The Jobs Report and ConfidenceIn the past few weeks we have spoken a lot about confidence. Certainly, confidence has been the major influence behind the recent stock rally. It has also influenced the recent movements in rates and oil prices. If this confidence spills over to a hiring spree, then the chances of another rate increase by the Federal Reserve Board’s Open Market Committee likely comes sooner than later.
In other words, confidence begets confidence. For example, a bigger stock portfolio can move someone to purchase a home. Home purchases also can be spurred by fear. Existing home sales were up to start the year and one factor cited was the fear that rates could rise even further. For years, we have indicated that the time may come when the sale on money may be over. Keep in mind that we are not declaring this sale over, but certainly the recent confidence could help influence its demise.
It is interesting to note that interest rates spiked just after the election, along with the stock market rally. But since the first of the year, stocks have continued to shine, as rates have been fairly stable. Of course, the jobs report released this week could go a long way towards determining if this trend continues. A strong report which influences the Fed to act quickly, could create volatility. If the report is moderate, rates could remain calm. In a couple of days, we will know for sure.
Existing-home sales in January reached their fastest pace in nearly a decade, the National Association of Realtors® reports. Total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—rose 3.3 percent to a seasonally adjusted annual rate of 5.69 million in January. That’s 3.8 percent higher than a year ago and marks the strongest month since February 2007, according to the NAR. “Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” says NAR chief economist Lawrence Yun. “Market challenges remain, but the housing market is off to a prosperous start as home buyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.” Additional data from the report:
- The median existing-home price for all housing types in January was $228,900—a 7.1 percent increase from a year ago.
- Total housing inventories at the end of the month increased 2.4 percent to 1.69 million existing homes available for sale. That is still 7.1 percent lower than a year ago.
- All-cash transactions comprised 23 percent of transactions in January, down from 26 percent a year ago. Source: NAR
Bigger isn’t necessarily better when it comes to appreciation. In fact, a new study shows that smaller homes likely will offer a bigger percentage return on a home shopper’s investment. A new study conducted by NerdWallet culled three years of listing data from realtor.com® of 20 of the largest U.S. metro areas and shows that smaller homes, in general, appreciate at a faster rate than larger homes. Markets can vary greatly, however. In 17 of the 20 metro areas analyzed, listing prices of the smallest 25 percent homes rose faster when calculated as a percentage, according to NerdWallet. The median annual growth rate for the smallest quartile of homes was 8.9 percent from 2013 to 2016, the study showed. The second smallest group of homes had the second-fastest growth rate: a median annual growth of 7.4 percent. Still, while the smallest homes appreciate fastest when viewed as a percentage, larger homes appreciate fastest by absolute dollar amount, the study showed. Richard K. Green, a professor and chair of the Lusk Center for Real Estate at the University of Southern California, says one reason smaller homes are likely appreciating faster is due to less inventory of starter homes available. Buyer demand for starter, smaller homes remains high, however. Source: NerdWallet
Wellness-minded design is gaining traction in the construction world as younger generations demand healthier environments in their workplaces and homes. That means developers are devoting more attention to the air quality, potential toxins, and impact of lighting in their projects. The resulting shifts affect everything from the numbers of particulates in water to even the kind of food being sold in a building’s vending machines. In homes, systems that can introduce and circulate probiotics in the air, diffuse homeopathic scents throughout the home, and purify water are becoming more popular. The International WELL Building Institute (IWBI) has partnered with the American Institute of Architects, the Cleveland Clinic, and other sustainability certification programs, such as LEED, and design firms like HKS to devote more attention to how to create healthier environments for occupants. Millennials are really driving the wellness trend, says John Kirk, architect and partner at Cooper Robertson. “It is a kind of milieu we’re in, that we’re probably going to stay in, driven by younger people who are much more sensitized to everything from environmental issues to sustainability to wellness and quality of life,” says Kirk. Source: ConstructionDive