December 8, 2015
This was it. The last jobs report before the Federal Reserve Board’s Open Market Committee makes its decision regarding a rate increase next week. There was a ton of data released before Friday’s jobs report, but none of it was conclusive. Some of the economic releases were positive, such as construction spending and personal income growth. Others were disappointing such as manufacturing data and growth in personal spending. However, none of these numbers are as important as employment growth.
So what did the jobs numbers tell us? The addition of 211,000 jobs and a steady unemployment rate basically tells the Federal Reserve Board that it is all systems go for a rate increase. It was a strong report, especially considering the fact that the previous month’s data was also revised upwards and the overall labor participation rate increased. The increase in wages were muted as they have been throughout the recovery. The markets believe at this point that a rate increase is coming, barring some sort of significant international news that would put it on hold.
As we mentioned previously, even if the Fed does indeed raise rates, there will be several questions remaining. How large an increase will we see? And what will their statement accompanying the action say about the future? The markets are sure to hang on every word. These words may tell us how long-term rates will react to any rate increase. Certainly, rates have moved up already in anticipation of the move and we should not assume that rates will move up further in this reaction.
The Markets. Rates on home loans were down slightly again in the past week going into Friday’s employment data, however, they rose after the survey was released. Freddie Mac announced that for the week ending December 3, 30-year fixed rates eased to 3.93% from 3.95% the week before. The average for 15-year loans fell slightly to 3.16%. Adjustables were mixed, with the average for one-year adjustables increasing to 2.61% and five-year adjustables falling to 2.99%. A year ago, 30-year fixed rates were at 3.89%, virtually the same as today’s levels. Attributed to Sean Becketti, chief economist, Freddie Mac –“Treasury yields ticked down 3 basis points after weak manufacturing data. In response, the 30-year fixed rates dropped 2 basis points to 3.93 percent. After the survey closed, Yellen implied that the economy is ready for a rate hike in December. However, all eyes remain on this Friday’s jobs report, the last significant release prior to the FOMC’s meeting.” 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 December 4, 2015
|Daily Value||Monthly Value|
|6-month Treasury Security||0.45%||0.11%|
|1-year Treasury Security||0.57%||0.26%|
|3-year Treasury Security||1.27%||0.93%|
|5-year Treasury Security||1.74%||1.39%|
|10-year Treasury Security||2.33%||2.07%|
|12-month LIBOR||0.838% (Oct)|
|12-month MTA||0.256% (Oct)|
|11th District Cost of Funds||0.649% (Oct)|
Home buyers are wise to take careful note of the houses around them before they make an offer on that picture-perfect home. Buying the most expensive house in the neighborhood isn’t always the best strategy. Sure, they’ll have bragging rights, but your buyers may need to be informed about some challenges during resale. After all, unloading the priciest home on the block and seeing an increase in equity isn’t easy. “A lot of buyers forget a home is an investment,” says Brendon DeSimone, a real estate expert and author of “Next Generation Real Estate.” “The world changes. Things happen fast. People transfer, people lose their jobs. Now imagine yourself as the seller of that home.” With the nicest home on the block, home owners who do any upgrades – even minor – may be doing a larger mismatch between their home and the surrounding homes. By considering the home as an investment, buyers will look at homes that leave some room for improvement and that will allow them to build equity and hopefully even pay it off when they do sell. DeSimone actually recommends to his clients buying the worst house in the best neighborhood. “You can add value on your own,” he says. “If you’re choosing between an awesome house in a crappy location and an awful house in a great location, I would choose the latter.” Improvement doesn’t need to entail a total renovation either. DeSimone says just regular maintenance, refreshing the paint, and making minor repairs that the previous owner ignored could add to the home’s value. Source: Realtor.com
Extra garage space is coveted among home buyers. In a new analysis by realtor.com®, the site’s researchers examined median listing prices per square foot and all homes listed over a ten month period to determine how much more sellers are asking per parking spot. While added spaces cause prices to rise, the jump with a three-car garage boasts a notable 11.45 percent increase over those with a single spot, according to the study. The majority of the homes – or about 64 percent — have two-car garages but three-car homes tend to be larger and higher-end, which can increase the prices, Javier Vivas, realtor.com®’s economic researcher, told The Wall Street Journal. Also, homes with a seven-car garage see a price jump, on average, of 31.42 percent more than a one-car garage home. The share of luxury homes with big garages has been growing in demand in recent years among high-income households, says Stephen Melman, director of economic services for the National Association of Home Builders. “Most people who purchase a home with six, seven, even more garage bays—they’re really very likely to be either collectors or auto hobbyists,” he says. Source: The Wall Street Journal
Why do people choose to live where they do, and how do their priorities and housing trade-offs shift over time? Using data from a recent study by the Centre for Cities, a research and policy institute based out of London, CityLab highlighted some key insights into the motivations behind where people choose to live. It should come as no surprise that the top reasons overall for choosing where to live are the cost of housing (at 28 percent), being close to family and friends (28 percent), the size and type of housing (22 percent), and being close to their job or their partner’s job (21 percent). However, Richard Florida, co-founder and editor of CityLab, points out that these housing decisions vary significantly depending on age. He points out that people generally make three big moves in their lifetime, and their priorities and trade-offs are different at each of these three stages. “While some of us are inherent urbanites or suburbanites, our preferences change over the course of our lifetimes,” says Florida. “Many young people may prefer big cities, with their vibrant job and dating markets and abundant amenities and things to do. Those with families prioritize bigger homes with better schools and more parks and green space. Ultimately, we look for the cities and neighborhoods that fit us best at the time.” Source: CityLab