Higher Paying Jobs
This is the week that the October employment report is out. As our unemployment rate has fallen with millions of jobs being created each year, many have complained about the level of the jobs being created. Too many of these openings are for lower paid and part-time workers. We think the slow recovery of the real estate market has had something to do with that. The real estate industry is not only a great job creator, but also a creator of higher paying jobs, from construction workers to bankers and lawyers.
Judging by the strength of the real estate market this year, it is possible we will see the growth of better jobs soon. And based upon a recent report that was released by the Mortgage Bankers Association, things are only going to get better in the real estate market in the future. Nearly 16 million new households are expected in the U.S. housing market by 2024, which Mortgage Bankers Association economists said should lead to much greater demand for both renter- and owner-occupied housing. MBA Vice President of Research and Economics Lynn Fisher added “With an average of 1.6 million additional households per year, housing market growth over the next decade could be among the strongest the U.S. has ever seen.”
If we are right, then real estate could bring us to the final stages of our recovery and make it complete. We may not see a reflection of this theory in this week’s jobs report, but it does explain why the Federal Reserve Board keeps holding off on raising rates while still telling us to be prepared because a rate hike is coming. Builders are already talking about a shortage of skilled laborers. To put these numbers in perspective, it took our country almost 250 years to grow to 125 million households. ask definition Now we will see 16 million added in ten years. And that does not even include the housing stock which will have to be replaced because of age.
The Market Update
Rates on home loans eased down again in the past week, however, these numbers did not reflect the reaction to the Fed’s statement late Wednesday. Freddie Mac announced that for the week ending October 29, 30-year fixed rates fell to 3.76% from 3.79% the week before. The average for 15-year loans was unchanged at 2.98%. Adjustables were mixed, with the average for one-year adjustables falling to 2.54% and five-year adjustables remaining at 2.89%.
A year ago, 30-year fixed rates were at 3.98%, close, but still higher than today’s levels. Attributed to Sean Becketti, chief economist, Freddie Mac — “Treasury yields oscillated without a clear direction heading into the October FOMC meeting, as investors were confident there would be no rate increase. While the FOMC left rates unchanged at this meeting, they kept a December rate hike as an option causing Treasuries to sell off in the latter part of the day, after our survey closed. Recent housing reports have done little to add or detract from the possibility of a December rate increase. Existing home sales were strong, contrasting with disappointing new home sales.”
Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.