Daily News 2/27/2015

February 27, 2015

Friday – February 27

U.S. economic growth eased a bit in the fourth quarter of 2014, led lower by a decline in stockpiles and trade gap. The Gross Domestic Product (GDP) rose by 2.2% in the second reading, down from the 2.6% originally reported. For all of 2014, GDP was up 2.4%. Within the report it showed that consumer spending surged 4.2%, the largest gain since 2010. The housing gauge saw a 3.4% increase for residential investments, up from 3.2% in the third quarter. GDP measures goods and services produced across the economy.

Consumers across the nation felt the February chill as the Consumer Sentiment Index fell from an 11-year high in January, coming in at 95.4 from 98.1. Prices at the pumps did rise during February and should continue to rise as the warmer weather approaches. However, an improving job market and economy, low inflation, and rock bottom interest rates should keep consumer spending at robust levels. Americans views of their personal finances fell in February, while inflation expectations are trending higher.

The National Association of REALTORS® (NAR) reported on Friday that Pending Home Sales rose by 1.7% in January to a level of 104.2, the highest level in 18 months. All major regions except for the Midwest saw gains in activity in January. Pending Home Sales are up 8.4% from January 2014. And this from Lawrence Yun, the NAR chief economist, “The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth.”

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Daily News 2/26/2015

February 26, 2015

Thursday – February 26

Economic data was plentiful today, beginning with a government report showing that consumer prices fell in January, due in part to the big decline in gas prices. The inflation reading Consumer Price Index (CPI) fell 0.7% last month, just below the -0.6% expected. CPI measures what Americans pay for goods and services. On a year-over-year basis, the CPI fell 0.1%, the first annual decline since October 2009. Tame inflation has kept the Federal Reserve from raising short term interest rates and if this pattern continues, rates could remain low.

Over in housing, the Federal Housing Finance Agency reported that home prices rose by 1.4% in the fourth quarter of 2014. The gain was the 14th consecutive quarterly price increase in the purchase only index. The numbers are generated by gathering information on home sale prices from mortgages sold to Fannie Mae and Freddie Mac. Within the report it showed that prices rose nearly 5% from the fourth quarter of 2013 to the fourth quarter of 2014.

Americans filing for first time unemployment benefits spiked in the latest week to the highest level since January 10. Weekly Initial Jobless Claims rose by 31,000 to 313,000, though claims remain near the 300,000 level, a historically low number. The job market has been picking up steam in the past year as the economy continues to improve. In the months from November to January, employers added more than one million jobs, the best three month pace since 1997. One caveat, hourly earnings or wage growth has been muted in the past five years, though there was a 0.5% increase in January, the most in six years.

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Daily News 2/25/2015

February 25, 2015

Wednesday – February 25

Sales of New Homes were relatively flat in January from December, though the rate of sales are near multi-year highs. The continued improvement in the U.S. economy and the job market give hopeful signs for the sector. January New Home Sales came in at an annual rate of 481,000 units, which was above the 470,000 expected. Sales in the Northeast were sluggish due to harsh weather, where sales had the biggest decline since June 2012, falling nearly 52%. The median new home price rose 9% from a year ago to $294,300.

Fed Chair Janet Yellen was on Capitol Hill yesterday testifying in front of the Senate Banking Committee on the Federal Reserve’s monetary policy and the current state of the U.S. economy. Ms. Yellen signaled that yes, interest rates will rise this year, but the Fed is in no hurry, given the low inflation environment along with a sluggish global economy. Ms. Yellen said that the Fed will consider raising rates “on a meeting-by-meeting basis” and that “patience” remains in the Fed’s rhetoric.

Despite historically low home loan rates, mortgage application volume fell in the latest week. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, fell by 3.5% in the latest week, while the refinance index declined 8%. The closely watched purchase index, rose by 5%. As previously mentioned, home loan rates are hovering just above record lows, but have increased in the month of February.

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Daily News 2/24/2015

February 24, 2015

Tuesday – February 24

Home prices across the nation and in 20-select cities rose in December, but are well below the lofty price gains seen in 2013 and early 2014. The S&P Case Shiller 20-city Home Price Index was up 4.5% from December 2013 to December 2014, while month-over-month prices were up 0.9%. The 4.5% was just above the 4.3% expected. Economists are saying that moderate prices gains bode well for home owners, while big gains make homes unaffordable for consumers, due to a stall in wage growth.

Consumer Confidence in February eased from the lofty levels seen in January to 96.4 from the 103.8 recorded last month, reported the Conference Board. “After a large gain in January, Consumer Confidence retreated in February, but still remains at prerecession levels,” said Lynn Franco, director of economic indicators at the board. Within the report it showed that 20.5% of consumers feel that jobs are plentiful, while 15.1% of households think that their incomes will rise in the next six months, both below prior levels.

Fed Chair Janet Yellen is testifying on Capitol Hill today in her semi-annual meeting with Congress. Ms. Yellen is in front of the Senate Banking Committee today saying that due to both an improving economy and job market, interest rates could start to move higher later in 2015. The rise in rates still depends on a continuing improving economy, and will increase the benchmark Fed Funds Rate on a meeting-by-meeting basis. On the inflation front, Ms. Yellen said that it continues to run below the Fed’s target rate of 2% and the members will be closely watching those levels.

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Daily News 2/23/2015

February 23, 2015

Monday – February 23

The National Association of REALTORS® (NAR) reported on Monday that Existing Home Sales in January fell to their lowest levels since last April as tight inventories, seasonal weather and the ongoing rise in prices kept buyers out of the market. Sales fell to an annual rate of 4.82 million units, below the 4.95 million expected. Despite the decline, sales are up by 3.2% from a year ago. A spokesman from the NAR said, “low rates are attracting potential buyers, but the lack of new and affordable listings is leading some to delay decisions.”

The closely watched S&P 500® Stock Index closed at a record high of 2,110 on Friday, led higher by a strong corporate earnings season. The S&P has risen 2% so far this year after gaining 11% in 2014. The closely watched index had hit a multi-year low of 666 back in March of 2009, which was the height of the Great Recession. The S&P 500® is widely regarded as the best single gauge of large cap U.S. equities. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

If you’re planning a vacation to any of the Disney theme parks in the near future, be ready to shell out extra bucks for the ticket prices. The Walt Disney Co. just raised prices for one-day tickets to visit Mickey and Minnie. A one-day ticket for either Disneyland or California Adventure in Anaheim, California is now $99, up from $96 for anyone older than 10. Single-day tickets for the Magic Kingdom in Florida have been raised to $105 from $99. Disney said that it typically raises prices each year as it continues to add new experiences for visitors.

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Daily News 2/11/2015

February 11, 2015

Wednesday – February 11

A recent poll of 82 economists revealed that the U.S. economy is expected to record its best performance in 10 years due to an improving job market, which should increase consumer demand for goods and services. The poll showed that the economy should grow by 3.2% in 2015, which would be the fastest since 2005. However, the results did show that slower growth across the globe was the biggest headwind to U.S. growth. Most of the economists did say that the Federal Reserve will most likely raise interest rates either by mid-year or later in 2015.

Robust sales of iPads, iPhones, iPods and Macs have propelled sales at Apple through the roof in recent years, as consumers continue to rack up sales for the company. Apple’s Stock price closed at an all-time high yesterday of $122, which has pushed the market capitalization of the popular company to just above $700 billion, a record here in the U.S. No other company in the history of this country has ever reached such lofty levels. The $700 billion is far above the second most capitalized company in the U.S., Exxon Mobile, which is around $380 billion. Market capitalization is calculated by taking the amount of outstanding shares and multiplying it by the current share price.

Despite historically low interest rates for home loans, mortgage applications fell in the latest week, due to a slight increase in home loan rates from the previous week. The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of total loan application volume, fell by 9% last week. The refinance index decreased 10%, while the purchase index was lower by 7%. Fixed rates for 30-year conventional home loans rose to 3.84%, up from 3.79% in the previous week. The survey covers over 75% of U.S. retail residential mortgage applications, according to MBA.

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Daily News 2/10/2015

February 10, 2015

Tuesday – February 10

Job openings in the U.S. rose to the highest level since 2001 in December, due to a rise in consumer goods and services. The Labor Department reported that its JOLTS (Job Openings and Labor Turnover Survey) report saw that there were 5.03 million job openings in the last month of 2014, up 181,000 from November. In addition, more workers were willing to quit their jobs, which signals that people could find another job as the sector continues to improve. The increase in job openings were seen in retailers, construction companies, professional and business services, and education and health care providers, while the manufacturing sector saw a decline.

Spring is in the air! Home Depot announced today that it will be hiring 80,000 additional workers around the country as it ramps up for its busiest season of the year, springtime. The home improvement giant will be hiring in its retail stores as well as in its distribution centers to cope with the big demand for spring seasonal products. Home Depot operates 2,200 stores around the country and employs 300,000 people year round.

The home foreclosure arena has been improving since the Great Recession ended back in June of 2009. Analytics firm CoreLogic reported that there were 39,000 foreclosures nationally in December 2014, down from the 46,000 in December 2013. The report went on to read that in 2014, the annual sum of completed foreclosures declined by 15% from the 662,000 reported in 2013. According to the report, “In 2014 [completed foreclosures] were less than half the 1.2 million peak in 2010, but remain twice the normal activity over 10 years ago.”

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Daily News 2/9/2015

February 09, 2015

Monday – February 9

Oil prices continue to rise after the steep sell-off in recent months. The price for West Texas Intermediate oil is currently near $53/barrel, up from $43 in the past few weeks. The recent rise in oil is pushing prices at the gas pumps higher. The national average price for a regular gallon of gasoline is at $2.17, up from $2.05 a week ago. A spokesman from motor club AAA said that gas prices are increasing due to refinery issues and due to the rise in oil prices. Many refineries conduct maintenance and upgrades in the spring to prepare for the busy driving season, which can reduce production at a time when both driving and gasoline demand rises as the weather improves.

Renters in 2014 paid a record amount, dolling out a collective $441 billion in rent payments, up $20.6 billion, or 4.9% from 2013. In 2014, developers broke ground on the largest number of rental units in 25 years for both single and multi-family rentals, but there is still a shortage. But 2015 could be the year that renters could be looking at purchasing homes due to the recent announcement from Fannie Mae and Freddie Mac on new low down payments. In addition, home loan rates are near record low levels, which could entice renters to look to purchase home in 2015.

Popular online tax preparer TurboTax, has resumed electronic filing of state income tax returns after a rash of fraudulent returns and claim refunds in recent weeks. Early this past Friday it was learned that Minnesota’s revenue department stooped accepting returns via TurboTax due to the fraudulent returns. Taxpayers who were recently using the online tax service said that when they logged into the site, they found that a return had already been filed.

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Daily News 2/6/2015

February 06, 2015

Friday – February 6

The job markets continue to receive good news with robust job gains along with rising wages. The Labor Department reported that Non-farm payrolls grew by 257,000 in January, well above the 235,000 expected, while November and December’s figures were revised higher by 147,000. There was an average of 336,000 jobs created in the past three months, the best in 17 years. Average hourly earnings surged higher by 0.5%, above the 0.3% expected, while the annual rate rose to 2.2%, the best since August.

Within the report it showed that the Unemployment Rate rose slightly to 5.7% in January, from 5.6% as the rate increased due to more Americans searching for jobs. The 5.6% is well below the 10% recorded back in October 2009, at the height of the recession. The data revealed that retailers posted the biggest hiring gains of 46,000, with 39,000 construction jobs added, while the manufacturing sector added 22,000. The data said that a total of 140.59 million Americans were employed at the end of 2014.

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Ready to Trade-In Your Home? Perhaps You Should Remodel Instead!

February 06, 2015

By Roy Sperr, MLO
Equity Source Mortgage, Inc.

ROGERS, MN – Each year, millions of Americans move into the home of their dreams. As
time goes by, families expand, kids grow older, and suddenly that home isn’t quite so perfect anymore. Or perhaps you still love your home, but you really want a gourmet kitchen and a larger master bedroom. Should you start looking for a new house? Or would it be better to stay where you are and remodel instead?

Both options involve a significant investment of time and money, so it’s important to take your time and make an informed decision. You’ll also want to be sure to consider both the financial and the emotional sides of the equation. Let’s begin by examining the financial factors involved.

Moving: A good local real estate agent should be able to assist you with estimates on these  numbers.
How much will it cost to purchase a home that will meet your needs?
How much could you sell your existing home for? Don’t forget to subtract the agent’s
commission from this total.
What will it cost to move? According to real estate consultant and best-selling author of
Remodel or Move, Dan Fritschen, a typical move costs 10% of the value of your home.
How much will your property taxes increase as a result of the move?

What projects do you want to have done and how much will they cost? An architect or
general contractor will be able to assist you with these figures.
How much will the improvements add to the value of your home, also known as the
“payback”? A local real estate agent can assist with this as well.
If the decision about whether to renovate or move were purely a financial one, then it would  be quite easy to look at the numbers and come to the right conclusion. However, there are  also emotional factors that come into play, and they have a value as well. Let’s consider some  examples.

Reasons you may want to move:
 If you relocate to a new neighborhood, your children could attend superior schools.
 You would like to reduce your commute or have better access to local amenities, such as
restaurants and shopping.
 You’re not particularly fond of your current neighborhood.
 Your yard is too small, and you cannot expand it.

Reasons you may want to stay and remodel:
 You’re happy with your location. It’s convenient, you love your neighbors, and the
schools are either excellent or are not a factor.
 You love the layout of your home.
 All you need is a little more space, and your home will be perfect.

Of course only you know what is truly important for your happiness, so try to use these
questions as a starting point. Create a list of the pros and cons of each scenario and leave it
someplace accessible, so that you and your spouse can add to it as you think of additional
factors. You may also want to consider attending open houses and visiting new housing
developments to see what is available and how your home compares.

Once you’ve completed your list and your financial assessment, it’s time to draw some
conclusions. Are the numbers and the emotional factors pointing you in a clear direction? If  you’re still feeling unsure and would like some additional assistance, you may want to read  Dan Fritschen’s book, Remodel or Move, or visit his website at www.remodelormove.com.

Both contain a calculator that will assist you with the difficult task of quantifying the
ramifications of your decision. In addition, you can learn tips to assist you with the next step,  after you’ve determined what it will be.

If you choose to remodel, then you’ll need to have a clear idea of what you want to accomplish before finalizing any details with the contractor or architect. One of the most expensive things you can do is change the project midstream.

If you decide to move, then there are low-cost improvements you can make to your existing home that will help it to sell more quickly. The kitchen and the bathrooms provide the biggest return on investment in this area.

Whether you decide to remodel or buy a new home, it’s important to ensure that you have proper financing in place prior to moving forward. If you decide to purchase a home, a mortgage originator will help you to determine how much you can afford, as well as which loan package works best with your overall financial plan. In the case of remodeling, you should meet with a mortgage professional before any construction takes place. Otherwise you may severely limit the type of financing options available to you.

Additional Resources:
Remodel or Move?: Make the Right Decision, by Dan Fritschen

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