And They Are Off…
Yes, today we are talking about politicians. And we don’t mean “off their rocker” — just in case you are wondering. What we mean is that they are off and running in a Presidential race. The primaries are in the home stretch and there certainly has been a lot of noise. But as the candidates are finalized, the noise will get even louder. Or, should we say, the rhetoric.
Why is the Presidential race important for the markets? The markets obsess over everything. And if a Presidential candidate says something that upsets or is joyful to the markets, the markets will react as if they are already President, even though they are not. Basically, this will be just one more variable factor the markets will have to contend with for most of the year. Along with jobs (next week), the Federal Reserve Board’s interest rate decision (this week), oil prices, China and about one hundred other factors.
Speaking of the Federal Reserve Board, they announce their decision tomorrow. Most are expecting the Fed not to raise rates at this meeting. Even though the jobs machine has been humming, inflation is nowhere to be seen and most economic reports here and overseas have been less than overwhelming. If they don’t raise rates, speculation will be humming when we get to their next meeting, which is in the middle of June. Just in time for the Presidential conventions!
Officials from residential finance giant Freddie Mac have made a bold prediction: This year housing starts and home prices will reach their highest levels since 2006. The main reasons behind its bullish forecast is low interest rates, an improving job market, and a gradual increase in housing supply. “Housing markets are poised for their best year in a decade,” says Sean Becketti, Freddie Mac’s chief economist. “In our latest forecast, total home sales, housing starts, and home prices will reach their highest levels since 2006. Expect the 30-year fixed interest rate to remain very attractive throughout the spring home-buying season, staying below 4 percent until the second half of the year,” according to Freddie Mac’s monthly Outlook for March. For home sellers, they’ll be able to enjoy more home price increases. “In 2015, house prices increased about 6 percent on a year-over-year basis,” Freddie notes in its outlook. “Expect house prices to continue to rise, but at a moderating pace, with annual price appreciation slowing to 4.8 percent in 2016.” Also, gains in employment across the country will help to fuel hotter housing markets, according to Freddie Mac. The unemployment rate dropped below 5 percent recently. Despite some headwinds, officials remain mostly upbeat. The “nation’s housing markets should sustain their momentum from 2015 into 2016 and 2017,” the outlook notes. Source: Freddie MacHome prices last month experienced a 6.8 percent year-over-year increase and a 1.1 monthly uptick, according to new data from CoreLogic. Furthermore, CoreLogic’s Home Price Index Forecast is pointing to a 5.2 percent increase in between February 2016 and February 2017, while the month-over-month forecast is for a modest 0.6 percent bump-up in March. “Home prices continue to rise across the U.S. with every state posting year-over-year gains during the last 12 months,” said Anand Nallathambi, president and CEO of CoreLogic. “Improved economic conditions and tight inventories continue to drive exceptionally strong gains in many markets, especially for homes priced below $500,000.” Source: National Mortgage Professional
When it comes to marketing the value of environmentally friendly homes, you’ll want to watch your words. They can make a big difference in how consumers perceive the value of the home — even if some of the words mean the same thing. For example, homebuilders often use the word “green” to describe a house that is more environmentally friendly. Yet, consumers surveyed say that they perceive more value when they see the word “eco-friendly” instead. Indeed, 68 percent of about 3,370 consumers who purchased a home in the last three years say they feel the most value comes from an “eco-friendly” home compared to 32 percent who said a “green” home offered more perceived value, according to the 2015 study on consumer preferences by the National Association of Home Builders. Researchers also discovered other word preferences surface in describing sustainable products. For example, words like “comfortable” trump “livable,” the study found. Eighty-three percent of potential consumers say they find more value in a property that is marketed as “comfortable” over “livable.” Source: NAHB