Weekly Market Recap

Japan, The FOMC, and Renting vs. Buying

One trader put the terrible devastation that has occurred in Japan over the past week into a short precise sound bite: “What happened in Japan is a complete human, emotional, and economic disaster, not an opportunity for economic growth and profit taking.  Let’s have some semblance of compassion and class”.  Very true.

With the ill effects of the earthquake, and the after mass, there has been a flight to quality in the investment sectors over the past week – bad for equities, good for Treasuries, very good for MBS and mortgage rates.  Could be short lived as the region stabilizes (and let’s hope and pray for the best for all personally impacted).  Nevertheless, the unintended flight to safe investments has been positive for mortgage originators and interest rates with the spring market upon us.

Regarding the FOMC statement on Tuesday, there was no major change to a hawkish bias as suggested by one of the think-tank people, however, the tone of this statement is decidedly upbeat.  It is notable that they mentioned the upside pressures on inflation that rising energy prices will cause.

Deutsche Bank released a very interesting study this week showing that renting a home costs US households more than paying a mortgage for the first time in at least two decades.  The rent-buy ratio, or rent as a percentage of after-tax mortgage payments, is based on figures that Deutsche Bank compiled from NAR and the REIS information service.  Rent amounted to 100.2% of home-loan costs in last year's fourth quarter, the highest level since calculations began in 1991.

So dissecting this: renting is now more costly than buying, rates have come back down this week on a flight to safety, the spring market is upon us, and we have recently had 70+ degree weather which makes this an unprecedented time to go look at some beautiful homes.  Sounds like I can help!