The Weekly Rap! Friday Feb 27th 2015

The National Debt is currently: $18,138,885,132,587.00  is Higher by another 6 BILLION.  The interest pay-out alone on the debt is 268 Billion per year!  I post this so we will be aware of what we are leaving to our children.

Stocks traded slightly lower this morning, but are still on track to post their biggest monthly percentage gains since 2011.  The Nasdaq is within striking distance of hitting 5000, a level last touched nearly 15 years ago. The Dow last traded at 18,155 about the same compared with where it was last Friday.  The S&P 500 is trading at 2,105.  Gold is trading at $1,213 an ounce, while oil futures at $49.51 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.73/Gal.  That’s 0.62 cents higher a gallon in just 27 days!  See below.

The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 101.81 better by 0.75 over where we were last week.  Our current trading is about 101 to about 102.00.  We were just at 103.35 on Feb 1.  Basically the change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the lower the rate.     

If you like this commentary please visit and “Like” my Facebook pageAs rates drop more prospective buyers will qualify and competition will arise for the properties for sale.  I put all of my prospective buyers through underwriting so that when they place their offer it is as close to “cash” as you can get.  So to get your clients underwriter approved, please contact me and get your offer accepted!

In economic news this week; the reader’s digest version is the economy is still trudging along.  Inflationary pressures remain tame, with spring bringing a boost to the real estate market. 

The thieves are at it again!  Gasoline is 0.62 cents higher per gallon over a 27 day period while oil prices have risen just $2.20 in the same period. The seasonal lift in gasoline prices remains well underway across the country, with the West Coast seeing the most excruciating rate of price increases. 

Here are a few of the “excuses” I’m hearing regarding the dramatic rise.  An explosion at an Exxon Mobil oil refinery in Torrance last week, California companies begin scaling back production to convert to the mandated and more expensive summer blend of fuel, California’s carbon-emissions mandate for transportation fuels has added more than a dime in costs to a gallon, and demand is starting to rise with fuel consumption reaching its highest levels since Obama entered the White House in 2008. The summerlike weather California and parts of the West have enjoyed this winter also puts more people on the road, burning more gas. So basically it’s because they can!

According to the Chicago Fed’s national activity index, the economy resumed above-trend growth in January.   The indicator, a weighted index of 85 different economic reports, rose to positive 0.13 in January from negative 0.07 in December. The three-month moving average meanwhile slowed to 0.33 in January from 0.34 in December.

Consumers expressed less confidence in the economy in February, worrying a bit more about the availability of jobs and outlook for business in the months ahead.  The consumer confidence index fell to 96.4 this month from 103.8 in January, the nonprofit Conference Board reported.  The index topped the 100 mark in January for the first time since an economic recovery began in mid-2009, setting a seven-and-a-half-year high in the process. Consumer confidence has been climbing in fits and starts since the end of 2011, helped by a sharp pickup in hiring and, more recently, a plunge in gasoline prices.

Consumer prices fell again in January and inflation turned negative compared to 12 months ago, a reversal fueled by sharply lower oil prices that’s offered financial relief to workers and households.  The consumer price index dropped 0.7% last month, marking the third decline in a row, the Labor Department reported. Over the past year prices have actually declined by 0.1%, the first time consumer inflation has been negative since the fall of 2009.  

Energy prices dropped 9.7%, as the cost of most fuels including gas decreased.  Food prices were unchanged. Excluding food and energy, so-called “core” consumer prices rose 0.2% in January. Core prices are also up 1.6% in the past year, mainly reflecting rising prices for housing, the single biggest expense for consumers. Real hourly wages, meanwhile, rose 1.2% in January, a combination of higher pay and lower inflation. Real hourly wages have climbed 2.4% in the past 12 months.

Orders for durable goods rose 2.8% in January.  Orders minus transportation edged up 0.3%, the Commerce Department reported. Orders for core capital goods – a proxy for business investment – rose 0.6%. Shipments of core capital goods, a category used to help determine quarterly economic growth, fell 0.3% in January. Orders for all durable goods fell 3.7% in December, newly revised data show.

Federal Reserve Chairwoman Janet Yellen on Tuesday took another step closer to the first rate hike since 2006.  In testimony to the Senate, Yellen signaled to financial markets the Fed would soon drop the word “patient” from its forward guidance.  She softened the blow with several dovish comments that suggest no hurry about actually moving.  Markets have expected that when the Fed dropped “patient” from its policy statement that it would mean that a rate hike would follow in the next couple of meetings. That interpretation came from signals Yellen sent in December.

Now, however, Yellen stressed that the Fed wasn’t on automatic pilot and only wanted the flexibility to move “on a meeting-by-meeting basis.”  Several analysts said a June rate hike remains on the table if the Fed decides to drop the word “patient” from its policy statement on March 17-18. Yellen’s summation of the current economic environment suggests she is in no hurry to raise rates. “Too many Americans remain unemployed or underemployed, wage growth is still sluggish, and inflation remains well below our longer-run objective,” despite the falling unemployment rate, she said.

On the Real Estate front:  Existing-home sales in January fell 4.9% in January, a larger than forecast decline, the National Association of Realtors reported.  In our local El Dorado County area existing sales were down by 43% from Dec to Jan.  Lawrence Yun, chief economist for the NAR, attributed the decline to a lack of housing supply and rising prices at the end of last year.  The median existing-home price was $199,600, which is 6.2% above January 2014 levels. Inventory edged up 0.5% to 1.87 million homes, or a 4.7 month supply at the current sales price. 

Other factoids from the January report:

• All-cash sales were 27% of all transactions, up from 26% in December but down from 33% in January 2014.

• Distressed sales were 11% of all sales, unchanged from December.

• Properties typically stayed on the market slightly longer in January (69 days) than December (66 days) and a year ago (67 days).

• The share of first-time buyers declined to 28% in January, the lowest since June.

Sales of “new” homes avoided a winter dip in January, with prospects growing for a surge in demand as spring approaches.  New homes sold at annual rate of 481,000 last month, essentially unchanged from December, the Commerce Department reported.  Sales were 5.3% higher in January compared to a year earlier, another signal the housing market is continuing its long, slow recovery from its worst bust ever.  One worrisome sign: The median price for a new home was up 9% from a year ago, and a steady rise in prices could act as a potential drag on sales.  Mortgage rates, on the other hand, have fallen back near record lows (October 2012) and lenders appear to have loosened very strict requirements on how to qualify for a loan. That could make it easier for buyers to get a mortgage and afford a home.

The housing market seems to be getting off to a great start in 2015 though with “Pending” home sales rising in January to the highest level since Aug. 2013, the National Association of Realtors reported. Its pending home sales index rose 1.7% from an upwardly revised December level, and sales were up 8.4% from Jan. 2014 levels.  In our local El Dorado County area pending sales were higher by 65% from Dec to Jan. The NAR forecasts a 6.4% gain in existing home sales this year and a nearly 5% rise in median prices.

On the Employment front: The number of people who applied for U.S. unemployment benefits jumped by 31,000 to 313,000 in the seven days from Feb. 15 to Feb. 21, continuing a recent pattern of sharp up-and-down movements.

You can visit my corporate website at:


Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

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