After a good hike in long-term rates during the second half of 2013, just about every analyst in the country seemed to be sure that this was just the first phase of rate increases to come. After all, rates were the lowest in a generation and the increase we witnessed last year still put rates in very, very attractive territory. Jobs growth started accelerating during the second half of the year and the systems were ready to fire on all cylinders while the recovery finally got into full gear. Then came the long, cold and hard winter. So we understand that factor. Once again, the recovery halted and rates came down.
But this factor has passed. Job growth has heated up again and the stock market is at all time highs. The Federal Reserve has been slowing their purchases of treasury bonds and home loans in an effort to slow down fiscal stimulus and they are meeting this week with most observers feeling that rate hikes will be coming in early 2015. The question remains, why aren't rates going up in response to all of these factors? We could take the easy way out by saying that predictions of the future are futile and while this is true, we believe there are other factors at work.
Certainly one factor encompasses the political tensions around the world. Ukraine, Syria, Libya, Iraq and Gaza are all spots of conflict right now. The tragedy of a passenger jet being shot down just demonstrates how dangerous these situations are. When the world erupts, while our economy has not been as stable as we would like -- it is still a haven of safety compared to the rest of the world. When there is unrest, Treasuries are still a choice for those who are looking for safety in a world of conflict. While this factor does not completely explain why rates are not rising right now, there is no doubt that this factor is important and it also explains why predictions are futile. Next week, in addition to the analysis of the Fed meeting and the employment data, we will talk about one other factor contributing to low rates.
Sixty-seven
percent of consumers say they're planning a home renovation within the next six
months, according to realtor.com®'s Home Improvement Survey of more than 1,500
home owners. They're planning to spend more money on their renovations than
last year, the survey found. The most common budget range for home improvements
was between $2,001 and $5,000. Eighteen percent of respondents who say they
plan to renovate before the end of the year are budgeting $10,000 to $20,000 on
their renovation. Respondents indicated that these are the most popular areas
of the home to renovate: the kitchen (61%), bathrooms (59%), backyards or
patios (33%), and the exterior of the home (32%). "With 32% of
consumers planning to spend money on improving the look and feel of their
homes, home buyers should think about purchasing homes that require
renovations," says Barbara O'Connor, chief marketing officer for Move
Inc., the operator of realtor.com®. "By considering these kinds of homes,
buyers open themselves up to more affordable options and the ability to
renovate their homes to fit their specific needs and tastes." Source:
Move, Inc.
Want to know
exactly what employees relocating to a new housing market for a job are looking
for in their next home? Cartus, a provider of domestic and global relocation
services, recently surveyed 267 brokers who specialize in working with
relocating employees to find out the most important home characteristics for those
clients. These were the top three items transferees identified as most
important to have in their next home: A larger home than their former residence
(70%); new construction (64%); and single story (37%). Meanwhile, transferees
identified the following amenities as the most important in their next home:
·
Upgraded kitchen: 91%
·
Master bedroom on first floor: 60%
·
Finished basement: 44%
·
Pool/spa: 23%
·
Outdoor kitchen: 11%
·
Smart-home technology (such as control via phone/tablet for heat,
electricity, electronics, media, security, etc.): 10%
·
Media room/home theater: 7%
·
Fitness room: 4%
When it comes to
relocation, transferees ranked location near a specific school district and
less than a 30 minute commute to work as two key items of importance. “A
job transfer is a major life change for employees and their families, and
finding a home that fulfills their needs is important and enables the employee
to transition to the new job efficiently and with little disruption to family
lifestyles and routines,” says Gerry Pearce, executive vice president, broker
and affinity services for Cartus. Source: RISMedia
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