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Brentwood TN Homes: Finance Market Update March 8, 2011

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"I’ve got just what the doctor ordered...." And last week, the Jobs Report certainly had just what the doctor ordered for our economy. What did the report say, and what are the implications for Brentwood TN home loan rates? Read on to learn more.

The Jobs Report showed that 192,000 jobs were created in February, with a gain of 222,000 jobs in the private sector offsetting job losses in the public sector. As expected, there were also upward revisions to the prior two months, which added 58,000 more jobs than were previously reported: another positive!

What’s more, unemployment lines were a little shorter last month as the Unemployment Rate fell to 8.9%, down from the prior month's reading of 9.0%. This represents the best reading on the Unemployment Rate in nearly two years! Remember, the Unemployment Rate is derived from the Household Survey (exactly as it sounds, from calls made to households), and is considered to be more accurate than the Current Employment Statistics or Business Survey (again as it sounds, from calls made to businesses), which is used to determine the headline jobs number.

The one sour note within the report was the Hourly Earnings component, which showed that earnings remained flat and didn't grow. If wages don't increase, it suggests that wage based inflation is under control, but in light of the recent price increases in commodities and oil, there is a concern that people will start to demand higher wages.

So what does all of this mean for the housing market and home loan rates? In terms of the housing market, the continued improving trend for the job market is good news, as people tend to avoid purchases when they’re concerned about their job stability or prospects.

In terms of rates, February’s Jobs Report suggests that the Fed’s Quantitative Easing 2 Program (or QE2, which is their plan to purchase $600 Billion in Treasuries through mid-2011) will continue through the end of June as originally planned. This is because the report was good, but not a blowout reading... and Fed Chairman Ben Bernanke said earlier last week that we need to see a long stretch of sustained job growth in order to remove the present accommodative monetary policy.

Remember: The Fed’s three goals for QE2 are to boost Stock prices, lower unemployment, and create inflation. While these goals are designed to improve our economy, they can also cause home loan rates to rise, something we’ve seen since the program began. And while continued unrest around the world could help our Bonds and home loan rates, as Traders seek a safe haven for their money, in the long-term continued improvement in unemployment and achievement of the other goals of QE2 may cause home loan rates to rise.

The good news is that if you have been thinking about purchasing or refinancing a Brentwood TN home, home loan rates are still very attractive. Call or email me if you have any questions at all – I’m always happy to talk to you! Or forward this newsletter on to someone you know who may benefit from today’s historically low rates.

Forecast for the Week

This week in March will start off more like a lamb than a lion, at least on the economic report front, with no reports scheduled for Monday through Wednesday. But that doesn’t mean world events may not cause some rumbles in the markets any day ahead. Be sure to also look for:

  • Thursday will bring another weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Jobless Claims were reported at 368,000, also great news for the labor market as this is the lowest reading since May 2008. Will this week’s report follow suit?
  • Friday will bring the Consumer Sentiment Index - will it show consumers are feeling better about our economy?
  • Friday will also bring the Retail Sales Report for February, which is considered a timely indicator of broad consumer spending patterns.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, it was a volatile week in the Bond Market, though one that ended on an improving note. I’ll be watching to see if this continues next week.


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Chart: Fannie Mae 4.0% Mortgage Bond (Friday Mar 04, 2011)
Japanese Candlestick Chart
The Mortgage Market Guide View...

New Rules for Home Improvement Tax Credits

The tax break for energy-efficient home improvements made in 2011 isn't as big as in past years.

By Kimberly Lankford, Kiplinger.com

Can you still get a tax break for making energy-efficient improvements to your Brentwood TN in 2011?

If you didn’t get around to making energy-efficient home improvements last year, don’t worry -- it’s not too late to get a tax break. But the tax credit in effect for 2011 projects is a lot less attractive than the one that applied to 2009 and 2010.

In 2009 and 2010, you could claim a tax credit worth 30% of the cost of qualifying energy-efficient home improvements, up to a maximum credit of $1,500 for those two years combined. In 2011, the credit is much smaller -- $500 -- and it is off-limits if you already claimed the credit for energy-efficient home improvements in the past. (A tax credit, which reduces your tax bill -- or increases your tax refund -- dollar for dollar, is more valuable than a tax deduction, which merely reduces that amount of income that is taxed.)

The 2011 home energy tax credit is now limited to 10% of the purchase price of energy-efficient windows, doors and skylights, up to a maximum credit of $500, and only $200 of that amount can be allocated to the cost of replacement windows. Certain home improvements have specific dollar limits for the credit such as $300 for eligible central air conditioning, $300 for an air source heat pump, $300 for an electric heat pump water heater, and $150 for eligible natural gas, propane or oil furnaces. Even if you install several improvements, the maximum credit you can claim is $500. And you won’t be able to claim it on your 2011 federal tax return if you already received $500 or more in credits for energy-efficient home improvements from 2006 through 2010.

Some of the rules for tax-credit eligibility have changed, too. To see which products qualify, see the Tax Credit page at EnergyStar.gov or EnergyTaxIncentives.org for details.

A more generous credit is still in effect for taxpayers who buy and install alternative energy equipment in their homes. Qualified equipment includes geothermal heat pumps, solar water heaters, solar panels, fuel cells and small wind-energy systems (as long as no part of these systems is used to heat a swimming pool or hot tub). That credit -- worth 30% of the cost and installation of such improvements -- has no maximum dollar amount, and you have until December 31, 2016, to place those items in service.

If you’re still preparing your 2010 taxes and you’re wondering whether you can claim the energy-efficient tax break for home improvements you made last year, see these two articles about the 2010 credits: Tax Credits for Going Green and Tax Breaks for Energy-Efficient Home Improvements.

Reprinted with permission. All Contents ©2011 The Kiplinger Washington Editors. www.kiplinger.com.


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Economic Calendar for the Week of March 7-11, 2011

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of March 07 - March 11

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Thu. March 10
08:30
Jobless Claims (Initial)
3/05
382K
 
368K
Moderate
Thu. March 10
08:30
Balance of Trade
Jan
-$41.1B
 
-$40.6B
Moderate
Fri. March 11
08:30
Retail Sales
Feb
0.4%
 
0.3%
HIGH
Fri. March 11
08:30
Retail Sales ex-auto
Feb
0.3%
 
0.3%
HIGH
Fri. March 11
10:00
Consumer Sentiment Index (UoM)
Mar
76.5
 
77.5
Moderate

 

Courtesy Billy Winfree Pinnacle Financial Partners 615-743-8397
Permission to re-publish

Vanessa Stalets
615-957-6333
RE/MAX Elite
615-661-4400
Your Brentwood TN Homes For Sale Source

Published Tuesday, March 08, 2011 8:13 AM by Vanessa Stalets

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