Real Estate & Market Report: May 3, 2013
By: Fred Arnold
Sunday is Cinco de Mayo, hence the real-life, true, yes, true, well kind of true tale at the end of the paragraph. Anyway, Sunday celebrates the legendary Battle of Puebla on May 5, 1862, in which a Mexican force of 4,500 men faced 6,000 well-trained French soldiers. The battle lasted four hours and ended in a victory for the Mexican army under Gen. Ignacio Zaragoza. Cinco de Mayo has become a time to celebrate Mexican heritage and culture.
Most people don't know that in 1912, Hellmann's mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico, which was to have been the next port of call for the great ship after its stop in New York.
This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was lost forever.
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The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great that they declared a National Day of Mourning, which they still observe to this day.
The National Day of Mourning occurs each year on May 5th and is known, of course, as Sinko de Mayo.
Existing home sales have remained flat however do not let this fool you into thinking the real estate market is not improving at a rapid rate. Pending home sales, which is a fairly accurate predictor of future existing homes sales, rose 1.5% in March to an index level of 105.7. This is the highest level for the index so far this year. (This is an index developed by the National Association of Realtors to indicate housing activity)
Reports from all over the United States reinforce the future of housing is strong in that demand for existing homes and new construction is rising rapidly. Real estate professional and builders are reporting huge increases in buyer traffic at open houses and builder locations.
Wow, on Tuesday, the Case-Shiller Home Value Index indicated boom-time housing gains with an increase of 1.2 percent for February. This is on top of the prior months 1.0 percent gain. When we do the math that would come out to over a 12% home value increase on an annualized basis. Although there are no guarantees that this pace will continue, the amount of activity happening in markets throughout the country indicates that there is a tremendous amount of pent up homebuyer demand. As of this month's report home prices are up 9.3% from the same time a year ago and that includes periods that had much slower housing demand than we have today.
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First time jobless claims for the week of April 27th dropped unexpectedly to 324,000 which is the lowest point since the beginning of the recovery. National unemployment declined .1% to 7.5% in March. The economy added 165,000 jobs following a revised increase from the prior month of 138.000. Both numbers exceeded analyst expectations and it appears that the labor market may be improving slightly faster than most experts think.
Next week economic reports are extremely light:
Wednesday May 8th 2013 MBA Report
Thursday May 9th - First Time Jobless Claims
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