What is the new “must have” room in your house?
With mobile technology, it’s easy to work in any room of a house. And yet, according to designers and home builders, the home office is becoming one of a home’s must-have features.
Dedicated office space might not always be a full room. In fact, it might be a nook with desk space on the landing of a staircase or a corner of a bedroom or family room. But as people do more work away from the office and kids do more work outside of the library, the home office is growing in importance.
“That office or desk space is becoming as essential as the family room,” said Mollie Carmichael, who leads the consumer research team at John Burns Real Estate Consulting, based in Irvine, Calif. And that’s true no matter how large of a home it is, from a small apartment to a large single-family home, she added.
In fact, 77% of people surveyed by John Burns said that any additional rooms not dedicated as bedrooms would be used as an office in their next home — the most popular response. (Fifty-six percent said they’d use the extra space as a guest room, 25% said multipurpose room.)
There’s also some evidence that home offices can make a home more attractive to buyers. According to Remodeling Magazine’s 2014 Cost versus Value report, you can recover an average 48.9% of the cost of a home office remodel at resale, up from 43.6% in 2013 and 42.9% in 2012. A midrange office remodel, as defined by the report, is a $28,000 investment that involves installing custom cabinets that include 20 feet of laminate desktop, a computer workstation and wall cabinet storage, along with rewiring of the room for computer, fax machine, cable and telephone lines.
What Happened to Rates Last Week?
Mortgage backed securities (FNMA 3.50 MBS) gained +51 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to improve (move lower) from the prior week.
We had a holiday-shortened week with the bond market closed on Friday in observance of our Independence Day.
Overall, the economic data did show positive momentum even though a few of the economic releases were lighter than market expectations.
We started the week with a block-buster Pending Home Sales report which hit its highest level in 9 years. We then followed that up with a red-hot Consumer Confidence report that had its best reading in 8 years.
On the manufacturing side, the national ISM Manufacturing report continued to show expansion with a reading of 53.5 which was slightly higher than market expectations. We did have a disappointing Chicago PMI report that just missed expectations (49.4 vs est 50.0) but this report was glossed over by traders in favor of the larger scaled ISM report.
And that brings us to Jobs.
Jobs, Jobs, Jobs: Well we certainly had a mixed bag of jobs data on Thursday. Here is the break down for you:
– Non Farm Payrolls 223K vs est of 250K. Any reading between 200K and 250K is fine, but May was revised downward from 280K down to 254K.
– Non Farm Private Payrolls was also 223K vs est of 225K..so right on the money but May was revised downward from 262K to 250K.
– The average monthly job gains (NFP) for all of 2015 is now 208K. Not bad at all.
– The Unemployment Rate dropped from 5.5% down to 5.3%, the market expectations were for 5.4%.
– Part of the reason for that drop in the Unemployment Rate was in fact more people going back to work but also it was due to a drop in the Participation Rate from 62.9% down to 62.6%.
– The real key was the Average Hourly Earnings. We have seen several other economic reports that have shown wage pressure but it didn’t show up in this one as the Average Hourly Earnings were flat at 0.0% vs market expectations in 0.1% to 0.3% range.
– Now…what caused Average Hourly Wages to be flat? Why its the product mix, so to speak. You see we are trading full time jobs for part time jobs. Part Time Jobs jumped 161K but full time jobs tumble by 349K. Some of the reason for that is seasonality as we simply employ a lot of part time summer workers, some of that is due to regulations which make it very unattractive for business owners to hire full time employees and some of that is weakness in the labor force.
What to Watch Out For This Week:
Date Time (ET) Economic Release Actual Market Expects Prior 6-Jul 10:00 AM ISM Services – 56.3 55.7 7-Jul 8:30 AM Trade Balance – -$42.0B -$40.9B 7-Jul 10:00 AM JOLTS – Job Openings – NA 5.367M 7-Jul 3:00 PM Consumer Credit – $17.6B $20.5B 8-Jul 7:00 AM MBA Mortgage Index – NA -4.70% 8-Jul 10:30 AM Crude Inventories – NA 2.386M 8-Jul 2:00 PM FOMC Minutes – – – 9-Jul 8:30 AM Initial Claims – 271K 281K 9-Jul 8:30 AM Continuing Claims – 2210K 2264K 9-Jul 10:30 AM Natural Gas Inventories – NA 69 bcf 10-Jul 10:00 AM Wholesale Inventories – 0.30% 0.40%
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.