Economy
Moving To A New City? See How Much Your Cost Of Living Will Change.
by Jeff Underwood on Jun.09, 2011, under Economy, Personal Finance
It’s a fact: It’s more expensive to live in some cities than others. Beyond just the costs of buying a home, different cities also carry a different Cost of Living. For households relocating from Arizona and across state lines, the change in “life costs” can be jarring.
Depending on where you live, everyday expenses — from groceries to gasoline — make a different-sized dent in a household budget. And now you can see in numbers by how much your expenses might change.
Visit Bankrate.com’s Cost of Living Comparison Calculator.
The Cost of Living Comparison calculator is as basic as it is thorough. The calculator asks just 3 questions — (1) Where do you live now, (2) To what city are you moving, and (3) What is your salary — and uses your answers to produce a detailed, 60-item cost comparison between the two towns.
The city-to-city cost comparisons include:
- Dry Cleaning Costs
- Total Energy Costs
- Beauty Salon Costs
- Movie Costs
- Dentist Visit Costs
The list also features a mortgage rate comparison, and a comparison of local home prices.
The Cost of Living calculator is based on data from the ACCRA. On the ACCRA website, a similar report sells for $5. At Bankrate.com, the information is free.
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Jeff Underwood, The Street Economist
The Ugly Truth About Money
Case-Shiller Shows Home Values Rolling Back 9 Years
by Jeff Underwood on Jun.03, 2011, under Economy, Real Estate
The March Case-Shiller Index was released this week and it corroborates the findings of the government’s most recent Home Price Index — home values are slipping nationwide.
According to the Case-Shiller Index’s publisher, Standard & Poors, home values fell in March from the year prior.
The March report was among the worst Case-Shiller Index readings in 3 years. On a monthly basis, 18 of 20 tracked markets worsened. Only Seattle and Washington, D.C. showed improvement, rising 0.1% and 1.1%, respectively.
On an annual basis, price degradation was even worse.
Washington, D.C. is the only tracked market to post higher home values for March 2011 as compared to March 2010. The national index has now dropped to mid-2002 levels.
As a buyer in today’s market, though, you can’t take the Case-Shiller Index at face value. It’s methodology is far too flawed to be the “final word” in home prices.
The first big Case-Shiller Index flaw is its relatively small sample size. S&P positions the Case-Shiller Index as a national index but its data comes from just 20 cities total. And they’re not the 20 most populous cities, either. Notably missing from the Case-Shiller Index list are Houston (#4), Philadelphia (#5), San Antonio (#7) and San Jose (#10).
Minneapolis (#48) and Tampa (#55) are included, by contrast.
A second Case-Shiller flaw is how it measures a change in home price. Because the index throws out all sales except for “repeat sales” of the same home, the Case-Shiller Index fails to capture the “complete” U.S. market. It also specifically excludes condominiums and multi-family homes.
In some cities — such as Chicago — homes of these types can represent a large percentage of the market.
And, lastly, a third Case-Shiller Index flaw is that it’s on a 2-month delay. It’s June and we’re only now getting home data from March. Today’s market is similar — but not the same — to what buyers and sellers faced in March. The Case-Shiller Index is far less useful than real-time data of a city or neighborhood.
The Case-Shiller Index is more useful to economists and policy-makers than to everyday buyers and sellers in Phoenix. For better real estate data for your particular neighborhood, ask your real estate agent for help.
A real estate agent can tell you which homes have sold in the last 7 days, and at what prices. The Case-Shiller Index cannot.
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Jeff Underwood, The Street Economist
The Ugly Truth About Money
Making A Rate-Lock Plan Before Friday’s Jobs Report
by Jeff Underwood on Jun.02, 2011, under Economy, Mortgage
Tomorrow morning, at 8:30 AM ET, the Bureau of Labor Statistics releases its Non-Farm Payrolls report for May. If you’re floating a mortgage rate right now — or are in the process of shopping for a loan — consider locking your rate sooner rather than later.
The Non-Farm Payrolls report can be a major market mover, causing large fluctuations in both conforming and FHA mortgage rates in Chandler. It’s because of the report’s insight into the U.S. economy.
More commonly called “the jobs report”, Non-Farm Payrolls is issued monthly. Sector-by-sector, it details the U.S. workforce and unemployment rates.
Jobs momentum has been strong. Through 7 consecutive months, the economy has added jobs, the government reports. Nearly 1 million new jobs have been created during that time. These are strong figures for a country that lost 7 million jobs in 2008 and 2009 combined.
However, Wednesday, a weaker-than-expected “preview” figure from payroll company ADP has Wall Street wondering whether this month is the month that the winning streak ends.
May’s ADP data fell so far short of expectations that investors have had to re-assess their job growth predictions. Earlier this week, the consensus was that 185,000 new jobs were created in May. Today, those estimates are much lower.
The change is leading mortgage rates lower, too.
The connection between jobs and mortgage rates is somewhat straight-forward. Job growth influences mortgage rates because jobs matter to the economy. As job growth slows, so does the economic growth, and that puts downward pressure on mortgage rates.
The opposite is true, too. Strong job growth tends to lead mortgage rates higher.
So, with job growth estimates revising lower, Wall Street has adjusted its “bets” and that’s benefiting rate shoppers across Arizona. Should the actual jobs figures not be so bad, though, expect a quick and sharp reversal; and much higher mortgage rates for everyone.
The safe move is to lock your rate today.
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Jeff Underwood, The Street Economist
The Ugly Truth About Money
The Real Estate Collapse Was No Accident! Join Jeff Underwood on The Ugly Money Show
by Jeff Underwood on May.23, 2011, under Economy, Real Estate
The Real Estate Collapse Was No Accident! Join Jeff Underwood on The Ugly Money Show.
Join Jeff Underwood as he explains how this happened. Real Estate And Mortgage Talk with Jeff Underwood The Street Economist on BlogTalkRadio.com. Or, cut and paste this link http://www.blogtalkradio.com/jeffunderwood/2011/05/23/the-real-estate-collapse-was-no-accident-join-jeff-underwood
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Jeff Underwood, The Street Economist
The Ugly Truth About Money
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The Ugly Money Show – Talk Radio with an edge!
by Jeff Underwood on May.20, 2011, under Economy
The Ugly Truth About Money
In this episode of The Ugly Money Show with Jeff Underwood, CLICK HERE.
http://www.blogtalkradio.com/jeffunderwood/2011/05/20/the-ugly-money-show-with-jeff-underwood
Spending / National Debt and the debt ceiling / And, would the economy get better quicker if more people were to walk away from large debts ?? What do think about this theory ???
Stay Informed throughout 2011!
Join me for an exciting year of fun education on money, debt, real estate, credit, mortgage, the economy, and how they all work together!
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Jeff Underwood, The Street Economist
The Ugly Truth About Money
The Ugly Truth About Money
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Fed Minutes Put The Heat On Mortgage Rates To Rise
by Jeff Underwood on May.19, 2011, under Economy, Mortgage
The Federal Reserve released its April 2011 Federal Open Market Committee meeting minutes Wednesday. In the hours since, mortgage markets have worsened; rates in Arizona are higher by 1/8 percent this morning, at least.
The “Fed Minutes” is published 8 times annually, three week after each scheduled FOMC meeting. The minutes are the Federal Reserve’s official recap of the conversations and debates that shaped the prior FOMC session.
Another way to consider the Fed Minutes is as the companion piece to the more well-known FOMC press release. The press release is issued on the day of adjournment, and is brief, narrow, and high-level. The statement makes broad comments on the economy and outlines new monetary policy.
By contrast, the Fed Minutes is delayed, lengthy, and rife with details. The minutes highlights arguments and discussion points between Fed members, and digs deep into underlying economic issues.
The FOMC press release is measured in paragraphs. The Fed Minutes is measured in pages.
Here is some of what the Fed discussed last month:
- On inflation : Higher levels are “transitory”; will level-off with commodity prices
- On housing : The market remains depressed. “Vacant properties” are harming construction.
- On stimulus : The Fed will stick to its $600 billion support plan
In addition, at its meeting, the Federal Reserve discussed an exit strategy for its market support. The details are undecided, but the debate shows that the Fed is anticipated a change in policy sometime soon.
Wall Street estimates that a gradual economic tightening will begin within 12 months.
Mortgage rates have been fading since mid-April. The Fed Minutes may be the catalyst of a reversal. The Federal Reserve expects growth in the U.S. economy and growth tends to boost stock markets at the expense of bonds.
As bond markets fall, mortgage rates in Phoenix rise.
Join me for my latest episode of The Ugly Money Show on iTunes or on http://www.BlogTalkRadio.com/JeffUnderwood. And on Facebook at Facebook.com/TheUglyTruthAboutMoney
Stay Informed throughout 2011!
Join me for an exciting year of fun education on money, debt, real estate, credit, mortgage, the economy, and how they all work together!
Jeff Underwood, The Street Economist
The Ugly Truth About Money
Economic Update along with some staggering statistics
by Jeff Underwood on May.02, 2011, under Economy
Click Here to join me in this wild debate of whether the economy is getting better, OR NOT!! I will share some staggering statistics……….
Why Is the Truth About Money So Ugly? Do you feel confused, isolated, and powerless? You are not alone! Most consumers do!
With the economy in a recession, investment banks failing, mortgage industry in a meltdown, foreclosures running rampant, credit being frozen, financial bailouts everywhere we look, and no real end in sight, you need to start gaining knowledge that will make you feel more confident in your understanding of the economy and personal finances. Don’t leave your financial future to chance. It is time for you to gain control of your personal finances. This radio show will help you gain knowledge about: the economy, money basics, cash flow and budgeting, debt, credit, mortgage, interest, and how it all works together. Read the The Ugly Truth About Money blog, listen to The Ugly Money Show, and take back control of your financial life!
Thanks for following.
Jeff Underwood, The Street Economist
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A Simple Explanation Of The Federal Reserve Statement (April 27, 2011 Edition)
by Jeff Underwood on Apr.27, 2011, under Economy
Earlier today, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
The vote was 10-0 — the third straight meeting after which the FOMC vote was unanimous.
In its press release, the FOMC noted that since its March 2011 meeting, the economic recovery is proceeding “at a moderate pace” and that labor markets conditions are “improving gradually”. Household spending and business investment “continue[s] to expand” but the housing sector remains “depressed”.
Furthermore, the FOMC’s statement discussed the Federal Reserve’s dual mandate of (1) Managing inflation levels, and (2) Fostering maximum employment. The statement acknowledged recent inflation pressures on the economy, but it expects those pressures — because they’re related to oil and food prices — to be “transitory”. Unemployment remains “elevated”.
The FOMC statement also re-affirms the group’s plan to keep the Fed Funds Rate near zero percent “for an extended period” of time, and to keep its $600 billion bond market support package — more commonly called “QE2″ — intact.
The statement’s verbiage suggests that a third support package may be created after QE2 ends in June 2011, depending on the needs of the economy.
Mortgage market reaction to the FOMC statement has been positive thus far. Mortgage rates in Gilbert are unchanged, but leaning lower. And, as always, market sentiment could shift quickly. If you like today’s mortgage rates, consider locking in.
The FOMC’s next scheduled meeting is a 2-day event, June 20-21 2011.
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Jeff Underwood, The Street Economist
The Ugly Truth About Money
Mortgage Rates And Home Affordability – At The Whim Of The Federal Reserve
by Jeff Underwood on Apr.26, 2011, under Economy, Mortgage
The Federal Open Market Committee starts a two-day meeting today, the third of its 8 scheduled meetings this year.
The FOMC is a special, 12-person committee within the Federal Reserve. It’s led by Fed Chairman Ben Bernanke and the group is responsible for voting on our nation’s monetary policy. This includes setting the Fed Funds Rate, the rate at which banks borrow money from each other overnight.
The general public tends to confuse the Fed Funds Rate for “mortgage rates” but, as shown in the chart at top, the two interest rates are very different. There is no direct correlation between the Fed Funds Rate and everyday mortgage rates in Chandler.
Since 1990, the two benchmark rates have been separated by as much as 5.29 percent, and have been as close as 0.52 percent.
Today, the separation between the Fed Funds Rate and the national average for a standard, 30-year fixed rate mortgage is 4.625 percent. This spread will widen — or shrink — beginning 12:30 PM ET Wednesday. That’s when the FOMC adjourns and releases its public statement to the markets.
According to Wall Street, there’s a 100% chance that the FOMC leaves the Fed Funds Rate in its current “target range” of 0.000-0.250 percent, the same range in which it’s been since December 2008. Depending on the verbiage in the press release, plus the comments of Fed Chairman Ben Bernanke in his scheduled, 2:15 PM ET press briefing, mortgage rates aren’t expected to steady as well.
If the Fed projects higher growth in late-2011/early-2012, or hints at new market stimuli, expect mortgage rates to rise on concerns about inflation. Inflation is bad for mortgage rates, in general.
On the other hand, if the Fed indicates that the economy is slowing down, or that it plans to withdraw its existing, $600 billion bond market stimulus, look for mortgage rates to fall.
It’s hard to be a home buyer in the Power Ranch area when the Federal Open Market Committee meets. There’s just so much that can change mortgage rates and rising mortgage rates can affect purchasing power in a flash.
In the 6 months since November 2010, home affordability is off 9%.
So, if you’re shopping for mortgages, or just floating a rate, consider getting locked in before the FOMC issues its press release Wednesday. Once the statement hits, mortgage rates could soar.
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Jeff Underwood, The Street Economist
The Ugly Truth About Money
Inflation Pressures Mounting; Mortgage Rates Rising
by Jeff Underwood on Apr.14, 2011, under Economy, Mortgage
Inflation pressures are mounting in the United States. And, Friday, the Consumer Price Index should prove it.
More commonly called “The Cost of Living Index”, CPI measures cost changes in the typical items bought by American households. Among others, CPI measures goods and service in apparel and recreation; medical care and education; and housing and transportation.
The March CPI data is expected to show an increase in the cost of living for the 17th straight month — a reading that would take CPI to an all-time high.
If you’ve filled your gas tank, sent a child to school, or shopped for groceries, you’re likely not surprised. Household budgets have been squeezed from all angles lately. The dollar’s purchasing power is waning.
This is inflation, defined. And a weaker U.S. dollar is bad for mortgage rates.
The connection between the U.S. dollar and mortgage rates is direct. When inflation pressures rise, mortgage rates in Gilbert tend to rise, too, because mortgage rates are based on the price of mortgage-backed bonds — a security bought, sold and paid in U.S. dollars
Inflation, in other words, renders mortgage bonds less valuable to investors, all things equal, so investors sell them as inflation pressures grow. More sellers leads to lower prices which, in turn, causes mortgage rates to rise.
It’s why March’s Cost of Living data is so important to rate shoppers and home buyers in San Tan Ranch. Higher levels of CPI can harm home affordability, and stretch your household budget uncomfortably.
As Memorial Day approaches, gas prices are projected to spike, offering little relief from the inflationary pressures in the economy. It’s one reason why mortgage rates should trend higher over the next few months.
If you’re wondering whether to lock or float your mortgage rate, consider locking in. At least today’s rates are a sure thing. Tomorrow’s rates could be much higher.
Join me for my latest episode of The Ugly Money Show on iTunes or on http://www.BlogTalkRadio.com/JeffUnderwood. And on Facebook at Facebook.com/TheUglyTruthAboutMoney
Stay Informed throughout 2011!
Join me for an exciting year of fun education on money, debt, real estate, credit, mortgage, the economy, and how they all work together!
Jeff Underwood, The Street Economist
The Ugly Truth About Money
