Ed Dorame

Loan Production Manager

MLO 57774

Over 21 years experience!

Direct Line: 206-510-2118

Email: ed@gmseattle.com

www.guaranteemtg.com/eddorame

555 Dayton Street, Suite A1

Edmonds, WA  98020

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

http://youtu.be/RCSlO4GBUCg

For the week of February 25, 2013 – Vol. 11, Issue 8

>> Market Update

QUOTE OF THE WEEK... "Energy and persistence conquer all things."--Benjamin Franklin

INFO THAT HITS US WHERE WE LIVE... All who work in the housing market, from realtors to builders to lenders, have certainly shown energy and persistence. Although we're now in recovery, it's at a slow pace, so those qualities are still needed to keep things moving along. But the signs are encouraging, as January Existing Home Sales were up a tick to an annual rate just under 5 million units. Sales are up 9.1% from a year ago, the median price of an existing home is up 12.3% versus a year ago, and the supply is now down to 4.2 months.

Housing Starts were down 8.5% in January, but, remember, they shot up 15.7% in December. They're still running at a not bad 890,000 unit annual rate. Also, the January drop was all due to the volatile multi-family sector, as single-family starts were at their highest level since 2008, up 20% from a year ago.Builders are optimistic, as building permits went up 1.8% in January and are now up 35% from a year ago. Fannie Mae's monthly economic outlook reported that home price growth and the increase in home building suggest that housing is "on a sustained growth path." Gotta love that word "sustained."

BUSINESS TIP OF THE WEEK... Successful people love what they do, trust their intuition, and are good at finding solutions. Once they understand a problem, they revel in using their intellect, inspiration, and observations to solve it.

>> Review of Last Week

WANING ENTHUSIASM... Following Presidents' Day Monday, there were only four days of trading, not nearly enough time for investors to get up much enthusiasm for stocks. The Dow held steady, but the S&P 500 ended its seven-week winning streak, while the Nasdaq took a deeper dive. Economic reports went from in-line to disappointing. The minutes from the last Fed meeting revealed Committee members didn't see much change to the economic outlook. And many are worried about the economic impact of spending cuts when the sequester kicks in March 1 unless Congress reaches a compromise.

The Philadelphia Fed Index of manufacturing activity in that region fell to –12.5 in February from –5.8 the month before. Inflation still seems under control with January PPI producer (read wholesale) prices up just 1.4% in the past year. The CPI showed consumer prices unchanged in January, up 1.6% from a year ago. Core CPI, excluding volatile food and energy prices, was up 0.3% in January and is up 1.9% versus a year ago. This is still within Fed guidelines. Best news in the report was that inflation-adjusted hourly earnings were up in January and are up the last three months at a 4.4% annual rate.

The week ended with the Dow up 0.1%, to 14001; the S&P 500 down 0.3%, to 1516; and the Nasdaq down 0.9%, to 3162.

With the S&P 500 drifting downward, Treasuries rallied as investors sought the safe heaven of bonds. The FNMA 3.5% bond we watch ended the week up .01, at $105.09. The national average 30-year fixed rate mortgage was up a smidge in Freddie Mac's Weekly Survey, though rates still remain near historical lows. Freddie Mac's chief economist commented, "Mortgage rates have been relatively stable, hovering near record lows, for the past four weeks, which is helping to spur new home construction."

DID YOU KNOW?... The Census Bureau reported the vacancy rate for homeowner housing was down to 1.9% in Q4 of 2012, a level not seen since 2006, before the peak of the housing boom.

>> This Week’s Forecast

NEW AND PENDING HOME SALES, MANUFACTURING, GDP... We'll get more on the housing recovery, which appears to be proceeding, albeit slowly, with both January New Home Sales and Pending Home Sales expected up for another month. Manufacturing is forecast down a little in February, although both the Chicago PMI and ISM Index are predicted to remain in expansion territory.

We'll get the GDP – Q4 Second Estimate on Thursday and, happily, it's expected to be showing some growth in the economy, versus the contraction reported in the Q4 Initial Estimate. We should also look at the Core PCE Prices inflation reading on Friday, which is forecast still under control.

>> The Week’s Economic Indicator Calendar

>> Federal Reserve Watch

Forecasting Federal Reserve policy changes in coming months... The consensus so far among economists is that the Fed will keep the Funds Rate super low for quite some time. 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%