According to the latest information available from the Realtors Confidence Index survey, the price discount for distressed property relative to non-distressed property is in the neighborhood of 15 to 20 percent.

What does this mean for REALTORS®?

On average, non-distressed property is basically a different market from distressed sales.  Many Realtors® have indicated that distressed properties are not meaningful comps.  Realtors® have also mentioned that they caution clients interested in non-distressed properties not to expect the same level of discount to market as is the case for distressed properties.

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses job gains.

• Job gains are gathering momentum.  The net new jobs in February are up by 227,000, a strong gain.  Data for previous months was revised up to show 223,000 net new jobs in December and 284,000 in January.  That’s a total of 734,000 in the past three months.
• Coming out of a harsh recession, when the economy lost 8 million jobs, the economy has now added 3.4 million jobs from the low point of early 2010.  We are now almost halfway to a full jobs recovery.
• The unemployment rate did not change despite the job gain because labor force participation went up.  Only those who are seeking work but do not yet have a job can be officially counted as unemployed.  What is happening now is that previously discouraged jobless people who had been out of the labor force are now seeking work.
• Jobs in home construction went up by 2,000 but jobs in the constructing specialty trade fell by 2,000.  However, based on the trend of rising housing starts, these jobs will be rising in the upcoming months as well.
• Jobs at apartment rental leasing offices rose by 3,000, indicating a rising demand for rentals.  A good recovery in Professional Business Service jobs assures a steady rise demand for office spaces.
• The recent recession hit men much harder in terms of the unemployment rate.  Now because of the job gains, the unemployment rates between the sexes have matched up, though they are still elevated compared to normal.
• Overall, there are very good jobs figures in February.  More jobs will mean an increased demand for rental housing and for home buying.  Both can rise simultaneously.  The weak economy of several years ago forced people to double up, with many young adults living with parents.  But an improved economy will act as a release in the household formation such that both demand for rental and ownership can rise.
• Jobs trend by different sectors are shown below.

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses mortgage rates.

• Mortgage rates are set to move higher.  The 10-year Treasury borrowing rate has been mostly steady but the 30-year Treasury borrowing rate has already started to move up.  The 30-year mortgage rate will soon follow the upward trend.
• The long-term mortgage rate generally gets its cue from the 10-year Treasury, because most of the mortgages get retired within 10 years from people moving to buy a new home or because of refinancing.  But the rise in the 30-year government borrowing rate to 3.2 percent from the low of 2.8 percent a few months ago is hinting that the bond investors are beginning to pay more attention to potential inflationary pressure and less to another potential economic slowdown.
• Other factors pushing up rates are that America will need to borrow but China may be unwilling to lend.  America’s huge budget deficit of $1.2 trillion in the past 12 months assures continued borrowing and lots of it – even if it requires offering higher interest rates.  Fortunately for now, America is able to borrow even as it offers low interest rates.  China, on the other hand, will likely open up its capital market, albeit at a slow speed.  China was buying up U.S. Treasuries in large quantities because the government in essence used the huge savings of Chinese citizens make this happen.  But the opening of the capital market will mean permitting Chinese citizens to do their own investing (rather than forcing people to save at government banks) and many will not want to take on U.S. debt that pays very low interest rates.
• The Blue Chip Consensus forecast on the 10-year U.S. Treasury is for 2.4 percent by autumn and 2.7 percent by this time next year from the current 2.0 percent.  That will mean that the mortgage rate on a 30-year loan will rise from current 4.0 percent to about 4.7 percent by this time next year.