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Real Estate Report – The Employment Report Beckons

March 4, 2014

posted by Stephen Katz @ 11:05 AM
Tuesday, March 3, 1914

Real Estate Trends Newsletter -- A weekly news update for mortgage professionals
Stephen Katz
800 Johnson Ferry Road, NE
Atlanta, GA 30342
Stephen@KatzMortgageTeam.comNMLS ID: 69623

March 4, 2014

 The Employment Report Beckons

The monthly jobs report is the single most important economic release every month. Why? It is all about jobs–the economy, interest rates, real estate and more. To put it simply, consumer spending drives the economy and without enough jobs being created, consumer consumption will not grow. The relationship between job creation and real estate is a perfect example. When more jobs are created, increased demand is created within the real estate sector. When there is more real estate demand, more jobs are created.

The next question is — what are we looking for within the report? Traditionally, the unemployment rate is the headline number each month. Yet, as the unemployment rate has dropped more than 3.0% from its recessionary high, we see that the rate tells only part of the story. The labor “participation” rate can cause variations in the unemployment rate. Many who have removed themselves from the labor force through retirement and other factors can be enticed back if there is a demand for workers. Thus, the unemployment rate can go up with the creation of more jobs or the rate can go down with the creation of fewer jobs even though these results seem to be counter intuitive.

More recently, the number of jobs created appears to have become just as important as the unemployment rate. Even the Federal Reserve Board which had set a goal of a 6.5% unemployment rate before considering altering their fiscal policies admitted at their last meeting that other factors will be taken into consideration within the decision-making process. Plus, because the last two reports have been disappointing with regard to jobs creation, we will also keep a close eye on revisions of the previous two months’ of data. Complicating matters even further is the fact that winter storms continued through a good portion of February. As muddled as the picture is — a surprising report in either direction can affect the markets and the economy significantly.

 Home affordability took a turn for the better in the fourth quarter. Among the biggest cities, homeowners in the most expensive metropolitan area need to earn nearly $100,000 more than borrowers in the least expensive area. In Cleveland, a homeowner needs an annual salary of just $19,435 in order to afford a median-priced home in the area — the lowest of any of the 25 biggest metropolitan areas. The value was determined from the National Association of Realtors’ fourth-quarter data for median home prices, while the salary needed was based on average rates for a 30-year fixed home loan. At the other end of the scale was San Francisco. Someone looking to buy a home in the City by the Bay would need to earn $115,510. The findings were discussed in a report issued by The average salaries were based on principal and interest payments and excluded property taxes, insurance and other expenses. “In the most recent update of the study, using data from the fourth quarter of 2013, found that affordability has increased significantly since the third quarter of 2013 as home prices and rates on home loans have fallen,” the report said. Source: Mortgage Daily

Home inspections have the power to send all parties back to the negotiation table. As such, some sellers are taking the precautionary step of having an inspection done before listing the home for sale. Real estate professionals say that having a home inspection prior to listing can offer several benefits to the seller. “The buyer has the upper hand when they have an inspection,” says Jessica Edwards, Coldwell Banker consumer specialist and real estate professional. “If you are willing to do it ahead of time, you give the control back to the seller.” Sellers who have a home inspection upfront also can identify any major problems that could potentially derail a sale later on at the closing table. Any major repairs can be addressed beforehand. Doing repairs ahead of time might also be more cost-effective than having to pay a buyer’s own licensed contractor do the work. “If you have the items repaired or replaced ahead of time and it doesn’t come up with the buyer, it’s a non-issue,” says Edwards. Edwards says having a home inspection beforehand can also help sellers adjust their asking price if they aren’t willing to do certain repairs. Leslie Piper, consumer housing specialist for, suggests sellers consider a pest and roof inspection before listing. “The costs of repairs or the replacement of a roof can vary and could be a big-ticket item a seller may want to be aware of before they choose the price they are hoping to get for their home,” Piper says. “Having these inspections can be beneficial for a successful home sale, and also beneficial for a seller’s future budgeting plans.” Source: FOX Business

Many housing experts have predicted a slowdown in investor activity this year, but investors don’t appear to be fading away from the market. They might just be shifting their focus to different types of properties, as distressed inventories dry up in many markets. “There has been a clear rebound in investor participation in the housing market,” says Thomas Popik, research director for the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which showed strong activity among investors in December 2013. “The statistics for the housing market, particularly the non-distressed segment, remain generally strong, but investors still are increasing their activity.” Investors are increasingly targeting non-distressed properties. In November, investors accounted for 13.2 percent of purchases of non-distressed properties based on a three-month moving average. That’s up from 10.5 percent in August, marking a seven-month market share high for investors, according to the HousingPulse survey. Investors had started pulling away from the market in March 2013 as home prices soared, with their overall market share dropping to 16 percent, according to a survey by the National Association of Realtors®. But by December they bounced back — ending the year strong with a 21 percent market share — about the same level at which investors’ presence peaked during the foreclosure crisis. Source: RISMedia   

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Stephen Katz

(770) 309-0939 (direct) or (866) 742-8400 —

For the past 18 years, Stephen Katz has built a successful business almost entirely on referrals. As your mortgage consultant throughout the home loan process, Stephen will explain the pros and cons of all available mortgage programs and help you choose the financing option that is best suited to your needs.
Throughout the loan process, he will keep you informed and will respond quickly to your requests with answers and solutions.

Consistently a top producer, Stephen is a Mortgage Bankers Association “Diamond” Award winner, a Georgia Mortgage “Top Gun” and has closed almost half a billion dollars in loans. Put his knowledge and experience to work for you!

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