Real Estate Update From Bank of America
Remember that the Fed has been purchasing $85 billion a month in bonds to help lower unemployment and stimulate the economy overall. Last week, Fed Chairman Ben Bernanke noted that these purchases are by no means on a preset course and that bond buying could be reduced at a faster pace, a slower pace, or even increased for a time, depending on the economic outlook. Bernanke also mentioned the word deflation last week for the first time in recent memory, and this could pave the way for QE to last into 2014.
The bottom line is that the Fed’s decision on QE will be data dependent. If inflation starts to rise and economic reports continue to be strong, the Fed could consider tapering its bond purchases sooner rather than later. Whether this will lead to higher home loan rates, and how much higher, remains to be seen.
Speaking of key data points released last week, the Consumer Price Index rose by 0.5 percent from May to June due to rising prices in gasoline, food, clothing, medical costs and housing. This number was above expectations and the second highest reading this year. It is important to note that the year-over-year Core CPI (the reading that strips out volatile food and energy prices) ticked down a notch, which is likely why the Fed continues to say that inflation remains tame.
In the housing market, housing starts declined by nearly 10 percent in June from May to 836,000. This was below expectations and the lowest level since August 2012. The drop was attributed towards a big decrease in apartment construction. Building permits, a sign of future construction, also fell by 7.7 percent, below expectations.
Meanwhile, retail sales in June declined to 0.4 percent from 0.5 percent in May. It’s important to note that retail sales make up 30 percent of consumer spending. The latest Jobs Report showed a lot of part-time jobs were created and confirmed that wages for most people have not increased. Without wage growth, we should not expect any robust retail sales or pickup in economic activity. This is another data point the Fed will be watching as it makes decisions regarding QE.
The above data is nationwide. Mammoth has low inventory which typically is a marker for a changing market. While there aren’t a lot of new building permits, the remodels have picked up, as many of the REO’s and short sales that have been purchased, are being renovated. Interest rates have increased slightly, but current rates coupled with current pricing make now a great time to BUY in Mammoth.
The high altitude in Mammoth makes it an ideal place to train. I am sure you have noticed all the runners in town. Check out my weekly update for the list of activities and upcoming races.
Mammoth encourages a healthy life style. Why not make it a part of your life style? Families that play together stay together!
We don’t need more to be thankful for, we just need to be more thankful!...