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Rhode Island

Weekly Market Update

Michael Dutra: Loan Officer in Providence, RI

Keeping you updated on the market!
For the week of

September 6, 2010


MARKET RECAP

Most people would agree that it's best to maintain an even keel – don't get too up or too down about circumstances. That advice is particularly pertinent when following the weekly housing and mortgage data. The most recent fortnight serves as a perfect example: Last week, the data were mostly down; this week, the data are mostly up.

This week, the S&P Case-Shiller home price index posted a 1 percent rise in June, with 18 of 20 metropolitan areas posting price increases. The Case-Shiller index has been relatively steady over the past few months, and that's encouraging, but we need to keep in mind that the index will be presenting a post-tax-credit market going forward, so we wouldn't be surprised to see some price easing, as long as the mix of homes sold hasn't substantially changed.

This week also gave us news that the number of buyers who signed contracts to purchase existing homes rose in July, with the Pending Home Sales Index rising 5.2 percent to 79.4. The optimist in us believes this could lead to an increase in existing-home sales in September, but the pessimist in us still sees a double-digit months supply for some time.

On the other hand, “some time” might not necessarily be a long time. Economist Karl Case (of the Case-Shiller home price index) provided a useful (if not obvious) perspective on just how affordable houses are these days. In short, Case notes that four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of 6.6 percent was $1,533. Today that $300,000 house would sell (on average) for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833. What's more, the 20-percent down payment would be knocked down to $42,600 from $60,000.

Case makes another cogent point in noting that in a given year, the number of completed sales is about 4 percent to 5 percent of the housing stock. Therefore, it doesn’t require a large number of buyers to change the overall direction of the market. That's a point we've been making over the past year. And even though sentiment hasn't turned for the better, it's worth noting that it can turn on a dime.

We've also noted that mortgage rates are apt to turn on a dime. To be sure, rates seem to post new lows each week, but the drops have been marginally incremental in many cases. At this point, we think it's more of a game of chicken – holding out for small return at big risk – than anything else. New data, like Friday's employment report, which showed a better-than-expected net loss of 54,000 jobs (mostly temporary census workers) while the private sector added a better-than-expected 67,000 new jobs, can easily produce dime-turning moments.

.

Economic
Indicator

Release
Date and Time

Consensus
Estimate

Analysis

Mortgage Applications

Wed, Sept. 8,
7:00 am, et

None

Important. A new wave of refinances is powering activity.

Beige Book

Wed, Sept. 8,
2:00 pm, et

None

Moderately Important. The book will likely reflect the Fed's desire to keep interest rates low.

Consumer Credit
(July)

Wed, Sept. 8,
3:00 pm, et

$2.5 Billion (Decrease)

Important. The level of credit contraction continues to moderate.

International Trade
(July)

Thurs, Sept. 9,
8:30 am, et

$47 Billion (Deficit)

Important. An expanding trade deficit suggests greater economic activity.

Wholesale Trade
(July)

Fri, Sept. 10,
8:30 am, et

0.2%
(Increase)

Moderately Important. The recent trend shows business investment moderating.

A More Sensible Solution

Franklin Roosevelt famously said in his 1932 inaugural address “the only thing we have to fear is fear itself.” Roosevelt went on to define fear as “nameless, unreasoning, unjustified terror.”

Fear is one emotion holding back the housing market today. In this case, though, it isn't nameless, unreasoning or unjustified. It's really a fear of potential conflicts. The New York Times reported how a maze of government incentives and regulations are working against each other and Fed policy to keep a floor from forming in the market. In short, one incentive for one segment of the market tends to counteract the progress in another segment.

More market participation is one incentive the government could provide that wouldn't hamper any segment. More demand is the best way to soak up excess supply and stabilize prices.

We think more flexible underwriting standards would be the most inclusive and effective way toward achieving that goal. Convincing Freddie Mac, Fannie Mae, and FHA to jettison FICO scores might be a good start. The past couple years have roughed up the FICO scores for many potential borrowers who would be good credit risks today. Focusing on the basics, such as sufficient residual income and adequate reserves to cover loss of job or increase in liabilities, can be just as insightful as FICO scores at vetting lending risk while at the same time expanding demand.

Beavertail State Park - Jamestown RI 02835 - It's all about the View

Ginny L. Gorman - Rhode Island - 401.529.7849: Real Estate Agent in North Kingstown, RI

BeavertailBeavertail State Park in Jamestown RI 02835 - It's all about the View here on the island of Jamestown RI in Narragansett Bay.  Known as Conanicut Island after the Indians that lived on the island.  Jamestown is connected to the mainland by both the Newport and Jamestown bridges and it wasn't that long ago (1969) that you had to take a ferry to get to Newport.  Yes, it's worth a road trip when you come to RI.  It's the majestic southerly point of this island which makes Beavertail so spectacular- the ocean crashing on the many rocks, the lighthouse beacon still sending its light out to vessels entering the Bay and the pristine landscape of this state park for all to come and enjoy it...free. 

Video on Beavertail:

 



Whether it's the walking trails, the Beavertail rocks, historic lighthouse or just sightseeing from this point of interest, you'll want to come.  The afternoon I stopped by people were set up in the parking lots, on the rocks and on the grass with their lawn chairs.  It's just breathtaking to breathe the air and view the ocean from this point on the island.  It's not like any vantage point in Rhode Island.

So travel on down to the center of this little island's town, Jamestown, with incredible houses to look at (or buy), wonderful marinas and enjoyable restaurants after you've enjoyed the scenic views of anytime of day at Beavertail.  But if you ask me, there's no better time to be there then sunrise or sunset...just find time to do it.  Beavertail State Park in Jamestown RI 02835 - It's all about the View.

 

Beavertail

Beavertail Sunset

Beavertail

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If you are interested in staying abreast of the current Jamestown RI 02835 real estate information, local neighborhoods & real estate local hot spots, please subscribe to my blog.

Jamestown RI 02835 Real Estate Market Statistics - August 2010

Ginny L. Gorman - Rhode Island - 401.529.7849: Real Estate Agent in North Kingstown, RI

Fenway Park has stats too

The Jamestown RI 02835 Real Estate Market Statistics for the month of August 2010 for sold properties were as follows:

2 homes sold in Jamestown RI 02835 in August 2010
as follows:

1 home sold for between $300,000-$400,000
1 home sold for less than $300,000

Overall there were 91 homes on the market during the month of August 2010 in Jamestown RI which was 1 more than the number of homes on the market in the prior month. The home inventory in Jamestown RI appears to be staying constant from month to month.

There was a drop in the number of homes sold over the prior month of July 2010 which had 7 Jamestown homes sold. With only 2 Jamestown homes sold in August 2010 needless to say it was a slower sales month in Jamestown.

Pending sales increased over the prior month of July 2010 with 12 homes now in agreement or pending status and awaiting their closing. That's a minimal increase of 1 home over the prior month .

If you are interested in staying in touch with RI real estate information, local neighborhoods, updates on local businesses and/or real estate tidbits, please subscribe to my blog. It's easy and no hassle. As always, if you are in need of real estate assistance, contact the RI Realtor in the sparkly red shoes. Jamestown RI 02879 Real Estate Market Statistics for August 2010 provided to you by...


The Real Estate Report

09-03-10
Sean Wheelan
Sean Wheelan: Loan Officer in Warwick, RI


Sean Wheelan
TMG Mortgage, Ltd
1287 Post Rd
Warwick, RI 02888
SWheelan@TMGLtd.biz
401-490-2700

www.myRImortgage.com

Did you know that The Mortgage Group, for the 2nd year in a row, was one of the fastest 5,000 growing companies in the US! In the August 2010 addition of INC. magazine we were up to #2,782 from 2009's ranking of 4,136!!! IMPORTANT! If you currently have a FHA mortgage and would like to lower your rate without an appraisal, call or email soon. If you have a loan that is serviced by Fannie Mae or Freddie Mac and are slightly under water, we may be able to help folks if their negative equity is 5% or less. This program is also available for investment properties. Call or email for details. If you are a homeowner over age 62, and would like more information on the merits of a Reverse mortgage, please contact me. Remember, your referrals are the lifeblood of my business. Thank you for remembering me. I Hope you enjoy this newsletter.

August 31, 2010

ECONOMIC COMMENTARY
More Using the "D" Word

No, we are not talking about a depression here. We are talking about the more constant use of the word "deflation." Actually, deflation can be considered a depression of prices. We often say that one of the objectives of the Federal Reserve Board is to fight inflation. We can also say that another objective of the Fed is to protect us against deflation, however the threat of deflation comes up so rarely, there is little discussion of the issue. We all know why higher prices are bad for the economy. When consumers have to spend more of their income on staples, they have less money left over to spend and contribute to economic growth. Inflation is typically accompanied by higher rates which also depress the economy. If money will be worth less in future years, banks that lend money have to charge high rates in order to make a profit.

So why would deflation be bad news? Deflation is not only a symptom of a poor economy, it would contribute to the lack of economic growth as well. Why would a manufacturer produce goods if those goods are likely to fall in price below the replacement value? We have such an example right now where builders have found in some areas that homes are selling for less than the replacement costs. Why build a home if you can’t sell it at a price that is equal to the cost of building? Here is the good news. Natural population growth in the world has put so much pressure on natural resources such as energy, it is not likely that deflation will become a problem. It is more likely that the slow economic growth we are experiencing will be accompanied by low rates of inflation and therefore low rates such as we are experiencing. And this is a good thing, because we need these low rates if we are going to continue to grow out of the slump. A little inflation right now is good news but increased rates of inflation while the economy is not growing would be bad news. Then we would be discussing another bad word: stagflation.

WEEKLY INTEREST RATE OVERVIEW
The Markets. Like a broken record (or we should say records), the weak economic data continues to contribute to the current string of record-breaking rates. The streak has been running for over two months now. Freddie Mac announced that for the week ending August 26, 30-year fixed rates averaged 4.36%, down from 4.42% the previous week. The average for 15-year fixed fell to 3.86%. Adjustables were stable with the average for one-year adjustables down slightly to 3.52% and five-year adjustables remaining at 3.56%. A year ago 30-year fixed rates were at 5.14%. Attributed to Amy Crews Cutts, deputy chief economist, Freddie Mac, "Existing home sales plunged 27 percent in July, while new homes fell 12 percent to a new all-time record low, which led to some market concerns that the housing market may slow the economic recovery. As a result, long-term bond yields fell to the lowest levels since January 2009, allowing fixed rates to ease to new record lows this week. Much of the slowdown in sales, however, was expected due to the recently expired homebuyer tax programs, which pulled through future home purchases into the first half of the year. The average existing home sales over the first seven months of 2010 were nearly 8 percent higher than over the same period a year ago. Moreover, house prices still appear to be stabilizing. Nationally, house prices rose 0.9 percent on a seasonally-adjusted basis during the second quarter of this year this year after 11 consecutive quarterly declines, according to the Federal Housing Finance Agency’s purchase only index. Eight of the nine census regions experienced positive gains, compared to none in the first quarter." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages
Updated August 27, 2010

Daily Value Monthly Value

August 26 July
6-month Treasury Security 0.19% 0.20%
1-year Treasury Security 0.25% 0.29%
3-year Treasury Security 0.77% 0.98%
5-year Treasury Security 1.38% 1.76%
10-year Treasury Security 2.50% 3.01%
12-month LIBOR
1.124% (July)
12-month MTA
0.370% (July)
11th District Cost of Funds
1.797% (June)
Prime Rate
3.25%

REAL ESTATE NEWS
Breaking News: One of the most popular housing programs in the United States is tightening their guidelines for refinances, effective with loan applications taken on September 7th. If you are thinking about taking advantage of today’s record low rates, the time to act may be now as FHA is tightening their standards by requiring more equity in their homes for those who want to refinance to lower their payments.

More than 48 percent of first-time buyers expect home prices to increase by this time next year, according to a survey by Century 21 Real Estate. The survey posed questions to people who had bought or sold a home in the last year. Sixty percent of first-time home buyers say they didn’t understand the process of buying a home, and more than 85 percent of both first-time buyers and sellers said that using a real estate professional was important. The top three skills valued in a real estate professional by both buyers and sellers were knowledge of the area, trustworthiness, and responsiveness. More than 80 percent of buyers believe now is a good time to buy a home. In choosing a home, 95 percent of first-time home buyers thought price was the most important consideration, but 90 percent were also very concerned about neighborhood safety. About 54 percent of first-time sellers think home prices are more affordable now than they were this time last year, and 50 percent were selling because they were purchasing a property they saw as more attractive and better suited to their needs. Source: Century 21 Real Estate LLC

2009 survey of home owners conducted by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development shows that most of them are satisfied with their residences. About 70 percent of respondents rated their homes an 8, 9, or 10 on a scale of 1 to 10, with 28 percent giving them the "best" rating of 10. Residents of new construction tend to rate their homes even more highly: 84 percent gave them between an 8 and 10, and 45 percent gave a perfect 10 rating. Likewise, more than 68 percent of residents rated their neighborhoods highly, with 25 percent giving it a "best" rating. People living in newly built homes rate their neighborhoods especially highly: 75 percent rated their neighborhoods highly and 35 percent said their neighborhoods were 10s. The nation’s home owners paid a median of $1,000 in monthly housing costs in 2009, compared with $808 for renters, according to the findings. The most common reasons recent movers had for choosing their neighborhoods were convenience to job (20 percent), convenience to friends or relatives (14 percent), look/design of neighborhood (10 percent), and the house itself (10 percent). Source: US Census Bureau

Reis Inc. reports that the nation’s second-quarter apartment vacancy rate slipped 20 basis points to an average of 7.8 percent from the first three months of the year — the first drop in over two years. SNL Financial, meanwhile, notes that the average occupancy for apartments owned by REITs increased nearly 100 basis points from a year earlier to almost 95 percent as of the end of March. Falling homeownership, coupled with the young and employed leaving their parents’ homes or roommates to rent their own units at a rapid clip, suggest that demand for multifamily housing could climb at a modest clip for at least the next several months. Investor Business Daily

I Hear Music ! It's Rhythm & Roots Festival- Charlestown RI 02813 Sept. 3-5 2010

Ginny L. Gorman - Rhode Island - 401.529.7849: Real Estate Agent in North Kingstown, RI

It's all happening at the Rhythm & Roots Festival at Ninigret Park in Charlestown RI 02813 thisPerformers Friday through Sunday Sept. 3-5th 2010.  Come on Down Hurricane Earl.... because I do hear great  music within this festival of extraordinary music and performers this weekend is coming - no one is going to pass this music by. BUT we're all hoping Hurricane Earl passes us far to the East!  For the money of $50 a day, if you buy your ticket the day of the show, it is a great value to enjoy a full day of performances.

It's another year for a fun day, weekend & if you like to camp out (ugh!) you can do it all here in one place.  Bring your blanket, chair & bodies to a fun loving out door time of amazing artists & music to enjoy.  From bluesy grass, cajun to zydeco music..some extraordinary artists are here for all to enjoy...adore that Marcia Ball with that voice!  This is one of the performers that brings me to this festival this year.

There are plenty of wonderful vendors cooking up a great line up of cajun & creole food for anyone who wants to partake...you are allowed to bring your own food into the Rhythm & Roots Festival but just NO liquor- bags will be checked at the ticket entrance.  Liquor can be bought on the festival grounds though.

The line-up is as follows as of today (with rain expected Friday check online at www.rhythmandroots.com for the latest info) so please check it out:

Featured Artists at the Rhythm & Roots Festival Sept. 3-5th are:

Robert Randolph & the Family Band (Sun)
The Texas Tornados (Sat)
Marcia Ball (Sat)
Steve Riley & the Mamou Playboys (Sat, Sun)
Donna the Buffalo (Sat, Sun)
Dave Alvin & the Guilty Women (Sun)
CJ Chenier & the Red Hot Louisiana Band (Sat, Sun)
Johnny Nicholas & the Texas All Stars (Fri)
Bonerama (Sat)
Little Freddie King (Sat, Sun)
Horace Trahan & the Ossun Express (Fri, Sat, Sun)
Geoff Muldaur and the Texas Sheiks (Sun)
Red Stick Ramblers (Fri)
Jeffery Broussard & the Creole Cowboys (Fri, Sat)
Uncle Earl (Fri, Sat)
Danny Barnes Trio (Fri, Sat, Sun)
Ed Poullard & Preston Frank (Fri, Sat, Sun)
Occidental Gypsy Jazz Quartet (Sat, Sun)
Magnolia (Sat, Sun)
Planet Zydeco (Sat, Sun)
Hot Tamale Brass Band (Sat, Sun)

night music

 

Plus Workshops and Family Artists will be happening under tents during the various days of celebration.

Plan ahead for this weekend's doings and don't miss this great location in Charlestown RI that is a destination town on the ocean in southern RI.

If you are interested in staying abreast of the current Charlestown RI 02813 real estate information, local neighborhoods & real estate local hot spots, please subscribe to my blog.

MUSIC, not Earl, is what's happening this weekend in RI ...I Hear Music ! It's Rhythm & Roots Festival- Charlestown RI 02813 Sept. 3-5th 2010.

 

 

 


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