Opening job market and housing market
The job market is finally opening with the help of the Census job which contributes half of the 126K employed workers. Also Jan and Feb's employment data have been adjusted upward. That is what Pres. Obama labelled as "rare good news". Rare or not, it is good news. Since the census will remain for a while, so we would expect this good news will last. This likely pops the market next week to propel it to 11,000 mark and stay there short.
At the same time, media is, again, spread the threat of Fed's tightening credit policy. That is true that the Feb will close the tap, so as other entities. That implies the bear isn't doing nothing. We have been accustomed to such tones in 2010. The rally in 2010 seems not so certain compared to the one in 2009 (well, there were argues about shapes, W, L, V in 2009, whatever). Whenever good news came, e.g., on job data, housing, factory order, pay roll, etc, naysayers will come. Rate rises will press the equity and bond market on both sides. That is not good.
So what to do in the rest of the year?
The only thing is less negative is the housing market. That is, there is no more further negative. Prices have been dropping for 2 years and may be still on that trail but slowly bottom out. Four areas have seen uptick housing market in 2010. The rate is remaining low. One caveat is that as the incentive is expiring soon at the end of this month, we will see the trend more clear after that. Two possibilities:
First, the first-time home owner incentive expires and mortgage rate rises so that the general market will be flat. One of the two main driving power of the housing market, that is, first-time home buyers will leave the market. The other one, investors, won't be affected by this policy too much, will remain. The ones what have lost their houses are not going to buy houses that soon. The ones who foreclosed can't buy within 5 years. So only the rental market is opening. We are focusing on the residential real estate market. Prices should be stable for the rest of the year.
The other possibility is that more foreclosures are put in the market because banks need to clean up their books after tightened credits and mortgage resets. Even this case does occur, investor driven RE seems be able to absorb, at least in robust areas such as California. This is less likely because banks are working to alleviate their books. Bank of America started to lower 30% of struggling home owners' mortgage. Others will be expected to follow. So we think the housing market basically *IS* the bottom.
In all, a safe place to go now is real estate.
At the same time, media is, again, spread the threat of Fed's tightening credit policy. That is true that the Feb will close the tap, so as other entities. That implies the bear isn't doing nothing. We have been accustomed to such tones in 2010. The rally in 2010 seems not so certain compared to the one in 2009 (well, there were argues about shapes, W, L, V in 2009, whatever). Whenever good news came, e.g., on job data, housing, factory order, pay roll, etc, naysayers will come. Rate rises will press the equity and bond market on both sides. That is not good.
So what to do in the rest of the year?
The only thing is less negative is the housing market. That is, there is no more further negative. Prices have been dropping for 2 years and may be still on that trail but slowly bottom out. Four areas have seen uptick housing market in 2010. The rate is remaining low. One caveat is that as the incentive is expiring soon at the end of this month, we will see the trend more clear after that. Two possibilities:
First, the first-time home owner incentive expires and mortgage rate rises so that the general market will be flat. One of the two main driving power of the housing market, that is, first-time home buyers will leave the market. The other one, investors, won't be affected by this policy too much, will remain. The ones what have lost their houses are not going to buy houses that soon. The ones who foreclosed can't buy within 5 years. So only the rental market is opening. We are focusing on the residential real estate market. Prices should be stable for the rest of the year.
The other possibility is that more foreclosures are put in the market because banks need to clean up their books after tightened credits and mortgage resets. Even this case does occur, investor driven RE seems be able to absorb, at least in robust areas such as California. This is less likely because banks are working to alleviate their books. Bank of America started to lower 30% of struggling home owners' mortgage. Others will be expected to follow. So we think the housing market basically *IS* the bottom.
In all, a safe place to go now is real estate.
posted by Intl.investment.services at
8:06 AM
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