Some tech companies are still betting big on the return to the office once the pandemic fades. Google’s Alphabet Inc. is the latest, with a commitment to spend $7 billion this year on expanding its offices and data centers across the U.S. The company also plans to hire at least 10,000 new full-time staff over the next year as it becomes bullish on a post-pandemic recovery, The Wall Street Journal reports.

“Coming together in person to collaborate and build community is core to Google’s culture,” Sundar Pichai, Alphabet and Google chief executive, said in a blog post this week. “And it will be an important part of our future.”

Soon after the COVID-19 outbreak began in the U.S., Google was one of the first major companies to extend the time so that its employees could work remotely. That date has since been pushed to July. However, the company now expects employees to return to offices, while still leaving the door open to remote work two days a week.

Other tech giants have also committed to growing their office footprint, even at a time when other companies are looking to shrink theirs from the growth of remote work. Amazon announced this summer it would be expanding its physical offices to six U.S. cities, spotlighting the importance of still being able to one day work and collaborate once again in the same space. (Read more about Amazon’s plans.)

Google has thrived during the pandemic as online ad spending rose. Google has more than doubled its data centers since 2018 as it heavily invests in its cloud business. Still, its $7 billion commitment to expanding office and data centers this year is lower than its pre-pandemic office expenditures, which had an annual average spend of $11 billion in 2018 and 2019.

Google said that its investment plan this year will target growing its existing sites. It does plan to create three office sites in Minnesota, Texas, and North Carolina, The Wall Street Journal reports. Overall, that will then expand Google’s presence to 19 states.

Sub-3% mortgages are slowly fading into the rearview mirror as the 30-year fixed-rate mortgage continues to inch up. The 30-year fixed-rate mortgage averaged 3.09% this week, Freddie Mac reports.

Economists continue to remind consumers that mortgage rates are still near historical lows and are hovering around 3%. “Even though mortgage rates will likely continue to rise later this year, with the Fed keeping interest rates low, mortgage rates will remain favorable for would-be home buyers and owners to refinance,” Nadia Evangelou, senior economist and director of forecasting at the National Association of REALTORS®, wrote on the association’s Economists’ Outlook blog.

So far, the increase in mortgage rates has not appeared to deter would-be buyers. Home purchase mortgage activity continues to remain elevated and sales of both new and existing homes are at a 14-year high, Evangelou notes.

Fed Vows to Keep Benchmark Rate Low: What That Means for Mortgage Rates

Despite Buyer Demand, Builders Slow Production

Freddie Mac reports the following national averages with mortgage rates for the week ending March 18:

• 30-year fixed-rate mortgages: averaged 3.09%, with an average 0.7 point, rising from last week’s 3.05% average. Last year at this time, 30-year rates averaged 3.65%.
• 15-year fixed-rate mortgages: averaged 2.40%, with an average 0.7 point, increasing from last week’s 2.38% average. A year ago, 15-year rates averaged 3.06%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.79%, with an average 0.3 point, increasing from last week’s 2.77% average. A year ago, 5-year ARMs averaged 3.11%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.

The Federal Reserve voted on Wednesday to keep its benchmark interest rate near zero and at historic lows as the economy continues to recover from the COVID-19 pandemic. The Fed went on further to indicate that they won’t likely raise interest rates until 2023—at the earliest.

But that doesn’t necessarily translate into good news for mortgage rates—which have begun rising over recent weeks. The Fed’s benchmark rate does not directly influence mortgage rates. The Fed’s federal funds rate is not what consumers pay. It is what banks charge one another for short-term lending. However, the Fed’s action can have an indirect impact on what consumers end up paying on mortgage rates.

Mortgage rates loosely follow the U.S. Treasury bond, but over recent months, even that relationship has varied, Tendayi Kapfidze, chief economist at LendingTree, told MarketWatch. Ten-year Treasury rates rose in August 2020 as mortgage rates fell.

Mortgage rates reached an all-time low in January (the 30-year fixed-rate mortgage averaged 2.65%), according to Freddie Mac. But over recent weeks, they’ve been rising, increasing more than 30 basis points since the start of the year. Last week, the 30-year fixed-rate mortgage averaged 3.05%. Investors are growing concerned about inflation.

Still, economists are quick to note mortgage rates are still hovering near all-time lows. “People have been spoiled by getting sub-3% loans,” Robert Frick, corporate economist at Navy Federal Credit Union, told CNBC.

One move that could help push mortgage rates lower: The Federal Reserve has been increasing its purchases of mortgage-backed securities to add liquidity into the market since the pandemic. “Reaffirming its commitment to ongoing asset purchases while acknowledging that a tapering is on the horizon at some point—likely pretty far off—should help slow the rise of mortgage rates,” Danielle Hale, chief economist of realtor.com®, told MarketWatch.

The Mortgage Bankers Association predicts mortgage applications to stay high even as rates tick above the 3% mark. “While mortgage rates are likely to move somewhat higher, the purchase market remains on track for a record year,” Mike Fratantoni, MBA’s chief economist, told MarketWatch.

Construction on new homes weakened in February as material costs—notably on lumber—continued to challenge growth in new-home construction.

Housing starts—including for single-family and multifamily building—fell 10.3% to a seasonally adjusted annual rate of 1.42 million units in February, the U.S. Department of Housing and Urban Development and Census Bureau reported Wednesday. Broken out, single-family starts fell 8.5% last month to a 1.04 million seasonally adjusted annual rate while the multifamily sector—which includes apartment buildings and condos—fell 15% to a 381,000 pace.

However, buyer demand still remains strong.

“Despite strength in buyer traffic and lack of existing inventory, builders are slowing some production of single-family homes as lumber and other material costs, along with interest rates continue to rise,” says Chuck Fowke, chairman of the National Association of Home Builders. “Shortages of lumber and other building materials, including appliances, are putting future construction expansion at risk.”

Still, regardless of last month’s dip, NAHB Chief Economist Robert Dietz notes that single-family starts for the first two months of the year remain 6.4% higher than the first two months of 2020. Overall, “there has been a 36% gain over the last 12 months of single-family homes permitted but not started as some projects have paused due to cost and availability of materials,” says Dietz.

Single-family home building is still forecasted to increase in 2021, but Dietz says it likely will be at a much slower rate as housing affordability is challenged by higher mortgage rates and rising construction costs.

Regionally, combined single-family and multifamily housing starts only rose in the West last month, up 17.6% compared to the previous month. Meanwhile, housing starts dropped by 39.5% in February compared to January in the Northeast, declined 34.9% in the Midwest, and were 9.7% lower in the South. Dietz notes that February’s winter storm prompted home building to decline in Texas and some neighboring states.

Homebuilding likely will continue to face declines over the coming weeks. Housing permits—a gauge of future activity—declined 10.8% in February to a 1.68 million unit annualized pace. Broken out, single-family permits fell 10% to a 1.14 million unit rate and multifamily permits decreased 12.5%.

The McMansion, which was popular in the 1980s and ’90s, is having a renaissance as demand surges during the pandemic for larger properties with expansive yards. Homes that are 4,000 square feet or more sold 70% faster than smaller homes nationwide in February, according to realtor.com®.

Realtor.com®’s research team evaluated the 150 largest metros for the highest percentage of single-family listings that are 4,000 square feet or more. They then limited their rankings to one metro per state to ensure geographic diversity. The following markets have the largest number of McManions for sale:

1. Provo, Utah

• Median list price for homes 4,000 square feet and above: $1.04 million

2. Bridgeport, Conn.

• Median list price for homes 4,000 square feet and above: $2.7 million

3. Denver

• Median list price for homes 4,000 square feet and above: $1.4 million

4. Washington, D.C.

• Median list price for homes 4,000 square feet and above: $1.8 million

5. Santa Barbara, Calif.

• Median list price for homes 4,000 square feet and above: $8.2 million

6. Indianapolis

• Median list price for homes 4,000 square feet and above: $691,750

7. Boston

• Median list price for homes 4,000 square feet and above: $2.2 million

Even as home prices rapidly escalate, many first-time home buyers—a group economists long feared would be priced out of the market—are finding they actually have advantages over repeat buyers: more flexibility in the transaction and access to a greater variety of financing options. Flexibility is particularly helpful when shopping for a home in today’s competitive market, characterized by commonplace bidding wars.

Many repeat buyers require offer contingencies, such as selling their current property before closing on a new purchase. But offers with fewer contingencies are more attractive in a multiple-bid situation. “Anyone in a position to make an offer without a home-sale contingency is going to be better positioned than those who are waiting to free up cash,” Dana Bull, a real estate professional with Sotheby’s International Realty in Boston, told Apartment Therapy.

First-time buyers also may be less stressed, given that they’re likely to focus on one transaction at a time rather than buying and selling simultaneously, Bull adds. The National Association of REALTORS® chronicles the value members bring to these clients in its web series “First-Time Buyer”—another potential tool helping novice buyers navigate the homebuying process. (Watch the trailer at right.)

First-time buyers also have access to grants and down payment assistance programs that are unavailable to repeat buyers. While repeat buyers have the advantage of using the equity from the sale of their previous house, you can help first-time buyers find assistance programs that may offer thousands of dollars in savings. “You may be eligible for grants or specialty programs that cover some or all of your down payment amount, reducing the upfront cost of buying a home,” Andrina Valdes, chief operation officer of Cornerstone Home Lending, Inc., told Apartment Therapy.

First-time home buyers comprised 33% of existing-home sales in January, up from 32% a year earlier, according to NAR data.

Lifestyle improvement has emerged as the main motivator for renters looking for new spaces a year after the COVID-19 pandemic began, according to a new survey from RentCafé. Back in March 2020, the top renter preference centered around pricing.

In the latest survey, 41% of renters chose “open-air amenities” and “more space” as their most essential apartment features, outranking work-from-home amenities like a home office (5%) or a “good internet connection” (10%), according to the survey of 10,000 aspiring renters.

Forty-eight percent of survey respondents also say they prefer to remain in the same city. “This shows that improving housing conditions—not drastic change—is the goal,” the researchers note.

Many of the moves from the early days of the pandemic were motivated by expiring leases or financial insecurity. But those concerns do not appear to be triggering the majority of moves nowadays, the survey shows.