LAST WEEK'S NEWS HIGHLIGHTS

Minutes from the Federal Reserve's closed-door meeting of March 27 and 28 revealed that "most members thought that the end of the tightening process was likely to be near." Wall Street's response to a possible end to increases in the federal funds rate sent stocks higher, with the Dow Jones Industrial Average closing at 11,342.89 on April 20, its highest level since January 2000.

Fueled by higher prices for gasoline, clothing and shelter, U.S. consumer prices rose by 0.4% in March, far higher than the modest 0.1% gain in February, the Labor Department said April 19. Core inflation, which excludes food and energy costs, increased 0.3%, the biggest jump since March 2005. Meanwhile, wholesale prices rose 0.5% in March, following a 1.4% dip in February. Analysts had expected a 0.4% rise.

The Conference Board's Index of Leading Economic Indicators -- a closely watched reading because it predicts future economic activity -- dropped 0.1% in March after sinking 0.5% in February. The March and February declines follow four consecutive positive readings.
Housing starts in March also declined 7.8%, with permits for new construction down 5.5%, the Commerce Department said April 18.

Rates on 30-year mortgages rose to their highest point in nearly four years for the week ended April 20, according to Freddie Mac. Mortgage application activity for the week ended April 14 decreased 1.7%, the Mortgage Bankers Association reported on April 19.

(Courtesy of Louise Rose, ELB Mortagage Brokers)

WHERE DO I GET INFORMATION ON IRS PUBLICATIONS?

The Internal Revenue Service publishes a number of real estate publications. They are listed by number:

* 521 "Moving Expenses"
* 523 "Selling Your Home"
* 527 "Residential Rental Property"
* 534 "Depreciation"
* 541 "Tax Information on Partnerships"
* 551 "Basis of Assets"
* 555 "Federal Tax Information on Community Property"
* 561 "Determining the Value of Donated Property"
* 590 "Individual Retirement Arrangements"
* 908 "Bankruptcy and Other Debt Cancellation"
* 936 "Home Mortgage Interest Deduction"

Order by calling 1-800-TAX-FORM.

ECONOMIC NEWS OF LAST WEEK

The U.S. trade deficit fell to $65.7 billion in February, a 4.2% decline from January's record imbalance of $68.7 billion, as U.S. purchases of foreign oil, automobiles and other goods decreased. The deficit was the third highest on record.

Meanwhile, the U.S. government rang up a record $85.5 billion budget deficit in March, with the Treasury Department reporting April 12 that federal spending totaled $250 billion for the month against government receipts of only $164.5 billion. The increase in federal spending was up 13.7% from March 2005.

Industrial production at factories, mines and utilities rose by 0.6% in March, the Federal Reserve said April 14. The better-than-expected increase suggests the economy is heading toward summer with decent momentum.

Sales at the nation's retailers were also up 0.6% in March, better than the 0.5% gain that economists were forecasting, the Commerce Department reported April 13. Among the merchants reporting gains were auto dealers, furniture stores, building and garden centers, sporting goods, and books and music stores.

In other news, the National Association of Realtors projected that 2006 sales of new and existing homes would experience their third-best year ever, after 2005 and 2004. Also on April 13, the 10-year Treasury note -- a touchstone for various consumer, corporate and government borrowers -- surpassed 5% for the first time since June 2002.

(Courtesy of Louise Rose, ELB Mortgage Brokers)

LAST WEEK'S ECONOMIC NEWS UPDATE

Unemployment dropped to 4.7% in March, a 4-1/2 year low, as employers boosted payrolls by 211,000 workers, the Labor Department reported April 7. At the same time, wage growth was sluggish, with the average hourly wage up just 0.2% to $16.49, a shade less than the 0.3% increase economists had forecast. Modest wage growth, however, is seen as a positive sign for keeping inflation in check.

First-time jobless claims also fell for a third straight week to 299,000, down 5,000 from the previous week. The total number of Americans receiving benefits dipped to 2.44 million, the lowest level in six years.

Meanwhile, the services sector of the U.S. economy expanded to 60.5 in March from 60.1 in February, according to the Institute for Supply Management index issued April 5. A reading above 50 means that non-manufacturing activity is growing.

Construction spending rose to a seasonally adjusted annual rate of $1.185 trillion in February, an all-time high, the Commerce Department said April 3. The 0.8% gain over January's level was greater than the 0.5% increase Wall Street had expected.

Rates on 30-year mortgages rose to their highest level in 2-1/2 years, Freddie Mac reported April 6.

(Courtesy of Louise Rose, ELB Mortgage Brokers)

Investing in Different Real Estate Markets

Real estate investments have proven themselves to be relatively lucrative in recent years. In today's global marketplace, many more real estate investors are buying properties in areas beyond their local markets. There are several reasons that you should consider investing in real estate markets beyond your immediate area:

Inventory, average selling prices, and appreciation rates may be more favorable in markets outside of your own.

Investing outside your market is a sound means of diversification, buffering you against depreciation in your primary home should your local market experience any downturn.
Internet communication and web-based real estate tools make buying a distant property a much simpler proposition than in years past.

Deciding to buy outside of your home market doesn't mean you have to brave the buying process alone. Real estate professionals in your local area should be able to provide information on investing in new markets or refer you to an agent in the market of your choosing. If the prospect of buying distant real estate makes you uneasy, you may decide to start by buying a property in a city a bit closer to home.

LAST WEEK'S ECONOMIC HIGHLIGHTS

The Federal Reserve raised the federal funds rate (the interest rate on overnight loans between banks) another quarter-point to 4.75%, the highest level in five years. In its March 28 announcement, the Fed also stated, "Further policy firming may be needed."

Consumer spending showed a minuscule 0.1% gain in February, after a huge 0.8% surge in January, the Commerce Department said March 31. It was the weakest gain in six months. Meanwhile, personal incomes rose by 0.3% in February, less than half the 0.7% jump in January. The Commerce Department further reported that the overall economy (gross domestic product) grew by just 1.7% in the final three months of 2005, the weakest rate in a decade.

Americans' optimism in the economy, however, rebounded in March, sending the Conference Board's widely followed index on consumer confidence up 4.5 points to 107.2, the highest level since May 2002. Analysts had expected a reading of 102. The University of Michigan's consumer sentiment index, issued March 31, also rose from 86.7 in February to 88.9 in March.
Mortgages showed positive movement as well, as the Mortgage Bankers Association (MBA) market index, published March 29, rose 1.2% over the previous week. The MBA's purchase index increased 2.7% while its refinancing index fell 1.0%.

The number of Americans filing new jobless claims fell by 10,000 to 302,000 in the week ended March 25, suggesting continued health in the labor market.

(Courtesy of Louise Rose, ELB Mortgage Brokers)