"There is magic in that little word, home." Robert Sotheby. And last week, there were more signs that the housing sector continues to improve. Read on for details.
Housing Starts surged by 12.1% in December to 954,000 units on an annualized basis. This was above expectations and the highest level since June 2008. Building Permits, a sign of future construction, also increased, coming in slightly higher than the November reading.
In addition, research firm CoreLogic reported that home prices rose by 7.4% in the year ended in November. This figure, which includes the sales of distressed properties, was the largest year-over-year increase since 2006 and it has been positive for nine straight months. Also, the Obama Administration's December Housing Report showed that home prices had solid annual gains for the year ended in October, with the Federal Housing Finance Agency (FHFA) and Case-Shiller housing price indices up 5.6% percent and 4.3%, respectively, from one year ago.
It's also important to note that RealtyTrac's year-end 2012 foreclosure report showed that foreclosure activity increased in 25 states. However, median home prices also increased in 25 states, which pulled 1.6 million homeowners out of negative equity in 2012.
So what's the takeaway? Goldman Sachs has reported that the fundamentals are pointing towards larger gains for housing prices in the next couple of years. And with home loan rates remaining near record lows, great opportunities are available.
As always, one thing that's important to monitor is inflation. Since inflation reduces the value of fixed investments, inflation is considered the arch enemy of Bonds–and, therefore, of home loan rates, which are tied to Mortgage Bonds. However, last week's wholesale-measuring Producer Price Index and the Consumer Price Index showed that inflation remains tame, meaning inflation is not a factor at this time.
The bottom line is that now remains a great time to consider a home purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.
- More housing news is ahead, with Existing Home Sales on Tuesday and New Home Sales on Friday.
- The only other economic report will be Weekly Initial Jobless Claims on Thursday. Last week, claims fell to a five-year low and this may have been due to seasonal factors. Investors will be looking for any uptick in the numbers.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.
When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.
To go one step further – a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Bonds worsened last week due in part to the better-than-expected housing news and an influx of investing dollars into Stock mutual funds. I'll continue to watch this situation closely.
"The easiest thing for a reader to do is to quit reading."
Michael Gartner, Pulitzer Prize winner and former President, NBC News
To some people, writing a business article can seem almost as daunting as public speaking. And yet, just like public speaking, business writing presents a variety of opportunities to share your expertise. Be it through local news outlets, community newsletters or shared access to a strategic partner's database, you can grab some fresh exposure for yourself or your business by writing a timely, helpful article.
Here are a few tips on how to write one that people will read and remember:
The Inverted Pyramid. Your goal should always be to create an easy reading experience for your audience. And there's no easier way to write an article than to follow in the footsteps of the experts. The inverted pyramid is a tool many journalists use to explain the structure of most news articles. For a classic example, read this news story (scroll down to the heading that says "History") that originally appeared in the New York Herald in April of 1865.
Start At The Bottom. You want to make sure all the newsworthy information is in the beginning, but not go into too much detail. It's critical you answer the Who, What, When, Where, Why, and How as early and as briefly as possible. If you skip this in favor of a long narrative, you're more likely to lose readers you wouldn't have lost otherwise.
Details, Details, Details. The benefit to keeping your introduction short and to the point is your readers are more likely to follow you into the nitty-gritty. This is the stuff you really want to talk about and here's where you'll expand on your message and deliver the value promised by your introduction. Make sure, however, you deliver the goods–or "pay off"–to your readers by giving them the information you've promised in your headline and introduction.
The Kitchen Sink. The ending is reserved for other information needed to back up your case, lend credibility to your point, or include relevant but non-essential information on the subject.
Call To Action. This step doesn't appear on the inverted pyramid model, but if you're writing for business, and your publication allows it, put a very clear call to action that lets readers know you take questions and are happy to receive a call from them if they want to talk more about it with you!