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Archive for June, 2010

Economic Highlights for the Week Ending June 18, 2010

Economic Highlights for the Week Ending June 18, 2010

MONDAY, June 14th Fed funds futures traders believe monetary policy will remain unchanged for the rest of this year while lowering expectations for a rate adjustment in early 2011. Traders are pricing in a roughly a 48% chance the Fed will bump the fed funds rate to 0.5% at their January 2011 meeting down from 58% one week ago. The fed funds rate has been targeted in a range of 0% to 0.25% since December 2008.

TUESDAY, June 15th The NAHB housing market index fell sharply in June, dropping to a level of 17 from a reading of 22 in May. The swoon in homebuilder confidence may be related to the downshift in the market following the expiration of the homebuyer tax credit. Weak economic data recently, especially the employment report for May also weighed. Builders lowered scores of current single family sales and sales six months from now while foot traffic through model homes decreased. The homebuyer tax credit provided temporary support for the housing market; now, recovery in the housing market is once again dependent upon growth in the economy, namely jobs and incomes.

WEDNESDAY, June 16th The MBA mortgage applications index jumped 17.7% to 659.9% for the week ending June 11. The purchase index rose 7.3% last week, rebounding from its lowest level since the end of 1996 in the previous week. Until last week, the purchase index had fallen nearly 40% in the five weeks since the expiration of the tax credit indicating a slower pace of home sales this quarter and into the third. The refinance index increased 21.1%on the week, its fifth increase in the past six weeks. Refinancings account from almost 75% of total application activity. The producer price index fell 0.3% in May as food prices fell 0.6% and energy prices dropped 1.5%. Excluding food and energy prices from the index, the core PPI rose 0.2% on the month and is up 1.3% on the year. These data indicate subdued inflation at the wholesale level. Industrial production increased 1.2% after a 0.7% gain in April. The May gain was led by a 4.8% surge in utilities usage though manufacturing output also increased 0.9% on the month. Total output has risen in 10 of the last 11 months and is now 7.6% above its year ago level. Although industrial activity has been in recovery mode for almost a year, it remains 7.9% below its December 2007 peak. Housing starts fell 10.0% in May to a 593k annual rate from a rate of 659k in April. The tumble in new construction starts last month correlates to the end of the homebuyer tax credit and the consequential pullback in demand for homes. Housing starts are now at their lowest level of 2010 but are still 7.8% above their year ago level. After the initial retraction associated with the homebuyer tax credit the outlook for home construction improves but does remain dependent upon a pick-up in job creation and the broader economy.

THURSDAY, June 17th The consumer price index fell 0.2% in May as energy prices tumbled 2.9%. Headline consumer inflation is now up a modest 2.0% on the year. The core CPI, which excludes food and energy costs rose 0.1% last month and was up by just 0.9% on the year. Soft final demand and slack in the economy are subduing inflationary pressures which will allow the Fed hold rates down in order to revive the economy. Jobless claims rose 12k to 472k for the week ending June 12. The level of claims remains stubbornly high which unfortunately is consistent with weak job creation in the private sector last month. The May employment report combined with the elevated trend in initial claims suggests ongoing duress in labor market conditions.

FRIDAY, June 18th

Stock Market Close for the Week

Index Latest A Week Ago Change DJIA 10450.64 10211.07 +239.57 or +2.35% NASDAQ 2309.80 2243.60 +66.20 or +2.95%

WEEK IN ADVANCE

New and existing home sales for May, due out in the coming week will inform on the depth of the post-tax credit pullback. Also, the FOMC will meet and release their policy statement Wednesday. We may see recent weakness reflected in their outlook. Another $108 billion in new supply is scheduled to hit the bond market this week as well.

Key Interest Rates Latest 6 Mos Ago 1 Yr Ago Prime Rate 3.25 3.25 3.25 Fed Discount 0.75 0.50 0.50 Fed Funds 0.21 0.12 0.19 11th District COF 1.825 1.259 1.380 10-Year Note 3.22 3.56 3.75 30-Year Treasury Bond 4.14 4.48 4.55 30-Yr Fixed (FHLMC) 4.75 4.94 5.38 15-Yr Fixed (FHLMC) 4.20 4.38 4.89 1-Yr Adj (FHLMC) 3.82 3.34 4.95 6-Mo Libor (FNMA) 0.75188 0.48813 1.2400 Sources: IBC’s Money Fund Report; Bank Rate Monitor; Federal Home Loan Bank of San Francisco

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Wealthy Homeowners Seeking Privacy are Increasingly Buying Adjacent Properties

Compounds are the hottest commodity in L.A.’s high-end real estate market, brokers say.

June 12, 2010|By Lauren Beale, Los Angeles Times

In the Middle Ages, moats were the thing. More recently, the rich have taken refuge behind tall hedges, view-obscuring walls and guarded gates.

But today’s super-wealthy, seeking even greater privacy, are increasingly buying adjacent properties as a buffer zone around their mansions. And that’s made the compound the hottest commodity on L.A.’s high-end market, real estate brokers say.

On the Westside, the growing list of compound owners includes movie industry titan Terry Semel, financier and producer Tom Gores and corporate housing kingpin Howard Ruby, founder of Oakwood Worldwide.

Divorcing Dodgers owners Frank and Jamie McCourt maintain two compounds, one in Holmby Hills and another in Malibu.

“If you don’t have a neighbor anymore, you create more privacy,” said Kurt Rappaport, co-founder of Westside Estate Agency, with offices in Beverly Hills and Malibu.

Not that the “buffer” homes are vacant. Some house family, friends, guests or staff. But these aren’t mother-in-law cottages or little guesthouses like the one Kato Kaelin holed up in at O.J. Simpson’s old place in Brentwood: Think multimillion-dollar mansions — next door, behind or even a few doors down.

The adjoining properties may be used during major fundraisers or large-scale entertaining, Rappaport said, to create more parking or as a place to stage the catering during lavish events. Some buyers have been known to tear down well-known homes for more elbow room.

Property records don’t fully capture the trend. Owners typically want the flexibility of selling the parcels individually, and so they usually don’t apply for a lot merger to create a formal compound. Still, veteran real estate agents say high-end buyers are increasingly looking to snap up adjoining properties.

“We’ve never seen this much activity going on,” said Drew Mandile, who works as a team with Brooke Knapp at Sotheby’s International Realty, specializing in Bel-Air.

Mandile and other agents said there were perhaps two or three compounds in Bel-Air 10 years ago. Today, there are at least nine.

“A decade ago, the idea of combining properties was extremely rare,” Rappaport said. “Now in the ultra high end it’s the norm to strategize about amassing multiple properties.”

New Monopoly Game Design – Does it Deliver or Disappoint?

From Stylture.com

Notable designs and functional living spaces

February 5th, 2010