Real Estate Report - January 2014
Jobs--The Key Ingredient
Last week we reported on a disappointing jobs report. We also indicated that we should not jump to a conclusion as to the importance of this one report. One report can be very misleading and is subject to significant revisions in the next two reports. In this case we had inclement weather which could have temporarily affected the numbers as well -- especially within the construction industry. In addition, if you look at the trends in first time unemployment claims, you can see a reason to be optimistic about better numbers ahead.
But the next question we must ask is--why is the employment report so important? Every month the employment release is under more scrutiny than any other report. The answer to this question is much easier than predicting the future of jobs growth. A healthy economy produces more jobs. More than that, the jobs created by a healthily economy causes more jobs to be created. This is what we call a "virtuous cycle." One good thing leads to another which comes back and supports the first good thing. During the recession and during our painfully slow recovery, we climbed out of a vicious cycle, but never quite reached a virtuous cycle.
Adding over 200,000 jobs per month puts us in reach of the virtuous cycle. We were starting to see these numbers late last year until the last report. Now we must ask if the December report was just an aberration of numbers, or was it the start of a new trend. Thus far the economic reports are certainly strong enough to support decent job growth. All we can do is wait a few weeks for more numbers. But for those who are looking to purchase big ticket items such as homes and cars--the reaction of the markets to the jobs report gave us moderately lower rates and that is a good thing. However, it is likely to be temporary at best if the employment picture gets stronger with the next report or first time claims of unemployment continue to trend downward.
Real estate agents have been somewhat absent in the whole debate over the qualified mortgage lending and ability-to-repay rules, but they are not immune from the consequences. With the lending guidelines taking effect, it’s definitely time for the consumer-side of the real estate business to get knowledgeable enough to help homeowners who may find themselves facing new outcomes when they apply for a home loan. Realtors are definitely impacted by new lending rules. How, you ask? After all, Realtors have never handled the loan approval process; and it’s not up to them whether a client gets a loan or not. At most, they are a referral service when it comes to the lending side of the equation. But the reality is they are impacted. If they don’t want to waste your time or your client’s, it’s crucial for a Realtor to know how the lending process is changing. A lender – may advise Realtors to skip the conditional pre-qualification process (which is quicker and easier) and move directly to a pre-approval before taking a client out to look for houses. Source: HousingWire
Note: The new era of regulatory changes definitely make obtaining pre-approvals more important for a prospective home buyer. Contact us if you would like more information regarding procuring a pre-approval or have a client in need of this service.
Year-over-year gains in Americans’ attitudes toward homeownership demonstrate that the housing recovery continues to move forward on firm footing, according to Fannie Mae’s December National Housing Survey results! . Forty-nine percent of consumers surveyed believe home prices will go up over the next 12 months, compared to 43 percent in December 2012. Consumers’ average 12-month home prices expectations moved to 3.2 percent, up from 2.6 percent last year. Those who say it’s a good time to sell a home rose significantly to 33 percent from 21 percent in December 2012. And, despite a higher interest rate environment, consumers are more optimistic about their access to residential finance credit than they were a year ago, with those who say that it would be easy to get a home loan today rising to 50 percent, compared to 45 percent last year. "The marked improvement in housing market sentiment over the course of 2013 bore out our view going into the year that the housing recovery was on a firm footing. Year-over-year gains in home price expectations and attitudes about the current selling environment were particularly notable,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.Source: Fannie Mae
Year-over-year gains in Americans’ attitudes toward homeownership demonstrate that the housing recovery continues to move forward on firm footing, according to Fannie Mae’s December National Housing Survey results! . Forty-nine percent of consumers surveyed believe home prices will go up over the next 12 months, compared to 43 percent in December 2012. Consumers’ average 12-month home prices expectations moved to 3.2 percent, up from 2.6 percent last year. Those who say it’s a good time to sell a home rose significantly to 33 percent from 21 percent in December 2012. And, despite a higher interest rate environment, consumers are more optimistic about their access to residential finance credit than they were a year ago, with those who say that it would be easy to get a home loan today rising to 50 percent, compared to 45 percent last year. "The marked improvement in housing market sentiment over the course of 2013 bore out our view going into the year that the housing recovery was on a firm footing. Year-over-year gains in home price expectations and attitudes about the current selling environment were particularly notable,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.Source: Fannie Mae
With bidding wars easing in many markets, buyers may face less competition in their attempts to snag a home this winter. That's according to the latest Bidding War Report by the real estate brokerage Redfin. According to the report, competition for homes hit its lowest point since 2011 last month. About 51 percent of Redfin agents nationwide reported facing bidding wars in November, down from 63.6 percent a year earlier. The home-buying competition rate has dropped for eight straight months, after peaking in March at 75.3 percent. Still, the brokerage’s report does show demand growing stronger than expected at the end of the year. “Home buyers who failed to get an offer accepted early in the year have been stockpiling down payment money all year long,” says Amber Hancock, manager of Redfin’s San Francisco East Bay market. “They’re jumping back in this time as better qualified, more confident competitors, taking advantage of the easing late-fall market.” Buyers are still using competitive strategies to get the house they want—with the use of all-cash offers, waived financing and inspection contingencies, and personal cover letters becoming more common in November. The two markets that saw the largest month-over-month decreases in competition were Seattle and Orange County, Calif. Meanwhile, bidding wars heated up in November in Washington, D.C., San Diego, Baltimore, and Los Angeles. Source: Redfin
Charlottesville Real Estate Experts
metros have the huge inventory of expensive homes but the buyers are less, while the number of affordable homes is less but have more buyers.
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