Trivia question of the day: what was the microwave oven originally called when it was introduced in the 1960s? Answer: the “Radarange.” It wasn’t until the ‘70s, however, that Sharp introduced low-cost microwave ovens for residential use.


When homeowners began buying countertop microwaves in droves, it wasn’t long before builders began integrating them into the cabinetry (often over the cooktop), almost as a feature of the newer kitchen. Now? They get hidden in lower cabinet drawers, nearly incognito in appearance.


While microwave remain popular no matter how you cut it, according to a report in Remodeling Magazine and reiterated by Builder Magazine’s Vincent Salandro, higher-end homeowners are opting for something different.


“For some high-income homeowners, microwaves are one of the first things they look to replace in their kitchens,” says Salandro. “Steam and speed ovens are two alternatives that provide many of the same functions as microwaves at a higher quality.”


More than 344.7 million microwave ovens were sold in 2017, included in 92% of homes. While the elite speed and steam ovens range from $1,700 to $8,000, microwave units cost in the hundreds, with smaller units available for as little as $70 at Target. Even the more stylish microwave-in-a-drawer can be had for less than $1,200.


Modifications like the microwave drawer (Sharp owns the patent, even though other product manufacturers put their names on them) are one of many options for homeowners who prefer to lessen the look of their microwaves as a stand-alone appliance. “The drawer microwave can be integrated into open floor plans, which typically don’t have much wall space in their designs,” says Salandro, although he admits that some homeowners see them as an accessible danger for children and a pain in the back for some homeowners.


The west coast seems to lead the way in “new stuff,” and alternatives to the microwave oven are no exception. The speed oven, a smaller appliance with convection cooking and microwaving capabilities, seamlessly fits into open design plans and kitchen islands. Homeowners are beginning to prefer them to traditional microwaves, citing how, especially when children leave the home, the quality of food preparation can become more important than speed.


Health-conscious homeowners are also opting for steam ovens rather than microwaves. However, for most remodelers across the country, the majority of kitchen jobs still include microwaves, especially important for families with smaller children because of the convenience of reheating and food preparation.


“Additionally, in order for substitutes like the steam oven or speed oven to become more reasonable for a broader range of consumers, manufacturers would need to invest in more cost-effective production to drive down the cost of the appliances,” says Salandro.


Today’s microwaves may now have a smaller role than envisioned 20 years ago when many expected the appliance to displace the range and oven and frozen food was more popular.



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The stock market posted modest gains this past week, as did mortgage bonds, while the 10-year Treasury yield pulled back on Thursday and Friday after hitting the 3% mark intraday on Wednesday.  This resulted in relatively stable equity, bond, and mortgage markets for the week.


There were a significant number of economic reports released during the week headlined by the Federal Reserve’s monetary policy decision on Wednesday and the Labor Department’s latest Employment Situation Summary on Friday.


As widely expected, Fed officials left interest rates unchanged to keep their target range from 1.75% to 2.00%.  The Fed’s policy statement characterized the economy as “strong,” suggesting the Fed remains on course to raise interest rates two additional times this year.  The Fed Funds Futures market is projecting the next rate hike will likely arrive at September’s policy meeting with a current probability of 93.6%.


On the job creation front, the Labor Department released a “not too hot, not too cold Goldilocks” jobs report revealing a below-forecast increase in nonfarm payrolls of 157,000 new jobs vs. a consensus forecast of 190,000 jobs.  However, June’s jobs number was upwardly revised to 248,000 from 213,000 while the three-month average of new job formation is trending noticeably higher.  Average Hourly Earnings increased 0.3% matching expectations, and the year-over-year increase in Earnings held steady at 2.7%.  The Unemployment Rate fell to 3.9%.  Overall, the financial markets were pleased with this report.


In housing, the National Association of Realtors reported Monday a week ago that Pending Home Sales edged higher for the month of June by 0.9%.  This was a slightly better number than analyst expectations of 0.5%, but was 2.5% lower year-over-year.  However, home inventory levels increased by 0.5% year-over-year, the first increase in three years, suggesting greater opportunities for future sales as many potential buyers are “waiting in the wings” to purchase a home.



The latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey released on Wednesday showed a decrease in mortgage applications.  The MBA reported their overall seasonally adjusted Market Composite Index (application volume) fell 2.6% during the week ended July 27, 2018.  The seasonally adjusted Purchase Index decreased 3.0% from the week prior while the Refinance Index decreased by 2.0% from a week earlier.


Overall, the refinance portion of mortgage activity increased to 37.1% from 36.8% of total applications from the prior week.  The adjustable-rate mortgage share of activity increased to 6.4% from 6.3% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.84% from 4.77% with points remaining unchanged at 0.45.


For the week, the FNMA 4.0% coupon bond gained 10.9 basis points to close at $101.672 while the 10-year Treasury yield decreased 0.55 basis points to end at 2.9525%.  The Dow Jones Industrial Average gained 11.52 points to close at 25,462.58.  The NASDAQ Composite Index added 74.60 points to close at 7,812.02.  The S&P 500 Index advanced 21.53 points to close at 2,840.35.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 3.01%, the NASDAQ Composite Index has advanced 13.16%, and the S&P 500 Index has added 6.24%.


This past week, the national average 30-year mortgage rate remained unchanged at 4.72%; the 15-year mortgage rate fell to 4.18% from 4.19%; the 5/1 ARM mortgage rate remained unchanged at 4.00% while the FHA 30-year rate was also unchanged at 4.42%.  Jumbo 30-year rates eased to 4.48% from 4.50%.


Economic Calendar – for the Week of August 6, 2018


Economic reports having the greatest potential impact on the financial markets are highlighted in bold.


Mortgage Rate Forecast with Chart – FNMA 30-Year 4.0% Coupon Bond


The FNMA 30-year 4.0% coupon bond ($101.672, +10.9 bp) traded within a narrow 37.5 basis point range between a weekly intraday low of 101.313 on Tuesday and a weekly intraday high of $101.688 on Friday before closing the week at $101.672 on Friday.  Mortgage bonds remain “oversold” while trading in a familiar sideways pattern between resistance and support.  The chart continues to suggest there will be stable to slightly improved mortgage rates this coming week.



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