Strong August U.S. Jobs Growth Suggests That Higher Interest Rates Are Coming

September 7, 2018 by  • Posted in 

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  • Today’s national employment report from the U.S. Bureau of Labor Statistics offers continued support for strong economic growth, with an increase of 201,000 jobs in August.
  • Over the last 12 months, the U.S. economy has added 2.33 million jobs. After downward revisions of June and July data, job gains have averaged 185,000 per month over the last three months. The current economic cycle is the longest continuous expansion on record, with 95 straight months of job additions.
  • The national unemployment rate remained at 3.9 percent. The alternative measure of examining the number of people working part-time for economic reasons (in other words, those who would prefer full-time employment) decreased further to 7.4 percent, the lowest level since April 2001.
  • Another of the report’s positive points was a pickup in wage growth, which is up by 2.9 percent over the year. The growth rate has been slow and in August reached the highest level since the middle of 2009, with a 77-cent increase in average hourly earnings for all employees.
  • Job additions were generally positive across most sectors, with manufacturing employment falling by 3,000 jobs after 12 months of continuous gains. The largest gains remain in the professional and business services sector, with 53,000 jobs added in August and more than 500,000 positions created over the year.
  • The U.S. Bureau of Labor Statistics Job Opening Labor Turnover Survey released earlier this month says that open positions remain at historical highs, with 6.6 million job openings in June. The continued highs in job openings confirm survey data showing that the share of small businesses reporting that they have at least one job to fill rose to the highest level in the survey’s history. The number of openings remains highest in the accommodation and food services industries, as well as in health care and social assistance. Note that these are generally not high-income jobs. The information sector also continued to add jobs at a robust pace, though slightly slower than in April, when it reached the highest rate since 2007.
  • According to a CompTIA report released today, the information-technology sector shed 400 jobs in August for the first time after 14 consecutive months of gains. Year to date, the tech sector has added 58,300 positions. Four of five categories showed job gains, with only the telecommunications category down by 20,600 jobs for the year. The number of employer job postings in August for core technology positions declined by 39,000 but still totaled more than 261,000. However, even with large monthly fluctuations in the number of openings, 2018 has averaged about 50,000 more openings than in the previous two years.
  • By all measures, today’s jobs report suggests that the Federal Reserve remains on track to increase interest rates two more times this year. Pacific Union’s recent analysis on the impact of rising mortgage rates suggests that shorter term — through the end of 2018 — 30-year, fixed rate mortgages are still not expected to rise above 4.7 percent.

Selma Hepp is Pacific Union’s Chief Economist and Vice President of Business Intelligence. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

(Promotional photo: iStock/monkeybusinessimages)

Real Estate Roundup: The Nation’s Hottest Housing Markets Move Eastward

July 9, 2018 by  • Posted in 

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

BAY AREA FALLS OFF LIST OF HOTTEST HOUSING MARKETS
Bay Area housing markets dropped even further on realtor.com’s list of the nation’s hottest real estate markets in June, marking the first time a California metropolitan area was not among the top five markets in six years.

The San Francisco-Oakland-Hayward area fell to No. 6 on the monthly list, down from No. 3 in May. Vallejo-Fairfield slipped to seventh place in June, from fifth in May, as more-affordable markets move up the ranks. On average, housing markets with prices below realtor.com’s national median list price of $299,000 jumped 12 ranking spots year-over-year.

June’s ranking shows that super-competitive markets are increasingly scattered throughout the country instead of dotted along the high-priced West Coast. Midland, Texas, was first among the hottest markets, followed by Columbus, Ohio; Boston; Fort Wayne, Indiana; and Boise City, Idaho.

“As the record pace of sales continues to challenge would-be homebuyers, the hottest market rankings show that buyers are looking for markets that offer relative affordability,” Danielle Hale, chief economist at realtor.com, said in a statement released with the June ranking.


… BUT STRONG FORECAST LIFTS SAN FRANCISCO, OAKLAND, AND SAN JOSE
San Francisco, Oakland, and San Jose are high on a list of real estate markets on track for housing booms in the near future, according to an analysis of trends by Local Market Monitor, a North Carolina research firm.

A boom is likely when a region’s average home price is at least 15 percent above the local “income price” and rising 10 to 15 percent per year, according to a  Forbes.com report on the Local Market Monitor data. By that measure, Denver is already in boom territory, with home prices 47 percent above income price and a 10 percent increase year over year.

San Francisco isn’t far behind, with prices 29 percent above income price and 8 percent growth. Oakland prices are 23 percent above income price, with 9 percent growth. San Jose prices are 21 percent above income price, with 10 percent growth.

The analysis credits strong economic growth and a shortage of housing construction for creating an imbalance that drives a boom.


INTEREST RATES WON’T HOLD BACK HOUSING GROWTH
Will rising interest rates — and therefore rising mortgage rates — imperil the nation’s real estate markets? In a word, no, according to Stuart Miller, executive chairman of Miami-based builder Lennar Corp.

“Concerns about rising interest rates and construction costs have been offset by low unemployment and increasing wages,” Miller said recently in a statement announcing financial results for Lennar. He stated that there is still a “short supply” of houses on the market after “years of underproduction of new homes,” but “demand remained strong” and “affordability remained consistent” thanks to interest rates that remain relatively low.

Lennar reported that revenue and profit for the second quarter topped Wall Street forecasts.

(Photo: iStock /LightFieldStudios)

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Real Estate Roundup: Outdoor-Entertainment Amenities Significantly Boost California Home Values

June 25, 2018 by  • Posted in 

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

BARBECUES, FIRE PITS ADD MORE THAN 20 PERCENT TO GOLDEN STATE HOME PRICES 

Summer officially arrived late last week, and California homeowners who have tricked-out their backyards for outdoor parties not only stand to have good times ahead but also higher home prices if and when the time comes to sell.

That’s according to a new realtor.com report, which analyzed more than 150,000 U.S. home listings to gauge where outdoor summer-fun features are the most popular and how much of a premium such amenities will command. Nationwide, the 10 states with the most home listings mentioning “summer” are almost all in areas of the country with brutal winter weather, including four in New England. (California ranks No. 9 in America for listings that mention summer, though that accounts for only less than 1 percent of homes for sale in the state.)

Barbecues, on the other hand, are mentioned in 9.5 percent of home listings in California, second in the U.S. behind Arizona. Golden State homes for sale that include mentions of barbecue list at $364 per square foot, 23 percent more than the average California listing. Similarly, fire pits, which are found in 5 percent of California home listings, add 22 percent to a home’s per-square-foot price. The state also has the country’s second highest number of listings with swimming pools — 2.8 percent — which causes list prices to rise by 14 percent.

The study comes not long after survey results from Houzz found that more than half of Americans who upgrade their homes’ outdoor spaces plan to entertain guests more. Fire pits are the most popular outdoor amenity in 2018, cited by 66 percent of the landscaping professionals that Houzz polled.


SAN MATEO COUNTY JOBS OUTPACE NEW HOUSING UNITS BY ALMOST 20-TO-1
With a 1.9 percent unemployment rate, San Mateo County had California’s lowest unemployment rate as of May, according to the latest numbers from the state Employment Development Department. And while Silicon Valley‘s job growth has been exceptional, it has the unfortunate by-product of reducing the region’s affordability and creating nightmarish freeway traffic.

Citing data from San Mateo-based Housing Leadership Council, Curbed SF reports that the county created 72,800 new jobs between 2010 and 2015 but constructed only 3,844 new homes. Worse still, most of the construction is in higher price brackets, squeezing out a significant portion of would-be San Mateo County renters.

Because of Silicon Valley’s extreme cost of living, many workers are forced to commute from California’s Central Valley and other far-flung communities. The region’s workers languish in traffic for about 37 hours each year, among the nation’s worst rates of congestion.


MARIN COUNTY RESIDENTS ARE AMONG THE NATION’S LONGEST-LIVED
Anyone seeking to maximize their time on this mortal coil would do well to secure a home in Marin County, where residents live almost as long as they do anywhere else in the U.S.

Those lucky enough to call Marin County home can expect to live an average of 83.8 years, the longest in America behind residents of Summit County, Colorado and Billings County, North Dakota. Realtor.com, the study’s author, cites Marin County’s generally healthy lifestyle and number of doctors — as well as its bans on public smoking and word-burning heaters — as factors contributing to its residents’ longevity.

But as realtor.com points out, in Northern California, living a long life comes with a big price tag. According to Pacific Union’s most recent monthly real estate update, the median sales price for a single-family home in Marin County was $1,450,000 in May, up by 4.1 percent year over year.

(Photo: iStock/KatarzynaBialasiewicz)

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Want to Be a Good Neighbor? Avoid These Behaviors.

June 15, 2018 by  • Posted in 

  • A recent poll found that Americans think that nosiness is the worst quality in a neighbor.
  • Nearly half of those surveyed have observed their neighbors be too loud, fail to clean up after pets, and violate parking protocols.
  • One-third of baby boomers have reported getting into a verbal or physical confrontation with a neighbor.

Neighbor spying out the window with binoculars

Anyone who hopes to be known as a good neighbor would do well to mind the old saying about good fences.

A recent survey from Porch asked Americans about their neighbors’ 10 most annoying habits. Using a 100-point scale, the company ranks neighborly behavior by annoyance level, with higher numbers indicating greater degrees of irritation.

The top complaint people have about their neighbors? That’s privacy intrusion, be it spying, making unannounced house calls, or being a busybody. Americans gave nosey neighbors a 75 on the annoyance scale, and 26 percent of those surveyed reported having a personal encounter with a snoop. Only 2 percent of Americans would admit having invaded their neighbors’ privacy themselves.

Noise is also major hassle, earning a score of 71. Almost half of respondents reported that their neighbors have played music too loudly or engaged in boisterous conversations, making it the most common peeve of the 10 included in the report. A near equal number have seen neighbors fail to clean up after their pets or park their cars in someone else’s spot, making these the third and fourth biggest neighborly annoyances, with respective scores of 67 and 66.

When it comes to resolving disputes, older Americans are more likely to confront their neighbors, with 33 percent reporting having engaged in a verbal or physical altercation. Confrontations with neighbors were cited by 28 percent of Gen Xers and 23 percent of millennials.

Porch suggests that getting to know neighbors can go a long way to smoothing over disputes should they arise, and being on a first-name basis definitely helps. And while 77 percent of those surveyed know some or all of their neighbors’ names, one in five don’t know any of their neighbors’ names.

So what can one do to get in the good graces of the neighbors? Apartment Terapy has compiled a list of 36 tips, ranging from smiling and saying hello to offering to take care of their pets while they are away. And HGTV has published this good-neighbor guide, which addresses how to behave on neighborhood- or community-focused social-media pages.

(Photo: iStock/tirc83)

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Millennials Are Now the Most Active Home Remodelers

June 14, 2018 by  • Posted in 

  • Millennials have completed more home-improvement projects over the past 12 months than any other generation.
  • Despite increased home-renovation activity by millennials, they still spend the least on projects, while baby boomers spend the most.
  • Tight inventory conditions and rising mortgage rates should cause both remodeling activity and spend to grow in the coming years.

Young couple studying remodeling plans

Having either purchased lower-end homes in need of renovations or unable to move up due to tight housing inventory conditions, millennials are leading the charge when it comes to home remodeling, though they are not the biggest spenders.

Those are two of the key findings from HomeAdvisor’s 2018 TrueCost Report, which says that millennials — defined as those between the ages of 24 and 38 — have completed more home-renovation jobs than any other generation over the past year. Millennnials tackled 18 percent more remodeling jobs than Gen Xers and 42 percent more than baby boomers, a shift in trends seen in previous years’ surveys.

“Most millennials have had to compromise on the size and condition of their starter homes — with many purchasing older homes in need of repair just to be able to afford homeownership,” writes HomeAdvisor Chief Economist Brad Hunter, the study’s author. “Many of the millennials who did buy a home in the last few years are seeking to upgrade. But a lack of housing inventory, coupled with inflated home prices and rising mortgage rates, has them renovating their existing homes instead of selling and moving.”

In another reversal of prior survey results, HomeAdvisor found that bathroom remodels are now common than kitchen renovations among homeowners of all ages. Here again, millennials lead the trend and are twice as likely to complete a bathroom remodel than baby boomers.

Even so, baby boomers have spent more than any other generation over the past 12 months, an average of $7,524, compared with the national average of $6,649. By contrast, millennials have been more cost-conscious about renovation budgets than all other generations, spending an average of $5,693.

HomeAdvisor expects that the nationwide housing inventory shortage, which is particularly severe in California and the Bay Area, will lead more homeowners to remodel rather than sell and attempt to purchase another property. More than 80 percent of those surveyed have no plans to list their homes over the next year, and half of them are considering upgrading their current residences. Homeowners of all generations say that they plan to spend as much or more on improvements in the coming year as they did in the past 12 months, led by millennials at 82 percent.

Finally, the anticipation of rising mortgage rates will likely cause more homeowners to stay put and improve their current homes than buy another one over the next few years, Hunter predicts. Yesterday, the Federal Reserve raised interest rates by one-quarter of a point, and as the Los Angeles Times reports, two more increases are expected for this year.

(Photo: iStock/skynesher)

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Craig Curreri

707.477.5120   craig@craigcurreri.com   License #: 01408111

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