Lake Tahoe
Real Estate News - June 30, 2004 |
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| FED BUMPS RATES BY ONE-QUARTER POINT The Federal Reserve today raised its target for the federal funds rate by 25 basis points to 1.25 percent. But even after the increase, its stance on economic policy still supports ongoing economic activity, the Fed said in a prepared statement. "The evidence accumulated over the inter-meeting period indicates that output is continuing to expand at a solid pace and labor market conditions have improved," the Fed said. "Although incoming inflation data are somewhat elevated, a portion of the increase in recent months appears to have been due to transitory factors." C.A.R.'s Deputy Chief Economist Robert Kleinhenz said, "The rate increase was relatively small at .25 percent. The credit markets already have figured this rate hike into their calculations. We anticipate that there won't be much of a change in interest rates in general nor mortgage rates in particular over the near term. In fact, the markets may already have figured another quarter- to a half-point increase into current rates and yields." "As for the housing market, there is likely to be more of a psychological impact than anything else," added Kleinhenz. "Buyers and sellers now know that the era of rates at historic lows is over and rates are expected to climb in the coming months. When coupled with the fact that we are presently in the peak selling season, the anticipated rise in interest rates should drive near-term sales up. However, as we look at the balance of the year, we will likely see sales in the last half of 2004 fall below sales for the same period in 2003." C.A.R. REPORTS MEDIAN PRICE UP 26.5 PERCENT IN MAY TO NEW RECORD The median price of an existing home in California in May increased 26.5 percent and sales increased 10.5 percent compared to the same period a year ago, according to a recent C.A.R. report. "The real estate market has kicked into high gear with the prime summer selling season underway," said C.A.R. President Ann Pettijohn. "The up-tick in mortgage interest rates has only accelerated the demand for housing in California. The median price posted the greatest percentage increase on record, pushing the median price to a new high of $465,160." Closed escrow sales of existing, single-family detached homes in California totaled 632,380 in May at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 10.5 percent from the 572,260 sales pace recorded in May 2003. The statewide sales figure represents what the total number of homes sold during 2004 would be if sales maintained the May pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. C.A.R.'s Unsold Inventory Index for existing, single-family detached homes in May 2004 was 2.2 months, compared to 2.3 months for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate. CONSUMER CONFIDENCE UP IN JUNE After last month's virtually static Consumer Confidence Index, the Conference Board yesterday reported a sharp increase in consumer confidence in June. The Index, which now stands at 101.9, is up from 93.1 in May. The Present Situation Index is now 104.8, up from 90.5 in May, while the Expectations Index rose to 100 in June from 94.8 the previous month. "The strong improvement in current conditions has propelled consumer confidence to levels not seen since June 2002," said Lynn Franco, director of the Conference Board's Consumer Research Center. "Looking ahead, consumers expect the economy to continue to grow at a healthy clip and to continue to generate additional jobs. And, with prices at the pump beginning to ease, the short-term outlook remains favorable." Consumers' assessment of current conditions improved considerably in June, with those saying business conditions are "good" rising to 25.6 percent in June from 22.2 percent the previous month. Those claiming conditions have worsened fell to 17.5 percent from 21.6 percent in May. Consumers claiming jobs are "hard to get" decreased to 26.5 percent in June from 30.3 percent the previous month, while those saying jobs are "plentiful" rose to 18 percent from 16.6 percent in May. GDP GROWTH DISAPPOINTS FED This year's first quarter economic growth didn't live up to previous U.S. Dept. of Commerce estimates, according to a recent report. Gross domestic product (GDP), the value of goods and services produced by a nation, grew by 3.9 percent during the January-March period, according to revised estimates released by the Bureau of Economic Analysis on June 28; previous estimates predicted a growth spurt of 4.4 percent. Consumer spending, which accounts for nearly two-thirds of GDP, rose at a 3.8 percent annual rate, according to the report. MORTGAGE LOAN APPS FALL 4.4 PERCENT The Market Composite Index of mortgage loan applications, a measure of mortgage loan applications for purchases and refinancing, decreased by 4.4 percent to 575 on a seasonally adjusted basis for the week ending June 25 compared to 601.2 the previous week, according to a report released today by the Mortgage Bankers Association (MBA). The refinance share of mortgage activity was 33.4 percent of total applications for the week ending June 25, unchanged from the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 33.9 percent of total applications for the week ending June 25 from 33.5 percent the previous week. On an unadjusted basis, the Index decreased by 4.8 percent for the week ending June 25 compared with the previous week and was down 63.5 percent compared with the same week one year earlier. Fast Facts Calif. median home price - May 04: $465,160 (Source: C.A.R.) Calif. affordability index - April 04: 20 percent (Source: C.A.R.) Calif. highest median home price by C.A.R. region - May 04: Santa Barbara South Coast $1,115,000 (Source: C.A.R.) Calif. lowest median home price by C.A.R. region April 04: High Desert $214,470 (Source: C.A.R.) Mortgage rates - week ending 6/24: 30-yr. fixed: 6.25% Fees/points: 0.6% 1-yr. adjustable: 4.13% Fees/points: 0.7% 15-yr. fixed: 5.64% Fees/points: 0.6% (Source: Freddie Mac)Information provided by - C.A.R. Newsline is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 135,000 REALTORS® statewide. |
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