Discussing the latest reports on mortgage rates, construction jobs, the UofM consumer survey, income inequality and how to dramatically improve your wealth and net worth!
Since it is Friday the 13th, I have to ask if you think 13 is an unlucky number? I don’t think it is but in real estate numbers are important. Some of the most important numbers are the current mortgage rates…
Let’s check out the latest reports from Freddie Mac and the MBA on mortgage rates. First up, Freddie:
Freddie Mac Reports Increasing Mortgage Rates
- 30-year fixed-rate mortgages averaged 3.91% with an average 0.5 point
- This is up from last week when it averaged 3.85%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.47%
- 15-year fixed-rate mortgages averaged 3.21% with an average 0.5 point
- This is up from last week when it averaged 3.15%
- Last year at this time, 15-year fixed-rate mortgages averaged 2.76%
This is the second consecutive week of Freddie reporting increasing mortgage rates. Check out the chart:
2 consecutive weeks of increasing rates isn’t good but it is not time to panic yet. Especially if you consider this chart showing just how low rates are today compared to the past;
Some of the people reading this may not remember just how high mortgage rates were in the past…
The MBA Also Reported Increasing Mortgage Rates
The MBA said:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.16% from 4.12%, with points decreasing to 0.44 from 0.45 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.11% from 4.09%, with points increasing to 0.31 from 0.26 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.44% from 3.42%, with points decreasing to 0.36 from 0.39 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Again, do not panic. These are the average rates and do not reflect what is possible for every home buyer.
As the chart above clearly shows, we are still doing much better than the home buyers of the past…
However, the MBA did report something this week that is troubling. They said that new home purchase applications were down 7.5% year over year.
Once again, we heard that the hurricanes are the culprit. It is so sad to think about the people that lost so much due to the recent hurricanes. Insurance can pay to replace or repair but there were lives lost as well.
Construction Job Openings Reach New Cycle High
From Eye On Housing:
The count of unfilled jobs in the construction sector continued to rise in August, reaching the highest level since February 2007. Given the significant need for repair and restoration work in the wake of Hurricanes Harvey and Irma, we can expect additional increases in the months ahead.
According to the BLS Job Openings and Labor Turnover Survey (JOLTS) and NAHB analysis, the number of open construction sector jobs (on a seasonally adjusted basis) increased to 247,000 in August. This represents a 34% increase since August 2016.
They did not mention home builders having difficulty finding qualified workers. I imagine this problem is still causing issues with some home builders.
Consumer Confidence Hits 13 Year High
Consumer sentiment surged in early October, reaching its highest level since the start of 2004. The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints. The data indicate a robust outlook for consumer spending that extends the current expansion to at least mid 2018, which would mark the 2nd longest expansion since the mid 1800’s.
This really contradicts the reports I covered in yesterday’s post. I am pretty confident about the economy but also realistic that we never know when a disaster, either natural or man made, will muck things up.
Remember, hope for the best but always plan for the worst!
From the IMF:
Rising inequality and slow economic growth in many countries have focused attention on policies to support inclusive growth. While some inequality is inevitable in a market-based economic system, excessive inequality can erode social cohesion, lead to political polarization, and ultimately lower economic growth.
There is no doubt there is a problem with stagnant incomes for the majority of people. But what to do and how to help those willing to help themselves?
The IMF does suggest that raising taxes on the ultra wealthy is a way to start but I don’t see that happening. They pretty much run everything. The rich and powerful can manipulate the mindless to vote for policies that actually hurt them…
Besides, it is up to us to do something about our lives if we are unhappy about them. And one of the best ways to increase your wealth is by owning a home…
Homeowner Net Worth Compared to Renter Net Worth
If you have reached a point in your life that buying a home makes sense, then I strongly suggest you consider it. The cold hard facts are in and owning a home creates a dramatic difference in your net worth!
Every 3 years, the Federal Reserve performs their Survey of Consumer Finances. They gather data about all economic and social groups. The latest Fed survey covered 2013-2016 and was published 2 weeks past.
The research said that the 2016 median net worth of homeowners was $231,400. This is 15% higher than 2013.
Compare that to the median net worth of renters of $5,200! Not only is the net worth of renters pretty pitiful, it has decreased by 5% compared to 2013.
In other words, the net worth of a homeowner is 44 times greater than a renter.
Now, you can’t just run out and buy any home without doing your research. You have to buy smart and pick a home that is right for your budget and lifestyle.
Well that is it for this lucky Friday the 13th! Please hit the share buttons and subscribe so you never miss another post!