Big Housing News
April 7th, 2008 by Jeff Daley | no responses
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INFO THAT HITS US WHERE WE LIVE The big housing news last week came out of Washington. Senate Democrats and Republicans agreed in principle to a $15 billion housing stimulus package that could pass as early as this week. Interesting provisions. A property-tax deduction for homeowners who don’t itemize. FHA insurance up to $550,000. $100 million for counseling borrowers on the verge of default. A tax credit for buyers of foreclosed homes. Tax-exempt bonds for local housing authorities. Block grants for foreclosed properties. Tax breaks for homebuilders. It needs to get through the House and be signed by the President. But at last there is a strong bipartisan effort to get housing back on track.
On another positive note, a law has been passed that extends until 2010 the tax deduction for mortgage insurance (MI) premiums. Borrowers with adjusted gross incomes of $100,000 or less can deduct 100% of these premiums. The deduction continues on a sliding scale up to $110,000. This legislation makes MI another option for borrowers to consider in today’s market.
>> Review of Last Week
BULLS RALLY AND ACTUALLY HANG ON… Monday saw Q1 close, recording the market’s worst quarterly performance in six years. At the same time, Treasury Secretary Paulson announced a plan for overhauling the US financial regulatory system. It would streamline the bureaucracy to make US financials more competitive globally. Terrific stuff, although no one expects anything to happen until we get through the present challenges, as well as the presidential election.
Tuesday, the market rallied big time, which was impressive given Swiss bank UBS and German Deutsche Bank taking multi-billion dollar Q1 write-downs. Investors felt this showed the financial sector was bottoming. They were supported by some good news. The aforementioned UBS announced plans to raise $15 billion of new capital, Lehman Bros. said it raised $4 billion in an oversubscribed offering, and Merrill Lynch CEO John Thain said his outfit doesn’t need to raise any fresh capital. All this helped settled people’s liquidity concerns, hence, one heckuva day in the market.
Best of all, stocks hung onto these gains for the week, holding off post-rally selling efforts, as well as a clump of not-so-good news. Fed Chairman Bernanke gave Congress a rather tepid view of the economy for the first half, forecasting teensy growth or MAYBE a little contraction. Initial jobless claims hit 407K and Friday’s employment report put unemployment at 5.1%, with nonfarm payrolls falling 80K. The market took it in stride.
The fact is, Bernanke’s concerns weren’t a shock to anyone. And while the decline in payrolls isn’t good, it doesn’t fit recession specs, where payrolls drop 150K to 200K a month. We’re averaging a 77K per month decline, a miniscule 0.06% of our 138 million employed workers. Finally, to the dismay of recessionistas everywhere, ISM manufacturing and services indexes scored higher than expected. So there.
With the bulls prevailing, the Dow ended the week at 12,609.42, up 3.2%. The broader S&P 500 had an even better 4.2% boost, to 1370.40. And the NASDAQ won the upside prize for the week, soaring 4.9%, to 2370.98.
Considering the performance of stocks, things went OK in the bond market. The price on the benchmark 10-year Treasury dipped slightly, pushing the yield up a trifle, to 3.475%. Mortgage rates should continue at appealing levels.
>> This Week’s Forecast
A QUIET WEEK…IN THEORY… This week starts a new round of earnings reports, revealing how everyone did during Q1. Recessionistas will be scouring the data for any negative numbers of course. First up for the Dow components will be Alcoa on Monday, with General Electric wrapping up the week on Friday.
We’ll certainly want to watch Pending Home Sales. And EVERYONE will be looking at the minutes from the Fed’s latest meeting to see if there’s anything that might push the markets one way or the other. Given last week’s employment report, Initial Jobless Claims will be a big focus Thursday.
We expect it to be a tranquil week, although we haven’t seen that for quite some time.
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The Author: Jeff Daley
About: Jeff Daley, is a REALTOR® and owner/agent with Keller Williams Realty - Scottsdale and a member of the international Institute for Luxury Home Marketing where he took specialized training in the selling and marketing of upper-tier homes. He holds an MBA from George Washington University and rose through the ranks to senior management within Lucent Technologies before taking early retirement in 1999 and starting his second career in real estate. Jeff has won numerous awards in real estate, is a Certified Luxury Homes Marketing Specialist, a member of the Millionaire Guild, is published in national publications, and is an instructor for real estate. He and his wife and partner Jane, have their business and home in Scottsdale, Arizona where they specialize in Luxury Homes.
This entry was posted by Jeff Daley, on Monday, April 7th, 2008 at 1:29 pm and is filed under Featured, News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response on the right, or trackback from your own site.
