Danny Salas

Archive for September, 2009

Chico, CA Interest Rates Market Report – Economic Influences – September 30, 2009

Rates Are Still Low

I’m Down With ADP…Yeah, You Know Me…

Yeah, well I’m NOT so down with American Data Processing (ADP).  ADP is an American payroll company that releases its own unemployment statistics, separate from the government’s statistics.  Sometimes they’re right on…and other times…well let’s just say that other times…they’re just plain rediculous.  So, you have to be careful with the information that they report. 

254,000 Jobs Cut

ADP reported that the private sector of business cut 254,000 jobs.  They only expected that 200,000 jobs would be cut.  So, you’d think that the market would consider that horrible information and interest rates would plunge downwardly.  Part of the problem is the media.  Remember when we were losing 380,000 jobs, or more, a month?  The media’s take on this is that a loss of 254,000 is almost like Christmas!  Well, my take is that there is almost nobody left to lose their job.  So, where’s the good news in that?

The Real Jobs Numbers

So, let’s take a look at where we really are.  The population of the work force of the United States grows, at 1.5 Million people per year.  So, that’s 125 thousand new jobs a month.  So, if we’re losing 254,000 and the work force is growing at 125 thousand…that puts us at 379,000.  That number close to any other number mentioned in this article?  Now think about this…ten percent of that work force is unemployed.  So, fifteen million people are out of work.  But think about the people whose unemployment compensation has run out.  Also, if you don’t physically look for work in a four week period, you’re not included in those numbers, either.  That bring unemployment to more like, eleven percent.  Now, many of the Americans that lost their jobs over the past couple of years, had to settle for part-time jobs.  That’s another six percent.  So, realistically, The United States of America is seventeen percent (17%) unemployed.  UGLY!

What’s Your Point, Danny?

We’ve got a long way to go.  To put it mildly, we would have to have the best employment period, ever on record over a ten year course, to get back to normal six percent (6%) unemployment.  I know, “Danny Doom & Gloom.”  But, don’t let the media tell you that things are golly and rosy out there.  They’re not.  So, this information should keeps low, however, when the government stops buying Mortgage-Backed Securities, rates will move up.  And when inflation moves up, that’s when things could get ugly.  SO BUY NOW!  When I say that employment figures should keep rates down, I’m looking at the 7.0% range, in a couple years. 

Float Like A Butterfly

So, we’ll be ready to “sting like a bee,” with a quick finger on the lock button, but let’s see how the day pans out, before locking.  If you have time…

Related Must Reads

Why You Can’t Close A Loan In Six Days, Anymore
Read PAST ADP Mistakes
ADP Getting Better?

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Chico, CA Interest Rates Market Report – Economic Influences – September 29, 2009

Housing Prices Reach Their Lows?

The Case-Shiller Home Price Index is a report that shows the nation’s twenty largest cities’, year over year, and month over month, pricing comparisons.  The year over year price fell 13.3%, however, they expected a 14.2%.  The good news was that eighteen of these cities also showed a month over month gain in values.  The only two cities that showed decline were Las Vegas and Seattle. 

Can Rates Get Better…

It may prove difficult.  Until we move into October and earnings reports, from corporations, start exposing their bottom lines.  The reason why is that we’ve hit lows, again, for the year.  Not the two hour lows that we saw in January and March, but whole day lows (two times, this year, you could obtain 4.25% for zero points on a 30 year fixed rate…for about two hours).  We’ve broken through the 200-Day Moving Average, and now, we’re about 50 basis points above that trend line.  So, should any economic news show a little sign of strengthening, 50 points is a lot of room for prices to fall (causing rates to go up).

Consumer Confidence…No So Confident

Consumer Confidence for September, was reported at 53.1.  The market expected a more solid reading of 57.0.  I’ve been somewhat surprised, frankly, at these numbers the past months, anyway.  So, I feel like this is where we should be, regarding confidence.  I, personally, don’t think things are as rosy as the market seems to feel.  I hope we’re coming out of this recession, and that home prices are on the mend, but think that when the Mortgage-Backed Security Purchase Program ends, and interest rates will be effected negatively, it will have a bad effect on the recovery process.

By The By…

Today marks the anniversary of the worst day that the Dow Jones Industrial Average history.  That’s right, September 29, 2008, saw the Dow lose 777.68 points after the House did not approve the $700 Billion Bailout Plan, its first attempt through.  Stocks lost $1.2 Trillion in value. 

Locking

If you don’t lock today, you better be ready tomorrow.  Just don’t know if we can push through the highs of the year.

Related Must Reads

Read A Brief History of What 2008 Meant To The World
Boy, We Thought It Was A Good Time To Buy, Then…
 

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Chico, CA Interest Rates Market Report – Economic Influences – September 28, 2009

It’s Yom Kippur

Congratulations to our Jewish friends that are celebrating this holiday, today.  Generally, holidays are light trading days, and light trading days can be extremely volitile.  So, I hate to be so repetative, however, it’s a good idea to keep your finger on the “lock” button.

Slow Day

Not much economic activity to report on today, however, the rest of the week will be full of information.  One important note is that the Fed will be making another annoucement regarding the Treasury Auctions.  The annoucements have hurt interest rates, in the past.  However, the actual auctions themselves, have been quite promissing for interest rates, as of late.  It will be interesting to see how the market plays out, after the Feds annoucement last week, regarding the winding down of the Mortgage-Backed Securities Purchase Program, scheduled to occur the first quarter of 2010.

Related Must Reads

August 26, 2009 – Read about Treasury Auctions
The Start of The Auctions in 2008

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90-Day “Flipping Rule” Fannie/Freddie/and FHA

What’s “Flipping?”

Here’s the deal…Different banks have different contracts with Fannie Mae and Freddie Mac.  That’s why Bank of America can’t do some loans that Wells Fargo can.  Period!  One interesting opportunity, that we’re seeing a lot of currently, is buying a property that has been foreclosed on, for an extremely low price, then turning around, fixing it up, and selling it for a significant profit.  Otherwise known as, “flipping,” in the industry.

The 90 Day Rule

Here’s a general rule.  When someone buys a home for a certain price, and tries to immediately sell it for more (immediately, here, means 90 days), banks have rules.  One of those rules is that you may not “flip” the property.  The key word, here, is “banks.”  Fannie Mae and Freddie Mac DON’T CARE if you turn and sell the property, immediately.  FHA Does!

Want To Turn An Immediate Profit?

So, what do people do if they’re trying to turn a quick profit?  Well, work with me, of course!  Here’s why!

What’s The Deal?

Fannie Mae and Freddie Mac’s guidelines are clear…you may purchase a home, fix it up, and sell it, promptly.  Even for a profit.  So, why don’t many banks allow a buyer to come in and purchase a “flipper” within the 90 days?  Let’s talk about FHA’s guidelines.

FHA “Flipping” Guidelines

 If you care, read about them, here!

Hey Investor, You Can Still Flip!

So,as I stated above, Fannie Mae and Freddie Mac have different contracts with different banks.  So, if Fannie Mae doesn’t care if you “flip” a property and Freddie Mac doesn’t care if you “flip” a property, why don’t banks let you?

Many banks interpret FHA’s guidelines as their guidelines, regarding flipping. But some banks’ legal departments understand these guidelines…particularly.  So, guess who knows which banks interpret Fannie/Freddie Guidelines regarding “flipping,” as opposed to FHA’s guidelines regarding “flipping?”  I DO!

So, if your listed home doesn’t meet FHA’s criteria, regarding “flipping,” but does Fannie/Freddie’s criteria…and you want to “flip” that home, immediately, for a profit…call me!  Access has contracts with banks that allow it!

 

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