From Event to EventIf you were looking for a respite in the markets after the meeting of the Federal Reserve’s Open Market Committee, you would be disappointed. This week the jobs report for September is being released, the first big news of the last quarter of the year — though it is based upon third quarter numbers. Because the Federal Reserve lowered expectations of growth for the fourth quarter, these jobs numbers will be watched closely.
A strong employment sector has the potential to increase momentum for economic growth in the fourth quarter and would make an increase in interest rates by the Fed a virtual certainty in December. We continue to note that the Fed meeting in November is less likely to produce changes because of its proximity to the election. Speaking of the election, starting from the end of this week, we have two jobs reports, another meeting of the Fed and a Presidential Election scheduled within approximately 30 days.
Thus, the potential for volatility in all the markets, from equities to interest rates, is exceedingly high for the near future. And a strong jobs report this week will increase that potential, because of the specter of a rate increase to follow all of these events. Where these things will lead, is anyone’s guess. We suggest you hold on for the ride. If you have already purchased a home, you are likely enjoying your low rates and payments. For those who wait, again, we don’t know what the future will bring.
Wider credit opportunities are in store for home shoppers as Fannie Mae released 10.0, the 31st version of its automated credit decision engine named Desktop Underwriter or DU. The first enhancement is a newly automated credit decision process for borrowers with no-credit-scores, for which Fannie’s term is non-traditional credit. The second is trended credit data being added to your residential credit report, giving more consideration to borrowers who pay their credit card balances off each month. In the past, if mortgage applicants did not have enough traditional credit to generate credit scores, lenders could still manually underwrite and decide on those would-be borrowers. As a practical matter, few lenders do any manual underwriting for fear of missing something that the automated process detects and having to buy the loan back later from Fannie Mae for not meeting underwriting standards. “You needed at least one score for a traditional Fannie Mae DU approval,” said Mindy Armstrong, Fannie Mae’s DU product manager. For the new no-score automated approval, only your down payment or equity in the event of a refinance, debt-to-income ratios, cash reserves and loan-to-value are considered in the loan decision, according to Armstrong. You will need two sources of non-traditional credit history. “One must be housing related – a 12-month history,” said Kristi Waters, a Fannie Mae credit risk analyst. The other type could be utility bills, child care payments, tuition payments, also on a regular 12-month basis. Source: The Orange County RegisterMillennials may be drawn from pricey city centers to the less expensive suburbs, but nonetheless say they want a suburb that still has the look and feel of a big city in some ways. Some suburbs are finding means to cater to that desire and promoting the amenities they can offer to attract more younger people. For example, some are touting their specialty shops, dining options, and the plentiful sidewalks, bike lanes, and trails. The bike lanes and trails may be one of the biggest lures. Homes near walkable — and bikeable — trails get a premium boost of 5 percent to 10 percent, according to a study by Headwaters Economics, a research group focused on land management and community development. “What’s happening is, a little bit of the city is following people into the suburbs,” says Ed McMahon, senior resident fellow at the Urban Land Institute. “Almost all the successful suburbs are building walkable, mixed-use [i.e., a housing and shopping combo] centers.” Also possibly getting more millennials relocating to the suburbs, more companies are either moving or expanding to suburban areas to lower their operating costs. “What millennials want are places that have a vibrancy, where you … can shop, go out to bars, walk, and bike,” says Lynn Richards, president and CEO of the Congress for the New Urbanism. Source: realtor.com®
Counties with the lowest levels of natural hazard risk saw home sales rise 4.2 percent in the first six months of the year. That’s more than twice the 1.9 percent increase among counties with the highest level of natural hazard risk, according to the ATTOM Data Solutions 2016 U.S. Natural Hazard Housing Risk Index. Researchers measured the hazard risk of more than 3,000 U.S. counties. Risks factored in included earthquakes, floods, hail, hurricane storm surge, tornadoes, and wildfires. They also analyzed home sales and price trends within the counties. “While price and affordability, along with access to jobs, are the primary drivers in local markets with strong increases in home sales activity in 2016, it’s evident from this data that natural hazard risk does make a difference to home buyers and investors who are active in this housing market,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Even among the subset of counties where the median price is below the national median, as well as among the subset of counties where home prices are still affordable for average wage earners, there is a consistent trend of stronger increases in home sales volume compared to a year ago in the lowest-risk markets for natural hazards compared to the highest-risk markets.” Source: RealtyTrac