New Home Sales Tumble in February

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New Home Sales Tumble in February.WF reportI uploaded this report for you to review. Again, keep your eye on the pendulum. It appears that new home construction is also finding it’s bottom. Timing may also be good to look into the opportunities that will surround this business in the future.

Source: Wells Fargo Securities

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Interest Rates

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Got a rate sheet last week from Bank America, Craig Tiffany.
Quote then was:
Conventional 30 year fixed-rate @ 4.75%
Conventional 15 year fixed-rate @ 3.875%
5/1 ARM @ 3.125%
FHA/VA 30 year fixed-rate @4.75%

Be advised that these rates won’t last forever…they will go up. A rate increase of 1% and if your payment was to stay the same, would mean a reduction of approximately 10% of your loan amount.

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Consumer Confidence for March 2011

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Currently at 63.4, down from 72.0 in February. In March 2009, 26.0. In March 2010, 52.5.
So as you can see, we have come a long ways. The future looks really bright.
DON’T WAIT TO BUY REAL ESTATE, BUY REAL ESTATE AND WAIT!

Source: Consumer Conference Board

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Lakehome Inventory in Alexandria, MN

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As of this morning there are 172 lakehome/cabins listed for sale in the MLS in Douglas County. In 2010, we sold and closed 100 lakehome/cabins in Douglas County. In 2009 there were 84 sales and in 2008 there were 82 sales. I’m sure that by the time the season ends that there will have been close to 250 lakehome/cabins offered for sale in the Douglas County area. If we sell 100 again, that is about 40% of the inventory that will be sold, the rest…unsold.

Source: Greater Alexandria Area Association of Realtors Multiple Listing Service

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U.S. Population…today(as best we know)

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In reading the U.S. Population clock(under www.census.gov/population) the number today stands at 311,066,702.
If you read the blog from December 22, 2010, the last census reported 308,745,238 residents. That’s where the official number stands for the last census of 2010. The census report for 2000 was that the United States population was 281,421,906.
If you read my blog of 7.19.2010, the population clock was 309,774,892.
If you read my blog of 2.15.09, the population clock was 305,849,952.

So I think that it’s safe to say that we have somewhere around 310 million people living in the United States today. That would be roughly another 30 million people since the census a decade ago.

Minnesota is around five and half million people. The growth in U.S. population in the last 10 years is like adding almost 6 Minnesota’s to the base.

If you think housing is tanked, you may want to rethink this market. This is an opportunity market, not a “cry in your beer” market. In the way that we transmit data, which is almost instantaneously, and the sheer amount of people in the world around us; I predict that market cycles will have greater highs and greater lows. Also, that the peaks and valleys will be closer together.

It is hard to not have “herd” mentality when investing. The negative connotations are consistently in your head (and your best friends head…of which they will constantly remind you of) dissuading you to a safer, alternate course. Again, I must say that this is an OPPORTUNITY MARKET unlike any I have seen in a very long time. Tomorrow’s marketplace is going to be much different than today. You look into the future and tell me what you see. I know that some of you out there have great vision. Did I ever tell you the story once asked of Hellen Keller?
Helen Keller, we all know was the blind lady who made wonderful contributions to our society. She was once asked if there was anything worse than losing one’s eyesight? She said, ” Oh yes, having eyesight and no vision is much worse.”

Take time to look out into the future. You can see it, but you have to look first.

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U.S. Economy IS IMPROVING…

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Regardless what one watches on TV, our economy is fine…however, there is risk. But, there always has been.
To say that a full-scale depression was averted I think is an understatement. I believe that the Federal Reserve is ultimately responsible for reacting as quickly as they did and moving the money supply into the market saved us. It was risky and bold, unchartered territory for the Fed, only the future will tell the rest of the story; but for now, here’s what I got…

~This morning on CNBC, they reported the Dow was up 5.5% this year already. NASDAQ was up over 3% for the year…
~In reading the Wells Fargo report this weekend, it said that “after suffering the first contraction in global GDP in 2009, the global economy came roaring back in 2010, expanding nearly five percent last year.
~Final domestic demand (final sales to consumers, business and government) in the United States rose 2.9 perent in the fourth quarter of 2010, the strongest year-over-year growth rate in nearly five years.
~The US economy has expanded for six consecutive quarters, and monthly indicators suggest that the economy continued to grow at an annualized rate of roughly three percent in the ifrst quarter.
~Real GDP has surpassed its previous peak set in Q4-2007.
~There are signs that the recovery is becoming more sself-sustaining as personal consumption expenditures and business fixed investment spending have both been growing at solid rates. Non-farm payrolls have risen by 1.3 million workers over the past year, although it will probably take a number of years to recoup all of the 8.8 million jobs that were lost during the downturn.

KEEP YOUR EYE ON THE PENDULUM

Source: Wells Fargo Securities, CNBC

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The Housing Market…National Data

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The feeds that I get are interesting…I must say that the one from Wells Fargo (it used to be from Wachovia Securities till Wells acquired them) is good. You can get on their list to receive the data…but nonetheless, the data is assimilated well so one can read it.

3.18.11 “Housing market indicators reported this week, however, continued to show weakness. Housing starts plunged 22.5 percent in February to a 479,000 unit pace, the second lowest level on record Single-family starts fell 11.8 percent (406,000) confirming that the demand for new single-family homes remains exceptionally weak. While builder sentiment is finally improving after remaining unchanged for the past four months, prosepective buyer traffic has shown little to no improvement. The oversupply of existing homes on the market and downward pressure on home prices due to foreclosures continue to give builders little incentive to significantly ramp up building activity.

Existing home sales rose 2.7 percent in January to 5.36 million, the highest level in eight months. Sales gains were driven by distressed transactions which accounted for 37 percent of total sales.”

3.25.11 “The home sales data for February were worse than expected. Existing home sales declined 9.6 percent from January to an annualized 4.88 million unit pace. The new home sales data were even worse, falling 16.9 percent to a 250,000 pace in February, an all-time record low. Home prices are falling for both existing and new homes as builders struggle to compete with a glut of distressed and foreclsoed properties coming to market.

Like a drowning swimmer, the U.S. housing market came up for air last year, only to disappear again as soon as government tax credit incentives went away. The home sales data for February were worse than expected, but given weather-related problems and the volatility in the figures due to the fourth-quarter expiration of the California housing tax credit, there is probably more stability in housing demand than the headlines declines would indicate.
Existing home sales declined 9.6 percent from january to 4.88 million. On the bright side, there was a slight upward revision in the January sales figures to 5.40 million from the previously reported 5.36 million. Existing home sales fell in all 12 regions in February with the biggest declines coming from the Midwest and the South. A large percentage of the sales activity remains in distressed properties, at 39 percent of existing home sales in February, with the share of cash transactions increasing to 33 percent. The new home sales data were even worse, falling 16.9 percent to a 250,000 pace in February, an all-time low. Home prices are falling for both existing and new homes as builders struggle to compete with a glut of distressed and foreclosed properties. Builders are reacting to this by cutting back further on building. Earlier this month, February building permits hit a new record low. Home sales and building are expected to slowly recover this year as the U.S. economy continues to expand and better sector job growth becomes visible.”

Source: National Association of Realtors, Wells Fargo, National Association of Home Builders

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Housing Starts…It is A Fantastic Market…See the Future…

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NewHomeSalesTumble.Feb.2011OPINION: “It appears that housing starts is hovering near some sort of bottom. That’s good news, because it only goes up from the bottom. Based on what I am reading, this could be a double-dip in the housing sector. Everything I read up to this point says that prices will fall first-half of 2011, before bottoming out. The stimulus monies used for tax credits, the purchasing of mortgage-backed securities by the federal government and the foreclosure mitigation process all had an “artificial” effect on what the real market is/was. Right now, we are about to find out what the real market is. This spring, we do not have any government induced tax credits…sales are lagging. Prices may be sliding some from what they could have been last year, only because of the foreclosed and short sale pricing…that trend will eventually end.
However, let’s complete the circle…the price achieved means that there is a sale. If you have any interest in building equity, home ownership, financial freedom; then this is the market to do it in. The Housing Affordability Index is the highest ever recorded. Buy Now, Lock-Up money at these low rates. Once new construction kicks in, which it will, the existing home prices will recover quickly.
INflation…again this morning, on CNBC; they emphatically restated again that inflation is coming…I believe that real estate is one of the best places to be for the average American when inflation kicks in.
One Last Word…the government has been buying literally, the bulk of the mortgage backed securities at below market rates. THAT WILL CHANGE. The government wants out of this business, the private sector will take it over when they can make a profit…the current market rates are to low for that to happen…Someday, When the rates go up…say 1%, the borrower would lose more than 10% in borrowing power if the payment was to stay the same. For instance, today: $200,000 loan at 4.75% for 30 years, the payment is $1,042.64. If the rate were changed to 5.75% the amount you could borrow with the same payment falls to $178,758….you need to consider where you are at today and the world that we will see tomorrow. Consider making a move in real estate, if only to capitalize on this interest rate environment.
The future will be different, it will change from where it is today…”

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Traffic Count for Alexandria, MN

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This is the 2006 study, best one I got…

(CLICK HERE)hopefully, we will see another one soon
Source: MnDot

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Auto Sales are Accelerating

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Data released this week showed that auto sales rose to their highest levels since the “Cash for Clunkers” program ended in in the summer of 2009. Total vehicle sales climbed to a 13.4 million annualized rate in February, a 27 percent increase from the previous year. In the United States, domestic sales in February matched the 10.2 million annualized rate seen at the height of “Cash for Clunkers”. Sales have been trending upward and will likely continue their trajectory as dealers are cautious of overbuilding inventories. Moreover, between 2000 and 2007, total sales averaged 16.8 million vehicles a year compared to 11.8 million a year since 2008, suggesting that there is some pent-up demand for new vehicles that will propel sales further throughout the year.

Retail sales at motor vehicle and parts dealers have also been on the rise. As consumers feel the economic recovery taking hold, their willingness to make large purchases is increasing. Overall confidence in the economy has improved for six consecutive months and, while historic data on “plans to buy and auto” is limited due to recent changes in it collection, the series edged up to 13.2 in February from 10.9 in January.

We (Wells Fargo) expect vehicle sales of 13.3 million for 2011.

Source: Wells Fargo Securities

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