HOME PRICES: 

This past week, I reviewed the median home price information for the 80 highest priced metropolitan areas for the last three years (2005-2007) as compiled by the National Association of Realtors using U.S. Census Bureau information. Over the two year period, only 16 are down. Two are in California, six are in New England, four are in Florida, two are in Nevada, and the other two are in the metropolitan areas around Minneapolis, Minnesota and Hagerstown, Maryland.

Over a one year period (2006-07), 9 areas have dropped double digits, and all but two (Las Vegas and Hagerstown) are in Florida or California. Those going up by double digits over a one year period are in San Jose California, Atlantic City, NJ, Kennewick, Washington and Yakima, Washington. The Philadelphia area has gone from a median of $215,000 in 2005 to $234,600 in 2007.  Allentown Pennsylvania has gone from $243,400 to $260,500.  The New York, North Jersey area has moved from $445,200 to $469,700.

ECONOMIC AND MARKET UPDATE: Housing starts in April recorded a surprisingly strong +8.2% increase. The gains were in multi-unit construction. Single-family housing starts continued to decline. Permits for new construction were up +4.9%. Both starts and permits were about thirty percent below year-earlier figures. Retail sales declined by 0.2% in April, but the entire decline was in auto sales. Non-auto retail activity was up 0.5%.  The Consumer Price Index (CPI) was up 0.2% for April and the “core” rate (excluding food and energy) was up 0.1%. The markets continued to recover and close in on break-even for the year.  The Dow Jones Industrial Average was up nearly 2% (down 2.1% for the year).  The S & P 500 was up 2.67% (down nearly 3% for the year).

GOLD AND OIL: 

According to the Financial Times, “an ounce of gold will now buy only seven barrels of oil. Ten years ago, it could have bought as much as 26 barrels.”

AVERTING A STUDENT LOAN CRISIS?:

On May 7, President Bush signed The Ensuring Continued Access to Student Loans Act of 2008. The Act seeks to ensure that college students and their parents have uninterrupted access to federally guaranteed student loans despite the recent turmoil in the credit markets. The Act grants the Secretary of Education temporary authority to purchase loans from lenders in the federally guaranteed loan program. The Act also authorizes the Secretary of Education to advance federal funds to guarantee agencies that are operating as “lenders of last resort” in the event they don’t have sufficient capital to originate new loans. The Act also dispenses with the requirement that students demonstrate an inability to borrow from other sources before turning to a lender of last resort.

The Act increases loan limits on unsubsidized federal Stafford Loans by $2,000 for undergraduate students and increases the total loan limits (for both unsubsidized and subsidized loans) to $31,000 for dependent undergraduate students (up from $23,000) and to $57,500 for independent undergraduate students (up from $46,000).

Dependent undergraduates will be able to borrow up to $5,500 in Stafford Loans during their first year of college ($3,500 of which can be subsidized); $6,500 during their second year (up to $4,500 subsidized); and $7,500 in the third, fourth, and fifth years of college (up to $5,500 subsidized). For independent undergraduate students, the new borrowing limits are $8,625 for the first year (up to $3,500 subsidized); $9,500 for the second year (up to $4,500 subsidized); and $12,500 for the last three years (up to $5,500 subsidized). Finally, the Act now gives parents who take out PLUS loans the option to defer repayment for up to six months after their child has left school.

UNEMPLOYMENT: The unemployment rate in the USA is 5.0% today. The unemployment rate in the 15-nations that use the euro (i.e., the Euro-zone) is 7.1% today, the lowest ever recorded. The euro was introduced in January 1999.

This information is provided by my good friend and business associate, Doug MacGray. Doug is a certified financial planner, so if you need assistance with financial planning please feel free to contact me and I can refer you to Doug.

If you need help with a home loan please feel free to call me (John Thomas) at 302-368-7132 or you can APPLY ONLINE HERE.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713