Trick or Treat
We rarely get to publish on Halloween (technically once every seven years) and thus we could not resist the headline. There are many theories about the origins of Halloween and evidence of somewhat similar practices go back as far as the Middle Ages. Like other holidays in the United States, Halloween has evolved and grown and become a big commercial — or dare we say “sweet” — success. For some it is the real start of the holiday season in which our economy has grown so dependent upon.
Like every jobs report, every holiday season is a very important indicator of the direction of our economy. Consumer spending makes up about 70 percent of gross domestic product, and a solid chunk of it takes place in November and December, mainly in the form of gift purchases. A fifth of all retail sales occur in the year’s last two months, according to the National Retail Federation. Thus, these holidays are very, very important to our economy.
Speaking of the jobs report, the time has come for another reading. Last month the numbers were skewed as expected because of two major hurricanes. During this month’s statistical period we added another major hurricane and also devastating wildfires in Northern California. Thus, we are expecting major volatility in the numbers. This volatility may not only apply to the October numbers, but also to the revision of the September numbers already released. It will be hard for the markets to interpret these numbers, and therefore reactions may be muted as well.
Projections for next year’s housing market are already underway, as 2018 could be seeing significantly more home renovations and repairs taking place. A report released from the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University predicts a growing momentum in 2018 for money spent on remodeling homes. The Leading Indicator of Remodeling Activity finds annual gains in home renovation spending will surge from 6.3 percent in the fourth quarter of 2017 to 7.7 percent by the third quarter of next year. “Recent strengthening of the US economy, tight for-sale housing inventories, and healthy home equity gains are all working to boost home improvement activity,” says Chris Herbert, managing director of the Joint Center for Housing Studies. “Over the coming year, owners are projected to spend in excess of $330 billion on home upgrades and replacements, as well as routine maintenance.” “And while it’s too early for our LIRA model to capture the effects of recent hurricanes and other natural disasters experienced around the country, there is certainly potential for even stronger growth in remodeling next year as major reconstruction and repairs get underway in affected regions,” says Abbe Will, research associate in the Remodeling Futures Program at the JCHS. Source: Joint Center for Housing Studies of Harvard University — Want help finding financing for major renovations? Contact Us.Prospective homebuyers are resorting to creative approaches in shopping for a home to stand apart in a market seeing increased competition, according to Berkshire Hathaway HomeServices’ latest Homeowner Sentiment Survey. The survey found that 58% of millennial respondents would offer more of an earnest deposit to show their commitment to sellers. Other ways millennial respondents would compete in the market include sending personal letters to sellers (36%) and making offers above asking price to secure the home (31%). Also, 45% of prospective homebuyers are willing to cover closing costs to remain competitive, according to the survey. Although the market is seeing tight competition, consumers continue to view the market enthusiastically given low interest rates and potential increases in home values. Seventy-one percent of homeowner respondents expressed a positive sentiment toward the real estate market, with 51% saying low rates drove their favorable feeling and 44% citing price appreciation. “Historically low interest rates continue making homeownership achievable for many Americans,” Berkshire Hathaway HomeServices President and CEO Gino Blefari said. “We believe rates will remain within a range of current low levels for the foreseeable future.” Source: MPA
Consumers view homeownership as a priority and say they’re willing to make significant compromises in order to purchase a home, according to a survey of more than 1,000 consumers considering a home purchase, conducted by the online brokerage firm Owners.com. Sixty-nine percent of survey respondents say they’re concerned they won’t have enough cash for a down payment in order to buy a home. As such, they’re willing to forgo some financial goals and investments to make sure they save enough. Respondents said that saving for a home takes priority over saving for an emergency (61 percent) or contributing to retirement funds (60 percent). Seventy-two percent of survey respondents said they would limit their contributions to other investment funds in order to save enough to buy a home. Surveyed consumers also say they’re willing to compromise on some elements of the home if it means they can move into a home this year. For example, 51 percent said they would consider buying a fixer-upper, and 36 percent said they would purchase a smaller home than what they desire.Source: USA Today