What is going on in the Economy?

The European Union is struggling; Iceland and Greece are both on the brink of financial collapse. Spain and Italy are making changes that may not be beneficial in the long term. A few states here in America are struggling for liquidity.  Government pension plans are under capitalized.  Are we Okay?  As of today we are okay.  We have to be vigilant.

There is optimism in the air:

• Resales of homes in the United States rose 7.6% in April to a seasonally adjusted annual rate of 5.77 million as buyers rushed to complete sales before a tax credit expires, according to data released by the National Association of Realtors.
• Sales were stronger than expected by economists.
• Inventories surged 11.5% to 4.04 million in April, an “unwelcome” development, said Lawrence Yun, chief economist for the NAR.
• The inventory level represented an 8.4-month supply at the April sales pace.
• Yun said the elevated inventories suggest that prices won’t raise much over the next year or two. The median price is up 4% in the past year
• New construction is up slightly by offering incentives at the $173,100 median price range
• Laid off workers and new hires are about even
• Housing interest rates continue to be very favorable near term
• Condominiums in South Florida continue to rebound  
• GDP growth is still forecasted to be between 2.5 to 3% for 2010
• Corporate inventory is replenishing, future inventories replacement will be gradual
• Greece and Spain’s downgrading has not had an impact on U.S. based companies
• Sellers in some markets are offering up to $8000 in incentives to purchase their house
• Frugal spending behavior is beginning to soften
• Stock market recently made a quick and deep correction; however, long term, the market will continue upwards
• The value of the dollar may have reached its floor and is beginning to strengthen

• The Fed Chairman continues to hold interest rates at their current rate
• Inflation is still flat, but expect some movement upward later in the year
• Banks profits continue to improve
• Appraisals have become more realistic; however, some appraisers still use foreclosures and short sales in their mix of comparables forcing values downward
• Cost of a barrel of oil has fallen by 18% in recent weeks, expect the price to begin to rebound; however, oil is still trading in the normal range and supply is still greater than demand
• Unit number of foreclosures will continue to increase short term; a decrease will lag behind improved employment numbers

     The public is hopeful that following the November elections, Congress will reign in the government spending that is still occurring.  This optimism has the consumer confidence at its highest level in two years.  Consumer spending will grow at a modest rate.   Because the economy continues to grow slowly, home sale opportunities are increasing.  Isn’t it great that you are positioned to help those consumers that are returning to the market?  The Southern Region wishes the best for everyone during 2010!