Economic News Week: September 24, 2012

By Tony Stevenson/SWBC Mortgage

The DOW closed slightly downward at 13,579.47 on Friday.  Global news is that Europe is moving closer to solving its own debt woes. Especially, giving  Spain a way out of its own debt crisis.  Friday, a week ago, the DOW closed at 13,593.  So the see-saw continues  before U.S. election day.  As almost predicted the markets have been fluctuating from 12500 to 13500.  I have noticed that some economists are predicting a “sky is falling” outlook and  that we could take huge losses once again in stocks, using transportation stocks as the predictor. I am not saying either way what I think will happen except phooey!  If the average stock  investor listens to these so-called “woe-is-me” economists, bad things could very well happen, especially  if they  start a sell-off and money grab. But, I like to keep things in perspective and look for the positive.  Besides Europe’s good news, oil has dropped, causing most Americans to have a little more spending cash from the little savings in gasoline prices we have seen recently.  Oil slid from $100 a barrel to $92 a barrel this past week.  Hopefully, gas prices will slide even further in coming days. One other bit of positive news is that the U.S. trade deficit dropped 12.1 percent in  the second quarter. Weekly jobless claims fell slightly last week too.  The U.S. economy is not where we want it to be, but it is far better than it used to be-just a few short years ago. So,  Christmas may be a little brighter this year as a result.  Welcome Fall weather and activities!


Real Estate, Mortgage Industry, and Other Economic News


The Unemployment rate dipped to 6 percent in August for San Antonio, down from 6.8% the month before.  This is the Alamo City’s lowest level in more than three years as 4,300 jobs were added according to the Federal Reserve Board in Dallas.  The jobless rate for Texas is 7.1% compared to the U.S. average which is 8.1%.  Austin has the lowest unemployment rate for metro areas at 5.7%.  Keith Phillips, the senior economic policy advisor for the Dallas Fed in San Antonio said, “I look at the numbers and see a pretty healthy San Antonio.”  He said the area’s job picture has been clouded since the summer of 2011 when government hiring fell off, mostly related to layoffs in schools. In my opinion, our state government should be ashamed of themselves  for cutting back on our children’s future. Keep pressure on your Texas Legislatures to find a better way to fund education in Texas.


Statewide, “a major component in Texas’ long term economic development is consistent job growth, and that is exactly what we are seeing across a number of different industries (in Texas),”  commission chairman Andres Alcantor said in a recent news conference. I will also add that yes, jobs are a major component in growth, but  so is income.  We have to have good paying jobs to create a better economy as well.  The Eagle Ford Shale is helping in that area.


Existing home sales rose 7.8% in August year-over-year to a seasonally adjusted rate of 4.82 million the National Association of Realtors said.  This is the highest increase since May 2010 when a government first-time home buyers assistance program was in existence. According to the Commerce Department, housing “Starts”  were up 29% in August compared to August 2011 as well.  Confidence among home builders rose this month to its highest level in six years according to the National Association of Home Builders.  The housing markets seem to be rounding the corner in most areas across the nation.  I know that in Texas-as a whole-we are experiencing better housing numbers among the major metro areas, including the Texas Hill Country. I recently had closings in Boerne, Johnson City, Fredericksburg, and Kerrville. Business has been good and I expect it to get even better.


Kudos to Boerne for making “Liveabilitys”  Top 10 list of places to live/visit/vacation in the U.S. ranking at the number 4 spot nationwide.  Like many other Hill Country towns, Boerne offers a number of amenities, including the arts, beautiful nature areas and rivers , outside sports, shops, restaurants, and its good people.  Boerne also hosts events such as Boerne Berges Fest, Kendall County Fair, the annually Dickens on Main, and Christmas Parade, and much more.  Way to go Boerne!


According to Freddie Mac, the average U.S. rate on the 30-year fixed rate mortgage fell to its previous record of 3.49 percent last week.  The rate on the 15 year fixed Mortgage rate hit a new record, 2.77 percent. Keep in mind that these rates include a 1% origination fee and/or discount point.  After the Fed announced QE3 last week, we expected rates to drop further. The Fed’s announcement to purchase $40 billion in Mortgage-backed securities did cause rates to drop, but not to expected levels.  Mortgage Bankers/Lenders are having to calculate their losses in newly re-locked rates as some consumers threatened to go elsewhere if their  current rate-lock was not adjusted downward. What most folks don’t realize is that when a Mortgage rate is locked, it  costs Lenders and the secondary markets  money.  Those losses were calculated into current rates. Still at historically low levels, Mortgage rates and home prices are now at levels that it may be worth more to buy a home, than to rent.  Find a Local realtor and Local Mortgage Loan Officer and let them be your guide in the most important purchase you will most likely make in your lifetime.  Oh, and by the way, it is still fun and exciting  to buy a home as long as you find the right folks to help you with the process.


Economic Data Due this week:  Watch for Thursday’s 2nd quarter GDP report.  And  Friday’s Consumer Spending report as it will  show  how well consumers are doing just that-spending/consuming.  70 percent  of our economy relies on consumer spending.  The question is, “ did consumers tighten their wallets?”  Tuesday:  Consumer Confidence Index.  Tuesday:  Case/Shiller Home Price Index.  Wednesday:  New Home Sales report.  Thursday:  Weekly Jobless Claims.  Thursday:  GDP 2nd Quarter.  Thursday:  Durable Goods report.  Thursday:  Pending Home Sales Report.  Friday:  Consumer Spending Report.