Bankers hope loan trickle opens spigot

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OCALA, Fla. – April 15, 2009 – John Hunt is seeing a “trickle” of an increase in the number of people coming to his Ocala bank and asking for home mortgages.

And while a trickle doesn’t sound like much, during a time of the worst economic drought in more than half a century, a trickle could be a lifeline this spring to the county’s floundering real estate market.

“I think this increase is first-time home buyers seeing bargains and low mortgage rates and not much fear of being laid off and they’re pulling the trigger… and buying,” said Hunt, president of First Avenue National Bank.

What they’re mostly buying are homes in the $90,000 to $125,000 range, he said.

That trickle locally also was being reflected in a similar nationwide increase in mortgage requests last week, as demand for home loans jumped, according to data from the Mortgage Bankers Association (MBA) released Wednesday.

MBA is a trade organization that tracks and analyzes the mortgage industry.

MBA reported that its seasonally adjusted index of mortgage applications increased 4.7 percent. The applications include both home purchase loans and refinance loans for the week ending April 3, despite a slight increase in mortgage rates.

Bert Meadows, president of the Marion County Association of Realtors, said he’s also seen a modest increase in sales in the Ocala area.

“We’re beginning to see more people. The phone is ringing more,” he said.

“It’s not been back to normal, but at least I’ve been busy … and all the [Realtors] in South Florida I’ve talked to were getting busy again.”

The most recent home sales information for Ocala and Florida from the Florida Association of Realtors bears Meadows out.

February home sales in Ocala through registered Realtors was 166 units, up nearly 30 percent from the month before, when sales were stalled at 128 units.

The sales data also showed that home prices were dropping, which encouraged buyers to enter the market.

Median home prices in Ocala dropped from $120,400 in Dec. 2008 to $109,600 in February of this year.

Florida saw similar home sales data in February.

Florida’s existing home sales in February increased 20 percent, with a total of 9,858 homes sold compared to 8,181 sold the same month a year before, making it the sixth consecutive month that sales increased, according to the Florida Association of Realtors.

The increase in home sales locally and the uptick in mortgage applications follows the Federal Reserve announcement last month that it would buy up to $1.2 trillion in mortgage-backed securities, hoping to push down mortgage rates.

Overall mortgage applications last week were up 72.4 percent from a year ago.

Florida Association of Realtors spokeswoman Marla Martin said potential buyers should decide for themselves whether they should enter the market now, “but it can be a great time to buy in Florida. It can be a perfect opportunity for some buyers.”

Copyright © 2009 Ocala Star-Banner, Fla., Fred Hiers. Distributed by McClatchy-Tribune Information Services.

 

Source: http://www.floridarealtors.org/NewsAndEvents/n3-041509.cfm

Florida Realtors and Gov. Crist agree: ‘Now’s the time to buy’ a home in Florida

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TALLAHASSEE, Fla. – April 15, 2009 – Ten Realtors from across Florida met with Gov. Charlie Crist this morning to discuss increased home sales and other positive trends in their markets, as well as offer insight into some current issues facing the real estate industry. It’s part of this year’s Great American Realtor Days, April 14-15, when about 1,000 Realtors from throughout the state join forces at the state capital to meet with their legislators and discuss concerns affecting all Florida residents.

Representing markets from Miami to Jacksonville and all points in between, Realtors reported an upswing in existing home sales in the past three to six months, when comparing year-to-year activity and also month-to-month sales figures. John Sebree, vice president of public policy for the Florida Association of Realtors® (FAR), kicked off the Real Estate Roundtable meeting with Gov. Crist by noting that February’s statewide existing home sales rose 20 percent over the same period last year, according to FAR data. He also reported that February’s home sales were about 17 percent higher than January’s statewide sales activity.

Realtors also told the governor about other positive indicators such as: mortgage interest rates under 5 percent; reduced housing inventory levels as buyers take advantage of current, more affordable housing opportunities; and encouraging market reaction to the federal economic stimulus package, especially the new $8,000 first-time homebuyer tax credit.

Upon hearing these reports from around the state, Gov. Crist said, “It doesn’t get much better than this. [Housing] supply and demand is going to come into balance here. Two to three years from now, people will be saying, ‘Back in April 2009 I could have gotten that home for so many dollars’ – so you don’t want to wait.

“Prices have gotten as low as they can. Now is the time to buy, while the deals still exist,” the governor said.

Discussing some of the challenges in today’s market, many Realtors pointed to difficulties with so-called “short sales,” where the bank or lender agrees to accept less money on a home sale than the seller owes on the mortgage. They said that short sales are problematic not only because of how long it actually takes to finalize the sale, but also because of the inconsistencies in information and documents required by lenders. Streamlining the short-sale process and providing consistency in required documentation among the lenders would boost the recovery of Florida’s real estate market.

Solutions to ease lenders’ restrictions on the state’s condo market are also needed, said Edgewater Realtor Robert Clinton. “Not only is the prospective condo buyer having to be approved for a mortgage, but the condo owners association itself has to be approved and qualified, which is causing problems,” he said.

Largo Realtor Alan Riley told Gov. Crist that 50 percent of buyers involved in recent home sales in the Tampa Bay area paid cash for their purchases, a strong indicator that investors have returned to the housing market.

“Savvy investors have returned to our market as well,” added Eric Sain, a West Palm Beach Realtor. “But we’re also seeing a lot of young families buying a home to settle down and establish roots in the community. That’s a sign that people aren’t leaving the area, aren’t leaving Florida.”

Gov. Crist agreed, saying, “Of course they are [establishing roots] – it’s Florida. Why would they go anywhere else?”

Not only is it a great time to buy a home in Florida, it’s also a great time for businesses to move to the Sunshine State, noted Suzanne Sherer, a Fort Myers Realtor. Commercial and business properties are readily available in a range of price options, she said, providing prime opportunities for entrepreneurs. She asked the governor and state leaders to take steps to encourage the relocation of businesses and industries to Florida.

At noon today on the steps of the old Capitol, Gov. Crist addressed the crowd of nearly 1,000 Realtors participating in Great American Realtor Days, applauding their perseverance and dedication to their profession despite challenges posed by the economy and the marketplace. Amid reports of increased home sales and other positive signs, the governor said that the “changing landscape” for Florida’s real estate markets is “nothing short of remarkable.”

Other participants in Gov. Crist’s Real Estate Roundtable included: Jacksonville Realtor Millie Kanyar; Fort Lauderdale Realtor Jesse Acevedo; Miami Realtor Carlos Cruz; Port St. Lucie Realtor Scott Wingfield; Panama City Realtor Katie Patronis; and Orlando Realtor Les Simmonds.

© 2009 FLORIDA ASSOCIATION OF REALTORS

 

Source: http://www.floridarealtors.org/NewsAndEvents/n1-041509.cfm

Fla. catastrophe fund in relatively good shape

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TALLAHASSEE, Fla. (AP) – April 15, 2009 – Gov. Charlie Crist and the Florida Cabinet received a bit of encouraging news Tuesday about the state’s tenuous hurricane catastrophe fund.

The head of the agency responsible for Florida’s investments told them a loosening credit market provides the ability to bond an additional $5 billion, if needed.

“That’s good news, very good news,” said Chief Financial Officer Alex Sink. “Three or four months ago they thought we’d maybe be able to get $3 billion worth of bonds.”

Ash Williams, executive director of the State Board of Administration, said Florida could financially withstand a severe storm like Hurricane Andrew in 1992, which would cost about $22 billion today.

Crist heard the news by phone after his plane was delayed in Tampa by a tornado warning.

The Florida Hurricane Catastrophe Fund was established after Andrew to back up insurers in the event of a particularly devastating hurricane, or a quick succession of smaller ones.

It now has an exposure of more than $28 billion with less than $8 billion on hand to pay claims. The six-month 2009 hurricane season starts in less than seven weeks.

“We’re almost running out of time,” Sink said.

Sam Miller of the Florida Insurance Council cautioned state officials to continue looking for other options to ensure the “cat” fund can meet its financial obligations.

“These include the Legislature’s initiative to reduce cat fund coverage and allow insurers to buy private reinsurance,” said Miller. “They also include Insurance Commissioner Kevin McCarty’s continued efforts to negotiate a backup with the U.S. Treasury Department.”

But Williams, who has traveled to Washington with McCarty, said Tuesday that avenue looks closed without legislative intervention. Both men plan to return to the nation’s capital, where they will visit with Federal Reserve officials about the possibility of some type of guarantee to ease credit pressures.

U.S. Sen. Bill Nelson said last week he is considering legislation to provide some type of federal backup for the state.

 

Source:  http://www.floridarealtors.org/NewsAndEvents/n2-041509.cfm

Low prices lure Orlando-area home buyers

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ORLANDO, Fla. – April 14, 2009 – The Orlando area’s huge backlog of existing homes for sale shrank to a 26-month low last month as local Realtors sold 48 percent more houses and condominiums than they did a year ago.

The year-over-year improvement in resales, which extends back seven consecutive months to last September, was given a boost again in March by foreclosure-driven bargain prices. March sales of homes and condominiums in the core Orlando market rose to 1,653 this year from 1,120 a year ago, even as the median price fell nearly 38 percent to $137,000 from $220,000 in March 2008.

For the first time, the Orlando Regional Realtor Association examined “distress sales” in detail and found that 49 percent of the homes sold by its members last month were either owned by banks already or had been sold under financial pressure of some kind.

The report released Monday also revealed a wide disparity in market prices because of the large number of foreclosed properties:

• Bank-owned homes – those already through foreclosure – sold for a median price of $95,000.

• Homes for which lenders had agreed to take less than the amount owed on the mortgage – known as pre-foreclosure or “short” sales – sold for a median of $143,500.

• Homes marketed by owners not under financial duress sold for a median of $174,995.

Jeffri Moore and her husband, Alex, are among a growing number of local house hunters trying to snap up properties for deep discounts of 50 percent or more – sometimes, substantially more. For example, the east Orange County couple just submitted an offer for a condo unit in a former apartment complex near their home that was listed through a discount brokerage for $21,500. It had once been appraised for $131,000.

“We saw it, and it does need some work,” Jeffri Moore said. But the couple is planning to pay cash to avoid financing costs and to speed the process, she said, and they’re willing do most of the repair work on their own to save more money.

“We’re doing this for a family member who’s about to be homeless because they’re out of work. We don’t want to see that happen,” she said.

Mortgages prove elusive

Getting standard bank financing to buy a condo unit – particularly in a project with multiple foreclosures – is difficult if not impossible these days, even for buyers with excellent credit, incomes and steady jobs, the Moores and other prospective buyers are discovering.

The rising unemployment rate nationally and locally has added to the pressure on real-estate prices, driven downward for more than a year now by soaring foreclosure rates, which began with the meltdown of the subprime-mortgage market but spread to other financial sectors and the economy overall. Conventional mortgage lenders have tightened their lending standards as a result, particularly for condominiums and for second homes or “investment” properties.

The number of residential properties listed for purchase through the Orlando Realtors’ Multiple Listing Service, which covers mainly Orange and Seminole counties, peaked in late 2007 at more than 26,000. Last month, the local inventory stood at 21,448 homes, down by 720 from February and 15.8 percent lower than in March 2008. The last time the inventory was lower: January 2007.

Combined with the improvement in monthly sales, that means the inventory, as measured by “months of supply,” is shrinking even faster: It fell from 16.77 months in February to 12.98 months in March – far below its peak of 31.64 in January 2008 and the lowest it has been since December 2006.

Prices at 2003 levels

The March median sale price of $137,000 in the Orlando Realtors’ core market is the lowest for that measure since January 2003. The 1,653 sales in March are the most since May 2007. Pending sales, meanwhile, were up more than 100 percent last month, with 4,906 homes under contract compared with 2,398 a year ago.

“Orlando home buyers are getting back into the market and taking advantage of improved affordability,” Les Simmonds, president of the Orlando Realtors group, said in Monday’s report.

Simmonds, president of L.G. Simmonds Real Estate Corp. in Longwood, said record-low mortgage rates are helping fuel the improved sales. The 4.67 percent average in March for 30-year fixed-rate loans was the lowest on record, Simmonds noted, though rates inched up slightly last week.

 

Source: http://www.floridarealtors.org/NewsAndEvents/n2-041409.cfm

System alerts renters if home is in foreclosure

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TAMPA – April 6, 2009 – Hundreds of thousands of renters nationwide are at risk of being evicted, even though they’ve never missed a rent payment.

Most don’t find out until the police arrive to evict them after the home is lost in foreclosure.

So RealtyTrac, the California-based company that sells foreclosure information to investors, is launching a new system, RealtyTrac Renter Alerts. For $25 a year, a renter can have their address monitored.

Some landlords collect rent even though they’re not paying the mortgage. Under RealtyTrac’s system, as soon as the mortgage enters into default in the court system, the renter would be notified by e-mail.

The site also lets renters research properties to make sure they aren’t already in foreclosure.

Company executives say states such as Florida could benefit the most from such a system because the foreclosure rate is so high.

The Sunshine State had the fourth-highest foreclosure rate among all states in February, and the Tampa Bay area ranked 28th among the country’s metro areas for its filings, RealtyTrac said.

Florida’s foreclosure activity – default notices, auction sale notices and bank repossessions – increased 43 percent from February 2008.

The company’s renter Web site is at www.renter.realtytrac.com.

Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.

Strengthen your credit score

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MIAMI – April 6, 2009 – Four months ago, one of loan originator Gisela Sauzo’s clients settled on the perfect home for herself and her two children.

The single-family house in Miramar would have been a welcome change from apartment life. Although her credit wasn’t perfect – last December her credit score registered at 600 – it was high enough to secure a mortgage.

So she thought.

Four months later, Sauzo said the deal fell through because, in that time, her client’s credit score dropped to a 580. Her client – expecting to move into the home – didn’t renew the lease on her apartment and moved in with family. Her children are temporarily staying with her ex-husband.

Sauzo’s client isn’t alone. Across the country, mortgages are slipping through the fingers of potential borrowers because lending rules are getting stricter.

People with even above-average credit may have trouble getting loans.

For Sauzo’s client, the reason the score dropped is a mystery.

“It’s been an unpleasant ride,” Sauzo said. “I’m so upset about all of this – she’s a sweet lady.”

But as more people face unemployment or decreased wages, foreclosure or even bankruptcy, creditors are demanding the one thing people may struggle to hold onto in this economy: really good credit.

In the Miami-Fort Lauderdale metropolitan area, credit scores dropped about 13 points from the middle of 2005 to the end of 2008, according to the credit bureau Experian.

It’s a region of the country with some of the highest growth in credit card balances during the same time period, Experian spokeswoman Susan Thomas said.

Credit scores and credit reports, however, still rely on a formula that gives the most weight to punctual bill-paying and the amount of an individual’s debt. So some credit experts say that whatever your financial situation may be now, it’s important to keep your credit intact.

“Eventually, this storm will pass,” said Howard Dvorkin, founder of the nonprofit Consolidated Credit Counseling Services, which is based in Fort Lauderdale. “When it does, people are going to need their credit. At least for the next five years, there’s going to be very, very strict lending requirements.”

The most common type of credit score – called FICO – is based on a scale from 300 to 850.

But even people who had what was once considered a fairly solid credit score – more than 700 – will face extra fees if they are attempting to get a mortgage backed by Fannie Mae or Freddie Mac, said Kenneth Harney, executive director of the National Real Estate Development Center. For example, Harney said, a buyer with a 699 FICO score who has a downpayment of about 25 percent at closing will pay a 1.5 percent delivery fee under new guidelines that became effective Wednesday.

The lower the score, the greater the fees and the larger downpayment lenders are requiring.

“It stands to reason that during recessions, people have more problems meeting their credit responsibilities and that pushes down credit scores,” Harney said. “Then you have creditors and lenders of all types making it tougher to get credit.

“It’s a real squeeze there,” he said.

The alternative, of course, is for hopeful homebuyers to get loans backed by the Federal Housing Administration, but those typically require paying for mortgage insurance and come with higher interest rates.

Poor credit could also hurt those trying to find jobs and loans now and in the future. For example, the last time the Society for Human Resource Management surveyed employers in 2006, 42 percent of them said they check prospective employees’ credit reports before giving them a job.

And many auto insurance companies consider credit scores when setting rates. Bills moving through the Florida Legislature aim to curb this practice.

With good credit becoming more critical than ever, the definition of what defines a good credit score is changing.

‘The lenders are saying ‘We’re interpreting the scores differently,’ “ said Jeff Isaac, a San Diego attorney and money management expert with radio and television shows.

“Now a 680 is a higher risk than we used to think it was,” he said.

Fundamentally, credit scores are still the same, said Angela Granger, vice president of analytics at Experian, one of the three major credit bureaus. The others are Equifax and TransUnion.

“A 700 is still better than 500,” she said. “But it may be a little worse than a 700 was two years ago.”

Copyright © 2009 The Miami Herald, Nirvi Shah. Distributed by McClatchy-Tribune Information Services

Mortgage rates at record low for second week

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WASHINGTON – April 3, 2009 – Rates on 30-year mortgages fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market.

Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week, from 4.85 percent last week.

It was the lowest in the history of Freddie Mac’s survey, which dates back to 1971. Rates are down by more than a full percentage point from a year ago.

“Mortgage rates followed other interest rates lower this week amid reports of slower economic growth” Frank Nothaft, Freddie Mac vice president and chief economist, said in a prepared statement.

Low rates have sparked a surge in refinancing activity. The Mortgage Bankers Association said Wednesday its weekly application index climbed 3 percent for the week ended March 27, on top of a 30 percent increase a week earlier. Nearly 80 percent of applications came from borrowers seeking to refinance.

Mortgage rates fell dramatically over the winter and have fallen further after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans.

Lenders, however, have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

The average rate on a 15-year fixed-rate mortgage dropped to 4.52 percent this week, from 4.58 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages fell to 4.92 percent, compared with 4.96 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.75 percent, from 4.85 percent.

The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac’s survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.

Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Breakout: Mortgage Rate Trend Index
Well over half (64 percent) of mortgage industry experts polled by Bankrate.com this week expect mortgage rates to remain relatively stable for the next 30 to 45 days. While 29 percent predict an increase, only 7 percent foresee additional declines.

Real estate pros want pre-approval short sale program to continue

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MANATEE COUNTY, Fla. – April 3, 2009 – Area real-estate professionals are hoping Fannie Mae continues a limited pilot program aimed at facilitating short sales, especially as local foreclosure filings continue to hit record highs.

Since its January launch, the program has prevented at least a handful of homes in 11 Florida counties – including Manatee and Sarasota – from falling into foreclosure by making it easier to sell them for less than their outstanding mortgages.

The project initially was scheduled to last three months, but officials with a regional listing service said Wednesday they’re hoping to persuade Fannie Mae to extend it.

“We’re very excited about the project, and we’d like to see it continue,” said John Weeden, marketing manager for the Mid-Florida Regional Multiple Listing Service, which is collaborating on the pilot program and is scheduled to update Fannie Mae on its progress next week.

About 300 Florida homes are in the program, which streamlines the short sale process by getting all necessary approvals and property research done beforehand. A short sale is one in which the lender – Fannie Mae for homes in the pilot program – agrees to accept less than what is owed on the home to avoid the costs of foreclosure.

Weeden said he did not know how many short sales have closed through the program, which applies only to homes with Fannie Mae mortgages.

Quicksilver Real Estate Group Inc., a Tampa firm with an office in Bradenton, has closed three and has two others pending, broker/owner Linn Wyllie said. Those sales have come together in a matter of weeks as opposed to the several months or longer that a typical short sale can take, he said.

“It’s huge for the industry,” Wyllie said of the pilot program’s time savings.

Fannie Mae, officially known as the Federal National Mortgage Association, also launched a similar program in the Phoenix area.

The program didn’t prevent lenders from maintaining their record pace of foreclosure filings in Manatee, however. Lenders filed 608 foreclosure suits in Manatee County Circuit Court in March, the highest monthly total ever, court records show.

There have been 1,653 foreclosure actions filed through the first three months of 2008, up 33 percent from the 1,241 filed during the same period a year earlier. At that pace, last year’s record of 5,592 foreclosure filings will be broken in September.

For the third straight month, more primary homes than seasonal, vacation and rental homes fell into foreclosure: 54 percent were homesteaded, while 46 percent were not. That’s largely the result of mounting job losses and indicates foreclosures likely will remain high as the county’s unemployment rate worsens, experts said.

 

Source: http://www.floridarealtors.org/NewsAndEvents/n2-040309.cfm

Broker price opinions contributing to downward spiral?

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WASHINGTON – April 2, 2007 – The National Community Reinvestment Coalition and real estate appraisal associations testified before the House Subcommittee on Financial Institutions and Consumer Credit on March 11, saying that broker price opinions (BPOs) are hurting property values nationwide.

More realty practitioners have been doing BPOs due to an increase in foreclosures and short sales, and they insist their estimates are accurate due to their comprehensive knowledge of the local market. However, some groups say agents low-ball BPOs in order to expedite sales; and they insist that this tactic pushes down neighborhood residential values because appraisers must take both recent listing prices and closed sales prices into consideration when valuing properties.

Those who testified at the subcommittee hearing want Congress to prohibit the use of BPOs as substitutes for appraisals in transactions involving distressed properties, noting that 23 states make it illegal for agents to sell BPOs.

The National Association of Realtors® plans to release a statement on the issue in May.

Source: Chicago Daily Herald (03/27/09) Harney, Ken

Hopeful signs emerge at end of ugly quarter

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CHICAGO (AP) – April 2, 2009 – Even with a promising finish, the best thing that can be said about the first quarter is it’s over. Even a dramatic rise in March wasn’t enough to prevent the market from falling for the sixth consecutive quarter.

Despite intensive government efforts to stem the decline, the U.S. recession deepened in the first three months of 2009, unemployment surged to a 25-year high and consumer confidence hit an all-time low. And the Standard & Poor’s 500 index ended the quarter down 11.7 percent from the start of the year.

“It was a terrible quarter,” said Alan Skrainka, chief market strategist for St. Louis-based investment Edward Jones. “All indications are the economy dropped just as much in the first quarter as in the fourth quarter of last year.”

Yet whether or not the slump deepens, there may be some comfort in the statistical likelihood that the downturn is closer to the end than the beginning. The recession that began in December 2007 was 15 months old at quarter’s end, a month shy of the postwar-record recessions of 1974 and 1981. What’s more, April 9 will mark 18 months since the start of the bear market.

“The passage of time is important,” said Art Hogan, chief market analyst at Jefferies & Co. in Boston. “We’ve gotten through 15 to 18 months of this down cycle, and that’s been something that doesn’t get enough attention.”

There are other hopeful signs.

The Associated Press asked three market strategists to review the first quarter and provide their outlooks. Here are some highlights:

Economy

The consensus of economy-watchers can be summed up by the baseball fan’s byword, “Wait ‘til next year.”

The experts don’t expect any meaningful recovery this year. Liz Ann Sonders, chief investment strategist for brokerage Charles Schwab & Co., thinks the recession will end in the third quarter. But putting the brakes on the downturn isn’t the same as hitting the accelerator.

Similarly, Hogan doesn’t see actual growth in the gross domestic product, the broadest measure of the nation’s economy, until the first half of 2010.

Nevertheless, they were heartened by the fact that the onslaught of negative economic news slowed a bit toward the quarter’s end.

Glimmers of hope that emerged amid the gloom: Orders for costly manufactured goods and new-home sales both registered unexpected gains in February, and retail sales dipped less than expected. Consumer spending turned back up in January and February.

“The outlook for the economy is getting better,” said Hogan. “That’s the first quarter we can say that in quite some time. It certainly wasn’t the case in the third and fourth quarters of last year.”

Some economic indicators such as income and industrial output slipped lower in February. But the overall picture for key measures, while still weak, wasn’t as bad as it had been.

“We’re still in the basement, but we may be on the steps out of the basement,” Sonders said.

The three strategists also think the Obama administration removed uncertainty hanging over the market by laying out its major economic recovery plans by the quarter’s end.

Unemployment and consumer confidence

High joblessness and a lack of consumer confidence are linked, and there’s a long way to go for both before the economy stabilizes.

The unemployment rate reached 8.1 percent in the quarter, the highest in more than 25 years, and many economists expect it to reach 10 percent by year’s end.

Hogan thinks the rate could keep rising until the second half of 2010, especially if GDP doesn’t show sustained strength until next year.

“It’s important to remember that the unemployment situation, as in all down cycles, will get worse even as the economy gets better,” he said. “Corporate America is reluctant to start new hires unless they’ve seen a string of quarters put together where we’re seeing improvement in the economy.”

The consumer confidence index, seen as a critical factor in turning the economy around, fell to an all-time low during the quarter.

A recent uptick in sales has laid the foundation to improve confidence, Skrainka said.

“It helped that we had our bank CEOs coming out and talking about how they’ll be profitable this year, (Federal Reserve Chairman) Ben Bernanke saying forcefully that he’ll do everything it takes, President (Barack) Obama saying it’s a good time to buy stocks,” he said. “I think as confidence spreads, people will spend a little more.”

Housing

The long-moribund housing market showed signs of life as the quarter came to a close.

Government intervention in credit markets helped nudge rates on fixed-rate 30-year mortgages to a record-low 4.85 percent, spurring a refinancing rush and new interest in home purchases. House prices rose 1.7 percent in January to end a months-long losing streak.

Housing starts and sales of new and existing homes all fared better than expected in the latest reports, although the slump can’t be declared over.

Hogan said there still are plenty of pending foreclosures left to hit the market, adding to an already-large inventory of residential real estate. But he said it’s noteworthy just that the housing market is not getting worse.

Nationwide, housing prices probably still have another 10 percent to 15 percent to fall, Sonders estimated.

Still, she said: “We’re starting to see a light at the end of the tunnel.”

Stock market

When the S&P 500 sank to 676 on March 9, it marked a 58 percent drop in the index since the bear market began — and a stunning 25 percent drop since the start of the year.

A sharp rebound in the following days left market-watchers hesitant to declare the bear’s demise, but somewhat confident the bottom had been reached.

“We’ve had a volatile year already and we’ve only gone through a quarter,” said Hogan. “We have probably seen the lows in the marketplace.”

He predicted the S&P will finish the year up 5 percent to 10 percent from where it began, albeit only after the market endures more fits and starts.

Sonders put the chances at “better than even” that the March 9 low turns out to be the bottom. She cited more promising technical signs than existed previously and a “mountain” of cash that investors have parked on the sidelines that stands ready to be to put back into equities.

Still, Skrainka said investors shouldn’t get too caught up in stocks’ short-term outlook.

The market’s potential looks more appealing now, particularly for the long haul. Skrainka said he likes to look at the S&P’s returns over 10-year periods, and it is certainly due to rise after declining by 1.4 percent from 1999 through 2008. The historic average return is a return of 6 percent to 7 percent after inflation.

“It wouldn’t surprise me if we were positive for the year,” he said. “But we really try to emphasize the importance of investing for the long term.”

 

Source: http://www.floridarealtors.org/NewsAndEvents/n1-040209.cfm