April 11, 2017
Interesting Jobs Data
Every month the jobs numbers are of major interest to analysts who are looking for direction with regard to the economy. In essence, there is no up-to-date economic statistic which is more important, as job growth is the spark which can spur on economic growth, as well as inflationary concerns. In addition, there are certain employment reports that seem to attract even more interest because of other events occurring before, or as the data are being released.
March's jobs numbers were no exception in this regard. This month, the numbers took on more importance because of these additional circumstances. For one, the report followed a pretty strong jobs report released last month. Two strong months of jobs growth could have provided a signal to the Federal Reserve Board, whose members will be considering when to raise rates again. To make the timing more interesting, the minutes from the last Fed meeting were released two days before the jobs report. These minutes give us a feel as to how the Fed is likely to react to the numbers, not only with regard to increasing rates, but also regarding paring off their portfolio of bonds and mortgages.
The report was also released after the stock market rally hit a pause in the second half of March, which enabled long-term interest rates to ease back down. A strong report had the potential to refuel the stock market rise and higher rates quite quickly. Thus, when the numbers were released on Friday, the increase of less than 100,000 jobs and the downward revision in the previous months' gains, as well as stable wage growth, all seemed to have signaled that the economy is not running too hot -- despite the drop in the unemployment rate. Weather factors may have affected the extreme variations from month-to-month and, thus, one should not be coming to any conclusions regarding one month of weak employment growth. Additionally, it will be hard to measure the immediate reaction to the news with the escalation of the Syrian conflict going on at the same time as the report was issued.
Rates moved down for the third week in a row, though the data was released before the employment report was issued. For the week ending April 6, Freddie Mac announced that 30-year fixed rates fell to 4.10% from 4.14% the week before. The average for 15-year loans decreased to 3.36%, and the average for five-year adjustables moved up slightly to 3.19%. A year ago, 30-year fixed rates averaged 3.59%. Attributed to Sean Becketti, chief economist, Freddie Mac -- "The 10-year Treasury yield was relatively unchanged this week, while 30-year fixed rates fell 4 basis points to 4.1 percent. After three straight weeks of declines, the 30-year fixed rate is now barely above the 2017 low. Next week's survey rate may be determined by Friday's employment report and whether or not it can sustain the strength from earlier this year." Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.
Current Indices For Adjustable Rate Mortgages
Updated April 7, 2017
|6-month Treasury Security
|1-year Treasury Security
|3-year Treasury Security
|5-year Treasury Security
|10-year Treasury Security
|| 1.790% (Mar)
|| 0.692% (Mar)
|11th District Cost of Funds
|| 0.591% (Feb)
|| 4.00% (Dec)
| Homeowners are opening their favorite piggy bank again — their homes. As home values rise faster than expected, that increased homeowner wealth suddenly seems more enticing. It's showing up in big remodeling growth. Ever since the financial crisis at the end of the last decade, homeowners have been extremely conservative with their home equity. Even those who had money in their homes kept it there. Now, as millions of borrowers come up from underwater on their home loans and many more see their home values jump sizably on paper, borrowing more is back in favor. Home equity lines of credit, known as HELOCs and often serving as second loans, allow homeowners to pull cash out of their homes when they need it. HELOC volume is now up 21 percent in the past two years, to the highest level since 2008, according to Moody's. It is still nowhere near its housing boom level, when many people treated their homes like ATMs, but the trajectory is definitely pointing higher. Borrowers are also putting smaller down payments on home loans now, starting with less home equity either to save cash or because they can't afford anything more. To put it in perspective, before the last housing boom, the median down payment was just over 7 percent. It then dropped to 3 percent during the height of the boom, as lenders offered all kinds of "creative" loan products that required little to no down payment. After the crash, down payments rose back above 7 percent again during the recovery. At the end of 2016, the median down payment had fallen to 6 percent, according to ATTOM Data Solutions, and it appears to be headed lower, as lenders offer more low down-payment products. Homeowners are clearly leaning toward more leverage, but they are doing so in a far different environment than in 2006. Underwriting is stricter, especially for home equity loans, and borrowers must prove their ability to repay loans, including all financial documentation. Home equity continues to rise steadily, according to the Federal Reserve Board, and it is still rising faster than borrowers are withdrawing it. Source: CNBC Interested in using your equity to remodel, payoff debt or for investment purposes? Contact Us.
The 65-plus population is expected to surge from 48 million to 79 million in the next 20 years. Yet, the availability and affordability of housing to meet this blooming population is inadequate, according to a recent Harvard Joint Center for Housing Studies report. The report shows that only 3.5 percent of today’s housing contains the following three key elements of “universal design”: zero-step entrances, single-floor living, and wide halls and doorways. Further, nearly 6.4 million low-income renters will likely need to devote more than 30 percent of their income to housing by 2035, the report notes. Housing experts say builders are not growing the supply enough to meet future demands from older adults and instead are continuing to put most of their focus on higher-end construction. “The Harvard study was a scary forecast,” says Lukas Krause, CEO of Real Property Management, the largest property management franchise in the nation. “The senior sector will be one of the hardest hit for affordability. The most important thing we can do is find affordable housing for older Americans and contemplate layout and design to accommodate the older population.” More homes will need to be tailored to older adults. For example, homes likely will need to be retrofitted as single-floor living with a master suite, wider doorways to accommodate wheelchairs, and walk-in showers with grab bars. Also, expect some changes in the way people live as the older population grows. For example, cohabitation and shared housing may grow in popularity as affordability concerns brew. And, expect a growth in mother-in-law suites in single-family residences as well as grandparents living with their families like previous generations once did, Krause says. Source: Forbes.com
Just how large a house really is may depend on whom you ask, The Wall Street Journal reports. That’s because appraisers, developers, builders, real estate professionals, tax assessors, and architects all measure spaces differently. No universal standard exists for calculating a home’s square footage. Further, it can also vary regionally. For example, some calculate space on only the interior dimensions of finished living spaces. Some industry insiders may count the garage or finished basement in the square footage; others may not. Whether to count the square footage of balconies, basements, garages, or even wall thickness can vary too. Fifty-eight percent of 400 consumers recently surveyed by Houzz.com said estimates of their home’s square footage varied among real estate professionals. Square footage is an important number when it comes to buying real estate, however. Buyers may even narrow their home search online and compare homes based on price per square foot. “People want more space and have become very sensitive to that number,” says Robert Edelstein, a real estate and business professor at the University of California, Berkeley. Real estate professionals, however, are not required to verify the square footage cited in the listings database, says Quincy Virgilio, chairman of the board of directors at MLS Listings. Real estate pros often draw from several sources, such as county records, developer floor plans, and previous sale listings. Buyers who want to know more about the home’s true size need to ask more about how the size was computed. For example, they should ask the source of the measurements and what is included in that number, such as private outdoor terraces, the garage, basement, utility closets, or even staircases. Source: The Wall Street Journal