Real Estate market data for the week.

1. I s su e 12 , Vo lu me 3 1 / Au gu s t 1 2, 201 1
Four Questions around Historical Volatility The Week Ahead -> The “Keys”
Tim McLaughlin - A watchful eye on the markets after a very volatile week
Should the markets have reacted like they have on
the news of a Sovereign US downgrade? Fear sparks Date Economic Release Prediction Last
unexpected emotions. The downgrade, which was more of a
warning to the US to get their finances in order, should have 8/15 NAHB Housing Market Index 15 15
been perceived as nothing more than that. The difference
between AAA and AA+ is like splitting hairs. France is AAA 8/16 Import Price Index (MoM) -0.1% -0.5%
and their per capita debt load is significantly larger than ours
8/16 Import Price Index (YoY) - 13.6%
is. This was more of a “straw that broke the camel’s back”
scenario (worries of a double dip recession, concerns over 8/16 Housing Starts 610K 629K
fiscal issues in Europe, digesting what the debt ceiling
agreement really means). The reaction to the downgrade 8/16 Housing Starts (MoM) -3.0% -
(and all global news) appears overblown.
8/16 Building Permits 606K 617K
Shouldn’t rates have increased on the downgrade
news instead of rallied? In a textbook economic world, 8/16 Building Permits (MoM) -1.8% 2.5%
absolutely. But the textbooks are obsolete, given the fact
8/16 Industrial Production 0.4% 0.2%
that Fixed Income rallied, further supporting the thesis that
the downgrade was more scope then substance. 8/16 Capacity Utilization 76.9% 76.7%
Remember, S&P is also the rating agency that rated billions
of Subprime paper as AAA, so strength and security is in 8/17 MBA Mortgage Applications - 21.7%
the eye of the beholder. And if action rings true, the
significant rally in Fixed Income solidified the fact that the 8/17 PPI (MoM) 0.1% -0.4%
US debt (Treasuries and Mortgage Backed) is as strong as
ever as buyers came in in droves looking for a safe haven. 8/17 ex Food/Energy 0.2% 0.3%
8/17 PPI (YoY) 7.0% 7.0%
Mortgage Rates have free-fallen and the Fed came in
Tuesday afternoon and said Fed Funds rates would be 8/17 ex Food/Energy 2.3% 2.4%
low “until mid 2013”. What does that mean? Do we go
lower? The statement was more of a symbol to support the 8/18 CPI (MoM) 0.2% -0.2%
market then anything. Most of us already thought the Fed
Funds would be low for a while longer anyways. But make 8/18 ex Food/Energy 0.2% 0.3%
no mistake – low Fed Funds rates til “mid 2013” does not
8/18 CPI (YoY) 3.3% 3.6%
necessarily equate to low mortgage rates in the same time
period. For now, rates are back down at the historical lows 8/18 ex Food/Energy 1.6% 1.6%
of last year. However, alternate forces (Fannie/Freddie/FHA
increasing fees, inflation, a pick up in the economy, buyers 8/18 Initial Jobless Claims - 395K
looking for alternate/higher yielding investments) all could
send mortgage rates back up at some point in the future 8/18 Continuing Claims - 3688K
despite where the Fed Funds rate are as the curve could
potentially widen, which we have seen in the past. 8/18 Leading Indicators 0.2% 0.3%
8/18 Philly Fed Survey 4.0 3.2
What to do? Housing is historically affordable and
mortgage rates are historically low. Looking to purchase? 8/18 Existing Home Sales 4.93M 4.77M
Missed your 2010 opportunity to refinance? We can help!
Ask us how and capitalize today. 8/18 Existing Home Sales (MoM) 3.3% -0.8%
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