Ed Dorame

Loan Production Manager

Guarantee Home Mortgage

MLO-57774

Direct Line: 206-510-2118

Email:  ed@gmseattle.com

www.guaranteemtg.com/eddorame

To find out more about Ed and Guarantee Mortgage, click on link:

http://youtu.be/RCSlO4GBUCg

For the week of February 18, 2013 – Vol. 11, Issue 7

>> Market Update

QUOTE OF THE WEEK... "Sometimes we stare so long at a door that is closing that we seek too late the one that is open."--Alexander Graham Bell, American inventor

INFO THAT HITS US WHERE WE LIVE... There is more and more evidence that the door of opportunity is opening in the housing market. On Valentine's Day Freddie Mac showed us some love in their Housing Market Outlook, which projected starts UP 22% this year, to a 950,000 unit annual rate. Their chief economist commented, "Across the nation, most local housing markets have room for sustainable growth.... As the broader economy heals, expect to see more good news, with house prices continuing their recent upward trend, and home sales and housing starts continuing to post strong growth rates."

Not to be outdone, the National Association of Realtors (NAR) reported Monday that the recovery in real estate values is picking up steam. Median home sale prices were UP 10% in Q4 over last year and 133 of 152 metro areas posted yearly gains, versus just 29 metro areas a year ago. The NAR's chief economist commented, "Home sales are on a sustained uptrend...fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising."

BUSINESS TIP OF THE WEEK... With social networks, focus on building a manageable number of meaningful connections, instead of going for hundreds of weak connections. Seek quality, not quantity.

>> Review of Last Week

WALL STREET'S POKER FACE... It was hard to gauge the mood of investors last week. One stock index was up and two were down. The up one was the broadly-based S&P 500, now posting gains seven weeks in a row for the first time in over two years. But these up and down moves were so small, they revealed nothing about investors' economic feelings. They may be simply bracing for a correction, which could be triggered by the sequestration -- the automatic spending cuts now scheduled for March 1 if Washington can't come up with a deal.

The economic reports should have made people feel better. Retail Sales, NY Empire Manufacturing, and Michigan Consumer Sentiment all came in meeting or beating expectations. The only one that missed was Industrial Production, down 0.1% in January, but November and December were revised upward considerably. Weekly jobless claims dropped to 341,000 and continuing claims dipped to 3.11 million. These figures have some economists expecting moderate growth in payrolls for February.

The week ended with the Dow down 0.1%, to 13982; the S&P 500 UP 0.1%, to 1520; and the Nasdaq down 0.1%, to 3192.

The positive economic data created selling pressure in the bond markets, pushing prices lower. The FNMA 3.5% bond we watch ended the week down .05, at $105.08. Freddie Mac's Weekly Surveyshowed national average mortgage rates holding near historical lows, the 30-year fixed rate unchanged for the third week in a row. The Mortgage Bankers Association reported demand for purchase loans UP 15% from a year ago.

DID YOU KNOW?... "Crowd funding" is the process of raising money for an organization or project from a large number of individual investors, typically through the Internet.

>> This Week’s Forecast

INFLATION, HOUSING, AND THE FED'S MINDSET... Among inflation readings, the Fed watches Core PPI for wholesale and Core CPI for consumer prices, which exclude volatile food and energy , and those are forecast in safe territory. Homebuilders chime in with January Housing Starts perhaps down a tad, and Building Permits, up. January Existing Home Sales should hold just under 5 million units annually.

The Fed's mindset at their lastmeeting will be revealed when the FOMC Minutes are released. These will be parsed by the pundits for the central bank's take on the economy.Financial markets close Monday, February 18, in observance of Presidents' Day.

>> The Week’s Economic Indicator Calendar

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months... Unless we hear anything to the contrary in the Fed Minutes this week, economists see the Fed keeping the Funds Rate super low for quite a bit longer. Note: In the lower chart, a 1% probability of change is a 99% certainty the rate will stay the same.

Current Fed Funds Rate: 0%–0.25%