Mortgage Business

Another Important Jobs Report

A View from the Beach
A View from the Beach
March 1, 2016 – 

Every month watching the release of the employment data is interesting. However, with the Federal Reserve Meeting coming up in just a few weeks, the jobs report will take on a special meaning. It has been a tumultuous start to the year with stocks, oil prices and interest rates moving lower in tandem. Before the year started, many were predicting the first rate increase of the year by the Fed at the March meeting. Now most analysts have changed their tune in this regard.

We should not assume that the Fed has changed their mind. We have already seen stocks trying to rally and a pick-up in consumer inflation for the first time in a while. Add a strong jobs report to the mix, and the speculation about the Fed will start up again. That does not necessarily mean that the Fed will raise rates in March, but even a strong statement about the health of the economy might be enough to affect the markets.

One thing is for sure — the markets are always changing and the changes can come quite rapidly. Thus, we should not take it for granted that stocks are going to have a down year and interest rates are going to hover at record lows all year. This means the markets will be watching the jobs report closely for any evidence that the economy is still producing enough jobs per month in order to put upward pressure on wages.


The Markets. Rates on home loans were lower last week, inching closer to 2015 lows. Freddie Mac announced that, for the week ending February 25, 30-year fixed rates fell to 3.62% from 3.65% the week before. The average for 15-year loans was also slightly lower at 2.93%. The average for five-year adjustables decreased to 2.79%. A year ago, 30-year fixed rates were at 3.80%, below today’s levels. Attributed to Sean Becketti, chief economist, Freddie Mac — “Yields on the 10-year Treasury continued their downward trend this week after a small rally the previous two weeks. The 30-year fixed rate responded, falling 3 basis points to 3.62 percent. Since the beginning of 2016, 30-year rates have fallen almost 40 basis points helping housing markets sustain their momentum into this year. Earlier this week, the National Association of Realtors announced existing home-sales were up 4 percent month-over-month in January and up 11 percent from last 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 February 26, 2016

Daily Value Monthly Value
Feb 25 January
6-month Treasury Security  0.46%  0.43%
1-year Treasury Security  0.56%  0.54%
3-year Treasury Security  0.85%  1.14%
5-year Treasury Security  1.16%  1.52%
10-year Treasury Security  1.71%  2.09%
12-month LIBOR  1.153% (Jan)
12-month MTA  0.350% (Jan)
11th District Cost of Funds  0.655% (Dec)
Prime Rate  3.50% (Dec)

Urban homes are now worth more than suburban homes, as Americans place a greater value on living in cities and in high-rise condos, according to Zillow. The average urban home is now worth 2% more than the average suburban home, Zillow said. Urban homes were worth 1.2% less than suburban homes in 2013. Cities in high demand with young people are seeing the biggest boost to the spread between the value of urban homes and suburban homes. Still, suburban homes outpace urban homes, in terms of average total value in many locales and other cities are seeing their suburban homes rise in value faster than urban homes. Homebuyers’ preferences are changing, “as they seek amenity-rich, dense and walkable areas that are often closer to their workplace,” Svenja Gudell, Zillow’s chief economist, said in a news release. Source: National Mortgage News

Unit size on new residential construction is on the rise as more home buyers desire extra space. But it’s also coming with a much steeper price tag. The average size of a new home rose to about 2,720 square feet in 2015, up from 2,660 square feet in 2014, the National Association of Home Builders reports. Nearly half of the homes constructed last year had four or more bedrooms. A quarter of homes also had garages that would hold three or more vehicles. In 2015, the average price of a new-home rose to $351,000 – up $100,000 from 2009, NAHB reports. Some of the increase is due to builders catering more to the luxury market and moving away from building homes for first-time buyers. “They haven’t made more starter homes in recent years mainly because of land prices, construction costs, and lack of available loans for less-affluent buyers,” The Wall Street Journal reports. First-time home buyers tend to bring the average size of new homes down since they tend to live in smaller homes than move-up buyers. The average new-home size was 2,360 square feet during the 2008 financial crisis. It then started climbing sharply, leveling out in 2014, and now back on the rise again in 2015. “Last year I was expecting, and I wasn’t alone, that the average size of homes would actually fall … because there were new measures that were supposed to bring in a wave of first-time home buyers,” says Rose Quint, assistant vice president of survey research at NAHB. “That didn’t happen.” Source: The Wall Street Journal

It could be a good year for women looking to buy real estate, particularly in cities where their incomes are rising faster than those of single men. For decades, single women played an important role in the U.S. housing market, buying more homes than single men. But after the housing crisis, the percentage of single female buyers dropped from 21 percent of purchasers in 2009 to 15 percent in 2015. Now they may be poised to make a comeback. For more than a year, the majority of respondents to a prospective homebuyer survey by real estate brokerage Redfin have been women—this according to more than 17,000 surveys completed on its website since 2012. Rising incomes may be especially important because single female homebuyers have traditionally stretched their budgets to buy homes, said Jessica Lautz, managing director of survey research for the National Association of Realtors. Many of them are single mothers or widows, said Lautz: “They are making sacrifices financially because they have a really strong desire to be a part of a community.” Beyond higher wages, here’s another factor that could bring single women back to the market: Because of their lower household incomes, single women often shop in the same price range as investors looking for rental properties, Lautz said. Such investors played a smaller role in many local housing markets in 2015 than in previous years. Source: HousingWire

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