Tuesday, March 20, 2012

March Views You Can Use

"I love to mix it up. I love to keep doing different things." - Actor Clive Owen. The economic headlines over the past month have been sending a mixed message - with one report leaning one way and the next report saying something different. Overall, however, things are slowly looking up. The articles below can help you make sense of what's happening...and what you should watch for in the near future.

Mixed News in the Housing Market  

The housing industry received mixed news last month. For example, in a report released in February, Existing Home Sales (which includes sales for single-family homes, townhomes, condominiums and co-ops) rose in January. That marks three gains in the past four months. In addition, the supply of existing homes on the market came in at its lowest level since April 2006.

However, New Home Sales for January fell slightly to come in at 321,000 units. On the flip side, the number of new homes sold in December was revised upward--from 307,000 to 324,000.

In terms of home loan rates, one of the major topics to watch is the seemingly endless negotiation between Greece, investors, and central bankers. At the end of last month, those parties came to an agreement that will help Greece fund itself through March and into the future. The mixed news, however, is that the country still needs to institute economic reform and austerity measures to provide any real relief to its financial problems in the future. So, any deal with Greece will be very tough to implement and a default could still occur...which makes this an important topic to keep close watch on.

The good news is that despite the mixed news, Bonds and home loan rates remain at historic levels, which means now is still a great time to purchase or refinance a home. Let me know if I can answer any questions for you or someone you know.

What to Watch: Inflation Reports  

Although it isn't much of a factor now, at some point inflation could be front and center with all of the cheap cash that is available currently. 

In fact, Dallas Fed Bank President Richard Fisher recently said that "excessive monetary accommodation might only add a further dosage of angst, fueling fears of inflation." In addition, Minneapolis Fed Bank President Narayana Kocherlakota stated that the easy Fed monetary policy could push inflation to 2.3% next year, which would be above the Fed's comfort zone of 2%.

One of the best ways to monitor inflation is by monitoring the Consumer Price Index (CPI) and the Producer Price Index (PPI). The CPI measures inflation at the consumer level, or rising costs that are passed on to consumers. The PPI, on the other hand, measures inflation at the wholesale level, or costs that producers are experiencing. Both reports are released at the beginning of each month. And, depending on what the data says, they can both impact home loan rates.

That's because any hint of inflation can serve to spook Bond investors--causing both Bonds and home loan rates to worsen, since inflation can reduce the value of fixed investments like Bonds. This is one story to keep a close eye on in the weeks ahead. 

I'll continue monitoring inflation and its impact on the markets. If you have any questions about economic reports and how they impact home loan rates, please call or email me. I'm always happy to explain what's going on and how it impacts the rate you can get based on your unique situation.

5 Low-Cost Home Improvement Projects  

If you're a homeowner, you know that there are always plenty of projects that you want to do around the house. It's easy to find inspiration in magazines or when you visit another friend's house. The tricky part is deciding which projects make sense. By concentrating on certain types of upgrades, you'll not only create a more comfortable living space for yourself, but you'll make your house more sellable if (or when) the time arises.

1. The Front Door
Repainting or replacing the front door will dramatically improve the exterior appearance of your home. It will enhance an area that everyone sees, no matter if they're driving by or walking up. Upgrading the hardware on the door is also a nice touch. And, if you're experiencing warm weather in your area, this may be a project that you can tackle this weekend.

2. Plant the Seed
Foliage on the outside of the home carries many benefits. Among them are the addition of color and vitality to the landscaping. If the weather in your area isn't conducive for gardening at the present time, concentrate instead on acquiring potted plants for your porch or walkway. As the weather warms up, think about potential projects for the front and back yards.

3. Fix the Fixtures
While upgrading bathrooms is a sound investment in terms of increasing your home's value, a remodel may not be part of this year's budget. That said, don't ignore your bathrooms altogether. Fixtures such as faucets, towel racks, lights and showerheads have the ability to spruce up both the look and functionality. Throw in newly painted walls and some decorative accents and your bathroom will feel brand new.

4. Fawn Over Flooring
New flooring is major "bang for your buck" when it comes to increasing a home's value. But, once again, is there money in the budget to do it? If the answer is no, opt instead for having your carpets and hardwood floors professionally cleaned by a quality and reputable company.

5. Don't Forget the Garage
The garage is a part of the home that is often neglected. If this sounds familiar, you may want to think about organizing the interior. Any items that are no longer in use can be sold in a true "garage sale." These proceeds can go toward either repainting or replacing the garage door. Don't laugh. It's an inexpensive yet effective way to spruce up your garage's exterior.

Remember, improving and updating your home doesn't have to be an expensive proposition. Just look for low-cost ways to create the brightest and most comfortable space possible.

Q&A: Impact of Oil Prices?  

QUESTION: How do oil prices impact the economy? 

ANSWER: On the one hand, high oil prices can be very detrimental to the fragile U.S. economy, as consumers have to put more money into their gas tanks--which means they have less to spend elsewhere. High oil prices are also inflationary since the added shipping and material costs apply upward price pressures on Producer or Wholesale goods that either have to be absorbed by the producer (thus hurting profits and the ability to expand or hire) or passed on to the consumer...a la a rise in consumer inflation.

On the other hand, high oil prices could actually be good news for home loan rates, as the dampening effect on economic growth produces a sluggish economic environment in which Bonds (including Mortgage Bonds, to which home loan rates are tied) thrive.

If you have any questions that I can help with at this time, please call or email today. It will only take a few moments to discuss what's going in the markets and how it impacts your unique goals and situation.

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