Where the Economy StandsCertainly, this past week was one to get a good assessment of where the economy stands coming into the new year and a new Presidency. In the past week or so, we have had reports on overall economic growth for 2016; personal income and spending for December; the jobs report for January; and a meeting of the Federal Reserve Board’s Open Market Committee. That is a lot of information to assess. Let’s start with the economic growth. Our rate of economic growth for 2016 was 1.6%, which was the slowest since 2011. The fourth quarter came in at 1.9% and is subject to revision, but even a significant upward revision will not affect the overall 2016 growth results by that much.
The next release measured personal income and spending for December, which was another report which shows how we finished out the year. December personal spending numbers are especially important because they reflect spending through the holiday season. These numbers came in moderately robust, and met expectations. We then had the meeting of the Federal Reserve mid-last week. The markets were not expecting the Fed to increase rates since they did so in December. And this prediction was right on the mark. However, the markets were watching the Fed’s statement closely. This statement indicated that economic growth remains moderate and the economy was balanced as of right now–with no more risks on the upside vs. the downside.
Finally, on Friday we had the all-important jobs report, which is the first economic reading for January. The report was a real mixed bag with strong employment growth of 227,000 jobs added, but an up-tick in the unemployment rate to 4.8% and lower wage growth than forecasted. The increase in the unemployment rate is not necessarily bad news because it indicates that more long-term unemployed are re-entering the workforce. Indeed, the labor participation rate did increase as well, but remains near all-time lows.
Are you delaying listing your home until the season begins? Many believe sales and prices tend to peak in the spring and summer. However, this year is different. Jonathan Smoke, realtor.com®’s chief economist, stresses in his latest column that the conventional wisdom isn’t correct this winter. Here’s why: At the beginning of 2017, inventory levels plunged to multiyear lows. Sellers are currently facing very little competition, he says. Mixed with that, buyer demand is “abnormally strong for the off-season,” Smoke writes. “The climb in interest rates that started in October and accelerated in November and December has created a sense of urgency among buyers.” With interest rates largely forecasted to move higher this year, buyers are more in a rush to lock in a low rate sooner. Plus, your sellers may have to worry about lending rates as well; Smoke estimates that 85 percent of sellers are planning to buy another home after they sell. Here’s the best tip, Smoke says: “If you are thinking of selling and buying in 2017, the early bird may get the worm. And the best new nest.” Source: National Association of Realtors®Millennial motherhood is on the rise. Could the increase in births for the millennial generation bode well for real estate and finally convince them to move into homeownership? About 1.3 million millennial-aged women gave birth in 2015, which accounts for 82 percent of all U.S. births that year, according to Pew Research Center data. Millennial women have lagged other generations in birth rates. Nearly half of Generation X women were already into motherhood by the time they were in the 18-to-33 age range, which millennials are at now. About 42 percent of millennial women aged 18 to 33 gave birth in 2015. However, birth rates among millennials whose ages are beyond 30 are rising, Pew research shows. The desire for parenthood is strong. Sixty percent of millennials say that being a parent is extremely important to their overall identity, according to a 2015 Pew Research Center survey. Millennials are a generation carefully being watched by the real estate industry since their numbers rival baby boomers. They now comprise 34 percent of the workforce in the U.S. Source: BUILDER
Porches are becoming more common on new homes over the past decade, showing their increasing popularity with homebuyers. Sixty-four percent of new single-family homes started in 2015 included a porch while 23 percent included a deck, according to the Census Bureau’s Survey of Construction data. Decks, on the other hand, have seen a decline in new homes. From 2005 to 2008, over a quarter of single-family homes started included decks. But that share has dropped to under 24 percent since 2011. There are clear preferences regionally for decks versus porches. For example, the share of new homes with porches ranged from a low of 46 percent in the Mid-Atlantic division to nearly 90 percent in the East South Central, the National Association of Home Builders’ reports on the survey data. In New England, decks are more popular with two-thirds (69 percent) of new homes including them. Certainly, both decks and porches can be added after a home is built. NAHB remodelers report that adding or enclosing a porch and adding a deck were among the most commonly requested projects in 2015. Source: National Association of Home Builders