Retail Sales Dropped In December And Now So Are Mortgage Rates

Mortgage rates are dropping this morning on weaker-than-expected Retail Sales data from December. Lower rates means more bang for your home-buying buck.

Excluding motor vehicles and parts, December's "ex-auto" sales receipts were down roughly $500 million from November. Analysts had expected receipts to grow.

The relevance of Retail Sales to home affordability isn't obvious, but it's definitely logical.

Retail Sales is directly related to consumer spending and consumer spending accounts for the majority of the U.S. economy. When consumer spending slows, the economy often does, too. It leads investors to seek out "safe" investments.

It's the reason why stock markets often drop on weak economic data -- stocks are among the riskiest investment classes available.

Conversely, the best place to find safety is in the market of government-backed bonds.  This world includes products like U.S. Treasuries and many of the mortgage-backed bonds that help set mortgage rates.  Weak economic data puts mortgage bonds in demand.

For rate shopper, this is good news.  More demand for mortgage bonds causes mortgage rates to fall.  Mortgage rates are lower this morning because Wall Street is shedding some risk.

December's Retail Sales report closes out a year of generally-weak data.  2009 marks just the second time that Retail Sales fell year-over-year since the government started tracking it 40 years ago.  The other year was 2008.

For home buyers around the country, though, today may represent an opportune time to lock a mortgage rate.  Housing data is still improving and other economic indicators are showing strength.  Soon, Wall Street will shift from a "safe" mentality and move toward risk.

When it does, mortgage rates will rise.

Take Advantage of all San Diego Has To Offer

 January is a great month for activities in San Diego.  It is the best month for whale watching.  You can often see them from Cabrillo Monument Park or take a boat out for an hour or two for an upclose encounter.  Click on the sidebar of January events for the phone numbers and emails for more information.  You will also find the entire calendar of activities for the month of January. Also January is the month for big waves.  The biggest waves will be found south of Del Mar.  Check the tide calendar for high tide.  One hour before high tide is the best time to see big waves.

Throw Out Your "Chip Clips". Get The Banana Seal.

If you've ever used a plastic Chip Clip and been miffed that your chips went stale anyway, you have to see the Banana Seal.  Its beauty is its simplicity.

Similar to the tongue-in-groove seal created by zip-top bags, the Banana Seal creates an airtight seal on bags of all sizes.  Chips stay crunchy, vegetables stay fresh, and freezer-burned food becomes a problem of the past.

The people of Banana Seal made a promotional video that shows the product in action. It's a little bit over-the-top in "sales mode", but gives some good ideas on how the Banana Seal works.  Aside from the obvious refrigerator, freezer and pantry uses, the video shows how Banana Seal can be used outside of the kitchen, too.

Buy an 18-pack of Banana Seal for less than $20 from Amazon.com.

2010 FHA Loan Limits Released

FHA home loans are federal assistance mortgages made by lenders, and backed by the government. The FHA doesn't make loans to homeowners -- it insures loans made to homeowners by federally-qualified lenders.

By all accounts, FHA home loans are surging in popularity.

• 2006, FHA insured 3.3% of all mortgages made
• Q2 2009, FHA insured 19.2% of all mortgages made

A major reason for the increase can be tied to guidelines.

As compared to its conforming mortgage cousins Fannie Mae and Freddie Mac, FHA home loans have lower downpayment requirements and looser credit standards. The FHA allows downpayments of 3.5 percent and Fannie Mae and Freddie Mac do not, as an example.

Another reason is that FHA home loans aren't subject to credit score fees the way that conforming mortgages are. Through Fannie or Freddie, a home buyer with a 650 FICO and 20% down is subject to 3% in risk fees.  Via the FHA, the fee is zero, making FHA the better "deal".

The FHA published its 2010 loan limits. There's no change from 2009.

The base 2010 FHA loan limits are:

• 1-unit : $271,050
• 2-unit : $347,000
• 3-unit : $419,400
• 4-unit : $521,250

We say "base" because these loan limits don't apply to all areas equally.  Higher-cost regions get higher loan limits, based on typical home values. Homes in Los Angeles County, for example, can be FHA-insured up to $729,750 in 2010, and there are special exceptions made for Alaska and Hawaii.

The official FHA announcement included a complete, county-by-county FHA loan limit list. The first spreadsheet shows each county at or above the $729,750 maximum; the second list is everyone else.

If your home's county is on neither list, use the "base" numbers above.

Home Buyers Get A Green Light : Pending Home Sales Plunge In November

Just one month after touching a 3-year high, the National Association of Realtors® Pending Home Sales index plunged in November.  A "pending" home sale is a home that is under contract to sell, but has yet to close.

The 16 percent drop marks the first retreat in Pending Home Sales since January of last year.

The weak Pending Home Sales data is an indication that Existing Home Sales data will be soft this month. This is because, historically, 80 percent of Pending Home Sales convert to "closed sales" within 60 days, and most of the rest close within 120.

With Pending Home Sales down, the housing market should lose some of its momentum.  For today's home buyers, this kind of slack can represent a terrific opportunity.

Home prices are a function of supply and demand; of buyers and sellers. When buyers outnumber sellers, competition leads to bidding wars, ultimately, and higher home prices overall.  The imbalance can also create a sense of urgency that results in over-paying for a home.

When buyers are sparse, on the other hand, the psychology of real estate shifts. 

Home sellers are keenly aware of foot traffic and requests for second and third showings. Without buyers, their homes can't sell.  They also note a lack of general feedback from the market.

It's at this point that seller fear can creep in and it becomes a buyer's best time to buy.

Based on November's Pending Home Sales data, it's clear that home sellers are in abundance right now.  Home buyers have leverage.

It may not last.

With mortgage rates easing lower this week, the federal home buyer tax credit still in effect, and the Holiday Season officially over, buyers are getting back to business everywhere. 

Plus, with the tax credit deadline of April 30, 2010 fast approaching, buyer activity should increase over the next 4-6 weeks.

The market looks ripe for a buy but don't rush it.  Take your time and bid right. But when you're ready, be ready -- once the market momentum shifts back to sellers, you might lose all that leverage you built up through the winter.

Home Cooking

Shrimp and Avocado Salad
1/2 cup fresh lemon juice
2 tsp. honey
1 TBSP Dijon mustard
1 shallot, chopped
1 cup extra virgin olive oil

Mix together first four ingredients. Slowly blend in oil until well blended.

1 lb. cooked shrimp
1 lb. jicama, peeled, julienned
1 pkg. frozen corn, thaw and drain well, slightly brown in skillet with small amount of oil.
1/2 cup flat-leaf parsley, chopped
1/2 cup cilantro, chopped
3 Hass avocadoes, peeled, and diced
Salt and Pepper to taste.

Mix together, lightly coat with dressing. Best served at room temperature (about 30 minutes). Dressing can be stored in refrigerator. Low Cal and Healthy!

Hearty Bacon Potato Chowder
8 slices bacon, cut into 1" pieces
2 cups (6 med) potatoes
1 cup chopped onions
1 cup sour cream
1 1/4 cup milk
10 3/4 oz. can cream of chicken soup
1 cup frozen corn
1/4 tsp pepper
1/4 tsp thyme (optional)

In 3 qt. saucepan cook bacon and onions over med. heat for 5 minutes; add potatoes. Continue cooking stirring occasionally until potatoes are tender. ( can pre-cook potatoes for less time). Add remaining ingredients. Continue cooking, stirring occasionally until heated through. (10 to 12 minutes)
Serves 6

ENGLISH TOFFEE

A favorite old family favorite that brings back childhood memories.

1 giant size Hershey Chocolate Bar
3/4 cup finely chopped nuts
2 cups sugar,
1 lb. butter plus additional butter for pan
2 TBSP water.
Grate Chocolate Bar. Using a cookie sheet with a rim, generously butter pan. Sprinkle with 1/2 of the nuts, layer 1/2 of the chocolate over the nuts. Set aside pan.

Combine water, sugar, butter, bring to a fast boil. Boil until the color changes to a a medium carmel color and it is foamy. Stir constantly. You do not want it too light in color or it won't set up, too dark and it will be too hard. Try for a light golden brown.

Pour over chocolate, top with remaining chocolate and then the remaining nuts. Cool completely. Break into pieces.

Get Your Home Ready For Listing : How To Eliminate Home Odors Completely

Difficult home odors plague homeowners.  Ground into rugs, absorbed into walls, and clinging to furniture, some smells are slow to fade, leaving lasting impressions on both guests and potential buyers. Often, that impression is unfavorable.

Do something about it. 

In this 4-minute piece from NBC's The Today Show, you'll learn how to eliminate bad smells and prevent them from returning.  It's all basic direction, too:

• How to use the porous nature of wood to your advantage
  
• How to remove get "smoke smell" out of a wall
  
• How to improve a home's air quality by cleaning carpets

For more serious offenses, the video covers in-home air purifiers, too.

"Smelly homes" are undesirable and can make your home less attractive to buyers.  Watch the video, follow the instruction, and declare your home an Odor-Free Zone.