Blog - Jeff Cost

Will Home Values Rise This Year?

January 13, 2012 by Jeff Cost

Will your home gain value over the next 12 months? Nobody can know for sure, of course, but should recent housing trends continue, there’s concrete cause for optimism.

The housing economy has suffered since 2007, knocking home values down nearly 20% nationwide. And while some areas have fared better as compared to others but, in general, home values are down.

Mortgage rates are down, too, and that’s good news for buyers in Cincinnati. The combination of low rates and low prices has led home affordability to an all-time high. As you’ll hear in this 4-minute interview with NBC’s The Today Show, carrying a mortgage costs 25% less per month as compared to just 3 years ago.

Some other notes from the interview include :

There are more buyers out looking for homes today, which leads to more sales
The housing market is expected to get gradually better, month-by-month, in 2012
Foreclosures will continue to be a big part of the housing market

With housing supplies shrinking, buyers throughout Kentucky may find their best “deals” today — before the Spring Buying Season begins in February.

However, we can’t forget that housing markets are local — not national. Each town and neighborhood has its own market drivers and prices where you live may have already started to climb.

For accurate, up-to-date data on the housing market, talk with a local real estate agent.

Fed Minutes Show An Improving U.S. Economy Threatened By The Eurozone

January 12, 2012 by Jeff Cost

FOMC Minutes December 2011 The Federal Reserve has released the minutes from its most recent Federal Open Market Committee meeting. The Fed Minutes are a detailed meeting recap; the companion piece to the more brief, more well-known press release.

As a comparison, the minutes of the last FOMC meeting contained 60 paragraphs and 7,027 words. The post-meeting press release was just 5 paragraphs and 382 words.

December’s Fed Minutes shows Fed members with a positive, cautious, take on the economy.

Recent data suggests that the U.S. economy is expanding, the Fed said, but “strains” in global financial markets pose “significant risks” to the downside. This tell us that the Fed believes its economy-stimulating programs are working, but that officials remained concerned by events in the Eurozone.

The U.S. economy could be impacted by fallout.

Other meeting consensus included :

On growth : The economy is expanding, despite slowing in “global economic growth”
On housing : Data suggests the “depressed” market “could be improving”
On inflation : Prices are stable, and remain within tolerance levels

The Fed’s analysis was of little surprise to Wall Street, and going forward, Fed Chairman Ben Bernanke wants to keep it that way. The Fed Minutes contained a passage regarding market communication, and how the Fed will be more pro-active about it in the future.

With the release of its minutes, in a section called “Market Policy Communications”, the Federal Reserve showed its plans to release 4 times annually its economic forecasts, and plans for the Fed Funds Rate. This signals in a shift in Federal Reserve transparency.

The Federal Reserve will begin including the forecast in its economic projections beginning after its next policy meeting, January 24-25, 2012.

Mortgage rates in Kentucky were little changed after the release of the Fed Minutes.

Home Affordability Set To Worsen On Thursday’s Retail Sales Data

January 11, 2012 by Jeff Cost

Retail Sales Growth (2008-2011)

Consumer spending continues to rise nationwide, fueled by jobs growth and a rosier outlook for the U.S. economy. Unfortunately for mortgage rate shoppers |*STATE in % STATE**|, it may also lead to higher mortgage rates later this week.

Thursday morning, the Census Bureau will release its U.S. Retail Sales data for December. The report is expected to show an 18th consecutive monthly increase, with analysts projecting sales volume higher by 0.4 percent from November.

This would be double the increase from last month, which saw a 0.2 percent increase in Retail Sales.

The Retail Sales report tallies receipts collected by retail and food-service stores nationwide. When the sum of these receipts rise, it puts pressure on mortgage rates to do the same. The connection is straight-forward.

Retail Sales are the largest part of “consumer spending” and consumer spending accounts for the majority of the U.S. economy — up to 70 percent, by some estimates.

As the economy goes, so go mortgage rates.

Remember: today’s ultra-low mortgage rates have been partially fueled by weak economies — both domestic and abroad — going back 4 years. Stock markets have sold off as economies have faltered worldwide, leading investors to seek refuge in the relative safety of U.S.-backed mortgage bond market. The new-found demand for mortgage-backed bonds has helped drop mortgage rates to levels never seen in history.

When economic recovery is apparent, therefore, we should expect a mortgage rate reversal, and should expect for it to happen quickly. Stock markets should rise; bond markets should fall. Mortgage rates will climb. Rate shoppers will lose.

Last week’s strong jobs report sparked hope for the U.S. economy. If Thursday Retail Sales data reveals similar strength, the risk in “floating” your mortgage rate may be too great. The safer play is to lock your rate today.

The Retail Sales report will be released at 8:30 AM ET.

Will Home Values Rise This Year?

Fed Minutes Show An Improving U.S. Economy Threatened By The Eurozone

Home Affordability Set To Worsen On Thursday’s Retail Sales Data

The Latest Articles

Our Location