Weekly Market Forecast…a little late

Week of: Tuesday, May 27, 2008

Present Market Conditions
Interest rates for fixed-rate mortgages fell slightly last week as a result of the increased price in Treasury Bonds according to Frank Nothaft, chief economist for Freddie Mac. Part of the increase was based on the speculation that the Fed will not be decreasing rates. “The thinking is that they will stay on hold, and that’s good for Treasurys,” said John Spinello, bond strategist at Jefferies & Co. “There’s also some speculation that if you get a pickup in the economy that the Fed might raise rates. I don’t agree with the tightening, and more likely they’ll stay on hold for the rest of the year.”

Expectations
Despite this being a shortened business week, there will be much activity. Investors will be anxiously waiting for the results of the Consumer Sentiment, GDP, Consumer Confidence Index, New Homes Sales and the Jobless Claims reports all due out this week.

Guidance
With housing prices favoring a buyers market and rates holding at historic lows, now is the best time to contact Georgie so she can structure a mortgage solution to meet your financial goals.

Inflation Fears Hit Mortgage Rates

 

 

Investors’ outlook for inflation worsened during the week, and mortgage

rates moved higher. While the economy remains relatively weak and the

recent inflation data has held steady, many signs point to higher levels

of inflation down the road. The Fed’s Fisher summarized it well, saying

that inflation expectations continue to worsen “even in the face of an

anemic (economy).” Higher energy prices are behind the inflation fears.

Dow Chemical announced this week that it will boost the price of its

products by as much as 20% due to its higher energy costs. Until now,

manufacturers have mostly absorbed higher production costs, rather than

raising the price of their goods. The action by Dow Chemical and several

other major suppliers may be an indication that companies are beginning

to aggressively pass along their rising costs.

 

Adding to the concerns of investors, Fed officials have been

consistently warning about the risks of higher inflation, and the next

move from the Fed is expected to be a rate hike later in the year. The

most recent inflation data showed that the overall April PCE price

index, the Fed’s preferred inflation indicator, rose at a 3.2% annual

rate. The Core PCE price index, which excludes the food and energy

components, increased at a significantly lower 2.1% annual rate,

although this level still would have to decline below 2.0% to fall

within the Fed’s “comfort zone.” Investors fear that the opposite

outcome is more likely, however, and that future readings will be

higher.

 

In the housing sector, April New Home Sales rose modestly from March.

Inventories of unsold new homes fell slightly, and median prices were

higher. Separately, the S&P/Case-Shiller home price index showed that

first quarter prices for existing homes declined 14% from one year

earlier. Bigger picture, though, the data indicated that home prices are

still 60% higher than at the start of the decade.

Corey Phelps

Front Street Mortgage

 

PHONE:

231-360-7283

 

FAX:

231-946-6321

 

corey@frontstreetmtg.com <mailto:corey@frontstreetmtg.com> 

 

805 W Front Street

 

Traverse City, MI 49684

 

Close, But Not Too Close – 3 BR Home on TC’s East Side

3576 Southbriar

Traverse City, MI

Time to move closer to town but yet be just out of town? Well established neighborhood in quiet sub. At this price, a buyer can’t go wrong with this well-maintained, stick built home! Just completed kitchen remodel and additional finished square footage in lower level makes this home bigger than it looks and move-in ready! Room for new owner to add bath in L.L. if desired. Nicely treed yard adds privacy and countryside setting.

Listing Details

For more information, please call Diane Mack at 231-631-1462 or dianemack@remerica.com

 

Ultimate 5th Floor Traverse City Condo

333 W Grandview Parkway #501

Traverse City, MI

  

This 5th floor condominium unit is available in white box condition, allowing you to finish every last detail to your own specs – including the layout! This particular unit can be utilized for either residential or commercial purposes. Create your own custom residential hide-away or develop your own private office space. You have over 2,700 sq.ft. of space with which to work. Large windows, covered balcony w/Bay views & resident clubroom w/ rooftop terrace. Walk to downtown shopping & restaurants or beach.

Listing Details

For more informtaion, please call the Nichols Team at 231-941-8283 or tcinfo@remerica.com.

 

Updated Turn-of-The-Century Victorian on Water

5681 E Boardman Rd

South Boardman, MI

Park-like setting! 140’ on Wellman Pond – bluegill, perch trout, canoeing, swimming! Take advantage of this great waterfront home without the high price. Updated turn-of-the-century Victorian home. Updated in 2005: newer windows, siding, furnace, interior & more. Bright with windows, country kitchen, wood laminate floors, screened porch plus your own private waterfront. Easy to show and priced to sell!

Listing Detail

For more information, please call Sharon Reid-Brown at 231-632-6260 or sharonreid@remerica.com

 

Tame Inflation Data Turns Rates Lower

Mortgage rates ended the week close to where they began the week, but the end result masked a lot of movement. The week began poorly for
mortgage markets. Stronger than expected Retail Sales data and tough talk on inflation from Fed officials pushed mortgage rates higher on
Monday and Tuesday. In particular, Tuesday's Fed speakers suggested that the economy was beginning to recover - even if there is still a long way
to go - and that inflation concerns have increased. The tide turned on Wednesday, however, when CPI, the most closely watched inflation report
of the month, showed a lower than expected increase in inflation. Mortgage rates fell every day through the remainder of the week.
 
The April Core Consumer Price Index (CPI) rose at a 2.3% annual rate, below the consensus forecast of 2.4%. So far, higher food and energy
prices have not been passed through in a large way to the prices of other goods. The Fed has been emphasizing inflation fears for a couple
of weeks, which has had a negative impact on mortgage markets, so the good news on inflation was a relief to many investors. The Fed is
generally considered to be comfortable with Core CPI readings below 2.5%.
 
In the housing sector, this week's news was mixed. Against a consensus forecast of 940K, April Housing Starts rose 8% to an annual rate of
1,032K units. Building Permits, a leading indicator of housing market activity, rose 5%, the first increase in in five months. The
construction of single family homes remained weak, however. The strength in the Housing Starts report came from new apartment construction, which
is extremely volatile on a monthly basis. Separately, the National Association of Realtors (NAR) reported that median home prices fell 8%
during the first quarter from the same period one year ago. The chief economist of the NAR suggested that the data may be a little misleading,
since a smaller percentage of high end homes were sold during the period due to the difficulty in obtaining jumbo mortgages. In addition, the
results varied in different parts of the country. 100 out of 149 metropolitan areas saw price declines during the first quarter.



Brought to you by:

Corey Phelps

Front Street Mortgage

Phone: 231-360-7283

3BR/2BA Home on 2+ Acres West of Interlochen

11091 Emerald Forest

Interlochen, MI

Gorgeous up north setting!!! This 3 BR/2BA home is surrounded by hardwoods and pines with wildlife galore! It also boasts a remodeled master bath, screen-in back deck, newer carpet, natural fireplace, oversized 24 x 36 detached garage, storage shed, central air, all appliances, water softener, ceiling fans, IMMEDIATE OCCUPANCY! Close to golf courses, lakes, skiing, snowmobiling, recreation right out your door! This is a bank owned home and all offer WILL BE CONSIDERED!

Listing Details

For more information, please call Jeff Yule at 231-392-6795 or jeffyule@remerica.com

Cottages for Sale – Crystal Lake Waterfront

3410 Crystal Dr

Beulah, MI

Quaint and cozy classic cottage nestled away from the road on a wooded 3 plus acre parcel with 100’ of Crystal Lake frontage. Dock & hoist included in sale.

Listing Details

For more information, please call Judy Stovak at 231-649-9777 or judy@remerica.com

 

Commercial Property – Endless Opportunities!

5200 US 31

Williamsburg, MI

Comm. 1.15 acres of property located in Acme w/beautiful East Grand Traverse Bay views, Tart Trail adjacent property & access to the bay w/in walking distance. High traffic visibility along US-31 N. Currently 10 unit motel zoned B-1S, allowing for most commercial uses including drug store, hotel/motel, party store, professional offices, restaurant, video store, bank & multi-family dwellings. A lucrative opportunity for creative buyers wanting to develop in growing area, close to boat launch, park & casino.

Listing Details

For more information, please call the Nichols Team at 231-941-8283 or tcinfo@remerica.com

 

Home on 6+ Acres Near Kingsley

770 Clous Rd

Kingsley, MI

3 BR 2 Bath ranch home with 9’ ceilings throughout on 6.13 acres with plenty of privacy and room to expand! Great master suite with Jacuzzi Tub! Walkout 13 block basement plumbed for an additional bathroom and partially finished with tons of potential for extra living space. Also, 149 Sq Ft deck and beautiful country view!

Listing Detail

For more information, please call Jeff Yule at 231-392-6795 or jeffyule@remerica.com