Word On The Street: Real Estate Talk In The First Weeks of 2017

Can you believe we are in our first week of the New Year! Whether you are recovering from the holiday madness, entertaining the kids on their THIRD week of winter break (whose bright idea was that?!) or just powering through your resolutions – you might be too busy to read up on what’s happening in the real estate market so far. The good news is…that’s our job! In this week’s edition of the Homes of Silicon Valley blog, we are sharing the ‘word on the street’ and summarizing the headlines and highlights of the first few days of 2017.

RATES

Much of the mortgage talk in January centered around rates…and the implementation of the second Fed key interest rate hike in a decade. You may have even skimmed our 'Real Estate Reality Check: The 3 P’s of the Rate Hike', and noticed that an imminent and steady rate rise wasn’t predicated. Well, here we are already seeing the first rate retreat as fixed-rate mortgages posted their first weekly decline in a month, and benchmark Treasury yields have subsided as well below the Dec 14^th high we were watching before Christmas. If anything, this is a trend you are likely to see throughout much of 2017 – breaking news, a knee-jerk market reaction and a moderating move towards ‘normalcy’. It’s a reason to have your finger on the pulse (or let us do it for you) and your decisions rooted in logic – not fear. There will be many ups and downs in 2017, but together – we’ll ride it out and make the very best decisions for you.

BUYERS & SELLERS

This week CoreLogic reported the largest home sales price jump in two years. Though not surprising given that low inventory is feeling the heat of increased demand, it is making both buyers and sellers reconsider their real estate plans. Sellers who are moving-up may wish to do so while their return on investment is high, and while their competition is lower before the spring and summer rush. Buyers watching this home price march upwards are becoming unwilling to pay even more for the same home in 6 months and are choosing to make a purchase today. We expect an early ‘spring’ season to start with buyers and sellers taking action on their goals as soon as mid-late January!

EMPLOYMENT

With the market tied so closely to job gains and employment progress citied as the Fed’s deciding factor for the key rate increase - all eyes are on jobs. At the time of this blog posting, the December 2016 stats are just being released and depicting jobless claims better than expected, but new job creation less than hoped. ADP states that this data reinforces that job growth is strong but may be slowing. Some of the data discrepancy could be rooted in the fact that “…December is typically when employers drop from their listings all individuals who have left permanently…” according to Chief US Chief US Economist Jim O’Sullivan as reported by MarketWatch. You may see some short-term market volatility in response to these reports overt the next week.

CHANGE ADVOCACY

Change is a common theme in our industry, and has been related to lender accountability and recovery since 2008. Today, the Washington Post released a list of suggested changes advocating affordability in the market, particularly as it presents itself to low-income and first-time buyers. With a new administration upon us, many of the solutions are yet to be determined – but possible positive changes could be: minimizing penalties originators for small lending mistakes (which are often passed on to borrowers in fee and qualification hits), tax credits for affordable housing, risk transfer of mortgages backed by Fannie and Freddie to private institutions/investors and policies which focus on market equilibrium in the present rather than the future. These are areas of discussion being brought up in a slew of articles and perspectives across the web, and only time will tell which solutions, as well as when and how, actually materialize and make an impact.

We hope the above summary has been helpful as you consider your own goals of buying, selling and investing in 2017! Remember that we are only a phone call away…or a hop down N. Santa Cruz Avenue. Please don’t hesitate to reach out so we can help weigh your current opportunities in the current market.

Cheers to all you dream (and more!) in 2017,

Mark & Jason

Resources

http://www.marketwatch.com/story/private-sector-adds-153000-jobs-in-december-adp-2017-01-05

http://www.reuters.com/article/us-usa-mortgages-freddie-mac-idUSKBN14P1TP?il=0

http://www.calculatedriskblog.com/2017/01/december-employment-preview.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29