For the moment we are in a very sweet – but temporary – spot as we have low mortgage and short term rates, a growing economy and have been shielded from inflation. As we stand in this temporary sweet spot, we expect the first half of the year to be the best period for selling or purchasing homes.

With the weak recovery and high unemployment, we don't anticipate big interest rate moves from the Fed during 2010, though we anticipate the quantitative easing will end. This suggests mortgage rates will be under pressure to rise when Fed buying ceases.

Consumer spending has been coming in positive relative to the depressed levels of late 2008, but not overly strong given the depths of the recent recession. Much of that slower growth in spending is due to the excesses of the years prior to 2008 when consumers were regularly using mortgage equity withdrawals to boost their spending. As you all know, that is greatly curtailed in today's mortgage market.

Unemployment will be staying much higher than we've been used to in the last decade, with increased globalization continuing to keep pressure on wages and job opportunities in this country.

We anticipate the equity markets will have another positive year, though more in the high single digits than the 20%+ markets of 2009. Equity valuations are reasonable given the level of interest rates, but not downright cheap as they were in March 2009 given what subsequently happened in the economy. Wall Street has formed a fairly solid consensus that corporate earnings will spike upward in 2010 by 35% (banks won't be writing off as much while other companies show better growth), but much of that rise has already been priced into today's markets.

The biggest wild cards out there are housing and the government. Banks are sitting on lots of foreclosed properties; if that supply comes on too quickly, the drop in housing inventories we have seen could reverse quickly and bring on another step down in housing prices. The government has been in full blown stimulus mode, and will soon have to back off the accelerator. That transition will have big implications for how interest rates and the economy will perform in the upcoming 12 months.

Regardless of the market landscape, our focus and offer remains the same: to lead clients as they plan, invest and finance for the futures they want to make happen.

Please call me to discuss specific situations or to review what actions to be in to meet both lifestyle and financial goals.

Andy Block - Mortgage Advisor & Financial Advisor
Opes Advisors
Email Me
Direct: 650.931.0605
Fax: 650.931.0601

License #01096311
400 S. El Camino Real
Suite 250
San Mateo, CA 94402
Fax 650.931.0601

Opes Advisors is licensed as a registered investment advisor with the Securities and Exchange Commission (SEC) and is licensed as a Residential Mortgage Lender by the CA Dept of Real Estate.

 

 

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