What’s in a (street) name? Everything
If you’d like to increase property values, try renaming your neighborhood something pleasant like “Willowy Boulevard.”
It turns out, that might actually help.
Recently, online real estate broker Zillow.com put together a survey of how property values relate to the street names they’re on. The team discovered that there’s a lot of power in a name. Street names can indicate whether a neighborhood is old or new, rural or downtown and, often, expensive or cheap. In fact nationwide it turns out that property values can swing pretty widely, predicted by nothing more than the street where they’re located.
“We looked at years of data about sales and listings,” Zillow CEO Spencer Rascoff wrote in The New York Times. “We learned three things about the relationship between home values and street names: First, names are better than numbers. Second, lanes are better than streets. Third, unusual names are better than common ones.”
How much of a difference can this make? Sometimes enormous.
The most common street name in the United States, according to the U.S. Census Bureau, is 2nd Street. (There are roughly a thousand more 2nd Streets than 1st Streets across the country, which really drives that American educational crisis home.) Nationwide a house located on 2nd Street is worth about 48 percent less than the national average, all other things equal. Spell out the name and you make matters worse; “Second Street” homes sell for 60 percent less than average.
In fact, numbered streets turn people off everywhere in the country except for Atlanta, New York City and Denver. In New York people presumably don’t have many other choices, but in Denver it turns out they actually prefer streets with numbers instead of names.
Main Street a Minus
By Zillow’s estimate a home on Main Street loses 44 percent of its value just by dint of the mailing address. As Rascoff noted, common names in general suffer this fate, and Main Street is one of the most common a town can have.
Occupiers everywhere will be pleased to know that Wall Street, while fairly common, tends to have homes worth about 60 percent of the norm. (In fact, after several random searches, it’s surprisingly hard not to have property values worth less than normal. One wonders if there’s a cluster of gloriously titled neighborhoods out there with their thumbs on the scale.)
So where’s all this property value going? Well, it turns out that every developer who named his sun-blasted subdivision “Shady Acres” was actually on to something. Descriptive names like “Lake Front” and “Sunset” often are indicators of high value, as are unusual names and “Ways,” “Drives” and “Boulevards.”
Homes located on Sunset Way, for example, tend to be about 76 percent more expensive than average while Lake Forest Drive gets an 11 percent bump. Idiosyncratic history buffs can also take heart: homes on Verdun Avenue cost 123 percent more than the national average.
For the Fun of It
It’s dangerous to read too much into this data though. Rascoff specifically warns readers not to confuse correlation with causation here. In reality, it’s pretty unlikely that home buyers pay close attention to the street signs. Far more likely, they pay attention to what those street signs reflect.
Lake Shore Drive has more value because, odds are, that house is somewhere close to a lake and people like water. Mechanically numbered streets may reflect a grid-like or heavily planned development, and older neighborhoods are more likely to end in “Street.”
Still, the numbers are there and names have value. They say something about a neighborhood, and might even be a good place to start if you’re looking for something affordable.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) lost -131 basis points (BPS) from last Friday’s close which more than wiped out the prior week’s gain of +69 BPS and caused 30 year fixed mortgage rates to rise to their highest levels of 2015.
In February, mortgage back securities lost an incredible -160 basis points from January’s close which drove up interest rates. And so far in March we are down an additional -131 basis points.
The U.S. Economic data continues to show growth we very strong readings in both ISM Manufacturing and ISM Services but the big market mover was the much anticipated jobs report on Friday.
February Non-Farm Payrolls surprised to the upside (295K vs est of 240K). January was revised downward from 257K to 239K but the three month average (net of revisions to all prior months) is a very robust 288K. This is certainly negative for rates as growth in the labor sector is a key precursor to the Federal Reserve raising rates.
Unemployment Rate: Dropped from 5.6% to 5.5%. Coincidentally (not) the Participation Rate fell from 62.9% to 62.8%….that explains your drop in the useless Unemployment Rate.
Hourly Earnings: Did rise again. This time just 0.1%….but it did rise. And the prior month (January) was reaffirmed at 0.5%…so that number was not a fluke. So..what we have is two straight months of wage gains. And while February was not a big spike like January, this reading coupled with other data recently reported (like Thursday’s spike in Unit Labor Costs) have long-bond traders thinking that the ‘Data Dependent’ Fed may have enough momentum in the labor market to start to tighten rates in June.
What to Watch Out For This Week:
|Date||Time (ET)||Economic Release||Actual||Market Expects||Prior|
|10-Mar||10:00 AM||JOLTS – Job Openings||–||NA||5.028M|
|10-Mar||10:00 AM||Wholesale Inventories||–||-0.10%||0.10%|
|11-Mar||7:00 AM||MBA Mortgage Index||–||NA||0.10%|
|11-Mar||10:30 AM||Crude Inventories||–||NA||10.303M|
|11-Mar||2:00 PM||Treasury Budget||–||NA||-$193.5B|
|12-Mar||8:30 AM||Initial Claims||–||306K||320K|
|12-Mar||8:30 AM||Continuing Claims||–||2421K||2421K|
|12-Mar||8:30 AM||Retail Sales||–||0.40%||-0.80%|
|12-Mar||8:30 AM||Retail Sales ex-auto||–||0.60%||-0.90%|
|12-Mar||8:30 AM||Export Prices ex-ag.||–||NA||-1.00%|
|12-Mar||8:30 AM||Import Prices ex-oil||–||NA||-0.70%|
|12-Mar||10:00 AM||Business Inventories||–||0.10%||0.10%|
|12-Mar||10:30 AM||Natural Gas Inventories||–||NA||-228 bcf|
|13-Mar||8:30 AM||Core PPI||–||0.10%||-0.10%|
|13-Mar||10:00 AM||Mich Sentiment||–||95.8||95.4|
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.