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Job Outlook: Second Quarter

Gallup US Job Creation Index

June’s job creation index was plus 36, just shy of the record high of plus 37 recorded in May. The index has been at or over plus 30 for 16 straight months signifying a greatly improved and steady job market compared with the years during and after the Recession in 2009. Various indicators suggest the US economy is generating new jobs at a steady pace, although only 138,000 jobs were  created in May, this report fell short of expectations and was a drop from the more robust government numbers recorded in April.  The Gallup job creation index did not show a significant drop in May and has again shown no significant change for June in contrast to these government numbers. In June, 45 percent of employees said their company was hiring, almost matching the 46 percent recorded in May. The percentage who sad their company was letting people go held steady at 9 percent. 41 percent of workers said their employer was not changing the size of its workforce.

Challenger Job-Cut Report

In confirmation that employers are holding onto their employees, Challenger’s layoff count for June is 31,105, the lowest total since October of last year. One industry where layoffs have been heavy, however, has been the retail sector which leads June’s total at 4,217.

Jobless Claims

Initial jobless claims rose 4,000 in the week of July 1st to 248,000 which remains steady and safely within the consensus range economists predicted. Seven states including California had to be estimated in the week which raises the risk of significant revisions in next week’s report. Continuing claims, where data lags by a week, rose 11,000 in the week of June 24th to 1.956 million with the unemployment rate for insured workers unchanged and very low at 1.4 percent. Estimations aside, this data remains near historic lows and continue to signal strong demand for labor.

Gallup Good Jobs Rate

The June good jobs rate rose to 46.3 percent, from 45.4 in May. The workforce participation rate reached a record high of 68.6 percent. Unemployment and underemployment rates remained steady. While the June 2017 Gallup Good Jobs rate fell short of the high point of 47.1 percent recorded back in July of 2016, it is two points above the average for the rate since the start of this report in 2010- 44.3 percent. It is nearly five points higher than the low point of 41.7 recorded in February of 2011 when the economy was still recovering from the recession. The workforce participation rose 68.6 percent in June,  a record high for this measure, though it is equivalent to the 68.5 percent rates set back in April and June of 2013. The participation rate is up from 68.0 percent in May and is one point higher than it was in June a year ago when it averaged 67.5 percent. Gallup’s unemployment rate for June was 5.2 percent, virtually unchanged from May’s 5.3 percent. It matches the rate of 5.3 percent in June 2016. The unemployment rate is near the record low of 4.9 percent recorded in November of 2016, and remains well below the record high of 10.9 percent recorded in January of 2010. The underemployment rate for US adults was essentially unchanged at 13.6 percent in June, compared to 13.9 percent in May. The current underemployment rate is the same as was recorded in June of last year though well below the high of 20.3 percent in March 2010.

Employment Situation

The split between strength in demand for labor and weakness in wages is more critical than ever after the June employment report which shows a significant upgrade to payroll growth but a flat line for aver5age hourly earnings. Nonfarm payrolls surged 222,000 in June with revisions to prior months adding another 47,000. The last 3 months of payroll growth were originally very soft but ahve4 now been revised. Not revised is earnings which could manage only a 0.2 percent gain in June with May, which was already weak, revised down another one tenth to a monthly gain of only 0.1 percent. Year on year wages are lifeless at 2.5 percent. The weakness points to low wage, low productivity jobs. But there are more and more jobs led in June by the service sector. Professional and business services lead among the service categories at 35,000 with related temporary help up 13,000. Strength here suggests that employers are unable to fill positions and are turning to contractors. Government jobs were also very strong up 35,000 following a run of uneven results. Retail id rise 8,000 in the month but this is following a string of declines. Gains for goods producers are led by construction at 16,000 and followed by mining at 8,000, and yet another disappointing month for manufacturing at only 1,000.Hours are up in what are additional signs of strength at 34.5 weekly hours overall for a 1 tenth gain with manufacturing also increasing to 40.8 hours. Other data includes a tick higher in the unemployment rate to a still very low 4.4 percent with the pool of available workers continuing to creep lower to 12.4 million. The labor pool may be shrinking but it’s not resulting in stronger wages.  Wages are a key driver for inflation and without greater pressure; overall inflation does not look to improve. Still the strength in both employment and hours make June a strong final chapter for the second quarter.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile
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New Listing! Exquisite Santa Maria Home


Amazing, exquisite, unmatched, phenomenal… These are just a few adjectives to describe what you’ll experience when you step into this home that shows like a model. Over 2700 sq ft of perfection. This four bedroom home offers so many amenities: two family rooms – one up and one down, a library/office, beautiful flooring, plantation shutters, granite counters, working island/breakfast bar, exceptional appliances, two fireplaces – one in the family room, one in the master suite – just to name a few… The backyard is a lush and welcoming retreat complete with gas and oak pit BBQ, sink, wet bar (hot & cold), fridge, low voltage lighting, infrared heaters under patio cover, waterfall, Jacuzzi, sitting areas as well as a fenced off RV area.
Wendy Teixeira 805.310.3505

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Mortgage Rates Continue to Decline to New 2017 Lows During the Month of June!

During the month of June, the Freddie Mac 30-year fixed conventional program’s APR reached a new 2017 low of 3.88%. Mortgage Rates during the month of June varied by only 6 basis points it reached a monthly high of 3.94% during the first week of the month, and ended the month with the lowest rate of 2017 at an APR of 3.88%. June was the first month that all the Freddie Mac 30-year fixed conventional rates reported were below the 4.00% rate. The 2017 low of 3.88% APR is 42 basis points below the 2017 high of 4.30% APR set during mid-March. A year ago at this time the 30-year fixed rate conventional APR was 3.48%, only 40 basis points above June’s low of 3.88% APR. The year on year gap is slowly closing in as rates continue to decline.

 

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New Listing! 3 Bedroom 2 Bath Santa Maria Home

This floor plan offers the owner easy living. The home has three spacious bedrooms with 2 bathrooms, a sleek and stylish gourmet kitchen that flows out into the dining room and great room. The great room has a ceiling fan, fireplace, a custom designed built-in cabinet and opens up to a rear patio. The master suite offers a walk-in closet and large soaking tub with a separate walk-in tub. The master bedroom also has a french door leading to the back patio. Each of the bedrooms have fans and custom shutters. Most of the house has crown molding. This home is centrally located and is part of the Bradley Traditions Development, which is just a short skip and hop away from Centennial Park, shopping schools and medical facilities.
Bernie Davidson 805.878.6967

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New Listing! Santa Maria Office Building

Prime Location Santa Maria Office Building. This single story property is approximately 1,753 Square feet on a 9,148 Sq. ft. Lot. Property was extensively remodeled in 2014, which included exterior stucco, paint and trim, hardwood flooring in hallways and reception area, custom woodworking by master carpenter that includes framed windows and sills, wood beam work throughout & built-in work stations. Milgaurd windows throughout, interior and exterior custom doors, custom high end lighting and fixtures and ceiling fans, both bathrooms remodeled with new fixtures, sinks and toilets. Saltillo tile at front walkway and side patio with marble stone patio set and water feature. Plus many other upgrades! Parking available in front and rear. ***Information deemed reliable but not verified or guaranteed by broker.***
Shea Hutchinson 805.260.6322

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New Listing! Morro Bay Beauty


This beautifully appointed home is situated in prestigious Morro Cove located just above the Embarcadero, bay, and marina on a street to street lot close to downtown. Enjoy spectacular sunsets and views of the bay and Morro Rock from the balcony of the spacious master suite with large bathroom and jetted tub. This stunning home features three bedrooms, two and a half baths, and a bonus room that could be used as a fourth bedroom or office plus a living room and family room each with their own gas fireplace. Gourmet chef’s kitchen with granite counter tops and top of the line appliances. Entertain family and friends from your private courtyard, that is easily accessed from the kitchen and family room, with pavers and native/drought tolerant landscaping. Central vacuum, security system, water softening system, and the highest quality fixtures and flooring through out.
Kelly Vandenheuvel 805.471.1046

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CCL Market Update

Mortgage Applications

Purchase applications for home mortgages fell 1 percent on a seasonally adjusted basis during the week of June 16th. The unadjusted purchase index is 9 percent above the level it was during the same week one year ago. The refinancing share of mortgage applications rose 1.2 percent to 46.6 percent of all home mortgage applications being for refinances; it increased 2 percent from the previous week to the highest level since November, when the presidential election took place and rates substantially increased. The weekly seasonally adjusted decline in purchase applications, which follows last week’s decline from the week of June 2nd when the purchase index reached the highest level it’s been since November 2009. The current 9 percent year on year gain indicates that prospective home buyers have been exceptionally active in June.

Existing Home Sales

In previous months housing has been sliding, but May’s existing housing report shows a very solid 1.1 percent rebound to a higher than expected annualized rate of 5.620 million. Today’s report includes gains for single family homes, up 1.0 percent to a 4.980 million rate and also condos are up 1.6 percent6 to a rate of 640,000. The median price rose 3.2 percent to $252,800.On a yearly basis the median is up 5.8 percent showing seller strength relative to a 2.7 percent gain for on-year sales. Another positive in the report is supply which is strengthened by the increase in prices, increased to 1.960 million vs. 1.920 in April and 1.8010 million in March. Relative to sales, supply is at 4.2 months compared to 4.1 and 3.8 in the two prior months. The housing sector opened the year strong then fizzled ou6t during the spring selling season. This report shows limited weakness in the housing sector and should confirm expectations of a bounce back in housing

Jobless Claims

Jobless claims are little changed in the latest report and remain consistent with demand for labor. Initial claims came in at 241,000 for the week of June 17th; this is right in line with economists’ predictions of 240,000. The week of June 17th also happens to be the sample week for the upcoming June employment report, compared to the sample week of the May employment report, there is a slight increase of only 8,000. The four week average is up very slightly to a level of 244,750 that is only marginally above the four week average mid-May which was at a level of 241,000. Continuing claims data lags by a week and are again little changed at 1.944 million for an increase of only 8,000. The continuing claims four week average is up 5,000 to 1.932 million. The unemployment rate for insur4ed workers, excluding job leavers and re entrants is unchanged and remains at a very low level of 1.4 percent. The readings throughout this report are at historic lows as employers hold on to their employees.

FHFA House Price Index

Though sales may be uneven, home prices are on the rise. The FHFA’s house price index jumped 0.7 percent in April with March revised 1 tenth higher and is now also at a lev el of 0.7 percent. The yearly rate is up 4 tenths to 6.8 percent which is the best showing in 3 years! Though the housing sector may have fumbled in the spring selling season, home prices are one of the high points of the nation’s economic data and are a major positive for household wealth.

New Home Sales

After a disappointing spring season for the housing sector, housing is back on track, following the strength in the existing home sales market report. New home sales rose a very solid 2.9 percent to an annualized rate of 610,000, near economists’ top estimate. The report also includes a shar4p 24,000 upward revision to April to a level that now stands sat6 593,000. This report, similar to the existing home sales report, shows great strength in the selling prices with the median surging11.5 percent in the month to $345,800. The year on year increase is 16.8 percent which is nearly double the 8.9 percent gain in actual sales. This price traction is related no only to demand but also to supply of new homes which remains very tight. New homes however did move into the market during the month, up 1.5 percent to 268,000 units, but sales relative to supply remain unchanged at only 5.3 months.

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New Listing! Foxenwood One Story on Corner Lot!


Foxenwoods One Story on corner lot! This three bedroom, 2 1/2 bath home has been beautifully remodeled & updated! Featuring granite tile, stainless steel appliances, lots of recessed lighting, scraped & cathedral ceilings,tile flooring & everything you’d desire in a home! The flowing & open floorplan works well for the active lifestyle! Large bedrooms & baths & even a separate guest bath. The backyard offers privacy & protection from our afternoon breezes making it great for that Santa Maria Style BBQ! The three car garage allows plenty of room for all your toys & the side yard has plenty of room for your RV, toys & even a shop!
Wendy Teixeira 805.310.3505

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FOMC Raises Rates

FOMC Meeting Announcement

As expected, the FOMC did raise its rate target up 25 basis points to a level ranging between 1.00 to 1.25 percent. The Fed said the labor market has continued to strengthen and business spending has continued to expand. It also said that house hold spending has picked up in recent months, referring to a 0.4 percent rise in April consumer spending; there was no mention of the 0.3 percent decline in retail sales. The official FOMC outlook for inflation was described as “has declined recently” and it will be “monitoring closely.”  The median for this year’s funds target remains at 1.4 percent, meaning only one more rate hike will take place this year, and next year’s median holding at three rate hikes. PCE inflat5ion has been downgraded to 1.6 percent this year, 3 tenths below the March forecast but remains unchanged for the next two years at 2.0 percent.  The core PCE is seen at 1.7 percent this year, down 2 tenths from March, then is predicted to hold at 2.0 percent in both 2018 and 2019. GDP forecasts increased 1 tenth to a median of 2.2 percent this year with no changes to 2018-2019, at 2.1 and 1.9 respectively.  The unemployment rate forecasts decreased by 2 tenths this year to 4.3 percent and is down 3 tenths for the next two years to a level of 4.2 percent; another indication of expected growing labor strength. The FOMC expects to begin unwinding its $4.5 trillion balance sheet this year, provided that the economy continues to expand as expected.

Fed Chair Press Conference

Janet Yellen in her in her quarterly press conference cautioned that the downgrade for inflation between the May FOMC meeting and the June FOMC meeting, may reflect noise in the economic data. On the upside for inflation, Yellen pointed out the decline in the unemployment rate, saying that the majority remains at work and that overall inflation will respond to changes in unemployment but not at a very quick pace. Yellen state a wide variety of data is pointing to labor market tightness, including household and business assessments of the jobs market; she also stated she believes wages are likely to move up. She said “removing a bit of accommodation” right now is prudent and will lower the risk that the FOMC, who suddenly is faced with an upturn in inflation, may need to raise the funds rate quickly in the future and thereby risk a recession.  As mentioned in the FOMC meeting announcement, it plans on unwinding the Federal Reserve’s $4.5 trillion balance sheet though no time frames were given. If the economy improves as the FOMC expects it to, Yellen said the unwinding could begin “relatively soon” and last perhaps a few years. She did not give a dollar level amount that the balance sheet would be brought down to, saying that will depend on bank demands for reserves.

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New Listing! Paso Robles Beauty


West side Paso Robles Beauty. This home has many upgrades you will enjoy. Maple kitchen cabinetry, granite slab counters in kitchen with sink and hardware also chosen with care. Ceiling fans in Kitchen and family room. Master shower is a delight and the solid surface flooring will please many buyers. Built by a local contractor who resided for a time, this home has been occupied by only one other family. Wood burning fireplace in the living room Back yard privacy with covered patio, pavers and yet room for flowers and other hobbies. Back yard is fenced. The two car garage has bench and shelving with a separated room for storage or your imagination. New roof 2017, hidden stereo closet, If being close to downtown is your desire, this may be it.
Marty Diffley 805.440.2078

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