Burbank Real Estate Blog

* Leading Indicators, inched up .1% trying to suggest that the economy will not officially dip into a recession.(Monday)

* Producer Price Index .2% increase seems tame following the 1.1% surge last month. (Tuesday)

* FOMC Meeting Minutes the Fed lowered it’s forecast for economic growth and indicated that it was pausing in it’s interest rate strategy for a while. They believe that while growth is contracting in the first half of 2008 it will rebound in the latter half of the year.(Wednesday)

* Jobless Claims came in at 365K which seems to suggest a stabilization in the jobs market.(Thursday)

* Exisiting Home Sales dropped by 1% in April and inventories rose from a supply of 10 months to 11.2 months.(Friday)

* Bonds…2 year 2.45%, 5 yr. 3.15% and the 10 yr. 3.85%….so far as market has not closed on the day yet, but will close early for the Memorial Day Holiday.

* Crude oil has been the big story this week hitting record highs, right now it’s sitting at $132.82 per barrel, below the record of $135 it hit yesterday.

Of note this past week:

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Here is the report for April and as you can see sales can vary greatly by area.

One thing is clear, however, money is still tight and sales are down. Latest forecasts have the turnaround starting later this year and into 2009. The recovery does hinge on access to loans and in many cases buyers are not qualifying under the current banking standards. A record 62% of banks reported tighter lending standards for prime mortgages and 72% have tighted subprime mortgage requirements(no surprise here).

Fixed mortgage rates are expected to rise to 6.2% later this year and 6.3% for 2009.

To keep things in perspective.....home prices in Los Angeles/Long Beach/Orange County areas increased 6.2% over the last 5 years.

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* Retail Sales - down .2%, less autos it was up .5% which was unexpected. Business Inventories- up .1% reflecting that fact that most businesses are trying to keep inventories low during the slow down. (Tuesday)

* Consumer Price Index - up .2% which was much better than expected, energy came in almost flat which is a mystery to me! (Wednesday)

* Jobless Claims -371,000 reflecting poor conditions in the labor arena.

* Industrial Production,-down .7%, worse than expected and again pointing to more widespread weakness in manufacturing.

* Philidelphia Fed Survey-continues to show weakness in manufacturing and came in down 15.6%.

* Empire State Manufacturing Survey-down 3.2%

* Housing Market Index-came in at 19 with the component for buyer traffic being very weak in May.(Thursday)

* Housing Starts- at 1.032M reflected an increase of 8.2% in May.

* Consumer Sentiment fell from 62.6 in April to 59.5 in May, lowest level in 28 years. Not surprising as inflation continues to be a top concern for consumers and rising gasoline and food prices are hurting wallets everywhere.(Friday)

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* Pending Homes Index fell 1% in March and is looking to be coming in at 20% year over year declines. Again the real story is when you look at specific markets. For example the Northeast did better, up 12.5%, so these numbers are somewhat meaningless unless you are looking for an overall trend, which currently is still down. Individual neighborhoods can be an entirely different story depending on where you are looking and at what price range. Tight money is still in play which means buyers are still finding it difficult to obtain loans.(Wednesday)

* Jobless Claims, came in at 365,000, lower than last week.

Chain Store Sales reported the best numbers since January, good news for retailers.

* Bank of England (BOE) Announcement, as expected came in at maintaining it’s key rate at 5%. The message here is that it still sees inflation as a real threat. * International Trade -The US trade balance shrank, which is good news for the dollar. Only bad news here is that less imports points to a weak economy.(Friday)

* Bonds…2 year 2.22%, 5 yr. 2.95% and the 10 yr. 3.76%.

* Crude oil finished at $125.96 per barrel, and some are now predicting $200 per barrel by Christmas.

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• Consumer Confidence fell from 65.9 to 62.3, lowest level since early 90’s.(Tuesday)

• FOMC Announcement-Fed lowered interest rates by .25%, to 2%. ,
• NAPM Chicago Index came in at 48.3. The report also showed that increasing costs of raw materials continues to be a problem. MBA Purchase Applications fell 4.8%.
• GDP came in at an annualized rate of 2.6% barely keeping us out of the official recessiondefinition.
• Employment Cost Index rose .7% in the 1st quarter, meaning real wages are not rising very much.(Wednesday)

• Jobless Claims, came in at 380,000, jumping by 35,000.
• ISM Manufacturing Index steady at 48.6 pointing to a slight contraction in business conditions.
• Personal Income and Outlays Personal income came in at .3% and consumer spending at .4%(Thursday)

• Employment Situation-The unemployment rate fell from 5.1 to 5.0%.(non-farm payrolls)(Friday)

• Bonds…2 year 2.45%, 5 yr. 3.17% and the 10 yr. 3.86%.
• Crude oil finished at $116.32 per barrel, despite some strength in the dollar.