Wendy Paulus, Cherry Creek Mortgage

143433 Resource 78724 78558 1 1159839453661 1250617448026 Controlled Financial Markets and their affect on second home purchases in Summit County

Change is afoot.

Wendy Paulus of Cherry Creek Mortgage provides our financial analysis for last week, along with a forecast.  Many of our Summit County buyers, from Breckenridge to Silverthorne, use her services. Last Week in Review>"SOME PEOPLE'S MINDS ARE LIKE CONCRETE...ALL MIXED UP, AND PERMANENTLY SET" (Anonymous.) While the great thing about the economic markets is that they are never permanently set, they are often mixed up. And last week was one of those times, on a huge batch of interesting and sometimes conflicting news and headlines. Let's take a closer look at the mix of the week, and how it impacted home loan rates.New and Existing Home Sales arrived with a conflicting read - Existing Sales a bit worse than expected, New Sales a bit better than expected - overall showing a moderate cooling in the housing sector, but no "bubble bursting". Prices appear to have flattened over the past 12 months, with some areas showing very modest increases and others showing very slight price declines.Durable Goods Orders - Bigger ticket items that last longer than three years - came in very weak, suggesting purchases are slowing down due to the higher cost of financing. But then the Purchasing Manager's Index - which rates the health of the Manufacturing sector, which makes these products - was surprisingly strong. Personal Income and Spending came in lower than expected - but Consumer Confidence and Sentiment readings were very positive. What a mix indeed...Bond prices and home loan rates bobbed around midweek on the news, but ended up almost exactly where they began.And that wasn't all - let's look at the inflation front, since it is the key driver of home loan rates...as well as being the largest determining factor on whether the Fed will decide to keep the Fed Funds Rate in a paused position, continue to hike, or revert to cuts in the near future.The Federal Reserve's favorite measure of inflation is Personal Consumption Expenditure (PCE) Price Index, which came in showing inflation still remains higher than expected, and outside the range of what the Fed wants to see. The Fed wants inflation to be 1% to 2%, on a year over year basis. And the PCE, which is the Feds most important measurement of Inflation, showed a reading of 2.5%. That's a little higher than what the Fed wants, but showing signs of moving lower. Why is the PCE so important to the Fed...and to us as well? Here's the inside scoop - take this little detail to the water cooler, and impress your friends and coworkers!PCE differs from the more widely watched CPI (Consumer Price Index) in a few important ways. CPI measures the change of the cost for a "fixed basket" of goods and services, and assumes that consumers will keep buying the exact same thing, regardless of price change, and assumes the consumer has endless resources to do so. PCE is far more accurate, because it is more realistic as to how the average shopper makes purchases. If the price of honeydew melons goes through the roof, a shopper will more than likely make substitutions, like cantaloupe...or even skip buying that item altogether, if this price has gone out of range. So let's continue to watch PCE in the months ahead to see if the Fed may be in a position to actually lower rates early next year.Forecast for the Week>The week ahead is again full of news and events, including more news on Manufacturing, a speech by Fed Chairman Ben Bernanke on Wednesday, and the important monthly Jobs Report on Friday. Because the news of last week was so mixed, the events of this week will take added significance, as traders, analysts and armchair economists try to get a gauge on what really is happening in the economy.Bond prices have been in a clear uptrend, meaning home loan rates have been in a clear downtrend...and stand at their best levels in six months. So what would need to happen to see more improvement in home loan rates? Bond prices and home loan rates tend to benefit from weak economic news, as traders and investors move money out of the Stock market, and into the stable safety of the Bond market. On the other hand, strongly positive economic news causes money to move into Stocks, and away from Bonds, which may not provide the exciting gains that the Stock market can offer in a vibrant economy.Bottom line: Weak economic news will help home loan rates improve, and strong economic news will generally cause home loan rates to worsen. Since the economic scene is a bit mixed at present with both some weak and strong indicators...the news this week will be very important, and likely provide the direction and tone for home loan rates for the near term.Visit Wendy's <a href="http://www.wendypaulus.com/" target="_blank">website</a> for more information. __________________________________________Want to buy or sell a SnowHome in Summit County?  Please visit our <a href="http://www.snowhome.com/">website</a>.  All the property listings are there.  When you live or visit here, you will know "Snow Place Like Home". 9 application/xml false bond prices Breckenridge Consumer Price Index Federal Reserve home loan rates Silverthorne stocks Summit County Wendy Paulus, Cherry Creek Mortgage Wendy's website http://www.wendypaulus.com/ Mozilla/4.0 (compatible; MSIE 8.0; Windows NT 5.1; Trident/4.0; .NET CLR 1.0.3705; .NET CLR 1.1.4322; Media Center PC 4.0; .NET CLR 2.0.50727; Zune 3.0) 127.0.0.1 127.0.0.1 $Admin 67.172.146.66 false true false false true 205866 false false true false false false true 78724 blog blogsite/SnowHome/web