Economic update for the week ending February 15, 2020

16. February 2020 Economic Update 0

Stock Markets Hit Record Highs Again This Week – Stocks closed higher again this week with all major indexes recording substantial  year to date gains. The Dow Jones Industrial Average closed the week at 29,398.08, up 1.0% from 29,108.51 last week. It’s up 3.0% year to date. The S&P 500 closed the week at 3,3380.16, up 1.6% from 3,327.71 last week. It’s up 4.6% year to date. The NASDAQ closed the week at 9,731.18, up 2.2% from 9,520.51 last week. It’s up 8.5% year to date. 

U.S. treasury bond yields – The 10-year treasury bond closed the week yielding 1.59%, unchanged from 1.59% last week. The 30-year treasury bond yield ended the week at 2.04%, unchanged from 2.05% last week. We watch treasury bond yields because mortgage rates often follow bond yields. 

Mortgage rates remain at lowest levels in 3 years – The Freddie Mac Primary Mortgage Survey released on February 13, 2020 reported mortgage rates for the most popular loan products as follows: The 30-year fixed mortgage rate average was 3.47%, almost unchanged from 3.45% last week. The 15-year fixed was 2.97%, unchanged from 2.97% last week. The 5-year ARM was 3.28%, down from 3.32% last week. 

California housing affordability increases in the fourth quarter of 2019 – The California Association of Realtors reported that 31% of California households could afford to purchase a $607,040 median-priced home in the fourth quarter of 2019. That was up from 28% in the fourth quarter of 2018, as substantially lower interest rates offset price gains. A minimum annual income of $119,600 was needed to purchase a $607,400 median priced single-family home with a monthly payment of $2,990. That payment included principle, interest, property tax and insurance with a 20% down payment, and a 30-year fixed loan.  Affordability also increased for condominiums and townhomes from one year ago. The report revealed that 41% of California households could afford a $480,000 median priced condominium or townhouse, up from 37% one year ago. An income of $94,400 was needed to qualify for a monthly payment of $2,360 on a median priced condominium or townhome. Single family home affordability in Los Angeles county was 27% in the fourth quarter of 2019, up from 24% in the fourth quarter of 2018. The median price in Los Angeles County in the fourth quarter of 2019 was $617,310, and the monthly payment was $3040. . Single family home affordability in Orange County was 26% in the fourth quarter of 2019, up from 20% in the fourth quarter of 2018. The median price in Orange County in the fourth quarter of 2019 was $828,000, and the monthly payment was $4,070.  Single family home affordability in Ventura County was 31% in the fourth quarter of 2019, up from 29% in the fourth quarter of 2018. The median price in Ventura County in the fourth quarter of 2019 was $660,000, and the monthly payment was $3,250.