How can jobs flourish without the economy responding? For years after the Great Recession, we were told that if we added jobs, consumers will start to spend on homes, furniture and cars and the economy will start flourishing. Well, since the Great Recession, we have created around 10 million jobs, which erases the job losses caused during the recession. Yet, the economy is still muddling along at less than a 2% growth rate. How can that be?
For one thing, even though we have created more jobs than the economy lost during the recession, when you look at the net jobs created during the past decade, we have not created enough new jobs to accommodate population growth. The U.S. population has been growing at a rate of between 2 to 3 million per year. Also, the jobs created are not necessarily the highest paying jobs, which makes a certain portion of the population “under-employed.”
What does this mean? As good as the headline numbers sound, it means that from a labor perspective, we are not fully recovered from the recession. Like the real estate sector, the recovery has been uneven. We are much closer than we were, but not all the way there. The good news? Because we have some distance to go, interest rates remain low and this means we are still applying the stimulus. Low interest rates increase the possibility that our real estate and the job markets are more likely to continue their recovery.
Nearly one in five consumers have a FICO credit score that is 800 or higher. The percentage has slightly risen from 19.9 percent currently from 19.6 percent six months earlier, according to the Fair Isaac Corp. As such, fewer consumers have credit scores below 550, a steady decline that has been appearing since late 2009. Since Fair Isaac Corp. started tracking in October 2005, the national FICO score is at an all-time high at 695. The improvement in credit scores does seem to be showing some signs of leveling off, however. FICO scores are one of three key metrics lenders use to evaluate prospective borrowers and determine rates on home loans. The rates borrowers get between the highest and lowest acceptable FICO scores can vary by more than 2.4 percent. Source: Real Estate Economy Watch Note: Want more information on how to improve your credit score? Contact us for free special report entitled — Increase Your Credit Score Now.New figures from the National Association of Realtors reveals that purchases of vacation homes in 2015 fell by 18.5 per cent. The drop to an estimated 920,000 followed the 2014 peak of 1.13 million and covered existing and new homes. Despite the drop, vacation home sales were still at their second highest level since 2006. “Baby boomers at or near retirement continue to propel the demand for second homes, although headwinds softened the overall volume of vacation sales last year,” said NAR chief economist Lawrence Yun. Meanwhile, investment home sales increased by 7 per cent to an estimated 1.09 million in 2015. Owner-occupied purchases jumped 15.9 per cent to 3.74 million last year, from 3.23 million in 2014. The median vacation home price was $192,000, up 28.0 per cent from $150,000 in 2014. The median investment-home sales price was $143,500, up 15.3 percent from $124,500 a year ago. Source: NAR
Studies are sounding the alarm on the greater need for more affordable housing for U.S. seniors. For example, a recent study by the rental advocacy group Make Room reports that the percentage of seniors who are in need of affordable housing is climbing faster than the increase in the nation’s elderly population. The study notes that between 2005 and 2014, the senior population – those aged 65 or older – rose 25 percent (from 22.5 million to 28.1 million). Also, the number of seniors who are paying more than half of their household income – before taxes – toward rent and utilities surged by 34 percent (from 1.4 million to 1.8 million), according to Make Room’s analysis. Many senior communities across the country are at capacity and are even maintaining lengthy wait lists of interested residents. “A lot more could be done,” says Daryl Carter, chairman and CEO of Avanath Capital Management, an investment firm. “We should be able to triple the $6.5 billion that we currently spend on the tax credit program. There’s just simply not enough assistance to address the affordable needs we have in this country.” Source: National Real Estate Investor