The question every economist is asking This Week in Real Estate, is after a better than expected May jobs report, will the Fed raise rates this year—June, September, early 2016? Below are a few of the highlights from the first week of June that influence our business:
* The Employment Situation in May—Better Than You Think. A strong jobs report for May adds strength to the argument that the weakness in March was an aberration. The Bureau of Labor Statistics (BLS) reported that payroll employment expanded by 280,000 in May. Job gains in March were revised upward by 34,000 to 119,000 and April was revised downward 2,000 to 221,000. The best news in the report is the uptick in the unemployment rate. This is actually a strengthening rather than weakening of the labor market. The increases in the unemployment rate in January and May were based on strong job gains but stronger gains in the labor force. At 5.5% the unemployment rate is at or near what some economists consider a normal level, consistent with a dynamic labor force and job switching, rather than sustained unemployment. “Today’s report showed the U.S. labor market has tremendous momentum. All those factors that parked a weak jobs number in March were short-term,” said Andrew Chamberlain, chief economist at Glassdoor. Full story… http://eyeonhousing.org/2015/06/the-employment-situation-in-may-better-than-you-think/
* Home Prices Ignoring Predictions. For some time conventional wisdom has held that home price increases are slowing and would continue to do so, but the CoreLogic Home Price Index (HPI) has joined the S&P Down Jones Case-Shiller Index in belying that prediction. Its HIP has now posted larger year-over-year increase in prices every month but one since the beginning of 2015. “For the first four months of 2015, home sales were up 9 percent compared to the same period a year ago,” said Frank Nothaft, chief economist for CoreLogic. “One byproduct of the increased sales activity is rising house prices, and, as a result, month-over-month home prices are up almost 3 percent for April 2015 and up more than 6 percent from a year ago.”
Full story… http://www.mortgagenewsdaily.com/06022015_corelogic_hpi.asp
* Average Down Payment Drops to Three Year Low of 14.8% for U.S. Home Purchased in the First Quarter. The average down payment for single family homes, condos and townhomes purchased in the first quarter was 14.8 percent of the purchase price, down from 15.2 percent in the previous quarter and down from 15.5 percent a year ago to the lowest level since Q1 2012. The Q1 2015 U.S. Home Purchase Down Payment Report also shows that the average down payment for FHA purchase loans originated in the first quarter was 2.9 percent of the purchase price while the average down payment for conventional loans was 18.4 percent of the purchase price. “Down payment trends in the first quarter indicate that first time homebuyers are finally starting to come out of the woodwork, albeit gradually,” said Daren Blomquist, vice president at RealtyTrac. The share of low down payment loans – defined as purchase loans with a loan-to-value ration of 97 percent or higher, which would mean a down payment of 3 percent or lower—was 27 percent of all purchase loans in the first quarter, up from 26 percent in the fourth quarter and also 26 percent a year ago to the highest share since Q2 2013. Full story… http://www.realtytrac.com/news/home-prices-and-sales/q1-2015-u-s-home-purchase-down-payment-report/
* Owners Tend to Overvalue Homes. A new statistical study, published in the Journal of Housing Economics, found that homeowners on average “overestimate the value of their properties by about 8 percent.” Tapping into federal databases, researchers concluded that overvaluations are likely tied to erroneous owner estimations of the capital gains they’ve accumulated in the house.
Full story… http://www.seattletimes.com/business/real-estate/owners-tend-to-overvalue-homes/
Have a productive week!