This week, we begin with a variety of recent housing numbers.
To start, 65.1 percent of U.S. households own a home, which is the lowest mark since 1996 as reported by the Tribune, according to the Census Bureau. The bubble years helped peak home ownership above 70 percent.
Foreclosure inventory sits at a record high of 4.29 percent of all loans. The time it takes for a foreclosure to get through the legal system is 631 days, a record. Foreclosure properties sell at a discount and bring down prices of nearby homes. Depressed pricing depresses investment. The supply of foreclosure properties will need to be worked through as the housing market recovers.
October posted some gains for the housing market. New home sales increased 1.3 percent in the month, up to 307,000. Overall, pending home sales increased by 10.4 percent in October, which is the highest number in a year. While positive, the numbers are still well below healthy market expectations. Economists suggest a strong housing market would have 700,000 new home sales a month. On the negative side, we had a very small number of new homes hit the market in October – just 162,000. The number suggests builders have stopped new projects due to low demand, difficulty in obtaining financing, and a surplus of existing homes on the market.
Last week, the Dow logged large gains to erase the small mid-November slump. The largest gain occurred after major central banks around the globe took action to ease debt tension and make it cheaper and easier for banks to borrow dollars when needed. In practice, this means that European banks have better access to dollar liquidity – something they haven’t had due to concern about the European debt issue and exposure to potential losses. This action is an attempt to avoid the kind of major credit crunch we saw in 2008, which would restrict lending and investment and shrink the global economy.
The nation’s jobless rate fell to 8.6 percent in November. In some ways, the number is misleading. Employers added 120,000 jobs, true, but the 0.4% drop in the unemployment number is also due to the 315,000 people who stopped looking for work and left the workforce.
Rates have improved over the past week. Nationally, the average for the 30-year fixed is 4 percent and 3.35 percent for the 15-year fixed. At Central Coast Lending, we offer a 30-year fixed starting at 3.750 percent (3.892 percent APR) and a 15-year fixed at 3.250 percent (3.503 percent APR). Rates are always changing, so make sure you call Central Coast Lending at 805.543.LOAN for an update about any movement.
As always, check in with our Facebook for daily updates about the economy and housing market numbers.