|
|
|
|
|
THE NORTHWEST ECONOMIC MAINLINE 07·06·2009
What to Watch This Week
- The most interesting numbers that we will be presented with this week will undoubtedly be the Northwest Multiple Listing Service release on sales activity in the Puget Sound. I am increasingly hearing whispers around agents' water coolers of offers being made and accepted in our region. It is appropriate to caution the reader, however, that we are in a split market where we are gaining traction at the more affordable price points but not with sales that require non-conforming financing. I am guardedly optimistic that our spring bounce will continue.
- On a national level, this week is rather thin in terms of rich data points. We will certainly be watching the ISM index for any movement in new orders for goods as well as its report on production and inventories.
What I Saw Last Week
- I was hoping to see some meager gains in the Consumer Sentiment figures following the unexpected rise in Consumer Confidence that we saw last week, but was sadly mistaken. On Tuesday, the Conference Board released its index of attitudes that showed a decline to 49.3 from the revised May level of 54.8. As a nation, we continue to be discouraged by the current levels of unemployment and, specifically, those that are not currently working appear to still be concerned with the lack of opportunities in the market.
- Specific to the residential real estate market, I was very encouraged by the government's decision to allow homeowners, who refinance their homes through loans backed by government agencies, to borrow up to 125 percent of their home's value. This is a move to restore affordability and stem the foreclosure crisis. It is my belief that this move will put affordable refinancing opportunities within reach of performing borrowers who have suffered the effects of local home price erosion; a good decision all around.
- The latest S&P Case Shiller Index came out on Tuesday and appeared to show that we may be showing signs of some stability in year-over-year losses. The 20-area index dropped by 0.6 percent in April, which was well below the 2.2 percent decline that we saw in March - forecasters predicted a decline of 1.8 percent. This being said, we are still down by 18.1 percent from the previous year, but the pace of decline does appear to be slowing.
The Seattle market actually saw a gain - albeit minor, of 0.2 percent over the March figure. This must, however, be tempered with the knowledge that we are 16.8 percent below April of 2008, but I still find encouragement in any numbers that don't start with a negative!
Across the U.S., nine of the cities used saw positive appreciation month over month. Again, encouraging signs.
- The National Association of REALTORS® released its latest pending home sales index for May. This forward looking indicator, based on contracts signed in May, increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004!
- Unemployment figures released on Thursday proved disappointing to all of us. June saw a larger than expected cut of 467,000 jobs that caused the overall unemployment rate to creep up further to 9.5 percent. All told, 14.7M people were unemployed last month. Even with the higher pace of job cuts in June, the report indicates that the worst of the layoffs have passed. The deepest job cuts of the recession came in January, when 741,000 jobs vanished, the most in any month since 1949. Even with this disappointing number, we remain hopeful that the full brunt of layoffs is behind us.
- Finally, last week saw the end of the first half of 2009, and what a ride it was. I am encouraged that the second quarter of this year saw all three major indices increase by double-digit percentages, marking the first quarterly gains for the Dow and S&P 500 since the third quarter of 2007. Remarkably, for the Dow Jones, it saw its largest quarterly gains since 2003!
Investors have gone through a big psychological shift over the past six months. After sending the Dow plunging to a 12-year low in early March amid fears of another Great Depression, they drove it up a staggering 34 percent from mid-March to mid-June as the global economy and corporate world showed signs of stabilizing.
Quote/Link of the Week
Here's a bank that is using somewhat creative marketing methods to gain customers: Redneck BankAnd, finally, it is clear that the recession hits at all levels, but I'm not sure that I agree with some of the solutions: CNBC Article
|
|
|
