Employment Report AnalysisThe fact that the Federal Reserve Board did not raise interest rates at their last meeting made this week’s release of the job numbers for September very interesting. A weak, or even moderate report would have affirmed the Fed’s position. A very strong report makes the markets think that the Fed should have acted. One must remember that it is not the Fed that causes long-term interest rates to rise, but the market’s reaction to what the Fed is doing. If the markets feel the Fed is not reacting strongly enough regarding inflationary risks, then rates could rise even before the Fed acts.
When the numbers were released showing that 156,000 jobs were created in September, roughly in line with expectations, one might have surmised that this was the best case scenario. The report showed that there is still a significant number of jobs being created, but it was not strong enough to require the Fed to act, especially right before the election. Even the uptick in the unemployment rate from 4.9% to 5.0% was seen as moderate news, because the increase was caused by a rise in labor force participation. This means that more Americans are re-entering the job market.
Now that this report has been released, expect that the markets will be focusing more and more upon the coming Presidential election. Thus far the campaign certainly has provided much entertainment, but with the home stretch upon us, the markets’ focus will be on assessing each candidate with regard to their positions on a wide range of issues that might affect the economy. For example, the consensus from the industry is that neither candidate has made housing issues a focus, despite calls from the housing industry leaders to address several pressing problems within the sector. Eight years ago, housing was front-and-center during the campaign. Another sign of the changing times.
Set the asking price just below a round number – that’s the best technique for pricing a home for sale, according to new research published in the Journal of Housing Research. Researchers found that buyers are more drawn to a house priced “just below” at, say, $199,000 than to a house priced at a rounded number like $200,000. “Our study suggests that by using the just below pricing strategy sellers can price their home slightly higher without driving away potential buyers,” says Eli Beracha, one of the study’s authors. “As a result, they end up selling their house for more.” Indeed, researchers found that such a “just below” pricing strategy yields a selling price that is about 2.5 to 3 percent higher – or $5,000 to $6,000 more – on a $200,000 house compared with a rounded pricing listing strategy. Still, rounded priced homes usually have a shorter time on the market and a lower discount relative to listing price, researchers found. Yet, “sellers’ ability to set higher listing prices for properties using a ‘just below’ pricing strategy, outweighs the lower discount and shorter time on the market associated with similar rounded priced strategy homes,” researchers found. Source: BUILDEROwning a home is still very much part of the American Dream with 4 out of 5 respondents telling the National Association of Home Builders that it’s a priority. “The survey shows that most Americans believe that owning a home remains an integral part of the American Dream and that policymakers need to take active steps to encourage and protect homeownership,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. A home was rated a good or excellent investment by 82 per cent of respondents and young Americans still consider home ownership to be important with 81 per cent wanting to buy a home. More than a third of respondents want to buy within 3 years and 46 per cent say now is a good time to buy, twice the number who say it is not. Source: NAMB A number of factors can determine how many days a home stays on the market, such as the listing price, housing characteristics, and amenities. CoreLogic Director of Analysis Matt Cannon, found that public listing comments can affect how many days a home stays on the market after controlling for list price, geographic variations, and housing characteristics. “After all, public comments that listing agents provide contain additional information about the property amenities, property architecture and neighborhood information, among other things.” In the analysis, geographic area variations were controlled to better understand the specific impact of words from listing comments, with days on market and distressed sales excluded. The study found that properties with features such as “fenced backyard,” “open concept,” “natural light,” and “updated kitchen,” tended to sell quickly while word pairs such as “golf course,” “gourmet kitchen,” “ceramic tile,” and “granite countertop” attached to properties tended to increase the number of days a property stays on the market. The word “fence” appeared frequently among the top word pairs, indicating it is a top priority for buyers; meanwhile, homes listed as “single story” tended to sell more quickly, while “two story” had a tendency to increase the number of days a property stayed on the market. “It is not easy to figure out why properties with ‘gourmet kitchen’ stay on the market longer, but one possibility is that this luxury feature would lead to a higher property value,” he said. “Homes that have higher prices relative to their neighbors may have less demand than lower-priced, more affordable homes, and hence it takes a longer time to sell.” Source: The MReport