This Week in Real Estate: August 8, 2016


Following consecutive months of stronger than expected jobs report, This Week in Real Estate leads to speculation again about whether or not the Feds will increase the interest rate before year end. Below are a few highlights from the first week of August that influence our business:

* U.S. Consumer Spending Exits Second Quarter With Strong Momentum. U.S. consumer spending rose more than expected in June as households bought goods and services, suggesting strength that appeared to be sustained early in the third quarter with auto sales surging to an eight-month high in July. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4 percent in June after a similar gain in May. The June data showed that consumer spending rose at a 4.2 percent annual rate, the fastest in nearly two years. While the second quarter’s robust pace of consumer spending will probably not be repeated, economists are optimistic that spending will remain solid, underpinned by steadily increasing wages as the labor market tightens, as well as rising house and stock market prices.
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* Jobs Increase in July Beat Expectations. Total non-farm payroll employment increased 255,000 in July, far above what experts predicted. The ADP employment report on August 3 predicted June’s strong job growth would carry over into July, but still only predicted 179,000 jobs. “Another solid month of job creation in July with 255,000 net new jobs,” NAR Chief Economist Lawrence Yun said. “From a year ago, the total now stands at 2.4 million new hires.” “In recent prior years, wages had been stuck, but the latest trend is showing an upturn,” Yun said. “In July, wages grew at the fastest rate since 2009, rising 2.6%.” “Given that homebuilders are experiencing labor shortage, a transfer of work into construction could help more home building, something that is critically needed to relieve the ongoing housing shortage,” Yun said. “Strengthening job and wage growth are positives for the demand side of the housing market, but weak residential construction hiring is worrisome from a supply perspective.” “Together, these developments suggest continued strong home price appreciation,” said Doug Duncan, Fannie Mae Chief Economist.
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* Home Values 77 Percent Higher in Zip Codes With Good Schools. ATTOM Data Solutions, the nation’s leading source of comprehensive housing data, released its 2016 Schools and Housing Report on Wednesday, which shows that homes in zip codes with at least one good elementary school have higher values and stronger home price appreciation over the long term than homes in zip codes without any good elementary schools. For the report, ATTOM analyzed 2016 home values and price appreciation along with 2015 average test scores in 18,968 elementary schools nationwide in 4,435 zip codes with a combined 45.9 million single family homes and condos. For purposes of this report, a good school is defined as a school with an overall test score of at least 30% above the state average. Out of 1,661 zip codes with at least one good school, the average estimated home value as of July 2016 was $427,402, 77 percent higher than the average home value of $241,096 in 2,774 zip codes without any good schools. “While good schools are one of the top items on most homebuyer checklists because of the quality-of-life benefit they provide, this report shows that high-performing schools also come with a financial benefit for homeowners in most markets – at least over the long term,” said Daren Blomquist, senior vice president at ATTOM.
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* Summer’s Hottest Housing Markets. Summer’s heating up, and so are real estate markets across the nation. The nation’s top five markets shifted dramatically as not one market held the same place it had last month. Ten-X released its Top Single-Family Housing Markets Report for Summer 2016. This report ranks the 50 largest U.S. housing markets according to current and forecasted data. Markets in the top five showed consistently strong demand, home price appreciation and economics and demographic growth. In Florida, where four of the top five markets are located, the state’s top metros have more affordable housing, subdued permit activity, revitalized local economies and a strong population growth trending significantly above the national average. On the other side of the U.S., Seattle, which made the list of top markets, (#5), represents the tech-driven gains of the Pacific Northwest along with Portland, which is now ranked as the ninth hottest market.
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Have a productive week!

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