America’s Labor Market Still Going Strong

The US Labor Department’s Jobs report for February showed the American labor market remained strong. Reflected in the report showed that 273,000 jobs were added by the US economy. The US Bureau of Labor Statistics said this was substantially more than us economists had foreseen. In fact, the numbers resulted in the largest monthly increase since May 2018 which put the unemployment rate back to the historic low of 3.5%.

Among the job gains per industry, the leading gains of new jobs were in health care and social

assistance, food services and government. Within those industries, 7,000 people were hired for the April Census.

The Institute of Supply Management supplied data showing that the US manufacturing sector has been growing the past five months. The ISM report is just another factor indicating that the US economy is in a good place.

“With global growth stabilizing in recent months and domestic economic activity also starting to pick up, the ISM survey adds to the evidence that 2020 is likely to be a better year for US manufacturers,” wrote Capital Economics’ Senior US Economist Andrew Hunter in a note.

The year leading up to the February job survey paychecks rose by 3% with a 0.3% bump in February. The month’s report in addition to better-than-expected services PMI from the Institute for Supply Management was a plus for the US economy according to Michael Hanson, SVP of research at Fisher Investments.

This is just icing on top of the January report which beat expectations. The Labor Department’s Jobs report found that the US economy added 225,000 jobs with an unemployment rate of 3.6%. Job growth was seen in the construction, health care, transportation and warehousing industries.

According to Capital Economics Chief US Economist Paul Ashworth, mild weather in January boost the construction and transportation sectors.


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Mortgage Rates at a New All-Time Low

Mortgage rates have been at record lows for a while now, but with a new emergency rate cut from Federal Reserve rates are at historic lows. Now is the time to refinance or buy a home with the half percentage point cut by the Fed this week which puts the benchmark interest rate range at 1% to 1.25%.

“It’s definitely a good time for someone looking to buy a home to get financing,” said Mark Hamrick, senior economic analyst for Bankrate.

Hamrick believes that rates will still go lower. According to Freddi Mac, last weeks are at an average

3.45% for a 30-year fixed-rate mortgage and 2.95% for a 15-year fixed-rate mortgage.

“If you’re trying to look for the silver lining in the midst of the current climate,” said Hamrick, “the mortgage interest rate is close to the top of the list.”

The spring market is looking up with the help of the rate cuts. Those that are on the cusp of purchasing a new home might move a step quicker with the favorable rates. The entire real estate sector, not just individual buyers will benefit.

“Hesitant home buyers will be enticed to take advantage of low-interest rates,” said Lawrence Yun, chief economist at the National Association of Realtors, in a statement.

As mentioned earlier, rates will drop even more but should home-buyers wait for lower rates? Those that are in the market to refinance or secure a new mortgage need to weigh the benefits. According to Mike Hennessy, a certified financial planner with Harbor Crest Wealth Advisors in Fort Lauderdale, “if you can meaningfully save on your interest costs, build equity quicker, or extract equity at a reasonable cost to fund a renovation project, then take the bird in hand today.”

Run the numbers to see if it would be beneficial to refinance. Comparing your current rate with the rate that is being offered on a mortgage refinance will help answer your question.

“If the new rate is 75 basis points (0.75%) lower than the current rate, that it’s generally going to be worth it to refinance after the costs of the refi,” said Cynthia Meyer, a certified financial planner with Real Life Planning in New Jersey.

“If you’re planning to stay in your home, run the numbers to see if it makes sense to refi from a 30- to a 15-year mortgage as well,” she said. “You may be able to pay around the same amount every month and get your house paid off a lot sooner, with lower total interest costs.”

Even with the historic low rates, always shop around. Lenders offer competitive rates and some will include closing cost.

“You shouldn’t assume you’re going to get a good deal from a big bank just because you have your checking and saving account with them,” Danielle Seurkamp, a certified financial planner with Well Spent Wealth Planning in Cincinnati, Ohio said. “Often the smaller, community banks offer the best deals.”


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How Often People Move Can Impact the Housing Market

Just like any other consumer product the more something is in demand the better the market for it. The housing industry is no exception to the rule. Everyone needs a place to live so this, in turn, affects every aspect of the housing market from real estate to lending to title. The data collected

regarding if and when people are moving can interpret if the housing market is thriving.

There are a variety of sources and people interpreting the data collected. This can hinder a potential home buyer’s research when it comes to the housing market. There are many “spin doctors” who want to influence the public and might be steering them in the wrong direction. When it comes to research, there are many ways to discern what is fact and what is fiction.

Go to the facts, remember for the most part numbers don’t lie. The Census Bureau is a great neutral source. The Census Bureau is supervised by the Economics and Statistics Administration within the Department of Commerce.

The history behind the Census Bureau is interesting within itself. Founded in 1790 when Secretary of

State Thomas Jefferson appointed U.S. marshals throughout the country to collect data on the 3.9 million residents. For the next 150 years, the six question census added many categories that included manufacturing, agricultural, mining, fisheries, native language and others. In 1940, data on housing was added (other than the names of those living in households) and the real estate industry began using the data to predict the health of the housing market.

The homeownership rate is an important statistic to focus on as a baseline to research. An interesting fact according to the census, is that the homeownership rate has held steadily for approximately 60 years. According to housingwire.com, the ” rate is calculated on the proportion of households that are owner-occupied and has continuously held strong in the 60-70% range throughout the years.”

Throughout the years the highest at 70% was in 2005 and the lowest at 62% was during the recession.
Statistics in migration patterns show that 43% of people move due to housing-related issues, 27% move because of family-related issues, 18.5% move because of employment issues and 10.6% move for other various reasons. The Southern Region of the country has seen the largest migration pattern.

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NAHB’s Analysis Shows Gain in Custom Home Building for 2019

Low Mortgage interest rates have supported a surge in custom home building in the fourth quarter of 2019. The NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey revealed that custom home building increased at the end of 2019.

The US Census Bureau’s Survey of Construction (SOC) is a survey conducted by the US Census Bureau and partially funded by HUD (Department of Housing and Urban Development). The SOC reports up to date national and regional data on housing starts, completions and characteristics of all residential housing. The data which is collected includes the start date, completion date, sales date, sales price (single-family houses only), and physical characteristics of each housing unit, such as

square footage and number of bedrooms. The Quarterly Starts and Completions by Purpose and Design is based on the Building Permits Survey and from the Survey of Construction (SOC).

The National Association of Home Builder’s analysis shows 44,000 total custom building starts during the fourth quarter of 2019. This is a 16% gain over the same quarter in 2018 which totaled to 38,000 total custom building starts. Data shows a solid gain occurred during the last four quarters with custom housing starts totaling to 177,000.

The custom home building market will continue to expand with demand from both owner and contractor built homes. The low mortgage interest rates will protect the custom home building market thus maintaining the positive custom home building outlook.

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Private Residential Construction Spending Still on the Rise

Decreasing mortgage rates along with solid growth of spending on single-family construction and remodeling have kept the private residential construction up for the sixth consecutive month. According to the National Association of Home Builders, the Census Constructions Spending data reveal a 1.4% increase to a seasonally adjusted annual rate of $540.7 billion for total private residential construction spending this last December.

The National Association of Home Builders provides a monthly estimate of the total dollar value of construction work done called The Value of Construction Put in Place Survey (VIP). On the first day of each month data collection and estimation activities begin for the month. The data that is recorded includes the cost of labor and materials, cost of architectural and engineering work, overhead costs,

interest and taxes paid during construction, and contractor’s profits. The survey is based on construction work that is done each month on improvements to existing structures or new structures for private and public sectors.

The growth in spending on single-family construction and remodeling has been great for the housing industry. Single-family spending was up 2.7% in December 2019 at an annual pace of $289.3 billion. This was 5.2% higher compared to the figures reported in December 2018. The figures included in the private residential improvements were based on spending on remodeling, major replacements, and additions to owner-occupied housing units. In December the figures rose to a seasonally adjusted annual rate of $193.7 billion.

In the second half of 2019, as seen in the graph, there has been solid growth in single-family construction and home improvement. Also shown is new multifamily construction spending which slowed down since last summer but did see solid growth from 2010 to 2016 and a growth spurt from late 2018 to early 2019.

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Greyhound A New Gastropub For Covington

If you are a local then you know about Del Porto Ristorante in downtown Covington. The owners, Torre and David Salazzo, serve delicious Italian cuisine at the local restaurant. The Salazzos want to open a second restaurant that will have a broader selection of food and flavor with a laid back neighborhood vibe. Greyhound will be located just down the street from Del Porto Ristorante and will be a gastropub.

Del Porto Ristorante opened its doors to Covington in 2002. The Solazzos opened the restaurant in a

smaller location than it currently resides. The original had just 10 tables which served “a fresh, seasonal take on regional Italian cuisine, and an alternative to the more prevalent local standard of Creole Italian.” In 2007, Del Porto moved to its larger location and then grew again taking over the adjacent storefront.

Although the new restaurant will be casual with a laid back atmosphere, it will be a cut above traditional tavern-style. There will be a wood-burning oven for pizza along with other fanfares such as burgers, tapas-style dishes, German sausages, fried chicken, Reuben sandwiches, matzo ball soup and beef short ribs just to name a few. Inspiration for the unique menu will come from the “family meals” that are made for the staff at Del Porto. The bar will offer bottled and canned beers with some offered on tap.

“It just opens up a lot of possibilities for us,” Solazzo said. “It won’t be a huge menu, but we keep on putting down all the food we like to eat, so it’s been growing.”

The Greyhound, named after the Greyhound bus station that once resided at 705 E. Boston St., plans

to begin serving lunch and dinner in May 2020. Work on the building has begun and will include configuring the restaurant into a main bar and a separate pizza bar.

“In the years we’ve been here, we’ve seen a lot of young people growing up, we think there’s a need for a place like this that’s more casual,” she said. “We want to stay in our little downtown area and bring something new here.”

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The New Year Starts Off With Mortgage Rates Below Last Year’s Average

A new year has brought good news for the housing industry. The first week reported that the average U.S. fixed rate for a 30-year fixed mortgage averaged at a low 3.72%. The findings were 80 basis points below data reported a week earlier.

George Ratiu, Realtor.com’s chief economist said, “The conventional 30-year loan slid 2 basis points to 3.72% in the first week of 2020. Rates remain about 80 basis points lower than the first week of

2019.”

Ratiu predicts that employment and wage gains will fuel the housing industry. The economy will maintain a moderate growth trajectory this year.

The 15-year FRM also was at a low 3.16% which was down from this time last year’s reportings of 3.99%. The average rate dropped in just one week from 3.19% to 3.16%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage also averaged 3.46% which was lower than the 3.98% reported this time last year.

“As mortgage rates remain favorable, buyers are likely to get a head start on the spring shopping season in the first couple of months of this year,” Ratiu said. “A stronger infusion of new homes in affordable price ranges would be a welcome gift for the New Year.”

Sam Khater, Freddie Mac’s chief economist, believes the rates have maintained around 3.7% for the last couple of months because of ” the combination of improved economic data and market sentiment has led to stability in mortgage rates.”

“The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices,” said Sam Khater.

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