unemployment rate

Impact of new jobs report on Glen home buyers & sellers

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The Labor Department reported last Friday that the economy created 271,000 new jobs in October which is much better than anticipated; and the unemployment rate dropped to 5%. That’s great news, of course.   In simple terms, people without jobs can’t purchase homes, so more jobs = a larger pool of prospective buyers.

Even entry level jobs can positively impact the market for higher priced homes in places like The Glen and greater Glenview where I focus my real estate practice. Why? Because the sale of an existing entry level home turns the home seller into a buyer of another home, presumably one with a higher price point.

There is a downside to today’s report, though my sense is that it will modest, at least in the short term. With the very positive news on job growth, the Fed is more likely to increase interest rates at its next meeting in December. If so, it will be the first increase since 2006. While the federal funds rate is not directly tied to mortgage interest rates, it increases the borrowing costs of lenders who will pass along their additional costs to their home buyer clients in the form of higher mortgage rates. I’m not an economist and I don’t play one on TV, but I suspect that the Fed’s December increase (if it occurs) and any further increases next year will be modest because the Fed does not want to throw a wrench into a still recovering economy.

So here’s the take away:  A healthier employment climate will increase housing demand, but expect modest increases in mortgage interest rates in 2016.

Margaret Ludemann

Realtor, @properties, Glenview Illinois

847-401-1802   margaretludemann@gmail.com

Conditions are favorable for home sales

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Stepping back from my usual Glen-specific blog content, I thought I would share with you some thoughts about the state of the housing market generally.

The environment for home sales remains strong as it has been for the last couple of years. Jobs are critical to a strong housing market, so I was heartened to see that the nationwide unemployment rate recently dropped to 5.1% which is the lowest rate in many years. Consumer confidence, which of course is influenced by low unemployment, is strong; and that means that people feel good about spending money…and in the context of housing, to purchase their first homes or to purchase higher priced homes.

The other hugely positive factor that is impacting housing is available credit. Sure, it’s not like the wild, wild west days that fueled the build-up to the bubble, and that’s good. But slowly and surely lenders are becoming more reasonable about lending standards, making mortgages more readily available to prospective home buyers. Specifically as it relates to The Glen – which has an abundance of high price point homes – many of the largest banks have loosened credit standards for jumbo mortgage loans which exceed conventional loan limits.

So all of this is good news for home sellers and home buyers. If you have any questions or comments, please get in touch with me. I am an award-winning Realtor with @properties who lives in the Glen (in Glenview Illinois), and I would be delighted to discuss the benefits of living here.

Margaret Ludemann            847-4-1-1802   margaretludemann@gmail.com

Positive economic environment for real estate sales

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The economic environment for real estate sales was positive through most of 2014, and that good news should continue in 2015. After a slow start in the first quarter 2014 due to the long winter, the American economy had the strongest 6 month performance in 11 years including a 5% growth rate on an annual basis in the 3rd quarter.

Job growth picked up steam in 2014. Nationally the seasonally adjusted unemployment rate fell to 5.6%, down from 7% a year ago and from its high of 10% in October 2009. Illinois unemployment dropped to 6.4% (through November 30), its lowest point since June 2008.

Interest rates remained low during the year. That was somewhat surprising as they were expected to rise in the 3rd and 4th quarters.

The Dow ended 2014 at 17,823, up 7.52% after a remarkable increase of 29.65% in 2013.

The economy is expected to be favorable for home sales in 2015…with growth picking up, unemployment continuing to fall, and mortgage interest rates remaining low (though moving up modestly later in the year). A week ago, mortgage rates hit their 20 month low. Freddie Mac reported the average 30 year fixed rate mortgage interest rate at 3.59%; and 15 year fixed rate mortgages averaging 2.92%

I see home prices rising again, in line with historical norms of 3% to 4%. The bottom line is that if you want to sell your home in 2015, you’ll probably get it done and at a better price than a few years ago.

Margaret Ludemann, @properties Realtor, homeowner in The Glen, Glenview, Illinois

Home sales surge, prices rise, time on market falls in The Glen

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2013 was the year that Glen homeowners have been waiting for.  The Glen is an upscale residential and retail development in Glenview, Illinois in the Chicago area’s North Shore. The real estate market for its homes was exceptionally strong.  Sales were up considerably, prices rebounded nicely, and the time it took to sell homes fell.  Further, nearly every Glen home listed for sale in 2013 sold.

Broad economic factors positively influenced existing home sales in the U.S. which gained 9.3% for the year.  The U.S. economy gathered strength through 2013.  Job growth continued to climb.  According to the Bureau of Labor Statistics the unemployment rate fell to 7% by November 2013 from 7.9% in January 2013 and from its recent high of 10% in October 2009.  Interest rates remained at historically low levels, though they inched upward during the year.  Low rates and the prospect of higher future interest rates served as incentives for many potential home buyers.  Stocks soared during the year with the S & P 500 gaining 29.6% which no doubt made potential home buyers feel more financially secure.

Years of declining values once again brought many bargain hunting investors into the U.S. housing market.  Pent up demand by trade-up buyers also fueled the increase in home sales. 

As prices rose during the year fewer homeowners found themselves “under water” (homes worth less than the mortgage balance), thereby reducing their incentive to sell.  This resulted in a decline of available housing inventory.  Over the last several years sellers far outnumbered buyers, but that was reversed in 2013 giving sellers the negotiating advantage.  The result…further improvement in home prices.

It was the best year for home sales and prices in years, and you will see that reflected in my future blogs dealing specifically with sales of Glen homes.

Margaret Ludemann

Glen homeowner and @properties Realtor