Cherry blossoms sprouting around the Washington, DC area were a sure sign that spring had arrived after a cold winter. As these flowers were in full bloom, the U.S. Department of Labor released the employment report for March: Unemployment declined for the fourth straight month to 8.8 percent, and net employment sprung up by 216,000, the largest monthly job gain since last May and a hopeful signal that the labor market was warming up. On a March-over-March basis, employment was up by 1.3 million.The March employment spurt was largely reflected in several service-providing industries, mining, and manufacturing. In contrast, local government employment was down again, and construction and real estate employment remained weak. Construction jobs have largely trended downward over the past five years, with total construction employment down nearly 30 percent from its peak in April 2006. Likewise, jobs in the real estate industry (which is distinct from construction in the Labor Department’s count) remain more than 100,000 below (7 percent less than) the peak during the spring of 2006. While the monthly job gains for this sector have been weak and inconsistent, nonetheless real estate employment was up by 10,000 since last November.

The housing market may also be poised to shake off the frigid sales pace of January and February, when new home sales slipped to the lowest pace since the Census Bureau began the series in 1963. Driven by low mortgage rates and home prices well below peaks, homebuyer affordability is at the highest level in at least forty years, according to the National Association of Realtors®. 

Indeed, sales contract signings for existing homes were up in February, positioning the market for a bounce up in settlements during the second quarter, the traditional time for the seasonal upswing in sales. interest rates will inch higher over 2011, reducing the financial gain and incentive to refinance. The rental market should continue to have gradually warmer market conditions as well, with rents continuing to pickup and vacancies dipping on class-A properties and in stronger metro areas. Rents and vacancy rates are also stabilizing for most other properties and locales.

The encouraging labor market report coupled with high homebuyer affordability should translate into a home-sales pick up, starting this spring. Sales comparisons with a year ago wil lunderstate sales growth, because these comparisons are affected by the 2010 tax-credit that helped to bring many buyers into the market through last April. Look for home sales to be up about 5 percent in 2011 compared with 2010, on a calendar year basis.

With the Federal Reserve maintaining its accommodative monetary policy and Treasury note purchase program, short-term rates will remain low and supportive of household borrowing.  The coupon difference between 30-year and 15-year fixed-rate mortgages has gradually widened to about three-quarters of a percentage point, in part reflecting the lower yields on shorter-term instruments. Homebuyers generally opt for 30-year financing, while borrowers who refinance tend to choose 15-year (and to a lesser extent, 20-year) fixed-rate loans. Refinancers not only benefit from the much lower interest rate on 15-year loans, but the faster amortization schedule means they accumulate home equity wealth more quickly.  While refinance continues to account for over two-thirds of all loan applications, it will likely account for a much smaller share later this year, for two important reasons. First, the number of borrowers who are “in-the-money” and financially positioned to refinance falls with each passing week, as more close on their new low-rate loan. Second, the consensus view is that long-term

So expect the economy and housing market to follow the cherry trees’ lead: Shake off the cold and show a bit of spring in activity.

http://www.freddiemac.com/news/finance/docs/Apr_2011_public_outlook.pdf

Frank E. Nothaft

Chief Economist

Opinions, estimates, forecasts and other views contained in this document are those of Freddie Mac’s Office of the Chief Economist, do not necessarily represent the views of Freddie Mac or its management, should not be construed as indicating Freddie Mac’s business prospects or expected results, and are subject to change without notice. Although the Office of the Chief Economist attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. The information is therefore provided on an “as is” basis, with no warranties of any kind whatsoever.

Information from this document may be used with proper attribution. Alteration of this document is strictly prohibited.

© 2011 by Freddie Mac.

Hawaii jobless rate holds at 6.3 percent

By Dave Segal
Article from: Star-Advertiser

Hawaii’s seasonally adjusted unemployment rate remained at 6.3 percent in March for the third straight month, according to data released today by the state Department of Labor and Industrial Relations.

The trade, transportation and utilities grouping comprised the greatest job growth, expanding by 900 jobs from February. Government jobs fell by 1,100.

Hawaii’s labor force grew to 633,950 from 631,900 in the previous month with those employed rising to 594,000 from 591,950 and those unemployed remaining flat at 39,950.

A year earlier, Hawaii’s unemployment rate was at 6.8 percent.

The state still continues to far outpace the U.S., which had an unemployment rate of 8.8 percent in March.

For the counties, whose numbers are calculated on a not-seasonally adjusted basis, Honolulu fell to 5.1 percent from 5.3 percent in February, Hawaii County remained at 9.5 percent, Kauai fell to 8.5 percent from 8.6 percent and Maui County declined to 7.8 percent from 8 percent.

Separately in Maui County, the island of Maui fell to 7.8 percent from 7.9 percent, Molokai dropped to 10.8 percent from 11.1 percent and Lanai declined to 5.4 percent from 5.8 percent.

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Foreclosure counts expected to rebound

Lenders will soon resume processing of delinquencies

By Andrew Gomes
Article from: Star-Advertiser

It’s been relatively calm on Hawaii’s home foreclosure front during the past several months, but the storm could soon return.

Foreclosure activity in Hawaii real estate declined for a fourth consecutive month in March, falling 37 percent from a year earlier, according to a report industry research firm RealtyTrac released yesterday.

The count — 691 foreclosure filings last month — was the lowest in nearly two years. It was also less than half the record 1,629 reached in August.

But RealtyTrac and local foreclosure attorneys say recent declines likely will be over soon when several major lenders resume more normal processing of delinquent mortgage cases after resolving issues with improper case documentation.

Marvin Dang, a Hono­lulu foreclosure attorney, said he expects a rebound as early as this month or next month.

“There should be some increases in foreclosures, though it’s hard to say how much,” he said.

Daren Blomquist, a RealtyTrac spokesman, said rebounds after the artificial lulls have already occurred in a few other states, and the trend most certainly will follow for Hawaii.

“Over the last three or four months, the (foreclosure) numbers have just fallen off a cliff,” he said. “It’s really too sudden of a decline to say that it’s a true market recovery.”

FORECLOSURE RANKING
Nevada had one foreclosure for every 88 homes in March. Below are the highest and lowest foreclosure filings:
» 1. Nevada 88
» 2. Arizona 175
» 3. California 223
» 4. Utah 278
» 5. Michigan 311
» 16. Hawaii 746
» 46. S. Dakota 3,264
» 47. Mississippi 3,456
» 48. W. Virginia 6,294
» 49. N. Dakota 12,657
» 50. Vermont 52,374
Source: RealtyTrac

Some lenders began announcing in October that they were voluntarily holding back on filing new foreclosure cases or selling repossessed homes after their loan documentation practices were called into question and rejected in some courts.

Since then, lenders including Bank of America, JPMorgan Chase and GMAC Mortgage have been addressing deficiencies. If problems are resolved, there will be a backlog of delinquent mortgages to process, though the size of a resurgence may be limited by processing capacity and take several months or more to return to more normal levels.

Eventually as the economy recovers, foreclosure filings will subside, but industry observers say it’s too soon to predict when that will likely happen given present instability in the economy and housing market.

Last month, foreclosure filings nationally fell 35 percent to 239,795 from 367,056 in March 2010, which represented the highest monthly total since RealtyTrac began publishing the data in 2005.

The national rate last month represented one foreclosure filing for every 542 households.

Hawaii had the 16th highest rate at one filing for every 746 households.

The worst rate was in Nevada, where there was one filing for every 88 households.

Kauai had the next best rate at one filing per 793 households, and the lowest number of filings at 38.

On Maui there were 161 filings, or one for every 414 households.

The worst rate was on Hawaii with one filing per 397 households based on 203 filings.

RealtyTrac counts three types of filings in its data that can occur at different stages of the foreclosure process — initial default notices, auction notices and lender repossessions.

Statewide, most Hawaii foreclosure filings, 365, were auction notices. Another 280 filings were lender repossessions, while just 46 filings were default notices.

The methodology produces a somewhat imprecise measure of how many homes are in the process of foreclosure because RealtyTrac counts different types of filings on the same property if they occur in different months, which means some properties may be counted in more than one month.

RealtyTrac also doesn’t exclude commercial property from its count, which means popular vacation property in Hawaii such as time shares and condominium-hotel units can be among RealtyTrac’s tally.

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