Taper ?

Open Bedroom with corrugated plastic roof and open sides 

Orange County doesn't seem to be back in the money, yet. The photograph above of a shed conversion of what I would call less than half an extra bedroom. It's a room open to the garden on two sides.
There are 86 commercial listings in Laguna Beach, and residential listings also have increased but with high and unrealistic prices.
The January 2014 Jobs Report also didn't ring any bells. Employers added just 113,000 new workers. This was well below expectations of 175,000 new jobs.  The number of job creations for December was raised a sorry 1,000, bringing December's total to 75,000. November was revised higher to 274,000. Jobs are the most important driver of our economy.

 The Unemployment Rate did fall to 6.6 percent, from 6.7 percent. However, this is not necessarily a good metric of labor market health, as the more important Labor Force Participation Rate (LFPR) remains at 63 percent, a 35-year low. The LFPR measures the proportion of working-age Americans who have a job or are looking for one, and it should be moving higher in a recovery.

Also of note, productivity in the fourth quarter of 2013 rose by 3.2 percent, with both the third and fourth quarters the highest since the second half of 2009. Employers are squeezing more out of current workers and may not be on the hunt for new employees given the economic landscape, which is another negative for the labor market.

CoreLogic w(hose corporate office is the view from my office in Irvine) reports that home prices, including distressed sales, rose by 11 percent in December 2013 compared to December 2012. December marked the 22nd consecutive year-over-year gain in home prices nationally. However, from November to December, prices fell by 0.1 percent.
It seems in pocket areas such as Newport Coast, Irvine and Laguna Beach prices increased almost seventeen percent - this may be too fast. The market now sees softening in those hot residential home  sale areas

What does this mean for home loan rates?
Rates are down a little!
 Mortgage Bonds and home loan rates have seen some improvement of late, due to some weak economic reports, and a shake down from news in China.
If economic reports continue to be weak, will the Fed continue to taper its Bond purchases? Taper too fast and we will end up with no one buying homes.
The Fed is still purchasing $35 billion in Treasuries and $30 billion in Mortgage Bonds (the type of Bonds on which home loan rates are based) to help stimulate the economy and housing market. This figure is down from the $85 billion in Bonds and Treasuries the Fed had been purchasing last year. The timing of further tapering is sure to impact Stocks, Bonds and home loan rates throughout the year, and it is a key story to monitor.
A few secondary market mortgage sources have come back looking to make money. Will the old easy qualifier and low documentation deal be back?

Now remains a great time to consider a home purchase or refinance. Hopefully you can afford the whole house!

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