Big Ben

Current Trend Direction: Higher
Risks favor: Neutral to Locking
Current Price of FNMA 6.0% Bond: $99.94, Unchanged

Paddles, Paddles!!! Bond prices have been flatlining for the past seven trading days, right along the 200-day Moving Average. But this quiet period could just be the calm before the storm. Traders have not had much in the way of economic news to chew on lately, and seasonably lower volume has added to the sluggish market activity. But all that is about to change – and Bonds will likely get some jolts that could start them beating to a more volatile rhythm during the next week.

It all starts today with Big Ben Bernanke speaking at the Fed’s annual shindig out in Jackson Hole, Wyoming. At 10:00am ET, he’s set to kick off this wild party with a speech about global economic integration. Those Fed boys really know how to whoop it up. But Traders will be listening for any clues on Bernanke’s present read on inflation, which could be a market mover. And speaking of the Fed’s read on inflation, the Minutes from the August 8th “pause” meeting will be released next Tuesday, August 29th. These Minutes should be juicy, since the decision to pause was not unanimous…and the concerns and comments made about inflation may also provide another jolt to price activity.

And if that weren’t enough to get your heart racing, other big economic events next week include Consumer Confidence, 2nd Quarter GDP, the Chicago Purchasing Managers Index (PMI), the Institute of Supply Management (ISM), Consumer Sentiment and the “big boy”…the monthly Jobs Report. And whirling around in the mix is the seasons first potential hurricane headed towards the Gulf of Mexico…”Ernesto” is on the way. If this develops, it could possibly disrupt supply to an already jittery oil market – which would lead to higher oil prices, and more inflationary pressures.

A Glipse Into The Real Estate Crystal Ball

SAN FRANCISCO -- Craig Donato, CEO for classified listings search site Oodle.com, has glimpsed the future of Internet searching – and it looks a lot like his 5-year-old daughter, who already has an aptitude for finding information online."When I think about search and real estate, all the data we've seen is that consumers are absolutely using the Internet. It's certainly happening with the new generation," he said. His daughter recently looked up song lyrics for "The Cheetah Girls" using the Web, he said, and that says something about the Internet's evolution as an everyday tool."She can search better than her mom. It's a natural, inert thing. The train has left the station in regards to search being a valuable tool in how people search for real estate listings." The World Wide Web has spawned a growing "Web 2.0 world," Donato said, featuring rich, integrated content such as blogs and Internet video. "We're in the process of turning ourselves inside out. It's not about getting everyone to come to you, it's about being everywhere." Donato spoke during a panel presentation Friday titled "A Gaze Inside the Crystal Ball: What Will the Real Estate Industry Look Like in 5 Years?" at the Inman News Real Estate Connect conference in San Francisco. Other panelists said they expect an increasing proliferation of online property listings information, more transparency and simplification of real estate transactions, a continuing shift of ad spending to online sites, and a further convergence of real estate-related technologies through mashups and partnerships. "The proliferation of listings will continue, and I think that's what's good," said Tim Fagan, CEO for HomeGain, a company that seeks to connect online consumers with real estate professionals. And while there is much talk in the industry about advertising dollars migrating from print to online, there are also reasons why print sources have survived, he said, and it has a lot to do with the strong relationships they have built over time with their customers, Fagan said. "Why newspapers and why traditional publishing outfits are still around is because they hold those values really to be sacrosanct," he said. Tim Fagan, HomeGain
As the real estate industry evolves, Fagan said companies in the media space must "not only get your model figured out on the consumer side," but must also understand the changing environment for advertising. While property listings information is finding its way to many online venues, some online players are putting a dent in real estate professionals' commission compensation by asking for referral fees in exchange for drawing in an online audience, said Joel Singer, president of Real Estate Business Services Inc., a subsidiary of the California Association of Realtors trade group. While Singer said he is supportive of putting property information online, he also said that real estate professionals should make sure they are getting the right return on their investment from real estate technology companies. "We know in a really good year there are 14 million buyers and sellers. There is a lot of infrastructure that goes on to ensure a 14-year-old in Indonesia can see a home for sale in Sausalito," he said, noting that just spreading around information online doesn't necessarily lead to a completed sale. "The guy who's making (the information) available ... didn't pay for content. It's not a shortage of leads -- it's a shortage of meaningful leads," he said J. Lennox Scott, chairman and CEO of large regional brokerage company John L. Scott Real Estate, said during the panel presentation that his company has worked to build its own Internet tools rather than rely on third-party providers. But he did not rule out the possibility of turning to other companies that disseminate property listings information. "We'll keep looking a bit and we'll see down the road. Never say never," he said. Eric Gorrell, HomeTeam Real estate information has already been let out of the box, so to speak, said Eric Gorrell, president and CEO of HomeTeam, a company that is building a real estate portal for first-time home buyers. And it's too late to put that information back in a box. Gorrell said he expects increasing transparency in mortgage originations, so that consumers will be better able to understand specific fees that they pay related to a home-mortgage transaction.
"There is absolutely no reason to sell a piece of property and fill out 87 documents right now," he also said. Five years from now, the real estate market should be very strong in California, despite the current downturn, said Singer. There are about 210,000 members of the state Realtor association this year, and they will "be doing the same number of transactions that 86,000 Realtors did two years ago," he said."There is no question that the housing market is slowing down and slowing down dramatically from where it was a year ago (in California)," he said, adding that the marketplace is still largely positive.
"My feeling is the market is going to pause for awhile. I think the pricing situation is going to be a longer pause than (sales activity). The next couple of years are going to be at a normal level." Basic demographics will drive demand and lead to a stronger market in future years, he said. Real estate technology companies will likely partner and consolidate more in the future, Fagan said. "They will find ways to work well together. We will see some combinations (of various technologies)," he said.

Housing Market Evaluation

We hope you will find the following snapshot of local Real Estate inventory interesting. The table represents aggregated values based on MLS data for the specified date.

Housing Inventory Snapshot

Aug 03 , 06


Santa Clara County, CA

Single Family under $1M
Average List Price $752,673 Median List Price Average $739,000 Days On Market 36

Single Family over $1M
Average List Price $2,096,132 Median List Price Average $1,595,000 Days On Market 54

Condo/Townhome under $600K
Average List Price $465,526 Median List Price Average $465,000 Days On Market 34

Condo/Townhome over $600K
Average List Price $745,311 Median List Price Average $679,950 Days On Market 36

San Mateo County, CA

Single Family under $1M
Average List Price $777,160 Median List Price Average $775,000 Days On Market 42

Single Family over $1M
Average List Price $2,591,519 Median List Price Average $1,699,000 Days On Market 59

Condo/Townhome under $600K
Average List Price $461,018 Median List Price Average $478,000 Days On Market 45

Condo/Townhome over $600K
Average List Price $787,016 Median List Price Average $719,000 Days On Market 48

Santa Cruz County, CA

Single Family under $1M
Average List Price $713,586 Median List Price Average $719,000 Days On Market 59

Single Family over $1M
Average List Price $1,862,658 Median List Price Average $1,400,000 Days On Market 70

Condo/Townhome under $600K
Average List Price $487,583 Median List Price Average $499,000 Days On Market 61

Condo/Townhome over $600K
Average List Price $871,512 Median List Price Average $739,000 Days On Market 60

Monterey County, CA

Single Family under $1M
Average List Price $656,356 Median List Price Average $639,900 Days On Market 73

Single Family over $1M
Average List Price $2,492,436 Median List Price Average $1,695,000 Days On Market 104

Condo/Townhome under $600K
Average List Price $418,816 Median List Price Average $399,900 Days On Market 73

Condo/Townhome over $600K
Average List Price $1,083,316 Median List Price Average $739,000 Days On Market 89

Contra Costa County, CA

Single Family under $1M
Average List Price $608,912 Median List Price Average $585,000 Days On Market 41

Single Family over $1M
Average List Price $1,689,276 Median List Price Average $1,399,000 Days On Market 37

Condo/Townhome under $600K
Average List Price $392,052 Median List Price Average $383,650 Days On Market 40

Condo/Townhome over $600K
Average List Price $711,359 Median List Price Average $699,000 Days On Market 33

Alameda County, CA

Single Family under $1M
Average List Price $643,337 Median List Price Average $629,000 Days On Market 36

Single Family over $1M
Average List Price $1,656,563 Median List Price Average $1,355,000 Days On Market 43

Condo/Townhome under $600K
Average List Price $445,223 Median List Price Average $439,000 Days On Market 35

Condo/Townhome over $600K
Average List Price $705,449 Median List Price Average $665,000 Days On Market 39

MORTGAGE. National Averages (July 31, 06)*

30-year fixed Rate - 6.17% APR - 6.38%

15-year fixed Rate - 5.88 APR - 6.2%

5/1 ARM Rate - 5.84% APR - 7.23%

Fed Fund Rates

Last Week In Review:
DING DONG…THE FED IS DEAD! OK…maybe not dead, but the chances of a Fed Funds Rate hike on August 8th are looking slimmer and slimmer. After seventeen consecutive rate hikes, it looks as if the Fed will pause at the August 8th meeting - which means the cost to finance business and personal goods and services will finally stop climbing. Including rates on Home Equity Lines of Credit! Why are they likely to pause? Last week's news shows the US economy is indeed slowing, with Gross Domestic Product (GDP) numbers for second quarter coming in lower than expected…and less than half of last quarter's number. And this low number confirms Bernanke's recent comments that the economy is slowing. And it all makes sense - the reason for the slowdown is apparently from the relentless barrage of Fed rate hikes, designed to slow things down and prevent runaway inflation, and it appears the Fed's strategy worked. The week's news showing an end in sight to the Fed hikes was good news for Mortgage Bonds, and home loan rates stabilized, or in some cases, improved slightly. And even with a moderation in the housing market, there's still no place like home. Last week also brought a read on the housing market, with New and Existing home sales numbers. The numbers were decent, not too far from expectations, and confirmed Fed Chair Ben Bernanke's recent comments that the housing market appears to be experiencing a slowdown which is "orderly".

Forecast for the Week:
The week ahead is bound to be another twister, as we edge closer to the Fed's next big get-together on August 8th. And this week holds an important report that might just make the odds of another Fed Funds Rate hike clear…the monthly Jobs Report. Currently, analysts are expecting to see 145,000 new jobs created. If the number misses the mark, it will add to the feeling that the Fed may indeed pause at the next meeting. But if the number turns out to be a blockbuster…the chance of the Fed hiking again might remain in question. When determining where home loan rates may head in the coming weeks, technical indicators become less important in the face of big news headlines - like the Jobs Report number and the Fed rate decision will be. But it's still important to watch the technical factors, to gauge where we've been…and where we may be headed. The chart below shows how the 100-day Moving Average of Mortgage Bond pricing has been a wicked technical "ceiling" to break in recent months. Every time Bonds have approached it in the attempt to gain more improvement and see home loan rates decline…the ceiling has pushed Bond prices lower and home loan rates have risen. As Bond prices approach the ceiling again, the likelihood of a breakthrough higher and improvement in home loan rates will likely rest squarely upon the flavor of the news this week, most importantly, Friday's Jobs Report. Weak economic numbers or news of low inflation would be good news for Bonds and home loan rates as well.

Valley Home Prices Climb Higher

This was a news article from the San Jose Mercury News that i pulled today. A very intresting article about real estate and what it may be headed towards soon...

Despite fewer sales and rising mortgage interest rates, the median sale price of Santa Clara County houses reached another new high in June, climbing to $770,000 from $755,000 in May.
June's median price was 9 percent higher than a year before, according to DataQuick Information Systems, which gathered the data from public records.

Despite the increase in the median -- the price at the midpoint of the month's list of homes sold area Realtors said sellers are gradually reducing prices in some areas as homes sit on the market longer.

There are more houses for sale in Santa Clara County this month than during any July since the slowdown of 2001, said Richard Calhoun, owner of Creekside Realty in San Jose. About 3,400 houses are on the market this week, compared with 2,100 a year ago. In July 2001, 4,200 houses were for sale in the county, he said.

But Calhoun said he thinks inventory is piling up not because an alarming number of sellers are flinging their homes on the market, but because buyers are holding back.

It's also taking buyers some time to get used to a changed market, said Audrey Sutton, co-owner of Asante Real Estate Group in Los Gatos.

A home she recently listed at $685,000 in San Jose's Rose Garden neighborhood sat with no offers for nearly three weeks, she said. The owners dropped the price to $649,000 and got multiple offers right away, selling it for $675,000. They would have taken $675,000 in the first place, she said, but no one bid low.