During the 4th of July holiday I read several articles pertaining to the housing market and over all economy and wanted to share it with you and not all bad news.

We all know family, friends and business partners struggling in this economy and its good to be updated and informed on what’s going on.

If you like the information, please comment and share it.

To Your Success,

Lo

Economists Sound Housing Warning on Post-Stimulus Recovery
by DIANA GOLOBAY

The US economy appears to be “in trouble” as the effects of significant government stimulus are already wearing off, according to TrimTabs Investment Research commentary over the Independence Day weekend.

As stimulus effects fade, consumer demand recedes with it. And with unemployment figures still high, the economy looks to be in for continued distress in the back half of 2010.

TrimTabs CEO Charles Biderman and executive vice president David Santschi, in commentary Sunday, countered the idea that a double-dip recession is “highly unlikely” due to its historical rarity. A double dip occurred three times over the last 150 years, the firm noted, but each recovery was partly characterized by an influx of demand.

Biderman and Santschi said a recovery from the current recession will not be attributed to the government’s unprecedented stimulus policies, since no other economic recovery was sourced almost entirely by government stimulus. Historical recoveries benefited at least in part, they said, by pent-up demand for housing and other hard goods — purchases of which were constrained during times of recession.

The current recession, however, resulted in stimulus efforts like the Obama Administration’s first-time homebuyer tax credit, which encouraged house purchases with tax credits of up to $8,000.

The deadline for qualifying home buyers to enter a sales contract passed at the end of April, and Obama last week signed an extension of the closing deadline to September 30, from the previous June 30 deadline. Despite the extension, pending home sales plummeted 30% in May after the contract deadline passed — indicating first-time buyer demand for houses may already have dried up.

The 30% drop in May followed a 6% jump a month earlier, according to research from outlook and commentary services firm Econoday:

“After the plunge in new home sales in May following the expiration of the sale deadline for the special homebuyer tax credit, it was no surprise that pending existing home sales also plummeted. But to many, the size was,” said Econoday senior economist Mark Rogers.

TrimTabs’ Biderman and Santschi wrote: “There is no pent-up demand for housing or other hard goods to source a lasting recovery.”

Unemployment and constrained wage growth further indicate the economy may be in hot water, according to TrimTabs. Based on tax withholdings, the firm estimates wages and salaries rose just 1.3% in June from a year earlier. At the same time, the Census Bureau laid off an estimated 243,000 temporary workers, weighing on an already underemployed labor force.

Things are likely to get worse in the economy in the second half of 2010, mainly due to unemployment and tax circumstances, TrimTabs said.

The firm noted that states and cities are likely to lay off hundreds of thousands of employees in the face of a $260bn budget deficit for the states in the next two fiscal years. Additionally, tax hikes in 2011 could discourage investment — and may even trigger waves of asset sales — in Q410, the firm said.

Weekly Mortgage Applications Rise 6.7%: MBA
by DIANA GOLOBAY

The volume of mortgage applications submitted weekly rose 6.7% in the week ending July 2, according to the Mortgage Bankers Association (MBA).

The amount of applications submitted for refinance jumped 9.2% to the highest volume in more than a year, since the week ending May 15, 2009. The uptick in refinance interest brings the refi share of total applications to 78.7%, from 76.8% a week earlier.

“Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated,” said MBA vice president of research and economics, Michael Fratantoni, in a statement. “As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high.”

At the same time, the amount of applications submitted for purchase mortgages fell 2%, marking the eighth weekly decline out of the last nine weeks.

In the month of June alone, MBA found that purchase applications plummeted nearly 15% from a moth earlier and more than 30% from April, the last month for prospective buyers to enter a sales contract in order to qualify for the first-time homebuyer tax credit, according to Fratantoni.

The share of applications specifically for adjustable-rate mortgages rose to 5.4% from 4.7% a week earlier, according to MBA.

The Mortgage Maxx index, which adjusts data to reflect the number of households applying for a mortgage, found 7.1% more households submitted applications than the week before.