Good News and OK News

So what do you want first? Ok Good news it is! (the What does this mean to me section is below)

New unemployment claims unexpectedly fell last week to the lowest level in three months, a sign the worst of the job cuts may be over. Fewer job losses reduce the chances that the recent increases in consumer spending and consumer confidence will wane in the near future

Some bad news:

Economists surveyed by Bloomberg News predict the payrolls report tomorrow may show unemployment rose to a 25-year high in April, indicating the labor market will be one of the last areas to rebound.

Over the past month the equity markets have shown the ability to maintain traction in the face of bad economic news and only the over-hyped H1N1 Virus scare (which I called) caused a brief selling stir. So even as the general economy struggles to regain its footing the financial markets seem be improving.

What does this mean to our local real estate market?

For Buyers: The better economic news should continue to help 401k's and IRA's improve. With that improvement to balance sheets it will be easier to make the necessary down payments and maybe even have a little left over for closing costs and new furniture- or the dreaded window treatments.

For sellers: Possibly better offers from sellers, more traffic through homes AND, if you have more of your own $$ from your portfolio you'll need less $$ from the sale of the current home so you can afford to concede a bit or price or closing costs.

For Realtors: You are still going to be working your butt off.

Slow and Steady

More signs that the general health of the economy is improving:

ADP released its monthly employment data today and the news was better than expected. Actually it was much better. Payrolls fell by 491,000 far below the estimate of 645,000 and the March numbers were revised lower.

There will be continued job losses and and unemployment levels will remain higher for a long time to come but the pace of job losses is slowing. Slowing unemployment and two months of increased consumer confidence could help our real estate market maintain gains we have seen over the past few months.

Again, with the "Housing Affordability Index" at its best ever level, mortgage rates remaining low and an $8,000.00 first time home buyer tax credit buyers and seller should be having an easier time getting together.

One Way to Get Rid of Old Listings

I saw the story below in the Wall Street Journal yesterday.

Here are the bullet points:

A bank in Texas foreclosed on a townhome development that was only partially completed. The unfinished and vacant homes were a financial and insurance liability so the lender elected to knock down the unsold and unfinished units. Seems to be an aggressive way to get rid of stale listings. It sure beats the heck out of offering free lawnmowers or flat screet t.v.'s.

Given the huge inventory of unsold new construction in many parts of the country and even Springtown Bucks County (the Elliot Development on Drifting Drive comes to mind), knocking down a few thousand units would not be a bad idea.

the link to the story is below if you are interested in reading the whole story:
http://online.wsj.com/article/SB124148169574985359.html

More Signs of Stabilization

"It is good to be greedy when others are scared and good to be scared when others are greedy"
-Warren Buffett
More good news today about the strength of the real estate market and another good reason for buyers and sellers to get together:

The number of Americans signing contracts to buy previously owned homes jumped in March for the first back-to-back gain in almost a year, reinforcing signs that the housing slump in its fourth year may be near a bottom.

Over the past two months we've seen prices begin to stabilize, and the number of homes under contract increase. The old adage that you don't know where the bottom is until you've been there will hold true. While prices in some areas are low the pace and amount of the discounts is slowing and sales are beginning to rebound. There is still a lot of inventory out there and it will take time for the market to absorb it but the best homes are starting to be shown more often and offers are coming in.

The National Association of Realtors' Housing Affordability index has never been higher. Rates on mortgages are still very close to their all time despite the recent increase in Treasury bond yields. Eventually, mortgage bonds will have to catch up and mortgage rates will increase.

The best indication that things are improving is two consecutive increases in the index of consumer confidence. For most of the 1st quarter of 2009 everyone was petrified that the recession would deepen and bread lines would not be far off. We are seeing an improvement in most sectors of the economy and even new unemployment claims are starting to abate.

We are not going to see a return of 2004 anytime soon and that is a good thing. Steady, justifiable growth, -that is the goal.