October 10, 2017
The Story Continues
With the release of last month's job numbers, we were able to get a glimpse of the major effects of three major hurricanes hitting within a few weeks. We have seen many pictures of devastation from Texas to Puerto Rico. The jobs report was one more picture which has made the national numbers look bad, even considering the drop in the national unemployment rate, but the national numbers still dwarf the drastic effects upon the local economies and millions of lives.
This story will not be a short story. It will be a novel with many chapters. It starts with mass devastation and the delivery of food and water, as well as other supplies of survival. It will end differently for many. Some will relocate and many others will be part of the rebuilding process. That rebuilding process will create thousands upon thousands of jobs. This is likely to result in construction job shortages in other parts of the country.
How long will it take to recover? No one knows the answer to that question. Many economic reports will be skewed as these regions go through the process. Even the federal budget deficits will be affected by a slowing economy and increased funds spent on recovery efforts. Along with the budget deficits, there will be a spike in mortgage defaults. But again, the housing stock will be rebuilt. For market analysts, this will be a very interesting story, but not nearly as meaningful as those affected locally.
Rates edged up in the past week, with rates on home loans rising less than Treasuries. For the week ending October 5, Freddie Mac announced that 30-year fixed rates rose to 3.85% from 3.83% the week before. The average for 15-year loans rose 2 ticks as well, to 3.15%. The average for five-year adjustables moved down to 3.18%. A year ago, 30-year fixed rates averaged 3.42%. Attributed to Sean Becketti, chief economist, Freddie Mac -- "After holding steady last week, rates ticked up this week. The 10-year Treasury yield rose 8 basis points, while 30-year fixed rates increased 2 basis points to 3.85 percent." 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
October 6, 2017
|6-month Treasury Security
|1-year Treasury Security
|3-year Treasury Security
|5-year Treasury Security
|10-year Treasury Security
|| 1.798% (Sept)
|| 1.002% (Sept)
|11th District Cost of Funds
|| 0.732% (Aug)
|| 4.25% (June)
| An adage in the legal profession goes, "A man who represents himself has a fool for a client." In the housing industry--particularly realtors--feel the same way about those who attempt to sell their own homes. And yet, For Sale By Owner, or FSBO, persists, with the temptation to cut out an agent and the typical 6 percent commission that comes with them. Trulia, San Francisco, estimated 6.2 percent of all home listing in the U.S. are FSBO. But with such temptation comes risk, Trulia said. When it comes to actually listing the home, Trulia reported FSBO sellers are slightly more optimistic about the value of their home and list their homes at a 2 percent premium nationally. "This sounds like great news for sellers, but there is a risk: FSBOs often see their homes sit on the market longer than agent-listed homes, sometimes by more than a month," Trulia said. So, is FSBO worth it? "Ultimately, it's not unreasonable for sellers to consider a FSBO listing considering the potential payoff," Trulia said. "But it's important to remember the value agents bring to the table. They have access to more listings and buyers, know a market's ins and outs and have experience negotiating a deal." More importantly, a listed price in many markets is just a starting point," Trulia said. "In some markets, properties can be priced lower to start bidding wars," it said. "FSBOs also run the risk of underpricing their homes." Additionally, Trulia said FSBO properties run the risk of languishing--perhaps due to the inexperience of the seller in finding and negotiating with a potential buyer. Source: The Mortgage Bankers Association
Americans with an education level of bachelor’s degree or higher are more likely to own a home by age 30, according to a new study from the Federal Reserve Bank of New York. That's regardless of their student debt situation too, the study finds. Researchers who tracked college attendance and homeownership rate by age for those born between 1980 and 1986 concluded that college graduation is associated with higher homeownership rates. By age 33, the homeownership rate for those who did not attend college trails about two years behind those who did attend college with debt but did not graduate, the study showed. “Past research has not been able to disentangle how different types of educational attainment and student debt interact to impact the likelihood of owning a home,” according to a blog post at Liberty Street Economics. “Because we observe not only whether an individual owes student debt and has attended college but also graduation status, level of degree obtained, and homeownership status, we are able to further disentangle the relationship between different education levels and homeownership.” Yet, the amount of student debt a person has is related to homeownership rates, the study concluded. Americans carrying more than $25,000 of debt are less likely to own a home than those with smaller debt numbers. Source: RIS Media
Recent housing data point to house buying as actually being cheaper than renting, but the demand for apartments reached a record high over the second quarter of the year. Nationwide, apartment demand increased by a third in the second quarter year over year, according to a recent RealPage report. “Today’s strong demand for apartments reflects the combination of solid job formation and widespread availability of appealing new apartments,” said Greg Willett, chief economist for RealPage. There were 175,645 apartments completed last quarter – exceeding 86,431 units completed in the same period in 2016. Mid-year apartment occupancy stood at 95% but still stood a bit shy from mid-2016’s 95.3% rating, according to Axiometrics. Source: MPA