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Happy 4th of July and the Market update!

Happy 4th of July and the Market update!
July 1, 2016 devsite

4th of july

Some thoughts to ponder..

  • People who do not think they can win have already lost
  • The secret of not having worries, for me at least, is to have ideas
  • Whenever I meet people for the first time, I assume that they have a great story to tell and that it’s my job to find it
  • Rain is a good reminder of how our attitude can affect everything. Some folks let it destroy their day; others consider it a blessing
  • A smile costs nothing in money, time, or effort but it is literally true that it can be of supreme importance in one’s life

And now for the market update..

At first the sky was falling because of Brexit.

  • The stock markets around the world tanked with fear of how this historic event can possibly cause a worldwide recession. (now follow me here)
  • For the last three trading days, the world markets have been rallying restoring much of the paper financial loss occurred since the Brexit announcement.
  • The reversal in the markets is ONLY because now investors feel that Brexit may not cause that much harm to the economy.

My point with all this is that NOTHING has changed.

  • Since the announcement, all there has been is Brexit discussion. Prior to the vote and announcement, all that took place was Brexit discussion.
  • There has not been one single logistical event or change put in place related to Brexit, and yet the markets, (meaning investors) have gone from one extreme to another.
  • Nothing could be clearer in displaying how emotion can be a much greater driver of the markets than logic.

In the housing market, the latest news on home prices comes from the S&P Case-Shiller Home Price Index.

  • Home price appreciation continues to rise however it is showing signs of moderating.
  • In the 20-city adjusted index, home prices rose 0.5 percent for the month of April.
  • This is an annualized growth rate of 5.4 percent.
  • Earlier in the year home prices were running about 6.0 percent above the same time last year.

17 of the 20 cities measured by the index showed gains.

  • Surprising was that both San Francisco and San Diego declined, which has been a very rare occurrence.
  • Overall, the West continues to lead the country with home price appreciation.
  • In the Pacific Northwest home prices compared to the same time last year are way up.

In Portland Oregon home prices are up 12.2 percent followed by Seattle which has risen 10.6 percent.

  • In third place for appreciation is Denver Colorado.
  • The two weakest markets for price appreciation are Washington DC and New York, which rose a meager 1.8 percent and 2.6 percent respectively.

Early summer data is pointing to the market slowing for pending home sales.

  • The index unexpectedly declined 3.7 percent for the month of May.
  • This decline essentially wipes out April’s revised gain of 3.9 percent. Even compared to the same time last year, the index is down 0.2 percent.
  • A boost to future home sales may come from the plummeting interest rates.
  • Since the announcement of Brexit and the market panic, mortgage rates have been diving.
  • Refinances are exploding through the roof again and there is a chance that purchasers may jump into the market to take advantage of the amazingly low rates.

Next week’s potential market moving reports are:

  • Monday July 4th Holiday – All Markets Closed
  • Tuesday July 5th – Factory Orders
  • Wednesday July 6th – MBA Mortgage Applications and FOMC Minutes
  • Thursday July 7th – ADP Employment Report and First Time Jobless Claims
  • Friday July 8th – National Employment Situation