Month: August 2015

New homes sales data for July was released on Tuesday, showing a 5.4% gain in the month to a 507,000 annual pace, with year-over-year sales up an impressive 26%. Median price also showed improvement, rising 3.0% in July to $285,900, but the year-over-year gain was less than expected, rising only 2.0%. Pending home sales for July came in at the low end of expectations, but still had a respectable gain of 0.5%, pointing to moderate growth ahead for existing home sales. Although prices are not hugely impressive, the supply of new homes is low, as are current mortgage rates, which continues to encourage builders to enter the market. The housing market, though not standout, continues to be a source of strength for the economy.

The past week was all about housing, starting with the July report for housing starts, which inched 0.2% higher to an annual rate of 1.206 million. The big news, however, came from building permits, with fell 16% in July to a 1.119 million annual rate. The results were somewhat skewed by a new real estate law in New York City that pulled permits into June at the expense of July. In breaking down the permit data, permits for multi-family homes fell a whopping 32%, while permits for single-family homes fell only 1.9% in July.

Existing home sales rose a higher-than-expected 2% in July to a 5.59 million annual rate, with a 10.3% increase in year-on-year sales. Single-family homes lead the way, rising 2.7% in the month to a 4.96 million rate, while condos, which show the most strength in the new homes market, fell 3.1%. Year-on-year, single-family existing home sales are up 11%, and condos are up 5%. Finally, the thin supply and high demand for housing lead to a boost in the median home price for July, up 5.6% to $234,000.

The current housing market index for August has risen 1 point to a very strong 61, led by the future sales component at 70, and the current sales component at 66. The report predicts that the new home sector will become an increasingly central source of strength for the economy, and builders continue to be more and more optimistic.

Curious how real estate has been doing here on the Central Coast? Check out our Central Coast and San Luis Obispo real estate updates for the first 6 months of the year HERE.

Jobless claims continue to remain at or new all-time lows, pointing to continuing improvement on the unemployment side of the labor market. Initial claims for the week of August 15 rose a slight 4,000 to 277,000, with a 4-week average of 271,500. Continuing claims, which lag by a week, dropped 24,000 in the week of August 8 to 2.254 million. The 4-week average for continuing claims showed a drop of 9,000 to 2.265 million. The fact that jobless claims are remaining so low is a good indication that employers are tending to hold on to their employees, whether they’re hiring or not.

 

Mortgage Rates

All loan programs displayed rate increases over the past week, although most simply returned to levels that were the same or similar to rates seen two weeks prior. The 30-year fixed displayed to smallest rate increase, up only 3.1 basis points from August 12. Rates remain below year-ago levels, with the 30-year fixed at a rate of 3.875% (3.946% APR) vs. 4.125% (4.161% APR) a year ago.

Sean Becketti, chief economist for Freddie Mac, commented on the economy in relation to recent mortgage rate movement:

“Overall inflation grew an underwhelming 0.2 percent year-over-year in July, but core inflation remains steady at 1.8 percent keeping chances alive for a potential rate hike in September. Housing markets have responded positively to low mortgage rates — the 30-year fixed mortgage rate has been below four percent for five consecutive weeks. The latest NAHB/Wells Fargo Housing Market Index for August 2015 was 61, the highest level in more than nine years. One-unit housing starts in July 2015 jumped to 782,000 units, up 12.8 percent from June and up 19 percent from last year. Overall housing markets remain on track for the best year since 2007.”

Contact the Mortgage Experts for your home purchase or refinance! With our 21-Day Processing method, you can make a stronger purchase offer, reduce stress, and save money! Give us a call at 805.543.LOAN to discuss your mortgage options and to get a free rate quote.

This remarkable property offers the right buyer a huge opportunity to own a piece of the central coast in rural Cayucos & have ultimate privacy while living the ranch lifestyle. Jump in your 4 by 4 and head up this unpaved road that will prevent any uninvited visitors. The main home has 3 br’s/ 2 baths and spectacular views. Bring your tools cause this one needs repair; mostly cosmetic however. The very large metal building will be great for storage and has a 2 bedroom apartment built inside half of the building. There are likely unpermitted improvements & buyer is advised to investigate w/County of SLO. Other structures may need to be removed as they may be unsafe. This property has so much to offer extended families, caretaker quarters, etc but there is much to be cleaned up/repaired by Buyer. Property offered in AS-IS Condition.

One will never find this type of quality workmanship and attention to detail in a home under $500,000. This meticulously crafted home speaks to those of us who love nature and want to be in a home that truly feels loved. Four bedrooms and 2 1/2 baths are featured in this 2300+ sq foot home nestled in a cozy culdesac. Dramatic, high ceilings will greet you at the front door, but it’s not overpowering – it’s warm and inviting. There has been no detail left behind, no thought to what a perfect, warm home could be because this home was almost all handcrafted by the talented sellers. Everything is here. Enjoy the drought resistant backyard complete with lighting, BBQ pit, fountain and mature landscaping creating a private oasis that you’ll never want to leave. Too many details to list…. This is a must see home.

Coastal living is easy in this wonderfully clean, well maintained home with open plan living area, two car garage, four good sized bedrooms and 2 baths. Master on the first floor plus office area near guest bedrooms. The energy efficient solar/gas hydronic heating system is zonally split, allowing separate zone heating. System is owned, not leased and appliances are energy efficient. Views of coast range and bay are fabulous, the quiet neighborhood has a peaceful country feel. The large West facing deck with a hot tub is just perfect for entertaining, stargazing or bay watching. Spacious yard is fully fenced and easy care, large side yard for your RV, boat or additional vehicles.

Opportunity knocks on one of the most desirable streets in the popular Anholm neighborhood of SLO. This vintage 1930’s home (2 bed/1 bath in main house) sparkles with charm–new front yard landscape and clean, airy interior with newer dual-pane windows, original hardwood floors, cozy wood-burning fireplace and fresh paint. Guest/rental studio with loft above detached garage and darling custom-built greenhouse make this a one-of-a-kind property–hurry, it won’t last long!

The Labor Department released their Job Openings and Labor Turnover Survey (JOLTS) for the month of June on Wednesday, reporting that job openings dipped slightly to 5.249 million from 5.357 million in May. This decrease in job openings is likely reflective of new hiring, as the hiring rate rose 1-tenth in the month to 3.7%. The layoff rate for June rose only 1-tenth to 1.3%, which points to weakness in labor demand, and the quits rate remained unchanged at 1.9%.

Jobless claims continue to be a positive in the employment category, as they continue to hold at historically low levels. Initial claims for the week of August 8 came in at 274,000, with a 4-week average of 266,250, 1,750 lower than the previous week, and the lowest level since April 15, 2000. The low initial claims numbers are a positive indication for the August employment report. With such healthy employment numbers, it is very possible that a rate hike may happen sooner rather than later.

Retail sales rose 0.6% in July while May and June sales figures were revised higher. Vehicle sales stood out in July, jumping 1.4%, nearly matching May’s historic 1.9% surge. But even outside vehicles, retail sales were strong with the ex-auto reading rising a solid 0.4%. Restaurants, in another strong signal of consumer strength, rose an outsized 0.7% following June’s 0.5 percent gain. These are very strong gains for this component.

The consumer sentiment so far in August has shown little change from the end of July, with an index of 92.9 for mid-month August vs. the 93.1 final July reading. The current conditions component was also nearly unchanged and hints at steady strength for consumer spending again this month and a possible upward revision for second-quarter GDP.

 

Q2 Real Estate Update

The Central Coast & San Luis Obispo County housing market continues to be largely positive through the first half of 2015.

The median home price for the county has risen 2.2% since March, and there have been 8% more home sales than in the first half of 2014. As you can see below, most statistics for SLO County for the first 6 months of this year have improved since this time last year:

• 1,349 home sales (2015) vs. 1,249 (2014)
• Only 4% of home sales distressed (2015) vs. 5% (2014)
• An average of 76 cumulative days on the market (2015) vs. 73 (2014)
• $511,000 median home price (2015) vs. $485,000 (2014)
• An average of $314.40 per square foot (2015) vs. $302.91 (2014)

Through the first half of the year, the most affordable area on the Central Coast is Orcutt/ Santa Maria, closely followed by Santa Margarita. Both cities have the least expensive median home prices by about 13%.

Click here to read more about Central Coast Real Estate in the first half of 2015.

 

Mortgage Rates

Mortgage rates have dropped by approximately 1/8 percentage points in all loan programs over the past week or so. The 30 year conventional is a perfect example with a rate of 3.875 (3.915 APR) on August 12, down from 4.000% (4.040% APR) on August 5. The largest rate decrease was for the 30-year FHA, dropping 0.218% to 3.375% (4.962% APR).

With rates moving downward once again, refinance applications have begun to rebound, up 3.0% in the week of August 7, their highest level since May. Purchase applications did not follow suit, falling 4.0% in the same week, although still at a level 20% higher than one year ago.

Sean Becketti, chief economist for Freddie Mac, commented on the current economy in relation to current mortgage rates:

“The jobs report for July showed that the economy added 215,000 jobs, in line with expectations. Wage growth remains modest at 2.1 percent compared to the same time last year, and another solid if not stellar employment report leaves a potential Fed rate hike on the table for September. However, this year’s theme of overseas economic turbulence continues with the focus shifting east to China. Over the past few days the Chinese Yuan has fallen sharply. In the midst of these mixed data mortgage rates inched up… Headed into the fall, we’ll likely see continued interest rate tension, with dollar appreciation weighing against possible Fed rate hikes leaving the rate outlook clouded.”

Desirable south Atascadero, just a 15 minute commute to San Luis Obispo. Delight in the park-like setting of this beautiful home, with cool shade trees, Koi pond, rose covered patio trellis, Jacuzzi type spa (included), horseshoe pit, outside fireplace, and small gentlemen’s vineyard set-up. Peaceful living at its best in this single lever approx. 1605 sq. ft. home that has 3 bedroom, 2 full bath, tile flooring throughout, and is set on a level acre off a quiet country road.

The construction spending report for June showed only a 0.1% gain, largely affected by the unexpected decline in single-family homes. Spending on single-family homes dropped 0.3%, after gains in May and April. Nevertheless, year-on-year single-family construction spending displayed an increase of 12.8%. Multi-family units showed much greater strength in June, up 2.8% for the month, and up 23.7% year-on-year.

Consumer spending continued to rise throughout the month of June, with a gain of 0.2%, but failed to compare to the 0.7% spike in consumer spending seen in May. Moving into July, Americans’ self-reported spending averaged $91 for the month, similar to the last few months. This number, although slightly lower than the July 2014 average, is higher than every other July average since 2009.

Employment reports have been abundant over the past week, starting with Gallup’s U.S. Job Creation Index for July, which maintained a record high of plus 32 for the third straight month. This score was a result of 43% of workers saying their employer is hiring new workers and expanding its workforce size, and 11% of workers who said their employer is letting workers go and reducing its workforce size, percentages that remained the same as in June.
On the flip-side is the Job-Cut report by Challenger, which reported a sizeable 105,696 layoff count in July. The number of layoffs for the month was majorly affected by an announcement by the Army that it is cutting 57,000 jobs over the next 2 years. Computer & electronics also reported heavy layoffs, at 18,891, contributing to the outsized July layoff count.

Despite the reported layoffs, jobless claims remain remarkably low. Initial claims for the week of August 1 came in at 270,000, and the 4-week average dropped 6,500 in the week to 268,250, more than 10,000 below the month-ago trend. Continuing claims for the July 25 week declined by 14,000 to 2.255 million, and the 4-week average did the same, dropping 18,000 to 2.239 million. Both initial and continuing jobless claims continue to report numbers at or near historic lows.

Payroll numbers, while not amazing, are solid enough to keep the possibility of a September rate hike alive. Non-farm payrolls rose 215,000 in the month of July, as was expected. Within non-farm payrolls, trade & transportation payrolls rose 60,000, professional & business service rose 40,000, retail jobs rose 36,000, and manufacturing, which is usually weak, rose 15,000 in July. In other employment news, wages are up 0.2% for the month of July, with a year-on-year rate of 2.1%. The labor force participation rate, which showed a sharp drop in June, held at 62.6% in July, and the unemployment rate remains unchanged at 5.3%.

Mortgage Rates

Mortgage Rates for most loan programs have remained unchanged over the past 2 weeks. Compared to the week of July 22, the 30-year fixed, high balance, FHA, FHA 203k, VA and USDA loan programs have shown little-to-no change. The 30-year fixed continues to hover around 4.000% (4.040% APR), averaging approximately 1/8 percentage points lower than this time last year. Among the remaining loan programs, the 15-year fixed and Manufactured FHA programs displayed very slight increases, and the Manufactured Conventional and Jumbo programs dropped 22.2 basis points and 11.5 basis points, respectively.

Stability in rates has helped to boost mortgage activity recently as well. Home purchase applications increased by 3.0% in the week of July 31, and are 23% higher compared to this time last year. Refinancing applications have also shown growth, up 6.0% in the last week of July.

Freddie Mac’s weekly mortgage rate survey reported that the national average rate for 30-year fixed mortgages dropped below 4.000% over the last couple of weeks. Freddie Mac chief economist Sean Becketti commented on the drop in rates, noting that “uncertainty about the economy helped drive down Treasury yields early in the week, and thus mortgage rates fell 7 basis points to 3.91 percent, the lowest level since June 4th.”

Stop by one of our 3 SLO County locations, or call 805.543.5626 to get started on your home purchase or refinance today!