Aaron Gallagher

The US Labor Department released a report showing that initial claims for unemployment benefits fell last week, as the number of people filing claims on an ongoing basis rose to a fresh record high. Economists had expected 635,000 new claims, according to a consensus survey by Briefing.com, but according to the report, in the week ended May 2, 601,000 people filed initial jobless claims, down 34,000 from an upwardly revised 635,000 in the previous week. This report comes on the heels of the two private sector reports we told you about yesterday, and seems to strengthen the notion that the rate of decline is slowing, even if the numbers of people on unemployment is rising. The unemployment rate is forecast to rise to 8.9% from 8.5%. Hey, let's be optimistic and call it good news.

The S&P Case-Shiller Home Price Index, measuring housing prices in 20 representative cities across America, fell for the 30th straight month in January, bringing house prices down to 2003 levels. And this time it actually set a record, falling 19% from January 2008. "There are very few bright spots that one can see in the data," said David Blitzer, chairman of the index committee at Standard and Poor's. "Most of the nation appears to remain on a downward path, with...nine of the MSAs (metropolitan statistical areas) falling more than 20% in the last year." According to Mike Larson, a real estate analyst with Weiss Research, home prices won't start advancing until the overall economy picks up.

Home bargains galore

In total, prices have plunged 29.1% nationally since they peaked during the second quarter of 2006, but that of course doesn't figure in individual cities, where prices are more varied. Dallas is the least affected at 4.9%, and Phoenix lost the most, at 48.5% from its peak. All 20 index cities were in negative territory, but the biggest losers are Las Vegas, Miami, Phoenix, San Francisco, and San Diego -- each losing more than 40%. The bad, and good, news is that the rate of decline has picked up recently. As Mike Larson, a real estate analyst with Weiss Research says, ""Arguably, that's just what we need to drive up sales activity and reduce inventory."

Big boys ready to pounce

Morgan Stanley is one of several early bird institutional investors getting ready to snap up real estate bargains -- it's close to raising $6 billion for a new global property fund: the Morgan Stanley Real Estate Fund VII Global. "I think these new real estate funds will look for distressed opportunities and they think they can bargain with developers who mismanage the balance sheets or have liquidity issues," said Laure Wang, managing director of Asia Alternatives, a private equity fund of funds. According to Paul Vosper, chief operating officer for real estate at Morgan Stanley's Alternative Investment Partners unit, the downturn in global property markets will create a period of strong returns.

While we all know that the economy is hurting and that housing has a few bruises don't take everything the news says as fact. It's true that home prices have been declining but please remember that the areas that went up the fastest crashed the hardest. Every market is different and you'll only know how your area is doing by talking to a local real estate professional. Please contact me anytime if you have any questions about our local market conditions I'm always here to help.

There is so much going on regarding housing and the economy it's getting harder and harder to keep up. I wanted to include a link from the NAR (National Association of Realtors) that has a good description of how the modified tax credit works. Please take some time and review the information and see if it might benefit you. Even though times are tough there are some great opportunities to purchase a good home at a great price. Remember I'm always here to help so please don't hesitate to call ........ Click Here

If you want to know where your tax dollars are going for the RECOVERY check out this website CLICK HERE. It will explain how the government is going to put your money to work in an effort to help stop our economy from sliding even further into the toilet. Here is a quote from the site, "This is your money. You have a right to know where it's going and how it's being spent. Learn what steps we're taking to ensure you can track our progress every step of the way." I really hope our elected officials aren't taking us down a slippery slope into the unknown....