While I wait for my tea to cool, some commentary from my morning perusal of the news headlines:
- From the Home Ownership Department: According to the Los Angeles Daily News, sales of real estate in Calfornia are still strong. In February, prices soared an annual 20% or more in Los Angeles County, with the median price of a previously owned home in Los Angeles County soaring an annual 21.4% to $473,350, down 0.5% from January. The statewide median increased an annual 20.4% to $471,620 and dipped 2.9% from January. Sales increased 6% from a year earlier. Nationally, according to the Los Angeles Times, sales of existing U.S. homes fell 0.4% in February, while home prices rose at double-digit rates. Sales of previously owned homes declined to a seasonally adjusted annual rate of 6.79 million units last month, and the national median home price jumped 11% to $191,000 from the same month a year earlier. The Daily News article noted that if sales activity proceeds at February’s pace, consumers will buy 608,170 homes by the end of 2005. And during the year’s first two months, statewide sales are 5.2% higher than a year earlier and up 6.1% in Los Angeles County. Appreciation rates are expected to average 15% this year from the 20% range of 2004. Mortgage rates are expected to rise but to a level still considered low by historical standards. Last month, the 30-year fixed rate averaged 5.63%, not much different from the 5.64% of a year ago. Adjustable rates averaged 4.16% last month, up from 3.55% a year ago. Lastly, it took on average 14 days longer last month to sell a house than a year ago.
Update: According to CNN Money, as a result of the recent Fed action, the average rate on 30-year fixed-rate mortgages climbed to 6.01%, with an average 0.7 of a point payable up front, up from 5.95% the previous week. Last year at this time, the rate on the 30-year fixed-rate loan stood at 5.40%. The average 15-year mortgage rate averaged 5.56%, with a 0.7 percent payable up front, up from 5.47% the previous week. A year ago, the 15-year rate averaged 4.70%. Five-year adjustable-rate mortgages (ARMs) averaged 5.35%, with an average 0.7 point payable up front, up from 5.31% the week before. One-year adjustable rate mortgages (ARMs) averaged 4.24%, up from last week’s 4.20%, with an average 0.8 of a point payable up front. At this time last year, the one-year ARM rate averaged 3.36%.
What does this all mean. First, I always note that they give the median price, not the average price. This likely prevent skewing of the price, but might be influenced differently depending on the inventory. Second, things are starting to cool. I’m curious what the signs of the bubble bursting were in 1990, and are they being repeated again. Still, it is still better to buy now. (And yes, I’m still working things out in my head regarding our options).
- From the So Live In Your Car department: The Los Angeles Times is reporting that GM could be phasing out another nameplate if performance doesn’t increase soon. GM’s vice chairman is quoted as saying, “GM’s Buick and Pontiac are both “damaged brands” because of lack of investment over the years, and GM is working to correct that with an array of new vehicles coming to market”. GM most recently phased out the Oldsmobile brand, and Chrysler phased out the Plymouth brand. On the other side of the ocean, we are seeing Hyundai roar. According to USA Today, Hyundai and Kia, owned by the same South Korean conglomerate, are investing heavily in the USA. They are adding dealers, introducing an ambitious slate of new vehicles and courting increasingly upscale customers. They are making XM radio standard in all vehicles, and have seen remarkably improving quality in their lines, especially Hyundai. Toyota sees them as a threat. Meanwhile, Audi and Nissan are fighting over who can use the letter “Q” in car names. This has gone as far as a lawsuit!
With respect to GM: Which nameplate do you think goes first? My bets are Buick. Nameplates convey certain images: Cadillac is classy; Chevy is middle-of-the-road; Pontiac is sporty; and we know about Hummers and Saturns. Where does Buick fit now?
With respect to Hyundai: They are now where Datsun (now Nissan) and Toyota were in the early 1970s. Remember the Datsun B210. They are just about to hit it big, once they get the quality issues down. We are about to see yet another American industry go down. The USA today article noted that gains of Hyundai and Kia are in sharp contrast to General Motors (GM) and Ford Motor (F), which were off 9.9% and 7.4% in the first two months of the year. When will the American car companies learn to have the quality and attributes that appeal to American consumers, and how will they overcome the poor reputation of the years.
- From the Coming to a Snopes.Com Near You department: According to the LA Times, a women at a San Jose Wendy’s bit into a part of a human finger while eating chili Tuesday night. She supposedly spit it out and warned other diners to stop eating, witnesses said. According to officials, the fingertip was about 1 3/8 inches long. They believe that it belongs to a woman because of the long, manicured nail.
First, how quickly do folks expect this to be embelleshed and attain urban legend status, such as the stories of a finger found in a can of menudo, hamburgers made with worm meat, or restaurants serving fried rats. Second, I didn’t know that things were so bad for Wendy’s in the Bay Area, or that meat prices were so bad, that they needed to go the Sweeney Todd route.
Lastly, a quick comment on the Teresa Schiavo case. Now that the Supreme Court has declined to hear the case, I hope that Ms. Schiavo passes quickly, and that her families put aside this legal wrangling and spend their last few days together with Ms. Schiavo. It’s time to move on with life.
