Early End of Summer Jobs ReportIt is unofficially the end of summer this week. Of course, we understand that the official last day of summer this year is September 21. But in reality, the summer ends with Labor Day because the kids are going back to school and vacation season ends. In addition, within many areas of the country, after Labor Day starts the fall real estate season. The fall real estate season is not usually as robust as the spring real estate market, but activity does pick up after the vacation season ends.
This year it did not seem like we had a real estate slowdown during the summer. With interest rates near record lows, the only thing which seemed to be holding sales back was a shortage of listings in many areas of the country. When assessing the potential for a strong fall showing, we must ask — will rates continue near record lows? The direction of interest rates depends upon several factors, one of which we will see this Friday when the jobs report is released.
We had strong jobs reports the last two months, however, rates did not react much because of the Brexit situation and also because we had a very weak employment report released in early June. Basically, the two strong reports evened out the numbers over the past three months. A third strong report could be seen as the evidence the Federal Reserve is looking for in order to justify raising rates later in September — especially if there is any hint of increased wage inflation. On the other hand, a weaker report with tame inflation would most likely keep any action by the Fed on hold until later in the year, or perhaps even next year.
Americans spend an average of 55 minutes per online visit with real estate apps on their phones, according to new research unveiled by Google. Basically, “customers roll over in the morning and start looking at real estate listings [on their phone],” John Thornton, a partner in Google’s real estate business, said about the study’s findings. Sixty-nine percent of respondents Google surveyed call shopping for real estate “fun” from their phone and online. In fact, Americans are so addicted to home shopping online that 64 percent say they keep checking out houses and home values even after they purchase a home. The Google study also finds that people start hunting on real estate sites three years before they buy, on average. Also, one in five of the people checking out homes on real estate apps and websites are actually in the current market to purchase a home, the study found. Source: The Republic/AZcentral.comThe sentiment of US homebuyers continues to edge higher with the improving economy. The latest Fannie Mae Home Purchase Sentiment Index has increased to a new high of 86.5 in July, up 3.3. points from June. Doug Duncan, senior vice president and chief economist at Fannie Mae said, “One interesting potential bright note for housing in the July survey is that younger households may finally be shifting toward buying rather than renting in greater numbers.” Duncan noted that it is too soon to say whether that shift among younger buyers is a trend but said that there is some further evidence coming through which is encouraging in this respect. The main components of the index increased including: now is a good time to buy (up 1 point to 33 per cent); now is a good time to sell (up 2 points to 20 per cent); rates on home loans will be lower over the next 12 months (up 5 points to a negative 36 per cent); and home prices will be higher after decline in June (up 8 points to 41 per cent). Source: Mortgage Professional America
In an effort to create more affordable housing options for entry-level buyers, home builders are increasingly turning to townhomes. In recent years, builders focused on constructing higher-end homes. Less than 20 percent of newly built single-family homes were priced below $200,000, and the size of a new home grew to an average of 2,700 square feet, according to Census Bureau data. The National Association of Home Builders say that rising regulatory costs – up about 30 percent over the past 5 years – means that it is more expensive to build a house today. As such, first-time home buyers have mostly been priced out of the new-home market. But builders think townhomes may change that. These homes tend to be smaller (the average size was 1,983 square feet, according to 2015 Census data). Townhouse starts totaled 94,000 in the last four quarters ending with the first quarter of 2016 – a 29 percent increase over the prior year, estimates Robert Dietz, chief economist for NAHB. In fact, the growth rate exceeds the total single-family building market, Dietz notes. “These trends will continue,” Dietz says. “As regulatory cost impacts persist and millennials enter the for-sale market, the cost of construction and the growing demand for medium-density housing in walkable neighborhoods in inner and outer suburbs will support townhouse development growth.” Source: Builder