|The Federal Reserve lowered its target range for the federal funds rate on Wednesday, October 30, its third rate cut in the last three months. The move was highly anticipated by market analysts.
The target range, the Fed’s primary policy lever for short-term interest rates, was cut by 25 basis points and is now 1.50% to 1.75%.1
The previous two rate cuts, which took effect on August 1 and September 19, were also 25-basis point reductions.
Mortgage rates react to more economic and financial factors than just the Fed’s policy on the short-term side of the financial markets. Consequently, the Fed’s action doesn’t necessarily imply any particular direction for mortgage rates.
One important guidepost for mortgage pricing is the yield on the 10-year Treasury note, which closed at 1.78% on Wednesday, October 30.2 The yield has averaged 1.81% over the past five trading days. In September, the yield averaged 1.70%.
The gap between the yields on the 2-year and 10-year Treasury securities has increased in October. With one trading day to go in the month, October has seen the 2-year Treasury average 1.55% while the 10-year averaged 1.71%. The resulting yield curve gap of 16 basis points is up from September’s 5 basis points. In October 2018, the yield curve gap was 29 basis points. Financial markets consider a negative yield curve gap an indicator of an oncoming recession.
One in nearly 6 of the most affluent communities in the country are in New Jersey, according to the 2019 Bloomberg Richest Places rankings.
Two of the big movers were Rumson, a wealthy Jersey Shore community that was once home to Bruce Springsteen and jumped 19 spots and into the top 20, according to the report. Bernardsvillejumped 31 spots to No. 64.
Indeed, a majority of the country’s richest communities are located in California, New Jersey and the New York City area, according to Bloomberg’s annual richest places index. Atherton, California, located in Silicon Valley, tops the news organization’s list as the richest town in America.
Atherton was No.1 on the list for the third year in a row, with an average household income of nearly $450,700. The No.2 community on the list was Scarsdale, New York, which has an average household income of $417,335.
According to Bloomberg, the top 100 towns on its list are located in just 16 states. California had the most among the top 100 (23), followed by New Jersey (18) and New York (13) (Reference the map titled “Uneven Color of Money” on the Bloomberg article to get the no. of communities in your state in the top 100).
Bloomberg listed the top 50 richest places on its website. Below are the New Jersey communities in the top 50:
- 6. Short Hills $367,491
- 19. Rumson $303,542
- 32. Upper Saddle River $271,700
- 39. Upper Montclair $263.035
- 47. North Caldwell $251,468
- 49. Glen Ridge $248,698
The rest of the towns appear to be available only via a corporate subscription account. Read the full article on Bloomberg, and to find out how to access the whole list.
The top 10 richest places in the country are:
- Atherton, California
- Scarsdale, New York
- Cherry Hills Village, Colorado
- Los Altos Hills, California
- Hillsborough, California
- Short Hills, New Jersey
- Highland Park, Texas
- Darien, Connecticut
- Bronxville, New York
- Glencoe, Illinois
Bloomberg ranks communities based on average household income using the US Census data. The designated areas do not include any unincorporated areas, and households without any type of income were excluded.
Only towns with at least 2,000 households qualify as “places” for purposes of Bloomberg’s ranking — excluding Kenilworth and its fewer than 900 homes.
Google photo of Rumson
More from Rumson-Fair Haven
MONTCLAIR, NJ — Montclair High School has been named to a list of “2019 Best Public High Schools in New Jersey,” as published by data compiler Niche. The school ranked #37 in New Jersey.
The list of the best public high school was released as part of Niche’s 2019 K-12 rankings. Niche also released an analysis of the state’s best school districts. You can see that here.
To arrive at the rankings, Niche said it looked at data from the U.S. Department of Education as well as test scores, college data and ratings collected from Niche users. (You can read more about the rankings and the methodology here.)
- Montclair High Holds 150th Graduation Ceremony (WATCH)
- 5 Montclair High Students Named National Merit Scholarship Semifinalists
- Montclair High School Crew Teams Have Memorable Season (PHOTOS, VIDEO)
- Montclair High Legend Had 12 Varsity Letters: NJSIAA Hall Of Fame
- Montclair Students Hold School Walkout On Gun Violence (VIDEOS)
If you thought about selling your house this year, now more than ever may be the time to do it! The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing. We were still in high school when we learned about the concept of supply and demand, so we understand that the best time to sell something is when the supply of that item is low and demand for that item is high. That defines today’s real estate market.
Lawrence Yun, Chief Economist at the National Association of Realtors, recently commented:
“Contract signings inched backward once again last month, as declines in the South and West weighed down on overall activity.”
Yun goes on to say:
“The reason sales are falling off last year’s pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it.”
In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction, including the inspection, appraisal and financing contingencies.
As a potential seller, you are in the driver’s seat right now. It might be time to hit the gas.
According to Realtor.com’s fourth-annual list of the Hottest ZIP Codes in America, older millennials are driving demand for homes in smaller, more suburban locations by nearly a 10 percent increase over the last year.
If you are interested in living close to New York City, in a town with amazing restaurants, tons of cultural and family activities with a hip vibe Montclair and surrounding towns is a place for you.
However, some prominent experts in the housing industry doubt that home values will be negatively impacted by the rise in rates.
Mark Fleming, First American’s Chief Economist:
“Understanding the resiliency of the housing market in a rising mortgage rate environment puts the likely rise in mortgage rates into perspective – they are unlikely to materially impact the housing market…
The driving force behind the increase are healthy economic conditions…The healthy economy encourages more homeownership demand and spurs household income growth, which increases consumer house-buying power. Mortgage rates are on the rise because of a stronger economy and our housing market is well positioned to adapt.”
Terry Loebs, Founder of Pulsenomics:
“Constrained home supply, persistent demand, very low unemployment, and steady economic growth have given a jolt to the near-term outlook for U.S. home prices. These conditions are overshadowing concerns that mortgage rate increases expected this year might quash the appetite of prospective home buyers.”
Laurie Goodman, Codirector of the Housing Finance Policy Center at the Urban Institute:
“Higher interest rates are generally positive for home prices, despite decreasing affordability…There were only three periods of prolonged higher rates in 1994, 2000, and the ‘taper tantrum’ in 2013. In each period, home price appreciation was robust.”
Industry reports are also calling for substantial home price appreciation this year. Here are three examples:
- The Home Price Expectation Survey says that prices will appreciate by 5.8% this year.
- The Freddie Mac Outlook Report is looking for home prices to appreciate by around 7% in 2018.
- The CoreLogic HPI Forecast indicates that home prices will increase by 5.2% on a year-over-year basis.
As Freddie Mac reported earlier this year in their Insights Report, “Nowhere to go but up? How increasing mortgage rates could affect housing,”
“As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”