MARKET WATCH April 22nd, 2012

Here’s the news for this week…

Interest rates held steady.  A “Construction – Perm” mortgage (one that is a construction loan during construction and then automatically converts to a permanent fixed rate loan upon completion of your new home) held steady this week at 3.975% on a 30 year mortgage. To those who follow us, you’ll remember that the 40 year average (“Normal Market”) is 8.81%.  Rates are at a once in a lifetime opportunity level.  Oh, and a 15 year fixed is at 3.225%!!!

We’re facing construction material price increases starting in August.  At this point the August increase, after tabulating all the various increases, will amount to about $8,000 per house on average.  We are blessed with trades who will lock the construction costs for those customers that commit to build before the increase takes effect even if the actual start of construction falls after the increases.  Please call us if you have a need to build your dream.

Oh and here’s a good one for Columbus… a REALLY BIG ONE!  Read the Grubb & Ellis article on the recovery.  This is why the Central Ohio economy and the custom new home markets are thriving and the resale markets improving! 

Where the Jobs Are, Redux

Every few months, it’s good to check the health of the labor markets in different parts of the country. One way is to compare how fast different areas are recovering the jobs they lost during and after the Great Recession – the recovery rate. This graph shows the percentage of jobs recovered in the U.S. and the nine Census regions. As of February, the U.S. has recovered 46 percent of the jobs lost, meaning that, since employment hit a trough, the U.S. is 46 percent of the way back to its prior peak. Only two regions are beating the U.S. average: West South Central (Texas, Oklahoma, Louisiana and Arkansas), which has surpassed its prior peak thanks to the booming oil industry, and Middle Atlantic (New York, New Jersey, Pennsylvania), powered by a strong recovery in New York City. But every region has its overachievers:

• In the Pacific region, it’s San Jose with a 71 percent recovery rate. Bakersfield and San Francisco also have above average recovery rates.

• In the Mountain region, Salt Lake City leads with a recovery rate of 83 percent. Denver is also outperforming.
• Columbus, Ohio leads the Midwest (the East North Central and West North Central census regions) at 66 percent followed by Grand Rapids, Mich.
  
• In the Southeast (East South Central and South Atlantic census regions), Nashville is ahead of the pack with a recovery rate of 83 percent. Other markets with above average rates include Charleston, S.C., Raleigh-Durham and Louisville.
• In the Northeast (the Middle Atlantic and New England census regions), New York City beats all other markets with a recovery rate of 133 percent, meaning that it is well past its prior peak. Washington, D.C. also has set a new peak while Pittsburgh is close.
  
• And finally, in the West South Central region, it’s tough to find a market that isn’t outperforming, but Austin stands out with a recovery rate of 184 percent; the recession was shallow in Austin, and it recovered quickly.

Of course, there are laggard markets as well, but – since this is Good News Friday – we will save those for another time.