, which implies a managed internal currency based simply on the amount of consumption goods available. And this again implies a stricter rationing scheme than is now in operation. It is no use at this stage of the world's history to suggest that all human beings should have exactly equal incomes. It has been shown over and over again that without some kind of money reward there is no incentive to undertake certain jobs. On the other hand the money reward need not be very large. In practice it is impossible that earnings should be limited quite as rigidly as I have suggested. There will always be anomalies and evasions. But there is no reason why ten to one should not be the maximum normal variation. And within those limits some sense of equality is possible. A man with Ј3 a week and a man with £1,500 a year can feel themselves fellow creatures, which the Duke of Westminster and the sleepers on the Embankment benches cannot.

Hong Kong Bubble?: Hong Kong Residential Property Prices December 2012

The latest release of the University of Hong Kong's Hong Kong Residential Real Estate Series (HKU-REIS) indicating that, in December, the price of residential properties declined 0.8% since November but climbed 26.77% above the level seen in December 2011.

The HKU-REIS is a set of property price indices constructed monthly using a “modified” repeat-sale methodology similar to that of the S&P/Case-Shiller indices yet suited to the Hong Kong property market.

The Open House at 115 Raspberry

It's been a while since I've done an open house, winter being what it was and the choice of my sellers NOT to have open houses during this season.  But I was pleasantly surprised at how many people came out today in really cold weather.

I always learn a lot about a house by holding it open to the public.  It's interesting to see what the buyers key in on...the agents wanted a family room instead of another eating area, and we provided that by changing the furniture around.  There were no comments today about it, except a few people who really liked the coziness of it.

The carpets had been steamed and stretched and looked wonderful.  I highly recommend doing that for all homes that have wall to wall carpeting.  They did look new!  So new in fact, that I found people teetering on the edge of the living room, not wanting to step on the pristine white carpeting!  Myself included!

I spent some of the time as people roamed around sitting by the fire in the family room, admiring the pretty white crown molding against the Cape Cod blue walls.  (Please see the photo below.)   Lo and behold a prospective buyer showed up almost in the same blue with Cape Cod on his sweatshirt!  Moments like that are fun...

The flow was great - people in and around and almost done and then another group would come.  Busy all the time.  The sellers left candies around with "welcome to our home" signs.  Very charming.

And the house was de-cluttered to the max!  People were impressed, and stated that.  While most in this price range - $319,000 - had homes to sell, they wondered if they could get their home as immaculate and well-organized.  I assured them they could, and that it was a process to be developed over time.

A good day!

Constuction Spending: January 2013

Today, the U.S. Census Bureau released their latest read of construction spending showing mixed results in January with total construction spending and non-residential construction spending declining while single family residential construction spending improved.  

On a month-to-month basis, total residential spending declined 0.02% from December climbing 22.05% above the level seen in January 2012 while still remaining a whopping 54.97% below the peak level seen in 2006.

Single family construction spending climbed a notable 3.62% since December rising 30.21% since Janaury 2012 but remained a whopping 68.00% below it's peak in 2006.

Non-residential construction spending declined a whopping 5.08% since December but still climbing 3.95% above the level seen in January 2012 and remained a whopping 27.36% below the peak level reached in October 2008.

The following charts (click for larger dynamic versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year, month-to-month and peak percent change to each since 1994 and 2000 – 2005.