Jul 11, 2013 | Federal Reserve
FOMC Minutes Suggest QE Tapering by Year-End
The minutes for June’s meeting of the Federal Open Market Committee (FOMC) suggest that committee members are mostly in agreement that the current quantitative easing program (QE) should begin winding down by year end, but the committee minutes are very clear concerning the committee’s intention to monitor inflation and ongoing economic and financial developments before taking action to reduce the current rate of QE.
The Fed currently purchases $85 billion monthly in Treasury securities and mortgage-backed securities (MBS). Investors fear that if the Fed rolls back QE too soon or too fast, it could cause long term interest rates such as mortgage rates to rise faster.
The Fed minutes indicate that factors the Fed will continue monitoring before making changes to QE include:
- Labor market conditions
- Indicators of inflationary pressures
- Readings on financial developments
FOMC members also agreed that the Fed would not sell MBS it has accumulated after the economic support program ceases. When the Fed ceases QE, demand for mortgage-backed securities is expected to fall. If the Fed were to sell off MBS holdings in addition to stopping QE, MBS prices could fall sharply. In general, when MBS prices fall, mortgage rates rise.
The FOMC minutes indicate that the Fed intends to maintain the Federal Funds rate at 0.000 to 0.250 percent “for a considerable time after the monthly asset purchases cease.” To be clear, the minutes do not reveal any specific dates for starting to wind down the program.
Concerns over financial conditions in Europe highlight the Fed’s intention to monitor global economic developments were discussed. Potential “spillover” of negative sentiments in response to Europe’s economic woes to U.S. financial markets were seen as a potential threat to the U.S. economic recovery.
Committee members found that although the economy showed moderate improvement since its last meeting, the national unemployment rate remains high at 7.60 percent. Members also noted that the numbers of long-term unemployed and those working part time jobs but wanting full time jobs remain higher than average. These conditions traditionally keep consumers from buying homes.
Housing: Upside-Down Mortgages Decreasing
Due to rapid increases in home values, the committee noted that fewer homeowners were under water on their mortgage loans. This is good news as homeowners can rebuild household wealth as their home equity increases. Having home equity also provides homeowners with the flexibility to sell or refinance their homes.
While housing is driving the economic recovery, high unemployment will likely keep the Fed from changing its QE policy in the short term.
Now may be a very good time to take advantage of still historically low mortgage interest rates before they rise. If you have specific questions on purchasing or refinancing your home mortgage loan and how these changes may affect you, please contact your trusted real estate professional today.
Jul 10, 2013 | Home Selling Tips
Does the time of year when you put your home on the market affect how well it will sell? What about the final sales price?
According to many studies in housing trends, the answer is yes. The time of year when you sell your home can have an effect on how many people are interested and how much the home will sell for.
Of course, if you need to move and sell your home at any point of the year, you will still be able to find buyers and negotiate a price that works for you. In some areas of the country, the currently swift moving housing market can help overcome poor timing.
However, if you have the ability to plan for a more advantageous time, it makes sense to make the most of your flexibility.
The Best Times Of The Year To Sell A Home
One of the best times of the year to sell your house is in the late spring and early summer — like right now.
The school year is over for most families, and many people will be looking to purchase a home that they can move into over the summer and get settled before school begins again in the fall.
Housing sales peak during this time, as studies show that 60% of people tend to move during the summer.
If you can sell your home during the spring or early summer period, it will typically be on the market for a shorter amount of time and you may have many more offers to choose from.
The Worst Times Of The Year To Sell A Home
One of the worst months of the year to sell a home is December. There are a number of reasons why trying to sell a home during the Christmas holidays can be difficult.
Most people aren’t thinking of moving this time of year. Their energies are focused on decorating their houses, preparing for the holidays, visiting friends and family and enjoying their time off work.
Another difficult time is the beginning of the school year, typically in September.
Children will have just started school and most families will not be considering moving at this point. If you attempt to sell your home during this time of year, you will be much less likely to get the the same pool of buyers that you might see in a more “move friendly” time of year.
Of course, these are just guidelines to help you plan your next home sale. No matter what time of year it is, if you need advice on selling your Worcester County area home, call your trusted real estate professional right away.
Jul 9, 2013 | Around The Home
Winter may have taken a toll on your home’s exterior this year. You’ve been noticing the cracking paint for months, but you don’t want to shell out the big bucks to hire a professional painter.
Don’t fret! With the weather warming and the nice summer weekends, it’s the perfect time to tackle that project of painting your home.
While this might seem like an insurmountable task, especially if you have a multi-story home, it’s not. It just takes the right tools and a bit of hard work. Below are step-by-step instructions to having the outside of your house looking shiny and new.
Test For Lead
Homes built before 1978 could have used lead paint, so be careful if you have an older home. They make kits that test for lead paint. If your home tests positive, then ensure you take the necessary precautions to keep yourself and your neighbors safe.
Scrub It Up
You need to wash the exterior of your home before painting. Mildew thrives under new paint, so kill it with a solution of water and phosphate-free cleaner.
Scrape And Sand
Take a scraper to your home’s exterior to remove any peeling paint. Spraying water under the paint as you scrape helps speed up the process. Then sand down any rough spots, so that you have a smooth canvas.
Apply The Primer
Paint on the primer immediately after you’ve prepped the wood. This will provide and even base for your topcoat of paint.
Buy Some Caulk
You’ll need to caulk all the joints to prevent water penetration and air leakage. Plus, caulk does a great job of filling in blemishes in your siding.
Pick Out Your Paint
Choose a water-based latex paint. It’s easier than applying oil-based paints. However, if your home already has an oil-based paint, you’ll have to stay with it. Once you’ve selected your favorite paint color, just grab a brush or rent a sprayer to start painting your home.
Maintain your exterior.
Be sure to check your home annually for any potential problems. Replace cracked caulk, remove mildew and patch any peeling paint before it spreads.
Utilize the beautiful summer weekends to get started on painting your home. Understand that this process normally takes two weekends, so be patient. Plus, by not hiring a professional, you’ll save a significant sum of money and have bragging rights when you receive compliments on the condition of your home.
Jul 8, 2013 | Housing Analysis
Last week saw a relatively quiet week due to the 4th of July holiday, but there were some housing-related developments:
Monday: The Department of Commerce reported that overall construction spending increased by 0.50 percent in May to a seasonally adjusted annual rate of $874.9 billion. Residential construction grew by 1.20 percent, and May 2012 construction spending was 5.40 percent higher than in May 2012.
More spending in residential construction can indicate builder confidence in housing markets; added construction could help ease low inventories of available homes.
Tuesday: CoreLogic reported that May national home prices increased by 12.20 percent over May 2012, and grew by 2.60 percent in May including sales of distressed properties. Excluding distressed properties, home sales rose by 2.30 percent in May for a year-over-year increase of 11.60 percent.
States hardest hit in the economic downturn are showing good recovery; Nevada home prices rose by 26 percent year-over-year. While double-digit increases in home prices are good news, economists note that home prices remain approximately 20 percent below their peak in 2006.
Employment Data: More Jobs, Less Unemployment
Employment data are important for housing markets; employment is closely tied to home buyers’ ability to qualify for mortgage loans. Last week ended with several important jobs related reports:
Wednesday: ADP reported that 188,000 private-sector jobs were added in June for the highest increase in four months. This number surpassed expectations of 160,000 new jobs and May’s revised figure of 134,000 jobs added.
Freddie Mac’s mortgage rates survey had some good news as average rates for a 30-year fixed rate mortgage fell from 4.46 percent to 4.29 percent with discount points also falling from 0.80 to 0.70 percent. Average rates for a 15-year mortgage fell from 3.50 percent to 3.39 percent, with discount points moving from 0.80 percent to 0.70percent.
Friday: The Labor Department released Non-farm Payrolls and the national Unemployment Rate for June. Non-farm matched May’s level of 195,000 jobs added, which surpassed expectations of 155,000 jobs added. The unemployment rate remains at 7.60 percent, just over expectations of 7.50 percent.
The Federal Reserve has cited a benchmark unemployment rate of 6.50 percent as a criterion for raising the federal funds rate and reducing its current quantitative easing policy; this news may help slow mortgage rates as the Fed isn’t likely to modify its programs based on the current unemployment rate.
Looking Ahead
This week’s economic news includes today’s report on consumer credit. Tuesday brings Job Openings for May, and Wednesday brings the minutes from the recent FOMC meeting. The minutes should clarify exactly what the committee discussed concerning quantitative easing and their plans for modifying it.
Thursday, Freddie Mac will release weekly mortgage rates. The federal government will release weekly jobless claims and will update the federal budget. The week’s economic news will conclude with release of the Producer Price Index (PPI) and Core PPI for June, along with Consumer Sentiment for July.
Jul 5, 2013 | Around The Home
The summer heat is starting to take its toll on you and your thirsty lawn. Homeowners spend hundreds of dollars every summer striving to grow healthy grass and keep it green.
If you’re sick of trying to maintain a manicured lawn, then you can go green another way. Install artificial turf.
The Grass is Always Greener
Today’s artificial grass is made out of polypropylene, nylon, or polyethylene threads that are sewn into a mesh backing that allows for water drainage. This is then usually laid on top of compacted gravel and tied down at the perimeter. Modern artificial lawns can mimic many varietals of grass and some even have a thatch layer to give it a more realistic look.
Sick Of Maintenance
Homeowners have many reasons for wanting to be free of their demanding lawns, such as high summer water bills and the constant use of pesticides. With a fake lawn, you won’t have to water, which is especially good for high-heat areas, you won’t have to mow and you can quit worrying about how the weather will affect it.
Considering The Costs
While installing artificial grass can cost a bit up front, it’ll be maintenance free for the next 15 to 20 years. You won’t have to worry about water bills, purchasing grass seed, buying fertilizer or getting gas for the lawnmower, which can add up to a couple hundred dollars every year.
Potential Drawbacks
While a maintenance-free yard does have some appeal, there are a few drawbacks to take into consideration. Fake lawns don’t absorb pet waste, so you have to hose them off regularly.
They can also heat up in direct sunlight. Planting shade trees will help with this issue. And, artificial lawns cannot be recycled, which is an issue that the industry is looking to remedy.
Saving water and reducing the use of pesticides is great for the environment. However, you have to like the look of artificial grass and make sure you’re ready for the investment.
If you’ve been considering going green by switching to year-round green grass, talk with a local installer for grass options and cost comparisons.
