Download Jobs Gains Will Support Housing Demand

Jobs Gains Will Support Housing Demand
Source: NAHB
It is hoped that job growth will help the housing industry this year and a stellar January jobs report only
bolstered that expectation. However, a cause for concern is that many of America's fastest growing
careers (in terms of numbers of workers) have average or below average homeownership rates.
Professions with homeownership rates above the national average, like engineers, lawyers, doctors, and
computer and math professionals, are seeing only average job growth.
Making sense of the story

Some experts suggest that acceleration in job growth, along with an ongoing expansion of
consumer confidence, will help support housing demand and residential construction during
2015.

The Bureau of Labor Statistics (BLS) reported that payroll employment expanded by 257,000 in
January, with an additional 147,000 jobs reported in November and December after data
revisions. The unemployment rate inched up to 5.7 percent in January from 5.6 percent in
December, which is in fact, a positive development as this change was due to more individuals
seeking work.

A separate BLS survey of job openings and turnover suggests additional hiring ahead. For the
overall economy, the job opening rate (number of unfilled jobs as a percent of total employment)
reached 3.5 percent in December, the highest rate for the post-recession period.

In December, total private residential construction spending increased 0.3 percent, driven by a
large increase in the single-family component of private residential construction. Single-family
spending increased 1.2 percent over the revised November estimate, while multifamily spending
increased 0.3 percent.

One of the factors holding back housing demand (rental and owner-occupied) has been weak
household formation, particularly among young adults. New research by BLS economists found
that for those born between 1980 and 1984, 90 percent moved out of their parents’ household by
age 27. Of those moving out, however, over 50 percent returned.

This lack of robust household formation, combined with weakness in existing home inventory,
has placed a ceiling on growth for the home resale market.

In contrast, the 55+ market continues to do well. NAHB’s 55+ Housing Market Index was higher
year over year for all segments of the senior market—single-family homes, condominiums, and
multifamily rental. The single-family index increased six points from the fourth quarter of 2013,
to 54—the highest fourth-quarter reading since the inception of the index in 2008.
Read the full story
http://eyeonhousing.org/2015/02/eye-on-the-economy-jobs-gains-will-support-housing-demand/
In other news …
3 ways to make your home worth more
Source: Yahoo! Finance
In the new book "Zillow Talk: The New Rules of Real Estate," Zillow’s CEO Spencer Rascoff and Chief
Economist Stan Humphries put data from the online portal to use by sharing ways to get the most value
out of a home. They crunched the data and found that a bathroom remodel adds the most value to a
house—not a kitchen remodel. According to Zillow's data, a mid-range $3,000 bathroom remodel results
in a $1.71 increase in home value for every $1.00 spent on renovation. They also argue that ending your
home price in a ‘9’ is incredibly beneficial.
Read the full story
http://finance.yahoo.com/news/3-tips-for-saving-money-on-your-home-125820548.html
It's Easier to Get a Mortgage in 2015
Source: Kiplinger
Thanks to rising home prices, less-stringent down-payment requirements, and new rules that limit
lenders’ liability when loans that meet certain criteria go bad, it is expected that borrowers should
encounter fewer obstacles when getting a mortgage in 2015. Mortgage rates are still hovering at levels
unimaginable a generation ago, but many buyers have been unable to capitalize on such low-rate loans
due to tight lending standards after the recession.
Read the full story
http://www.kiplinger.com/article/real-estate/T040-C000-S002-it-is-easier-to-get-a-mortgage-in-2015.html
More Young Adults Are Living With Their Parents, and It’s Probably
Because of Student Debt
Source: Wall Street Journal
A $10,000 increase in student debt per graduate in a U.S. state is associated with an additional 2.9
percentage point rise in the rate of 25-year-olds living with parents, according to an analysis of young
Americans with credit reports by the New York Federal Reserve. This is the latest study to show that
young Americans are now much more likely to delay leaving home, or to “boomerang” back. “Parental
co-residence rates” were as high as 50 percent in 12 U.S. states during 2012.
Read the full story
http://www.nytimes.com/2015/02/05/business/overseer-of-fannie-and-freddie-takes-cautious-steps-tostrengthen-housing-market.html?_r=0
We must boost homeownership
Source: Sacramento Bee
Chris Kutzkey, President of the CALIFORNIA ASSOCIATION OF REALTORS®, stresses the
importance of homeownership to families, communities, and the economy. Kutzkey writes, “Somewhere,
somehow over the last six years, too many decision-makers have come to believe homeownership isn’t
important. Their inability to create a clear path forward in the mortgage finance arena has led to
uncertainty and restricted credit for qualified homebuyers. This has hurt not only families, but the nation
as a whole.”
Read the full story
http://www.sacbee.com/opinion/op-ed/soapbox/article9698951.html
Castro grilled over lowering mortgage insurance premiums
Source: The Hill
Republicans grilled Housing and Urban Development Department Secretary Julian Castro during a House
hearing about his recent decision to lower mortgage insurance premiums despite the Federal Housing
Administration falling short of its capital reserve requirement. But Castro argued that the FHA is
delicately balancing its mission of meeting the needs of U.S. homeowners of more modest incomes while
trying, at the same time, to reach the statutory 2 percent capital reserve requirement.
Read the full story
http://thehill.com/policy/finance/232492-castro-grilled-over-lowering-mortgage-insurance-premiums
New home purchases jump 29%
Source: HousingWire
Mortgage applications for new home purchases jumped by 29 percent compared to the previous month,
according to the January Mortgage Bankers Association Builder Application Survey. The average loan
size of new homes dropped from $311,398 in December to $304,364 in January. The MBA estimates new
single-family home sales were running at a seasonally adjusted annual rate of 530,000 units in January
2015.
Read the full story
http://www.housingwire.com/articles/32915-mba-new-home-purchases-jump-29
Talking Points …

California housing affordability improved from third-quarter 2014 but dipped when compared to
a year ago, as lower interest rates failed to offset higher home prices, according to the
CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

The percentage of home buyers who could afford to purchase a median-priced, existing singlefamily home in California in fourth-quarter 2014 edged up to 31 percent from the 30 percent
recorded in the third quarter of 2014 but was down from a revised 32 percent in fourth-quarter
2013, according to C.A.R.’s Traditional Housing Affordability Index.

This is the seventh consecutive quarter that the index was below 40 percent and is near the mid2008 level of 29 percent. California’s housing affordability index hit a peak of 56 percent in the
first quarter of 2012. Home buyers needed to earn a minimum annual income of $91,550 to
qualify for the purchase of a $452,140 statewide median-priced, existing single-family home in
the fourth quarter of 2014.