Taos Real Estate

Market Direction:
Rates are: FLAT
Rate Volatility: MEDIUM

PLENTY OF INFLATIONARY CONCERNS...
VACATION & INVESTMENT PROPERTY SALES STILL STRONG...

Earnings reports, economic data and Fed speeches all had a hand in pushing rates higher last week - as much as 0.375% versus the week prior to that. Much of the increase came from concerns over inflation, as the Producers Price Index (PPI) blew past expectations. Investors also saw some opportunities for stock market gains, so they sold off holdings in bonds to purchase stocks. This also worked to lower bond demand and increase yield (ie: rate).

Today, Bank of America reported earnings down more than 80% from the same period a year ago. This pushed some money into bonds and had a hand in an intra-day reprice for the better. 160 additional companies in the S&P 500 will report earnings this week. If earnings are stronger than expected mortgage rates will continue higher. If reports are in line, or below, expectations we will likely see rates hold steady as they still have inflation to worry about.

On a positive note: purchases of vacation and investment home are continuing at a healthy clip. The National Assoc of Realtor's released a report conducted in March 2008 that, while showing a small decline in second home sales from the previous year, still accounted for 33% of all new and existing home sales. Lawrence Yun, NAR chief economist, said lifestyle factors and strong demographics remain positive for the second home market. "A peak of population is moving through the prime years for buying recreational property." Good news for our local vacation home market here in Taos

Carpe Diem.