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Black Knight – Mortgage Monitor

Black Knight – Mortgage Monitor:

tappable equity at
all-time high, but tax code changes could impact
homeowners’ utilization
– As of Q3 2017, approximately 42 million homeowners
with a mortgage have nearly $5.4 trillion in equity
available to borrow against, assuming a maximum 80%
total loan-to-value ratio
– Over 80% of all mortgage holders now have available
equity to tap via a first-lien cash-out refinance or
home equity line of credit (HELOC)
– Under the recently passed tax reform plan, interest
on HELOCs is no longer deductible, increasing the
post-tax expense of such products for those who itemize
– HELOCs have been an attractive option for borrowers
to utilize available equity without sacrificing low
first- lien interest rates; with interest on these
products no longer deductible, the value proposition
has changed
– In many cases, for borrowers with high unpaid
princ ipal balances (UPB), taking out low-dollar lines
of credit, the math still favors HELOCs
– However, for low-to-moderate UPB borrowers taking
out larger amounts of equity – assuming interest on
cash-out refinances remains deductible – the post-tax
math may now favor such products instead, even if it
results in a slight increase to first lien interest
rates

The Data & Analytics division of Black Knight, Inc.
released its latest Mortgage Monitor Report, based on
data as of the end of November 2017. This month, Black
Knight finds that tappable equity – the amount of
equity available for homeowners to borrow against
before reaching a maximum 80% total loan-to-value (LTV)
ratio – is at an all-time high. However, as Black
Knight Data & Analytics Executive Vice President Ben
Graboske explained, recent changes to the US tax code
may have implications for homeowners’ utilization of
that equity. “As of the end of Q3 2017, 42 million
homeowners with a mortgage now have an aggregate of
nearly $5.4 trillion in equity available to borrow
against,” said Graboske. “That is an all-time high, and
up more than $3 trillion since the bottom of the market
in 2012. Over 80% of all mortgage holders now have
available equity to tap, whether via first-lien
cash-out refinances or home equity lines of credit
(HELOCs). We’ve noted in the past that as interest
rates rise from historic lows, HELOCs represented an
increasingly attractive option for these homeowners to
access their available equity without relinquishing
interest rates below today’s prevailing rate on their
first-lien mortgages. However, with the recently passed
tax reform package, interest on these lines of credit
will no longer be deductible, which increases the
post-tax expense of HELOCs for those who itemize. While
there are obviously multiple factors to consider when
identifying which method of equity extraction makes
more financial sense for a given borrower, in many
cases, for those with high unpaid principal balances
who are taking out lower line amounts, the math still
favors HELOCs. However – assuming interest on cash-out
refina nces remains deductible – for low-to-moderate UPB
borrowers taking out larger amounts of equity, the
post-tax math for those who will still itemize under
the increased standard deduction may now favor cash-out
refinances instead, even if the result is a slight
increase to first-lien interest rates.

“As rates continue to rise and the cost associated with
increasing the rate on an entire first-lien balance
rises as well, the benefit pendulum will likely swing
back toward HELOCs. Even so, the change could certainly
impact HELOC lending volumes and loan amounts in the
coming months and years. To a certain degree, the same
question holds true for cash-out refinances, since tax
debt for homeowners who will no longer itemize becomes
generally more expensive without mortgage interest
deduction in the equation. These refinances will likely
be an attractive source of secured debt in the future,
but increased post-tax costs may have a negative impact
on originations. That said, it still remains to be seen
whether and to what extent tax costs will impact
borrower decisions in terms of either HELOCs or
cash-out refinances. At this point, only time will
tell.” The increase in equity, driven by rising home
prices, has also continued to shrink the population of
underwater borrowers who owe more on their mortgages
than their homes are worth. The number of underwater
borrowers declined by 800,000 over the first nine
months of 2017, a 37% decline in negative equity since
the start of the year. Only 2.7% of homeowners with a
mortgage (approximately 1.36 million borrowers) now owe
more than their home is worth, the lowest such rate
since 2006. Though still elevated from pre-recession
levels, the negative equity rate continues to
normalize. Even so, home prices in large portions of
the country remain below pre-recession peaks. While 36
states and 70% of Core Based Statistical Areas (CBSAs)
have now surpassed pre-recession home price peaks, 43
of the nation’s 100 largest markets still lag behind.

As was reported in Black Knight’s most recent First
Look news release, other key results include:
– Total US loan delinquency rate: 4.55%
– Month-over-month change in delinquency rate: 2.54%
– Total US foreclosure pre-sale inventory rate: 0.66%
– Month-over-month change in foreclosure pre-sale
inventory rate: -3.15%
– States with highest percentage of non-current loans:
MS, FL, LA, AL, WV
– States with lowest percentage of non-current loans:
MT, MN, OR, ND, CO
– States with highest percentage of seriously
delinquent loans: MS, FL, LA, TX, AL

Wall Street new year rally pauses as healthcare, bank
stocks weigh

The benchmark S&P 500 opened lower for the first time
in 2018 on Monday, as losses in healthcare and
financial stocks cut short Wall Street’s strongest
start to a year in a decade. The S&P and the Nasdaq
last week recorded its strongest first four trading
days in a year since 2006, and the Dow industrials
posted its best since 2003. “We had a strong market in
the past week, and what generally happens in the first
week sets the trend for the remainder of the year. Now
that it’s established, there could be some profit-
taking,” said Peter Cardillo, chief market economist at
First Standard Financial in New York. At 9:41 a.m. ET,
the S&P 500 was down 2.84 points, or 0.10%, at
2,740.31. The Dow Jones Industrial Average was down
31.55 points, or 0.12%, at 25,264.32, and the Nasdaq
Composite was down 4.19 points, or 0. 06%, at 7,132.37.
The Dow and the Nasdaq still eked out record highs
briefly after open. The dollar inched higher against a
basket of major peers with data showing that slower US
jobs growth did little to dent expectations for further
interest rate increases this year.

Capital Region totals exceed height of subprime crisis
A decade after the subprime mortgage crisis put
millions of Americans out of their homes, dozens of
houses are still falling into foreclosure each month in
the Capital Region. The trend continues despite a
much-improved economy, more-careful mortgage industry
practices and an infrastructure of support that has
been created for borrowers facing the loss of their
homes. “We have noticed that the number of foreclosures
have not gone back to pre-Great Recession levels,” said
James Flacke, executive director of Better
Neighborhoods Inc., a Schenectady nonprofit that
provides assistance to homeowners facing mortgage
foreclosure. Statistics compiled by ATTOM Data
Solutions show the following combined foreclosure
totals for Albany, Fulton, Montgomery, Saratoga,
Schenectady and Schoharie counties:
2006: 156
2007: 386
2008: 495
2009: 451
2010: 554
2011: 211
2012: 330
2013: 377
2014: 625
2015: 902
2016: 1,056
2017: 777
The 2017 total is for 11 months — December numbers were
not yet available. The other years count all 12 months.
And the totals are only mortgage foreclosures by
lenders — foreclosures by municipalities for nonpayment
of taxes are not included.

The head of another non-profit that offers housing
counseling, the Affordable Housing Partnership in
Albany, said the foreclosure rate never really slowed
after the subprime crisis. “The basic reasons are still
loss of income, primarily, or health reasons, or
divorce,” Executive Director Susan Cotner said. “The
big economic downturn crisis has passed but still
people struggle with their mortgages all the time.”
ATTOM found that New York had the 10th highest rate of
foreclosure among the 50 states as of September: one
foreclosure for every 1,671 housing units. ATTOM also
found that foreclosure activity of all types — default
notices, repossessions and auctions — in the third
quarter of 2017 was at its lowest level in 11 years
nationwide. The Capital Region apparently has not been
following the downward trend. There were 1,681 such
notices issued in the Capital Region from Nov. 21 to
Dec. 20, 1,500 one month earlier, and 1,528 two months
earlier. They had been averaging about 1,400 a month.

Oil approaches 2015 highs on fewer US rigs,

OPEC
Oil prices rose on Monday, coming close to new
three-year highs on a slight decline in the number of
US rigs drilling for new production and sustained OPEC
output cuts. US West Texas Intermediate crude futures
had risen to $61.94 a barrel by 1140 GMT, 50 cents
above their last settlement. WTI last week reached
$62.21, the highest since May 2015. Brent crude futures
were at $67.95 a barrel, 33 cents above their last
close. Brent hit $68.27 last week, the highest since
May 2015. Traders said the gains were due to a slight
decline in the number of US rigs drilling for new
production. The rig count eased by five in the week to
Jan. 5 to 742, according to data from oil services firm
Baker Hughes. Despite this, US production is expected
soon to rise above 10 million barrels per day, largely
thanks to soaring output from shale drillers. Only
Russia and Saudi Arabia produce more.

Trump expected to dilute Dodd-Frank in 2018

Analysts at Goldman Sachs think two issues will be the
subject of reform in 2018. “First, a few smaller issues
stand a good chance of enactment,” said the global
analytics team in an email to clients. “Among these are
health legislation that would incrementally stabilize
the ACA and banking legislation that would make
incremental changes to the Dodd-Frank Act. So, say
“Adios, Dodd-Frank,” Goldman says the president is
coming for you. Here’s the rest of the prediction:
“Second, Congress faces new fiscal deadlines. Spending
authority expires January 19 and the debt limit must be
raised by March. These deadlines could lead to
near-term uncertainty but are also likely to lead to
some additional fiscal stimulus. We expect spending
caps to be lifted and a third round of disaster relief
funding to be approved as part of the process.”

See you at the top!

Categories
Real Estate News

Anticipation high as California rolls out retail pot sales

Anticipation high as California rolls out retail pot
sales

Californians may awake on New Year’s Day to a
stronger-than-normal whiff of marijuana as America’s
cannabis king lights up to celebrate the state’s first
legal retail pot sales. The historic day comes more
than two decades after California paved the way for
legal weed by passing the nation’s first medical
marijuana law, though other states were quicker to
allow the drug’s recreational use. From the small town
of Shasta Lake just south of Oregon to San Diego on the
Mexican border, the first of about 90 shops licensed by
the state will open Monday to customers who previously
needed a medical reason or a dope dealer to score pot.
In November 2016, California voters legalized
recreational marijuana for adults 21 and older, making
it legal to grow six plants and possess an ounce of
pot. The state was given a year to set retail market
regulations that are still being formalized and will be
phased in over the next year. “We’re thrilled,” said
Khalil Moutawakkil, founder of KindPeoples, which
grows, manufactures and sells weed in Santa Cruz. “We
can talk about the good, the bad and the ugly of the
specific regulations, but at the end of the day it’s a
giant step forward, and we’ll have to work out the
kinks as we go.” The long, strange trip to get here has
been a frustrating one for advocates of a drug that in
the federal government’s eyes remains illegal and in a
class with heroin.

The state banned “loco-weed” in 1913, according to a
history by the National Organization for the Reform of
Marijuana Laws, the pot advocacy group known as NORML.
The first attempt to undo that by voter initiative in
1972 failed, but three years later felony possession of
less than an ounce was downgraded to a misdemeanor. In
1996, over objections of law enforcement, the drug czar
under President Bill Clinton and three former
presidents who warned it was an enormous threat to the
public health of “all Americans,” California voters
approved marijuana for medicinal purposes. While the
rollout of grassroots collectives of growers and
dispensaries where marijuana could be sold to patients
was at times messy, the law led to wider acceptance of
the drug as medicine. “The heavens didn’t fall,” said
Dale Gieringer, director of California NORML. “We
didn’t see increased youth drug abuse or increased
accidents or crazy things happening as our opponents
predicted.” Today, 28 other states have adopted similar
laws. In 2012, Colorado and Washington became the first
states to legalize recreational marijuana. California
is one of five states, plus Washington, D.C., that
followed suit. Retail sales are scheduled to begin in
Massachusetts in July.

Fannie and Freddie regain capital reserves; withhold
billions from Treasury

Fannie Mae and Freddie Mac have capital reserves again.
As expected, the government-sponsored enterprises on
Friday made their quarterly dividend payments to the
Department of the Treasury. But, thanks to the new
agreement between the Federal Housing Finance Agency
and the Treasury, each of the GSEs withheld billions
from the Treasury to ensure that each has enough
capital on hand to “cover other fluctuations in income
in the normal course of each Enterprise’s
business.”Under the previous version of the Preferred
Stock Purchase Agreements that went into effect when
the government took the GSEs into conservatorship,
Fannie and Freddie send dividends to the Treasury each
quarter that they are profitable. The PSPAs also
stipulated that the GSEs were prohibited from
rebuilding capital and each of the GSEs’ capital base
was required to be reduced, with their capital reserves
scheduled to be drawn down to $0 in 2018. But that all
changed earlier this month when the FHFA announced a
new agreement with the Treasury that allows the GSEs to
hold a $3 billion capital reserve. Collectively, the
GSEs made dividend payments this week to the Treasury
of $2.897 billion. Of that, $2.249 billion came from
Freddie Mac and $648 million came from Fannie Mae.

But those amounts are far less than the amount of
profit that each GSE made in the third quarter. Freddie
Mac’s profit was $4.7 billion, while Fannie Mae’s
checked in at $3 billion, but unlike previous quarters,
the GSEs did not send all of their profits to the
Treasury. Based on some rough calculations, Freddie
withheld $2.451 billion from the Treasury, while Fannie
withheld $2.352 billion. As the chart from the FHFA
states: “As set forth in the Letter Agreement dated
December 21, 2017, amending the Certificate of
Designation of Terms of Variable Liquidation Preference
Senior Preferred Stock, Series 2008-2, the dividend
amount is the Net Worth Amount for the dividend period
minus the Applicable Capital Reserve Amount. Beginning
in 2018, the Capital Reserve Amount is set at $3
billion under most circumstances.” With the $2.897
billion sent to the Treasury for the third quarter,
Fannie and Freddie have now paid approximately $278.783
billion to the Treasury in dividend payments since the
fourth quarter of 2008.

US steelmakers raise their bets

Steelmakers are betting on the US again, building mills
they hope will help them compete against cheap imports
as demand rises. Steel companies have complained for
years that steel from China, South Korea, Vietnam,
Turkey and elsewhere is being sold in the US for less
than the cost to make it. While imports are still
increasing, steel prices are also on the rise globally.
And demand for US steel is starting to rebound, thanks
to rising oil prices and a strengthening manufacturing
sector, steel executives say. Still, others see
expansion as a risky bet. Some steel companies say they
can capture more customers with new plants that can
make more steel at less cost than older plants, and can
deliver it faster to customers. They’re also counting
on additional US tariffs to drive out cheap,
foreign-made steel, creating more opportunities for
domestic producers. S tiff tariffs imposed over the past
18 months have significantly slowed steel imports from
China, according to Commerce Department reports. Nucor
Corp. is building a $250 million steel mill in Sedalia,
Mo. Startup Big River Steel LLC in Osceola, Ark.,
accelerated production early this year at one of the
largest new steel sheet mills built in the US in years.
And Tenaris SA started making pipe for oil and gas
wells at a new $1.8 billion mill near Houston this
month.

California’s record poverty and real-estate bubble are
creating a “wheel-estate” boom of people with good jobs
living in their cars

Extreme housing prices in California — driven by a
combination of speculation, favorable legal/tax
positions for landlords, foreclosures after the 2008
crisis, and an unwillingness to build public housing —
has created vast homeless encampments, but there’s a
less visible side to the crisis: working people in
“good jobs” who have to live in their cars. There’s a
whole subreddit devoted to these folks, a mix of maker
culture (modding cars to make them more comfortable as
homes), hobo chalk-marks (where can you park, and for
how long?), and generalized anxiety. It’s not just
single middle-class people, either — they’re roaming
America’s streets in company with a vast nomad army of
homeless seniors who drive from town to town looking
for seasonal work to repla ce their busted pensions.
What’s striking in California is that many communities
already accept people living in vehicles, despite there
often being rules or laws against it. This fall, the
city of San Diego expanded its Safe Parking Program,
which designates lots that can be used by those living
out of their cars, and many other cities have similar
programs. Under a law passed last year, Los Angeles
also allows overnight parking in some commercial
districts. In Mountain View, the mayor brags about the
services his city provides to those living in more than
330 cars, trucks and RVs. So long as vehicle dwellers
aren’t in residential areas, the NIMBY attitudes that
have helped spur California’s housing shortage seem to
be relatively in check. And given the many huge parking
lots that are empty overnight, capacity is not going to
be a problem if living in vehicles becomes a Califor nia
phenomenon — at least if owners of those lots have a
compassionate streak or can monetize this use of their
property. Given the centrality of Golden State’s car
culture to its image and history — reflected in movies
like “American Graffiti” and in the once-huge
popularity of drive-in restaurants and movie theaters —
a redefinition of the car in California as not being
about independence and adventurousness but about
shelter would be a twist that not many state residents
would have seen coming 25 years ago.

Foreclosure rate in Minnesota lowest in a decade

The foreclosure rate in Minnesota is now at the lowest
level in more than a decade, and far below the national
average.At the end of September, just 0.2% of all
Minnesota homeowners with a mortgage lost their homes
to foreclosure, according to CoreLogic, which tracks
mortgage delinquencies at several intervals. That rate
was down from 0.3% last year and was only about a third
of the national average. At the same time, far fewer
homeowners are having trouble staying current on their
mortgage payments. In Minnesota, 2.9% of all homeowners
were 30 or more days late on their payment compared
with 3.1% last year. “We’re encouraged to see another
year of flat or declining delinquency rates for
homeowners across Minnesota,” said Julie Gugin,
director of the Minnesota Homeownership Center. “It
shows people are in the right homes f or their families
and their wallets.” During the height of the
foreclosure crisis, the organization’s counselors were
overwhelmed by demand from homeowners who needed help
avoiding foreclosure, Gugin said. Today, the need has
shifted to providing unbiased information and hands-on
financial coaching for low-income families that want to
buy a home. “They want to make choices based on solid
and factual information,” Gugin said. “Rent prices are
on the rise and homeownership is a valuable
asset-building alternate for some families.”

Gugin said that while declining foreclosures are
clearly a positive sign, underlying problems linger.
Namely, the recession and subsequent economic recovery
only broadened the homeownership gap in Minnesota.
There are more low-income families than before that are
unable to own a home. “Our goal is to ensure that
homeownership’s benefits are fairly available and
sustainable to everyone, no matter their race or where
they live,” she said. “Next year — and even 10 years
from now — we want the delinquency rate to stay low,
and with a closed homeownership gap. Individuals and
families, communities and our state would be better off
as a result.” Foreclosure rates across the country are
also falling. Nationwide, the foreclosure rate fell
slightly from 0.8% to 0.6%, and the 30-day plus
delinquency rate fell from 5.2% last year to 5.0% in
September. There was a slight increase, however, in the
number of homeowners who were 30 to 59 days late on
their payments, mostly because of hurricane-related
troubles in Texas, Florida and Puerto Rico.

Categories
Real Estate News

NAR – pending home sales inch up 0.2% in November

NAR – pending home sales inch up 0.2% in November

Pending home sales were mostly unmoved in November, but
did squeak out a minor gain both on a monthly and
annualized basis, according to the National Association
of Realtors (NAR). Heading into 2018, existing-home
sales and price growth are forecast to slow, primarily
because of the altered tax benefits of homeownership
affecting some high-cost areas. The Pending Home Sales
Index, a forward-looking indicator based on contract
signings, rose 0.2% to 109.5 in November from 109.3 in
October. With last month’s modest increase, the index
remains at its highest reading since June (110.0), and
is now 0.8% above a year ago. Lawrence Yun, NAR chief
economist, says contract signings mustered a small gain
in November and were up annually for the first time
since June. “The housing market is closing the year on
a stronger note than earlier this summer, backed by
solid job creation and an economy that has kicked into
a higher gear,” he said. “However, new buyers coming
into the market are finding out quickly that their
options are limited and competition is robust.
Realtors® say many would-be buyers from earlier this
year, stifled by tight supply and higher prices, are
still trying to buy a home.”

One of the biggest questions heading into 2018,
according to Yun, is if the depressed levels of
available supply can improve enough to slow price
growth and make buying a home more affordable. While
last month’s significant boost in existing sales was
noteworthy, it did come with some concerns. Sales
prices were up 5.8% – more than double wage growth –
and the 3.4-month supply of homes on the market was the
lowest since NAR began tracking in 1999. “The
strengthening economy, and expectation that more
millennials will want to buy, serve as promising signs
for solid homebuying demand next year, while also
putting additional pressure on inventory levels and
affordability,” said Yun. “Sales do have room for
growth in most areas, but nationally, overall activity
could be slightly negative. Markets with high home
prices and property taxes will likely feel some impa ct
from the reduced tax benefits of owning a home.” Yun
forecasts for existing-home sales to finish 2017 at
around 5.54 million, which is an increase of 1.7% from
2016 (5.45 million). The national median existing-home
price this year is expected to increase around 6%. In
2018, Yun anticipates essentially no change (a decline
of 0.4%) in existing sales (5.52 million), and price
growth to moderate to around 2%. The PHSI in the
Northeast jumped 4.1% to 98.9 in November, and is now
1.1% above a year ago. In the Midwest the index rose
0.4% to 105.8 in November, and is now 0.8% higher than
November 2016. Pending home sales in the South
decreased 0.4% to an index of 123.1 in November but are
still 2.5% higher than last November. The index in the
West declined 1.8% in November to 100.4, and is now
2.3% below a year ago.

Trump targets Amazon in call for postal service to hike
prices

US President Donald Trump targeted online retailer
Amazon on Friday in a call for the country’s postal
service to raise prices of shipments in order to recoup
costs. “Why is the United States Post Office, which is
losing many billions of dollars a year, while charging
Amazon and others so little to deliver their packages,
making Amazon richer and the Post Office dumber and
poorer? Should be charging MUCH MORE!” Trump wrote on
Twitter. The US Postal Service is an independent agency
within the federal government and does not receive tax
dollars for operating expenses, according to its
website. The organization makes up a significant
portion of the $1.4 trillion US delivery industry.
Other players include Fedex Corp and United Parcel
Service Inc. Amazon was founded by Jeff Bezos, who
remains the chief executive officer of the reta il
giant. Bezos also owns the Washington Post, a newspaper
that Trump has repeatedly railed against in his
criticisms of the news media. Representatives for the
White House and Amazon were not immediately available
for comment. Shares of Amazon were last down 0.2% to
$1,183.50 in premarket trading.

CoreLogic – what caught the attention our readers in
2017

The numbers are in and our readers have spoken. We
tallied up the readership on our top 10 most-read
CoreLogic Insights blogs and found that top industry
executives were very focused on the health of the real
estate market, both nationally and in specific markets
across the country this year. The most-read blog, by a
wide margin, was a text mining analysis of public
listing information using word cloud which paired
certain listing terms to higher sales prices. Word
pairs like “quiet street,” “large backyard,” and
“hardwood floors” were among terms which could be tied
to higher sales prices. In addition, our audience also
engaged with our economic outlooks, credit
availability, and mortgage risk as prices continued
their upward spiral. And the envelope, please… Here
are the top ten most-read blog s (and video blogs) of
the year:
– Public Listing Comments Can Have an Impact on
Closing Price
– Is the Credit Cycle Turning?
– California Million-Dollar Home Sales Climb to a Q1
Peak as Stocks Soar
– Highest and Lowest Risk US Housing Marketing as of
Q1 2017
– US Economic Outlook: February 2017
– Hurricane Matthew Clocks Top Wind Speed for 2016 at
101 MPH
– Health of the Housing Market as of Q2 2017
– US Economic Outlook: October 2017
– Purchase Mortgages, High LTVs May Up Fraud Risk in
2017
– The Accuracy of Comparable-Property Data in an
Appraisal Report
2017 was a very busy blog year for our economists, data
research analysts and modelers, product experts and
industry SMEs. As we wrap up 2017 we’re proud to have
shared over 150 online, audio and video blog postings
representing more than 25 CoreLogic contributors. The
aim of CoreLogic Insights is to in form, educate and
provide perspective on many characteristics of the
housing economy and property markets. Our blogs address
housing policy and trends, mortgage performance,
property valuation, natural hazard risk, insurance and
international topics.

Trump’s agenda in 2018: What’s next?

After Republicans scored their first major legislative
victory with a tax reform bill passed just before the
end of 2017, the  has started
looking ahead to next year’s legislative docket. While
President Donald Trump’s aggressive plans to reform
health care, infrastructure and the tax system during
the first year of his tenure fell short on some
accounts, his plans for next year appear equally
ambitious, with welfare and infrastructure reform
topping the list, according to National Economic
Director Gary Cohn. Here’s a look at what the
administration and Congress are set to take on as we
head into the New Year.

Health care

While the GOP failed to pass multiple efforts to repeal
and replace the Affordable Care Act in 2017, the
president has not given up on designs to overhaul the
former administration’s signature legislative
achievement. In a tweet fired off in November,
President Trump reiterated that ObamaCare is a
“disaster,” adding that Republicans would begin to
repeal and replace “right after Tax Cuts.” While
different variations of repeal and replace narrowly
failed to pass the Senate this year, the president took
steps toward dismantling the Affordable Care Act
through an executive order issued in October. That
order directed the administration to look into allowing
employers to form associations and obtain coverage
across state lines, expanding the use of short-term
limited duration insurance (STLDI) plans and expanding
the use of Health Reimbursement Arrange ments, or
tax-free accounts that allow employers to reimburse
employees for medical expenses. The overall goal of
these directives, according to the White House, was to
provide near-term relief for Americans and to lower
costs by increasing competition and choice.

Welfare reform

One of the other items the president has brought up as
a priority after Republicans overhaul the tax system is
reforming welfare, which includes government programs
like Medicaid, Food Stamps and Housing Assistance.
“We’re looking very strongly at welfare reform, and
that’ll all take place right after taxes, very soon,
very shortly after taxes,” Trump said at the White
House last month. During an interview with Axios in
late-December, Cohn said he expected that welfare
reform would receive bipartisan support, with at least
60 votes in the Senate. There are bills currently
floating around Congress that aim to strengthen work
requirements for welfare programs, something that
coincides with the administration’s stated goals of
using welfare as an interim strategy to help lift
Americans out of unemployment and poverty. Office of
Management and Budge t (OMB) director and Consumer
Financial Protection Bureau (CFPB) interim director
Mick Mulvaney, a known deficit hawk, said back in March
that the administration was looking to create jobs and
put those who want to work, back to work. At the same
time, he said the White House would weed out welfare
freeloaders and take steps toward making sure Americans
aren’t exploiting programs, while assuring that the
administration would not deny deserving people
services.

Infrastructure

Senior White House officials have said President Trump
will release the full details of his infrastructure
plan early next year. It is expected to require at
least $200 billion in direct government funds over the
course of a decade, in addition to funding from the
private sector. While an infrastructure revamp was
widely viewed as a bipartisan proposal at the outset of
the president’s tenure, experts believe the outlook may
be murkier after the passage of a tax reform bill that
could pile on to the deficit. Trump promised a $1
trillion infrastructure overhaul, which was supposed to
be detailed within his first 100 days in office. US
Transportation Secretary Elaine Chao said in September
that states and localities will compete for government
funds, with the most innovative projects winning more
federal dollars. The infrastructure revamp is expected
to address everything from bridges, roads and airports
to energy, broadband and even Veterans Affairs
hospitals. Cohn told Axios that having broadband in
rural areas is a priority. He also said that the
government needs to reimagine infrastructure based on
the future, adding that the US can’t keep building
cities in 2050.

Housing reform
US Treasury Secretary Steven Mnuchin has been a key
player in the tax reform discussions, but has his
sights set on housing reform for the coming year. “I am
determined that we have housing reform and that we come
up with a permanent solution for Fannie [Mae] and
Freddie [Mac] so that they’re not in the current form,
which is essentially owned by the government,” he said
during a November speech at the Economic Club of New
York. “That’ll be a big focus of mine for next year.”
Mnuchin also said this is something he expected housing
reform to be completed on a “bipartisan basis.”

ATTOM – the off-market housing market

There’s a strange omission from the long list of
industries vanquished, disrupted, and dismantled by the
Internet. Retail chains are closing, cabs are not being
hailed, and hotel rooms are going empty. But amid the
rumble and ruin of traditional commerce, multiple
listing services (MLS) remain remarkably impervious to
disruption. That isn’t stopping would-be MLS disrupters
like REX from trying. “The MLS is an antiquated tool
created by real estate brokers to keep buyers dependent
on them,” according to REX. “But the Internet changed
all that.” The MLS has survived previous declarations
of its demise. If such predictions were true we should
now see a marketplace filled with broker-less
transactions, those selling for-sale-by-owner,
so-called FSBOs. In fact, precisely the opposite has
happened. Self-sellers are a vanishing species.
According to the 2016 edition of the National
Association of Realtors (NAR) Profile of Home Buyers
and Sellers, “only eight% of recent home sales were
FSBO sales again this year. For the second year, this
is the lowest share recorded since this report started
in 1981.” But the picture is markedly different at the
local level in markets where MLS disrupters like REX
are operating. Single family home sales listed on the
MLS represented 89% of single family home sales deeds
recorded in Los Angeles and Orange counties combined,
according to an ATTOM Data analysis of public record
deed data and MLS data provided by First Team Real
Estate, the largest independent brokerage in
California. Most off-MLS sales are the result of these
so-called pocket listings, according to Michael Mahon,
president at First Team Real Estate, which covers the
Southern California market. “We ha ve agents who have 50
to 75 buyers sitting there as pent-up demand waiting
for listings,” he said. “A lot of these home sellers
are willing to entertain an offer that they feel is
fair for the asking price they are wanting to get for
the property … a ready, willing and able buyer in queue
is very appealing.”

The share of off-MLS sales were also much higher than
the national average across the country in Dallas and
Phoenix. An ATTOM Data Solutions analysis of MLS closed
sales counts provided by the Texas A&M Real Estate
Center and public record closed sales counts in Dallas
County, Texas, shows MLS-closed sales of single family
homes in 2016 represented 86% of single family home
sales recorded with the county for the year. In
Maricopa County, Arizona, home to the city of Phoenix,
MLS-closed sales of single family homes represented
just 75% of the single family home sales recorded with
the county for 2016, up slightly from 74% in 2015,
according to an ATTOM analysis. What do Dallas and
Phoenix have in common? They are both testing grounds
for a quickly growing alternative to listing for sale
on the MLS: iBuyers such as Opendoor and Offerpad.
Opendoor has been able to assemble $320 million in
equity and more than $500 million in debt financing.
Such numbers instantly make Opendoor a notable player
in the local real estate markets where it is active.
Moreover, if it finds success, it will be able to go
back to the equity and credit markets for additional
funding. “The Opendoor difference is simplicity,
convenience and certainty,” said Evan Moore, Opendoor’s
head of agent experience. “For sellers, Opendoor makes
it easy for homeowners to receive a fair market value
offer in a few clicks, eliminating the hassle of home
showings and months of uncertainty and giving them the
power to close on their timeline. For buyers, Opendoor
also provides the ultimate in convenience by providing
on-demand access to Opendoor homes all day everyday.”

It’s not just disruptive startups like Opendoor and
Offerpad that are expanding off-market purchasing,
however. HomeVestors, a 21-year-old company known for
the “We Buy Ugly” houses signs has exponentially
expanded the markets it operates in since the housing
bust, according to CEO David Hicks. “We buy direct from
the home owner, without hitting MLS,” Hicks said. “And
the people we’re buying them from, they don’t want a
Realtor or anyone else traipsing through their house. …
They got cats or they got smell. Those are the houses
we are buying.” NetWorth Realty is another direct buyer
that has been around for several years and is
continuing to grow, with 1,726 deals totaling $234
million in 2016, up from 941 deals totaling $88 million
in 2013, according to its website. “We’ll find
properties. Our properties are off-market, they a re not
on the MLS,” said Networth Realty president Mark Bloom,
adding that the properties are also kept off-market
when re-sold to investor clients in an effort to
provide those clients with fixed pricing outside of a
competitive bidding environment. “We fix our pricing.
We keep all of our inventory off market.” The growing
number of acquisitions by iBuyers like Opendoor and
Offerpad are catching the attention of the Arizona
Regional MLS, which in its August STAT report devoted
three pages of commentary to an analysis of off-MLS
sales in the market, including those by iBuyers. “As an
analyst, the number one question I get asked is, ‘What
percentage of homes sold are listed on the MLS?’”,
writes Tom Ruff, housing analyst with The Information
Market, a subsidiary of the ARMLS.

Traditional MLS relationships are being challenged by a
growing number of member brokers who believe the
fastest and easiest way increase profits is to stop
dividing commissions, forget about MLS cooperation, and
cut out other brokers. “Off-MLS listings may contribute
to the unraveling of the MLS as we know it,” said
consultant Stefan Swanepoel in a 2016 report published
by NAR called the Definitive Analysis of the Negative
Game Changers Emerging In Real Estate – the DANGER
Report. Is there a way that “coming soon” transactions
could be made more palatable? “Coming soon can be an
issue from many fronts,” said Matthew L. Watercutter,
principal broker and senior regional vice president
with Ohio-based HER Realtors. “The only way for ‘coming
soon’ to be truly a benefit, is you still do not show
the home to anyone until it is actively marketed, so
all potential buyers have a fair and equal
opportunity.”

Categories
Real Estate News

NAHB – builders confident as market primed to expand in 2018

NAHB – builders confident as market primed to expand in
2018

Builder confidence in the market for newly-built
single-family homes increased five points to a level of
74 in December on the National Association of Home
Builders/Wells Fargo Housing Market Index (HMI) after a
downwardly revised November reading. This was the
highest report since July 1999, over 18 years ago.
“Housing market conditions are improving partially
because of new policies aimed at providing regulatory
relief to the business community,” said NAHB Chairman
Granger MacDonald, a home builder and developer from
Kerrville, Texas. “The HMI measure of home buyer
traffic rose eight points, showing that demand for
housing is on the rise,” said NAHB Chief Economist
Robert Dietz. “With low unemployment rates, favorable
demographics and a tight supply of existing home
inventory, we can expect continu ed upward movement of
the single-family construction sector next year.”
Derived from a monthly survey that NAHB has been
conducting for 30 years, the NAHB/Wells Fargo Housing
Market Index gauges builder perceptions of current
single-family home sales and sales expectations for the
next six months as “good,” “fair” or “poor.” The survey
also asks builders to rate traffic of prospective
buyers as “high to very high,” “average” or “low to
very low.” Scores for each component are then used to
calculate a seasonally adjusted index where any number
over 50 indicates that more builders view conditions as
good than poor. All three HMI components registered
gains in December. The component measuring buyer
traffic jumped eight points to 58, the index gauging
current sales conditions rose four points to 81 and the
index charting s ales expectations in the next six
months increased three points to 79. Looking at the
three-month moving averages for regional HMI scores,
the Midwest climbed six points to 69, the South rose
three points to 72, the West increased two points to 79
and Northeast inched up a single point to 54.

Wall Street poised for record on tax bill hopes
Wall Street’s main indexes hit new highs on Monday as
the long-awaited tax overhaul plan looked set for
legislation and buoyed by a flurry of year-end
corporate dealmaking that has topped $11 billion so
far. More US Republicans Senators on Sunday threw their
weight behind the tax bill they expect Congress to pass
this week. A Senate vote is set for Tuesday and
President Donald Trump is expected to sign the bill
into law by the end of the week.US stocks have enjoyed
a near year-long rally, of late powered by increasing
expectations of the promised tax overhaul, which aims
to lower corporate taxes to 21% from 35%, coming to
fruition. The benchmark S&P 500 has gained 19.5% so far
in 2017, set for its best year since 2013, as investors
bet that lower taxes could boost corporate profits and
trigger share buybacks and higher dividend payouts.

“The market is going to continue its rally based on the
belief that we’re going to see the Congress pass tax
reform,” said Robert Pavlik, Chief Investment
Strategist at SlateStone Wealth in New York. “People
are a bit weary about how long the rally will last, but
earnings continue to grow, (the) tax package should
help and the economy is doing well,” Pavlik said. “I‘m
very positive about the overall market. Lower corporate
taxes could also trigger cash repatriation, which
market analysts say could be used for merger and
acquisitions. On Monday, investors were treated to a
flood of deals.

CoreLogic – home price winners and losers

Since the US began recovering from the home-price bust
in 2006, economists have used the peak-to-current
change in prices as a measure of recovery in markets.
However, the peak-to-current change hyper-focuses on
economic losses for those who bought at the peak. What
about consumers who bought homes while prices were at
the bottom of the cycle? If someone was lucky enough to
buy as a market hit bottom and began to recover, they
have seen large home-price gains. Our view of home
price changes shows the peak-to-trough and
peak-to-current changes in the CoreLogic Home Price
Index (HPI) for the US, the four states with the
largest peak-to-current declines, and the four states
with the largest peak-to-current gains. In the states
where the HPI has passed the pre-crisis peak, the peak
used to calculate the numbers in Figure 1 is the
pre-crisis peak. The U S HPI peaked in 2006, and
returned to the 2006 peak in September 2017. Nevada
has the largest peak-to-current decline of any state,
and had the largest peak-to-trough decrease at 60%. On
the other end, North Dakota had a shallow
peak-to-trough decline, and has risen 47% above the
prior peak seen in 2008. A different view of the HPI
illustrates the depths of the most notable state-level
price declines and the subsequent upward trajectory in
those states, including the peak-to-trough and
trough-to-current HPI changes for the US and the seven
states that had larger peak-to-trough declines than the
US For the nation, from the 2006 peak to the 2011
trough, the loss was 33%, but from the 2011 trough to
September 2017 the gain was 50%. The most extreme drop
in the HPI was in Nevada, but prices in that state have
gained 89% since hitting bottom in 2012. For reference,
we can compare the gains in the HPI to gains in the
stock market. The S&P 500 fell 51% from peak to trough,
but has gained 229% from the trough through September
2017. The large price gains since the home-price bottom
translate into large amounts of home equity gained by
homeowners, improving their balance sheets. As shown in
the CoreLogic Homeowner Equity Report, in the 12 months
ending in September 2017, the average homeowner gained
nearly $15,000 in equity. Only seven states had equity
gains over the past year, but California and Nevada
stand out with the largest gains at $37,000 and
$23,000, respectively.

Average US gas price drops 3 cents to $2.51 for regular
The average price of a gallon of regular-grade gasoline
dropped 3 cents nationally over the past two weeks to
$2.51. Industry analyst Trilby Lundberg of the Lundberg
Survey said Sunday that further declines are likely
because US gas supplies are flush. The current gas
price is 25 cents above where it was a year ago. Gas in
San Francisco was the highest in the contiguous United
States at an average of $3.22 a gallon. The lowest was
in Jackson, Mississippi, at $2.14 a gallon. The US
average diesel price is $2.88, holding steady from two
weeks ago.

Categories
Real Estate News

NAR – home prices jump 6.2% in second quarter; eclipse 2016 high

NAR – home prices jump 6.2% in second quarter; eclipse
2016 high

The headstrong supply and demand imbalances in much of
the country slightly tempered the pace of sales and
caused home prices to maintain their robust growth in
the second quarter, according to the latest quarterly
report by the National Association of Realtors (NAR).
The national median existing single-family home price
in the second quarter was $255,600, which is up 6.2%
from the second quarter of 2016 ($240,700) and
surpasses the third quarter of last year ($241,300) as
the new peak quarterly median sales price. The median
price during the first quarter increased 6.9% from the
first quarter of 2016. Single-family home prices last
quarter increased in 87% of measured markets, with 154
out of 178 metropolitan statistical areas (MSAs)
showing sales price gains in the second quarter
compared with the second quarter of 2016. Twenty-three
areas (13%) recorded lower median prices from a year
earlier. Twenty-three metro areas in the second quarter
(13%) experienced double-digit increases, down from 30
areas in the first quarter (17%). Overall, there were
slightly more rising markets in the second quarter
compared to the first quarter, when price gains were
recorded in 85% of metro areas. Total existing-home
sales, including single family and condos, slipped 0.9%
to a seasonally adjusted annual rate of 5.57 million in
the second quarter from 5.62 million in the first
quarter, but are still 1.6% higher than the 5.48
million pace during the second quarter of 2016. At the
end of the second quarter, there were 1.96 million
existing homes available for sale4, which was 7.1%
below the 2.11 million homes for sale at the end of the
second quarter in 2016. The average supply during the
second quarter was 4.2 months — do wn from 4.6 months in
the second quarter of last year.

Last quarter, a rise in the national family median
income ($71,529)5 was not enough to offset weaker
affordability from the combination of higher mortgage
rates compared to a year ago and rising home prices. To
purchase a single-family home at the national median
price, a buyer making a 5% down payment would need an
income of $56,169, a 10% down payment would require an
income of $53,213, and $47,300 would be needed for a
20% down payment. The five most expensive housing
markets in the second quarter were the San Jose,
California, metro area, where the median existing
single-family price was $1,183,400; San Francisco,
$950,000; Anaheim-Santa Ana, California, $788,000;
urban Honolulu, $760,600; and San Diego, $605,000. The
five lowest-cost metro areas in the second quarter were
Youngstown-Warren-Boardman, Ohio, $87,000; Cumberland,
Maryland, $98,200; Decatur, Illinois, $107,400;
Binghamton, New York, $109,000; and Elmira, New York,
$111,600. Metro area condominium and cooperative prices
— covering changes in 61 metro areas — showed the
national median existing-condo price was $239,500 in
the second quarter, up 5.4% from the second quarter of
2016 ($227,200). Eighty-seven% of metro areas showed
gains in their median condo price from a year ago.

Total existing-home sales in the Northeast rose 1.3% in
the second quarter and are 0.4% above the second
quarter of 2016. The median existing single-family home
price in the Northeast was $282,300 in the second
quarter, up 3.2% from a year ago. In the Midwest,
existing-home sales increased 4.2% in the second
quarter but are 0.5% below a year ago. The median
existing single-family home price in the Midwest
increased 6.6% to $204,000 in the second quarter from
the same quarter a year ago.Existing-home sales in the
South dipped 3.0% in the second quarter but are 2.5%
higher than the second quarter of 2016. The median
existing single-family home price in the South was
$229,400 in the second quarter, 6.7% above a year
earlier. In the West, existing-home sales decreased
3.7% in the second quarter but are 3.1% above a year
ago. The median existing single-family home price in
the West increased 7. 5% to $372,400 in the second
quarter from the second quarter of 2016.

Chinese takeovers of US companies plummet this year
amid tough Trump talk
– As of early August, Chinese dealmaking in the US has
dropped by 65% this year, according to Dealogic.
– The sharp decline comes amid greater uncertainty
around whether the Trump administration will allow the
deal to be completed.
– The Dealogic report estimated a further drop in
Chinese deals in the US, putting $75 million in advisor
fees at risk.
As the Trump administration looks to take a tougher
stance against Beijing, Chinese investments into the US
have more than halved this year, according to Dealogic.
“Amid growing regulatory scrutiny of China outbound M&A
targeting the US, volume has seen a 65% year-on-year
decline in 2017 year-to-date,” Nicholas Farfan and Karl
But of Dealogic Research said in an Aug. 8 note. “In
comparison, such deals peaked at $65.2 billion last
year, with high-profile deals inc luding HNA’s
acquisition of 25% of Hilton Worldwide.” “With
tightening restrictions, Chinese buyers may look to
stop pursuing or shelve potential acquisitions in the
US,” the note said. The pressure and uncertainty is
coming from both countries. On Beijing’s side,
authorities are reportedly targeting some of the
largest Chinese dealmakers to try to keep capital from
fleeing the country and contributing to yuan weakness.
On the American side, reports indicate the Committee on
Foreign Investment in the United States is looking to
use national security concerns to prevent more Chinese
purchases of US firms, especially in technology.
Anecdotally, Gregory Husisian, chair, export controls
and national security group at law firm Foley &
Lardner, noted that an increasing number of clients are
concerned about working with Chinese buyers due to the
potential for regulatory intervention. The dealma king
industry could also suffer some significant business
setbacks. The Dealogic analysts estimate about $9.7
billion in pending Chinese deals to buy US firms could
fall under regulatory scrutiny, potentially putting $75
million in advisor fees at risk.

NAHB – single-family starts hold steady in July after
upward June revision

Nationwide housing starts fell 4.8% in July to a
seasonally adjusted annual rate of 1.16 million units,
according to newly released data from the US Department
of Housing and Urban Development and the Commerce
Department. Single-family production slipped 0.5% in
July to a seasonally adjusted annual rate of 856,000
after a strong, upwardly revised June reading.
Year-to-date, single-family starts are 8.6% above their
level over the same period last year. Multifamily
starts dropped 15.3% to 299,000 units. “The overall
strengthening of the single-family sector is consistent
with solid builder confidence in the market,” said
Granger MacDonald, chairman of the National Association
of Home Builders (NAHB) and a home builder and
developer from Kerrville, Texas. “The sector should
continue to firm as the jo b market and economy grow and
more consumers enter the housing market.” “New-home
production numbers this month are in line with our
forecast for a slow and steady recovery of the housing
market,” said NAHB Chief Economist Robert Dietz. “We
saw multifamily production peak in 2015, and this
sector should continue to level off as demand remains
solid.” Regionally in July, combined single- and
multifamily housing production rose 0.6% in the South,
and fell 1.6% in the West, 15.2% in the Midwest and
15.7% in the Northeast. Overall permit issuance in July
was down 4.1% to a seasonally adjusted annual rate of
1.22 million units. Single-family permits held steady
at 811,000 units while multifamily permits fell 11.2%
to 412,000. Regionally, overall permits rose 19.2% in
the Northeast. Permits fell 1.4% in the South, 7.9% in
the West, and 17.4% in the Midwest.

Fiat Chrysler joins BMW, Intel in developing
self-driving cars

Fiat Chrysler (FCAU) said Tuesday it will partner with
BMW and Intel (INTC) to develop a platform for
self-driving cars. The Italian-American automaker will
contribute engineering and other technical resources to
the existing BMW-Intel alliance, which launched in July
2016 to create an automated driving system for global
manufacturers. Fiat Chrysler also said its involvement
in the group will accelerate product development.
Earlier this year, the alliance announced its plan to
test 40 autonomous cars on public roads by the end of
2017. The companies, including Intel-owned Mobileye,
expect to offer solutions for fully automated driving
by 2021. The alliance’s goal is to create the “most
relevant” self-driving platform that automakers can
adopt while maintaining their brand identities. “In
order to advance autonomous driving technology, it is
vital to form partnerships among automakers, technology
providers and suppliers,” said FCA CEO Sergio
Marchionne. “Joining this cooperation will enable FCA
to directly benefit from the synergies and economies of
scale that are possible when companies come together
with a common vision and objective.” In a joint
announcement, the companies said they invite other
automakers and technology firms to adopt their
platform. Financial terms of the Fiat Chrysler deal
weren’t disclosed.

CoreLogic – US single-family rents up 2.8% year over
year in June

– National rent growth decelerated in June 2017
compared with June 2016
– Low-end rent growth more than doubled high-end rent
growth
– Orlando had the highest year-over-year rent growth
in Q2
Single-family rents, as measured by the CoreLogic
Single-Family Rental Index (SFRI), climbed steadily
between 2010 and 2016. However, the index shows
year-over-year rent growth has decelerated slowly since
February 2016, when it peaked at a 4.4%. As of June
2017, single-family rents increased 2.8% year over
year, a 1.6 percentagepoint decline since the February
2016 peak. The index measures rent changes among
single-family rental homes, including condominiums,
using a repeat-rent analysis to measure the same rental
properties over time. Using the index to analyze
specific price tiers reveals important differences. The
ind ex’s overall growth was pulled down by the high-end
rental market, defined as properties with rents 125% or
more of a region’s median rent. Rents on higher-priced
rental homes increased 1.9% year over year in June
2017, down from a gain of 3% in June 2016. Growth in
the low-end market, defined as properties with rents
less than 75% of the regional median rent, increased
4.4% in June 2017, down from a gain of 5.5% in June
2016.

Rent growth varies significantly across metro areas.
Rental vacancy rates are available quarterly from the
US Census Bureau Housing Vacancy Survey. Figure 3 shows
the relationship between the rent growth and rental
vacancy rates for 37 metro areas that are available for
both CoreLogic’s rental index and the Census’s vacancy
survey in Q2 2017. Cities with limited new construction
and strong local economies that attract new employees
tend to have low rental vacancy rates and stronger rent
growth. Orlando experienced 4.5% year-over-year rent
growth in Q2 2017, driven by employment growth of more
than 3% year over year and a rental vacancy rate of
7.1%, slightly lower than the 7.3% national
single-family rental home vacancy rate in Q2 2017. In
contrast, Oklahoma City, which has been hit with
energy-related job losses since early 2015 and a rental
vacancy rate of 11.5% in Q2 2017, experi enced a 3%
year-over-year decrease in rents, according to
CoreLogic data.

DSNews – further simplifying foreclosures

Foreclosures can be a messy process for all
involved—from the homeowner that loses their home, to
the servicers that eventually take care of the
property—it is anything but a pleasant experience. In
addition, the entire process can be complicated by a
slew of paperwork, payments, and transfers with many
moving parts that are easy to miss. But, according to
The Journal Times, one county in Wisconsin is making a
small change to its foreclosure procedure that could go
a long way in ensuring smooth transitions of title, one
that the rest of the country could possibly benefit
from if it goes as planned. The proposed change is as
simple as removing a middle-man, the article notes. In
Racine County, as of now, when a foreclosure is sold
through the sheriff’s office the buyer receives a copy
of the deed and is required to take that deed down t o
the Register of the Deed’s office to get it filed.
However, this little step is often overlooked,
according to the Racine County Register of Deeds, which
can cause big problems for borrowers and the state,
since the tax bill will continue to be sent to the old
owner to never be paid. This can lead to further
complications, like tax interception. The proposed
bill, Senate Bill 175, would allow the Clerk of Courts
Office to simply take the deed directly to the Register
of Deeds Office, and eliminate the middle man, who has
little incentive to make sure the task gets
accomplished.

Currently, this practice has been implemented in
Milwaukee County, but if passed would become state-wide
practice. Critical and constant examination of
foreclosure requirements and best practices are vital
to streamlining and simplifying the industry, and
taking a look at what certain states and municipalities
are doing is just one of the many ways for the industry
to stay ahead of the curve.

(edit)

Categories
Real Estate News

Black Knight – May Mortgage Monitor: underwater borrower population below two million for first time since 2006

Black Knight – May Mortgage Monitor: underwater
borrower population below two million for first time
since 2006

– The number of underwater borrowers declined by 16%
in the first three months of 2017
– 350,000 borrowers regained equity in Q1 2017,
bringing the total underwater population down to 1.8
million
– The underwater population has fallen by nearly one
million borrowers since last year, a 35% annual decline
– Nearly half of remaining underwater borrowers live
in the bottom 20% of homes by price in their markets
– Tappable equity has risen by $695 billion from last
year, bringing total lendable equity to just under $5
trillion
– Over 40 million Americans have tappable equity
available in their homes today; the largest population
on record

The Data and Analytics division of Black Knight
Financial Services, Inc. released its latest Mortgage
Monitor Report, based on data as of the end of May
2017. This month, Black Knight finds that rising home
prices have both decreased the number of borrowers
underwater on their mortgages while increasing the
amount of tappable – or lendable – equity available to
homeowners. As Black Knight Data & Analytics Executive
Vice President Ben Graboske explained, continued growth
in the equity landscape has also improved the net worth
of many – but not all – homeowners with mortgages.
“The steady upward trajectory of home prices continues
to improve the equity positions of many homeowners,”
said Graboske. “This is plainly visible in the number
of borrowers who are underwater on their mortgages,
owing more than their homes are worth. Over the past
year, we&rs quo;ve seen a 35% decline in the total underwater
population, with a 16% decline in that population over
the first three months of 2017 alone. Home prices rose
2.3% in the first quarter, as compared to 1.8% over the
same period last year, helping an additional 350,000
borrowers regain equity in their homes. As of today,
there are 1.8 million underwater borrowers remaining,
the first time this population has fallen below two
million since 2006. “What stands out is the disparity
we see in this improvement. As has been the case for
some time now, negative equity has become more and more
a localized phenomenon. But it’s also becoming
concentrated among a particular class of homeowner.
Nearly half of all borrowers who remain underwater own
homes in the lowest 20% of prices in their respective
markets. While the nation as a whole now has a negative
equity rate of just 3.6%, among owners in that lowest
price tier, it’s over eight%. In fact, these
lowest-price-tier properties are more than twice as
likely to be underwater as those in the next price tier
up, and 6.5 times more likely to be underwater than
those living in the top 20% of the market. This is the
highest differential we’ve seen between high and low
price tiers since we began keeping track in 2005. In
some areas, the disparity between the lowest price tier
and the highest is staggering. In Detroit, for example,
borrowers whose homes are in the lowest 20% of prices
are 50 times more likely to be underwater than those in
the top 20%.”

Rising home prices are also increasing the amount of
equity available for homeowners to borrow against.
Looking solely at borrowers with at least 20% equity in
their homes, Black Knight found that total tappable (or
lendable) equity increased by $695 billion dollars over
the last year. “Over 40 million Americans with a
mortgage now have tappable equity available in their
homes,” Graboske continued. “This is the largest this
population has ever been. Growth over the last year
brought the total lendable equity market to just under
$5 trillion as of the end of Q1 2017. If home prices
continue to rise at or near their current rate of
appreciation, tappable equity will likely hit record
highs by this summer. Though nearly half of the
country’s 100 largest metropolitan areas have already
reached record levels of tappable equity, as a whole
these areas remain geographically con centrated. The
majority are found in more coastal areas, specifically
in large city centers. In fact, more than half of the
nation’s tappable equity lies in the 10 largest metro
areas. California alone contains nearly 40% of
available equity. While the growth in tappable equity
is obviously good news for both homeowners and lenders
alike, it does represent some risk as well. Investors
in mortgages and mortgage servicing rights – as well as
others with a stake in the broader mortgage market –
need to be prepared to account for a higher share of
equity-driven prepayment risk, as well as an increased
chance of borrowers adding on second liens that primary
loan servicers and investors may not be aware of.” As
was reported in Black Knight’s most recent First Look
release, other key results include:
– Total US loan delinquency rate: 3.79%
– Month-over-month change in delinquency rate: -7.13%
– Total US foreclosure pre-sale inventory rate: 0.83%
– Month-over-month change in foreclosure pre-sale
inventory rate: -2.97%
– States with highest percentage of non-current loans:
MS, LA, AL, WV, ME
– States with the lowest percentage of non-current*
loans: OR, ID, MN, ND, CO
– States with highest percentage of seriously
delinquent loans:MS, LA, AL, AR, TN

Amazon is quietly rolling out its own Geek Squad to set
up gadgets in your home

For 15 years, Best Buy’s Geek Squad installation and
repair service has served as one key advantage over
Amazon that the e-commerce giant seemed unlikely to
match.But over the last few months, Amazon has quietly
been hiring an army of in-house gadget experts to offer
free Alexa consultations as well as product
installations for a fee inside customer homes, multiple
sources told Recode, and job postings confirm. The new
offering, which has already rolled out in seven markets
without much fanfare, is aimed at helping customers set
up a “smart home” — the industry term used to describe
household systems like heating and lighting that can be
controlled via apps, and increasingly by voice. While
Amazon has a marketplace for third parties to offer
home services like TV mounting and plumbing, these new
smart-hom e-related services seem important enough to
Amazon that it is hiring its own in-house experts. And
perhaps for good reason. Smart-home gadgets make up one
of the fastest-growing segments of the consumer
electronics industry, but they can be difficult to set
up and integrate with each other. That hurdle has led
to higher-than-normal return rates, experts say, so
Amazon is likely looking at the in-home services as one
way to lower that number. Perhaps more importantly,
controlling the smart home by voice is one of the most
promising use cases for Alexa, the virtual assistant
built into the Echo line of gadgets, which Amazon is
betting heavily on. So it’s not totally surprising that
Amazon would make the effort to close the education gap
for these products by sending its own hires into
customer homes. An Amazon spokesman declined to
comment. Amazon is charging $99 for installation
services like setting up an Ecobee4 Alexa-enabled smart
thermostat, though some services are discounted by 20%
this week. Multi-device set-ups that take more than an
hour may cost more. In eligible cities, shoppers can
book the installations during the checkout process.

New York City’s ‘Billionaire’s Row’ is dead — and a
record-breaking foreclosure could be the ‘nail in the
coffin’

A full-floor penthouse in the landmark One57 condo
building is headed to the auction block after it was
seized under foreclosure, Bloomberg reported. This is
most likely the largest foreclosure in the history of
high-end real estate in New York City, experts say. “I
don’t know of a foreclosure that’s larger than that,”
Donna Olshan, president of Olshan Realty, told
Bloomberg. The apartment, which was the eighth-priciest
sold in the building, will go to auction on July 19. It
was purchased for $50.9 million in 2014, with a $35.3
million mortgage loan from Banque Havilland. It was due
to be paid in full a year after purchase, but no such
payment was made by the shell company the unit was
registered under. Havilland is now forcing the auction
to recoup the funds it’s missing , plus interest,
according to court filings. One57 is emblematic of New
York City’s Billionaire’s Row, a stretch of 57th Street
near Central Park, which in recent years has become a
magnet for new condos courting high-priced investment.
One57 is considered the most expensive of the new
buildings, with record-breaking sales that included a
$100.5 million top-floor penthouse. This is the second
apartment in the building to face foreclosure in the
last two months. A unit on the 56th floor, which sold
for $21.4 million in July 2015, hit the auction block
on June 14. It’s unclear if the property has changed
hands yet.

Oil pares losses, but rising supply a worry
Oil dipped on Monday, paring some earlier losses
triggered by rising drilling activity in the United
States and no let-up in supply growth from both OPEC
and non-OPEC exporters, but the outlook remained
gloomy. Brent crude futures were last down 11 cents on
the day at $46.60 a barrel by 1430 GMT, while US crude
futures were last down 13 cents at $44.10 a barrel.
“The market is in trouble and looks very vulnerable to
lower numbers,” PVM brokerage said in a note. The
Organization of the Petroleum Exporting Countries has
agreed with some non-OPEC members to curtail production
until March 2018 but the move has failed to eliminate a
global glut of crude. Several key OPEC ministers will
meet non-OPEC Russia on July 24 in St Petersburg,
Russia, to discuss the situation in oil markets. Kuwait
said on Sunday that Nigeria and Libya had been invited
to the meeting and their production could be capped
earlier than November, when OPEC is scheduled to hold
formal talks, according to Bloomberg. Libya said on
Monday it was ready for dialog but added that its
political, economic and humanitarian situation should
be taken into account in talks on caps. Brent prices
are 17% below their 2017 opening despite strong
compliance by OPEC with the production-cutting accord.

Categories
Real Estate News

NAR – pending home sales tumble in May for third straight month

NAR – pending home sales tumble in May for third
straight month

The ongoing supply shortages that are propping up home
prices in many metro areas caused pending home sales in
May to slump for the third consecutive month, according
to the National Association of Realtors (NAR). None of
the major regions saw an increase in contract activity
last month. The Pending Home Sales Index, a
forward-looking indicator based on contract signings,
decreased 0.8% to 108.5 in May from a downwardly
revised 109.4 in April. The index is now 1.7% below a
year ago, which marks the second straight annual
decline and the most recent since November and December
of last year. Lawrence Yun, NAR chief economist, says
it’s clear the critically low inventory levels in much
of the country somewhat sidetracked the housing market
this spring. “Monthly closings have recently been
oscillating back and forth, but this thir d consecutive
decline in contract activity implies a possible topping
off in sales,” he said. “Buyer interest is solid, but
there is just not enough supply to satisfy demand.
Prospective buyers are being sidelined by both limited
choices and home prices that are climbing too fast.”
The persistent housing shortages seen in several
markets are most severe, according to Yun, in the lower
price ranges. That’s very apparent when looking at the%
change in closings in May compared to a year ago. Sales
of homes under $100,000 last month were down 7.2% from
last year and up only 2.0% for those between $100,000
and $250,000. In higher price brackets, sales expanded
incrementally all the way up to massive increases of
26.0% for homes priced between $750,000 and $1 million
and even more for those $1 million and up (29.1%).

Weaker financial and economic confidence could also be
playing a role in the slowdown in contract activity.
NAR’s quarterly Housing Opportunities and Market
Experience (HOME) survey, released earlier this week,
found that fewer renters think it’s a good time to buy
a home, and respondents overall are less confident
about the economy and their financial situation than
earlier this year. “The lack of listings in the
affordable price range are creating lopsided conditions
in many areas where investors and repeat buyers with
larger down payments are making up a bulk of the sales
activity,” said Yun. “Meanwhile, many prospective
first-time buyers can’t catch a break. Prices are going
up and there’s intense competition for the homes
they’re financially able to purchase.” Existing-home
sales are forecast to be around 5.63 million this year,
an increase of 3.2% from 2016 (5.45 million). The
nation al median existing-home price this year is
expected to increase around 5%. In 2016, existing sales
increased 3.8% and prices rose 5.1%.”A much higher
share of homeowners compared to a year ago think now is
a good time to sell1, but until they do, sales will
likely stay flat and low inventory will keep price
growth moving swiftly,” said Yun.The PHSI in the
Northeast decreased 0.8% to 96.4 in May, but remains
3.1% above a year ago. In the Midwest the index was
104.5 in May (unchanged from April), and is 2.8% lower
than May 2016. Pending home sales in the South declined
1.2% to an index of 123.4 in May and are now 1.4% below
last May. The index in the West subsided 1.3% in May to
98.6, and is now 4.5% below a year ago.

ABC News settles ‘pink slime’ food-libel lawsuit

ABC News has settled a defamation lawsuit filed by the
maker of a processed-meat product that critics dubbed
“pink slime,” bringing to a close a high-profile legal
test of so-called food-libel laws intended to shield
the food-production industry from bogus food-safety
scares. Terms of the settlement weren’t announced. Beef
Products Inc. sued ABC News, anchor Diane Sawyer and
reporter Jim Avila in 2012 for $1.9 billion, over a
series of stories about its lean, finely textured beef
product—what critics dubbed “pink slime”—claiming it
was the victim of journalistic hit job that harmed its
business. A judge dismissed the claims against Ms.
Sawyer before the start of the jury trial, which began
earlier this month in South Dakota. Due to a South
Dakota food-libel law that triples damages against
tho se found to have knowingly lied about the safety of
a food product, ABC News was facing, potentially, $6
billion in damages. Beef Products, a family-owned South
Dakota meat processor, said in a Wednesday statement
the settlement validated that lean, finely textured
beef, made from defatted beef trimmings in a process
involving ammonium hydroxide, was safe. “While this has
not been an easy road to travel, it was necessary to
begin rectifying the harm we suffered as a result of
what we believed to be biased and baseless reporting in
2012,” Beef Products said. “Through this process, we
have again established what we all know to be true
about Lean Finely Textured Beef: it is beef, and is
safe, wholesome, and nutritious.”

MBA – mortgage applications decrease in latest MBA
weekly survey

Mortgage applications decreased 6.2% from one week
earlier, according to data from the Mortgage Bankers
Association’s (MBA) Weekly Mortgage Applications Survey
for the week ending June 23, 2017. The Market Composite
Index, a measure of mortgage loan application volume,
decreased 6.2% on a seasonally adjusted basis from one
week earlier. On an unadjusted basis, the Index
decreased 7% compared with the previous week. The
Refinance Index decreased 9% from the previous week.
The seasonally adjusted Purchase Index decreased 4%
from one week earlier. The unadjusted Purchase Index
decreased 5% compared with the previous week and was 8%
higher than the same week one year ago. The refinance
share of mortgage activity decreased to 45.6% of total
applications from 46.6% the previous week. The
adjustable-rate mortgage (ARM) share of acti vity
decreased to 7.0% of total applications. The FHA share
of total applications increased to 10.3% from 10.1% the
week prior. The VA share of total applications
decreased to 10.3% from 10.4% the week prior. The USDA
share of total applications remained unchanged at 0.7%
from the week prior.

Dow surges more than 100 points as bank shares jump

US equities traded higher on Wednesday as bank stocks
led the charge. The Dow Jones industrial average jumped
137 points with Goldman Sachs and Disney contributing
the most gains.The S&P 500 advanced 0.7% with
financials rising 1.3% to lead advancers. The SPDR S&P
Bank exchange-traded fund (KBE), which tracks large
banks, spiked 1.7% higher as investors braced for the
release of the Federal Reserve’s stress test results.
Analysts expect several big banks to come out of the
test with substantial increases in return to
shareholders — potentially using cash reserves to pay
out more than 100% of their profits. As a result,
higher figures would also reflect banks’ confidence in
their own financial health. Shares of JPMorgan Chase
and Goldman Sachs both climbed about 1%. Stocks also
jumped after the European Central Bank tried to walk                                                                                  back remarks made by ECB President Mario Draghi a day
earlier. A source familiar with Draghi’s knowledge told
Reuters that Draghi intended to signal tolerance for a
period of weaker inflation, not an imminent policy
tightening. Draghi said Tuesday “the threat of deflation
is gone and reflationary forces are at play,” sending
the euro to a one-year high against the dollar. The
currency pulled back from those levels on Wednesday
following Reuters’ report.

WSJ – labor shortage squeezes real-estate developers

About two-thirds of the contractors who are struggling
with the labor shortages gripping the construction
industry say it has become a challenge to finish jobs
on time, according to a new survey. More than one-third
of contractors said they are being forced to turn work
down and 58% said they are putting in higher bids, said
the survey sponsored by USG Corp. USG 2.80% and the US
Chamber of Commerce. Three-quarters of those who said
they are having difficulty finding skilled labor said
they are simply asking their employees to work harder.
“Basically they’re just making people work harder as a
way to cope,” said Steve Jones, senior director of
Dodge Data & Analytics, which was the research partner
of USG and the Chamber on the project. The survey was
conducted as part of the development of a new economic
indicator launche d earlier this month named the USG +
US Chamber of Commerce Commercial Construction Index.
It was designed to gauge such trends as backlogs,
revenue projections, access to financing and labor
issues. Two-thirds of the contractors surveyed
predicted there would be more workers in the next six
months. But 61% of the respondents reported problems
finding skilled laborers in such trades as concrete,
interior finishes, masonry, electrical and plumbing.
“There is reason for concern in the lack of qualified
talent,” said Tom Donohue, chief executive of the
Chamber in a written statement.

Industry officials are warning that labor shortages
will become more acute if the Trump administration
moves ahead with its plan to spend $1 trillion on
infrastructure. “We couldn’t absorb $1 trillion worth
of brand new work,” said Mr. Jones. “We’re already
strapped just dealing with the work we already
have.”Labor shortages are partly due to the increasing
number of construction projects moving forward. During
the first four months of this year, construction
spending amounted to $359.5 billion, 5.8% more than the
same period in 2016, according to the US Census Bureau.
Also, tens of thousands of workers left the building
trades during the economic downturn. Even before it
hit, the construction workforce was aging, Mr. Jones
said. “You had an aging workforce in an industry that
doesn’t lend itself to long careers because it’s hard,
physical w ork and then you lose a whole bunch of
people,” he said. The USG and Chamber survey asked four
questions on coping strategies to the 61% of
respondents who said they’re having difficulty finding
skilled labor.

Categories
Real Estate News

Black Knight – “First Look” at March 2016

Published on: Apr 22, 2016 @ 8:12 am

Black Knight – “First Look” at March 2016

The Data and Analytics division of Black Knight
Financial Services (NYSE: BKFS) reports the following
“first look” at March 2016 month-end mortgage
performance statistics derived from its loan-level
database representing the majority of the national
mortgage market.

–  National delinquency rate fell 8% in March; at
4.08%, it is at its lowest point since March 2007
–  At just under 2%, the rate of 30-day delinquencies
is at lowest level in over 15 years
–  Spurred by declining interest rates, prepayment
speeds (historically a good indicator of refinance
activity) were up 46% from one month ago
–  Foreclosure starts were down 14% from February;
still driven primarily by repeat foreclosure activity

US jobless claims fall to 4-decade low

A proxy for layoffs across the US pointed to one of the
healthiest labor markets in decades, as the number of
US workers who applied for new unemployment benefits
declined to the lowest level since the early 1970s.
Initial jobless claims fell by 6,000 to a seasonally
adjusted 247,000 in the week ended April 16, the Labor
Department said Thursday. That was the lowest level for
jobless claims since the week of Nov. 24, 1973.  That
also marked the 59th straight week that initial jobless
claims remained below 300,000, the longest such streak
in more than four decades.  Recent claims data are
“astonishingly low,” said Timothy Hopper, chief
economist at TIAA Global Asset Management. “The fact
that the numbers continue to ratchet down suggests that
labor demand is strong and a sign the labor market
should continue to improve.”  Yet while the numbers
point to a stable labor market, they don’t foretell an
economic acceleration. In fact, last time jobless
claims were this low, an oil-shock recession had just
begun.  The direction of the layoff proxy is a key
difference between the latest readings and those in
1973. Jobless claims entered 2016 near these historic
lows but have fallen slightly. In contrast, by November
1973, when the National Bureau of Economic Research
pegs the start of a recession that stretched into the
early part of 1975, jobless claims had been modestly
climbing for nine months.

Federal Reserve officials will likely consider the
relative health of the labor market at next week’s
policy meeting. But recently, central bankers have
indicated they are concerned about weakness in the
global economy and are watching inflation readings and
wage gains closely. A large majority of economists
surveyed by The Wall Street Journal expect the Fed to
hold its benchmark interest rate steady at the meeting.
A low level of layoffs typically coincides with solid
hiring. Employers added 215,000 jobs in March, a
healthy increase. The unemployment rate ticked up to
5%, but the increase in part reflected more workers
entering the labor force.  Jobless claims have trended
near the four-decade low much of this spring. But that
comes with a caveat. The Easter holiday, which moves on
the calendar each year, can distort seasonal
adjustments to the data during March and April. The
four-week moving average, which smooths out volatility,
fell by 4,500 last week to 260,500. That level has
stayed fairly consistent since early March.  Still,
there was one other historical point of strength in the
latest reading. A measure of the number of people on
unemployment rolls, which are reported with a one-week
lag, fell by 39,000 in the week ended April 9 to the
lowest level recorded since 2000.

 

NAHB – remodeling market index dips in first quarter of
2016

The National Association of Home Builders’ (NAHB)
Remodeling Market Index (RMI) posted a reading of 54 in
the first quarter of 2016, dipping four points below
the previous quarter but remaining in positive
territory above 50.  An RMI above 50 indicates that
more remodelers report market activity is higher
(compared to the prior quarter) than report it is
lower. The overall RMI averages ratings of current
remodeling activity with indicators of future
remodeling activity.  “Remodelers were solidly booked
for jobs in the first quarter of 2016 but calls and
appointments for work slowed down in comparison to the
end of 2015,” said 2016 NAHB Remodelers Chair Tim
Shigley, CAPS, CGP, GMB, GMR, a remodeler from Wichita,
Kan. “Volatility in the financial markets during the
first quarter may have impacted consumers’ readiness to
commit to projects.”  The RMI’s current market
conditions index stands at 55, decreasing by a single
point from the previous quarter. Among its components,
major additions and alterations continued gains from
the previous quarter, rising to 55 from 54. The smaller
remodeling projects component decreased two points to
54, and the home maintenance and repair component of
the RMI decreased two points to 56.  At 53, the RMI’s
future market conditions index decreased six points
from the previous quarter. Among its four components,
calls for bids decreased to 51 from 58, the amount of
work committed fell to 52 from 57 and appointments for
proposals dropped to 52 from 60. Meanwhile, the backlog
of remodeling jobs decreased only three points to 58
from the previous quarter’s reading and high-water mark
of 61.

SunEdison files for bankruptcy protection

SunEdison, once the fastest-growing US renewable energy
company, filed for Chapter 11 bankruptcy protection on
Thursday as years of debt-fueled acquisitions proved
unsustainable.  In its bankruptcy filing, the company
said it had assets of $20.7 billion and liabilities of
$16.1 billion as of Sept. 30.  The company said its two
publicly traded subsidiaries, TerraForm Power and
TerraForm Global, were not part of the bankruptcy.  The
company said it secured up to $300 million in new
financing from its first-lien and second-lien lenders,
which is subject to court approval. The money will be
used to support SunEdison’s operations during its
bankruptcy, such as paying wages and vendors, and
proceeding with ongoing projects.  “Our decision to
initiate a court-supervised restructuring was a
difficult but important step to address our immediate
liquidity issues,” said Ahmad Chatila, SunEdison chief
executive officer.  He said the company planned to use
Chapter 11 to reduce debt, shed non-core operations and
take steps to get the most value out of its technology
and intellectual property.

Zillow – Q1 2016 market report: tight inventory, rapid
price growth represent real headwinds for the market’s
core

–  There are 5.9% fewer homes for sale in the US than
there were a year ago.
–  There are 10.4% fewer entry-level homes for sale in
the US than there were a year ago.
–  Low supply is driving up home prices among
entry-level homes, which are often sought after by
first-time buyers.

Faced with rapidly appreciating home values and a
dwindling inventory of homes for sale in the critical
entry-level and mid-market home segments, first-time
and move-up home buyers – typically the housing
market’s bread-and-butter – are likely in store for a
tough spring home shopping season.  Nationwide, median
home values rose 4.8% year-over-year in March and 1.1%
over the course of the first quarter, to a Zillow Home
Value Index of $186,200, according to the first quarter
Zillow Real Estate Market Report. And while overall US
home values continue to grow at a modest (though slowly
accelerating) clip, home values are rising the fastest
among entry-level and mid-market homes in a large
majority of the nation’s biggest housing markets.  A
number of factors are driving this growth, and many are
positive, including strengthening household formation,
continued growth in jobs and wages, and general
confidence and optimism in the overall value of
homeownership, especially among younger generations.
But the likeliest contributor to this rapid growth in
the bottom and middle is worrisome: There is a real
lack of homes to buy in these segments.

Overall, there were 5.9% fewer homes available for sale
nationwide at the end of the first quarter than there
were a year ago. But the number of homes for sale in
the bottom and middle thirds of the US market each fell
by 10.4%, compared to a relatively scant decline of
just 1.9% in the top third of the market.  This is
leading to a situation in which the majority of homes
for sale in many markets are more expensive homes not
typically sought by budget-conscious entry-level and
younger buyers. In all 35 of the nation’s largest
markets and the US as a whole, more homes are available
for sale in the top-third of the market than in either
of the other segments. In nine of those large metros,
top-tier homes make up more than half of all homes
available for sale.  And strong demand for
more-affordable homes, driven in part by those healthy
fundamentals noted earlier, can’t help but push prices
up more quickly for those budget-friendly homes that
are available. Home values in the bottom tier are
growing faster than the other two tiers in 18 of the
nation’s 35 largest metro housing markets, and
middle-tier growth is outpacing bottom and top-tier
growth in another eleven. That leaves just six of the
country’s 35 largest markets in which home value growth
in the top tier is outpacing the bottom and middle.
And in some cases, the growth rates between top and
bottom tiers aren’t particularly close. In the
fast-growing Denver metro, for example, bottom-tier
home values grew at a 20.3% annual pace in March,
fastest among markets in which bottom-tier values are
growing the most, and almost double local top-tier
annual growth of “just” 10.6%. Similar trends can be
found in Phoenix, where bottom-tier home values are
growing at almost triple the annual pace of top-tier
values (11.2% at the bottom vs. 4.2% at the top) and
Riverside (10% vs. 2.7%).

This rapid home value appreciation and limited
inventory in the bottom two-thirds of the market
undoubtedly puts a majority of would-be home buyers in
a tough spot. But the flip side is that those
better-heeled buyers in search of a top-tier home are
swimming in much smoother waters.  Annual home value
growth among top-tier homes in 20 of the nation’s top
35 markets is slower than the overall national pace of
4.8%. Additionally, the most expensive homes on the
market are also more likely to have a price cut. The
share of top-tier listings nationwide with a price cut
has increased 1.6 percentage points over the past year,
compared to just 0.4 percentage points in the middle
tier and 0.5 percentage points at the bottom.  In other
words, buyers looking for the most expensive homes will
find somewhat softening prices, a relatively larger
selection of homes to choose from and more limited
competition this spring. At the same time, entry-level
and mid-market buyers are likely to face much stiffer
competition, rapidly rising prices and very limited
inventory.  Yet another reminder that it pays to be
wealthy.

In March, the median US home value rose 0.4% from
February, according to the Zillow Home Value Index. US
home values have grown on a year-over-year basis for 45
straight months.  But while home values have been
growing consistently for going on four years, lately,
the pace of growth has picked up after a yearlong
cooling-off period from spring 2014 through spring
2015. The post-bottom pace of annual home value growth
peaked at 7.9% in April 2014, then slowed in each of
the subsequent 12 months, reaching a low of 2.7% in
April 2015. Annual home value growth has since been
higher than the month before in 10 of the past 11
months, before falling somewhat in March to a 4.8%
pace, from 4.9% in February.  While annual growth in
this range is largely sustainable and not much to worry
about on its own, this uptick in growth bears watching
as the spring home shopping season heats up –
especially in light of the rapid growth and limited
inventory issues noted earlier. If home values begin
growing too much, too fast, many more buyers risk
getting priced out of the market, which has a number of
trickle-down effects. One of these impacts could be
felt in the rental market, as would-be buyers are stuck
renting for longer, keeping apartments occupied that
may otherwise go to newly formed renter households and
contributing to upward pressure on rents themselves.
Another impact could be continued deterioration in home
affordability overall if growth in home values outpaces
income growth.  Home values in 25 of the nation’s 35
largest metro markets grew faster year-over-year than
the nation’s 4.8% annual pace in March. Home values
grew by more than 10% per year in seven of those large
metro markets: Denver (up 15.7% year-over-year),
Portland (14.8%), Dallas (13%), San Jose (12.6%),
Seattle (11.7%), San Francisco (11.5%) and Miami
(10.5%). None of the nation’s largest metros
experienced annual home value declines in March.

The US median rent in March was $1,389 per month, up
0.5% from February and 2.6% from March 2015, according
to the Zillow Rent Index. US rents have grown
year-over-year for 43 consecutive months. March was the
fifth straight month in which median US home values
grew faster year-over-year than median rents.  Similar
to home value growth, annual growth in rents in this
range is normal and nothing to worry much about.
However, between August 2015 and February, monthly
rents in each of those seven months hovered between
$1,380 and $1,382, before rising to the current $1,389
this month. This $7 per month bump isn’t huge by any
means, but does represent a bit of a departure from
recent trends, and could be an early signal that rental
growth is picking up again, potentially as a result of
tightness in the rental market caused by renters unable
to find a home to buy in their budget. This also bears
watching.  Median rents in all but one of the nation’s
35 largest metro markets grew year-over-year to some
extent, with only Cleveland experiencing an annual
decline (-1.2% from March 2015). Rents grew fastest
year-over-year in the San Francisco (up 9.9% from March
2015), Portland (up 8.6%) and San Jose (up 8%) metros.

Looking ahead, Zillow expects national home values to
continue growing, rising another 2.7% through March
2017 to a Zillow Home Value Index of $191,257. US rents
are also expected to keep growing over the next year,
at a 2.7% pace through March 2017 to a Zillow Rent
Index of $1,426.  Existing home sales activity in March
was fairly strong, a somewhat promising sign for the
upcoming spring season after a disappointing February.
But existing home sales have been very volatile lately,
and have failed to string together more than a couple
months in a row of increases before stumbling again. It
will take several solid months this spring to break the
two-steps-forward, one-step-back routine the market has
been stuck in for a while – and it’s hard to
meaningfully increase sales activity when the number of
homes for sale keeps dropping.  Which means the market
could be setting up to be pretty tough for potential
buyers this spring, especially for first-time buyers
and those looking to move up from their first home and
into a slightly more expensive place. Competition will
be fierce, and buyers’ patience will be tested. In
order to stand out in a competitive market, buyers
should get pre-approved for a loan, find an agent who
has experience with bidding wars and be prepared to
come in at the asking price, so the seller knows
they’re serious.

Categories
Real Estate News

CoreLogic – cash sales share in 2015 lowest in seven years

Published on: Mar 25, 2016 @ 10:37 am

CoreLogic – cash sales share in 2015 lowest in seven
years

Cash sales accounted for 33.4% of total home sales in
December 2015 and 33.9% of total home sales for the
full year 2015. The full year 2015 cash sales share was
the lowest since 2008. The December cash sales share
was  down 3.3 percentage points year over year from
36.7% in December 2014. On a month-over-month basis,
the cash sales share fell by 2.8 percentage points in
December 2015 compared with November 2015. The month
over month decrease in cash sales share was larger than
normal for the month of December, indicating that the
elevated share reported for November, and attributed to
the new federal mortgage rules (TRID), was temporary.
The cash sales share peaked in January 2011 when cash
transactions accounted for 46.6% of total home sales
nationally. Prior to the housing crisis, the cash sales
share of total home sales averaged approximately 25%.
If the cash sales share continues to fall at the same
rate it did in December 2015, the share should hit 25%
by mid-2017.

Real estate-owned (REO) sales had the largest cash
sales share in December 2015 at 59.2%. Resales had the
next highest cash sales share at 33.4%, followed by
short sales at 30.9% and newly constructed homes at
15.4%. While the percentage of REO sales that were
all-cash transactions remained high, REO transactions
accounted for only 6.9% of all sales in December 2015.
In January 2011 when the cash sales share was at its
peak, REO sales represented 23.9% of total home sales.
Resales typically make up the majority of home sales
(about 79% in December 2015), and therefore have the
biggest impact on the total cash sales share.  Delaware
had the largest cash sales share of any state at 57%,
followed by Alabama (50.1%), New York (46.5%), Florida
(46.3%) and Mississippi (45%). Of the nation’s largest
100 Core Based Statistical Areas (CBSAs) measured by
population, Detroit, Mich. had the highest cash sales
share at 62.7%, followed by West Palm Beach-Boca
Raton-Delray Beach, Fla. (53.4%), Miami-Miami
Beach-Kendall, Fla. (53.2%), Fort Lauderdale-Pompano
Beach-Deerfield Beach, Fla. (51.2%) and North
Port-Sarasota-Bradenton, Fla. (51%). Syracuse, N.Y. had
the lowest cash sales share at 12.5%.

Fourth-quarter GDP revised up; corporate profits fall
US economic growth slowed in the fourth quarter, but
not as sharply as previously estimated, with fairly
strong consumer spending offsetting the drag from
efforts by businesses to reduce an inventory overhang.
Gross domestic product increased at a 1.4% annual rate
instead of the previously reported 1.0% pace, the
Commerce Department said on Friday in its third GDP
estimate.  GDP growth was initially estimated to have
risen at only a 0.7% rate. The economy grew at a rate
of 2.0% in the third quarter and expanded 2.4% for all
of 2015.  Economists polled by Reuters had expected
that fourth-quarter GDP growth would be unrevised at a
1.0% rate.  The upward revisions reflected a stronger
pace of consumer spending than previously estimated.

Consumer spending, which accounts for more than two
thirds of US economic activity, rose at a 2.4% pace
rather than the 2.0% rate reported last month. That
reflected more consumption of services than previously
estimated.  The fairly solid pace of consumer spending
underscores the economy’s underlying strength and
should further allay fears of a recession, which
triggered a massive stock market sell-off early this
year.  Spending is being supported by a tightening
labor market, which is steadily lifting wages, and
rising house prices.  Gasoline prices around $2 per
gallon are also helping to underpin household
discretionary spending.  Inventory investment was
revised lower. Still, inventories remain high relative
to domestic demand.  Businesses accumulated $78.3
billion worth of inventory rather than the $81.7
billion reported last month. As a result, inventories
subtracted 0.22 percentage point from GDP growth
instead of the previously reported 0.14 percentage
point.

Zillow – February market report: peeking at home value
peaks

Median home values in more than a quarter of the
nation’s metro housing markets are currently, or were
recently, as high as they’ve ever been.

In February, home values rose 4.3% year-over-year to a
Zillow Home Value Index of $184,600.  Median home
values in more than a quarter of the nation’s metro
housing markets are currently, or were recently (within
the last year), at peak and as high as they’ve ever
been, according to the February Zillow Real Estate
Market Report. But what do home value peaks really
mean?  As with most things in real estate, the answer
depends on where you are.  The national Zillow Home
Value Index was $184,600 in February, 5.9% below the
record median home value set in mid-2007. But over the
past year, many housing markets in the South,
especially Texas and Tennessee, have joined many
Western housing markets in blowing past their previous
median home value highs. Dallas home values set a new
record at $180,700 in February, up 13.7% from last
February. Nashville home values rose 9.5% to a median
of $189,100.

In a general sense, the idea of home values being at
their “peak” is easy to take out of context. In a
normal market – in which nominal home values grow
fairly consistently year after year at a roughly 2% to
3% annual pace – home values are always reaching new
peaks. In this example, home values in Anywhere, USA,
can be reliably counted upon to be modestly higher this
year than they were last year, and to be a bit higher
next year than they are this year. Aside from periodic
slowdowns or small dips in home values caused by local
economic factors, nominal home values should always
just keep chugging slowly upward in normal times.  But
the past decade-plus has been anything but normal for
US housing, which has distorted this definition of
“peak” home values. By now we’re all familiar with
housing’s rough arc in the 21st century: a rapid
acceleration in home value growth between roughly 2000
and 2007, followed by an almost equally rapid decline
from May 2007 through early 2012 and then a steadier
climb back again in more recent years. The very broad
nature of last decade’s housing boom and bust means
that the majority of local markets have followed a
similar path as the US as a whole, though the severity
of their local booms and busts and exact peak and
trough dates will vary somewhat.

But not all local markets experienced the housing boom,
bust and recovery the same way. Some markets just kept
chugging away slowly, never really falling much in the
first place. It has taken others years to slowly claw
their way back to pre-recession levels after a
difficult bust. And still others had only a mild bust
period, recovered quickly and have been setting new
peaks for years.  Pittsburgh is a good example of a
market that has just kept chugging along, with no clear
boom and bust period, only steady growth over the past
two decades. Rather than experience a sharp dip during
the bust, home values in the Pittsburgh area more or
less flattened out without falling too much between
2008 and 2013, before resuming their somewhat more
rapid rise during the recovery. Far from being a cause
for concern, the fact that home values in Pittsburgh
are currently hovering very near their “peak” is really
just a sign of remarkable stability in the market.
Boston is an example of a market that had a clear
run-up in home values, a distinct decline during the
bust, and a long recovery over the past few years.
During the boom years, home values in Boston peaked
early relative to the nation, at $384,900 in September
2005. What followed was a long six-year period of
falling home values, reaching bottom in November 2011
at $311,800, a drop of almost 19%. It took until
January 2016 for home values in Greater Boston to
surpass their prior peak. Home values in Greater Boston
are, after years of bust and recovery, finally starting
to break new ground again, and look to be on a
sustainable growth path going forward.

Finally, a market like Denver is indicative of a market
that quickly shook off the bust and has taken off like
a rocket in recent years. Prior to the recession, home
values in the Denver area peaked at $237,600 in May
2006. During the bust, home values fell to a low of
$207,300 by August 2011. By July of 2013, Denver-area
home values had already surpassed their earlier peak,
and haven’t slowed down since. Currently, home values
in Denver stand at $326,300 – 37.3% higher than May
2006 values, and up a whopping 57.4% from their August
2011bottom.  This rapid growth in home values is
largely driven by Denver’s own massive population
growth over the past decade-plus, combined with a
limited supply of new homes for sale. This kind of
rapid and unflagging growth could be worrisome, and may
indicate a local bubble starting to form in Denver and
similar markets like the Bay Area. But even so, rapid
growth on its own isn’t enough to indicate a bubble as
long as this growth is driven by solid underlying
economic fundamentals like strong job and wage growth,
true housing demand and limited supply and not rampant
speculation – which is the case in Denver.  So while
taking a peek at peak home values naturally piques our
interest and is useful in determining how far some
markets have come and how far others still have to go,
interpreting what it really means is all a matter of
perspective.

In February, the median US home value rose 0.2% from
January and 4.3% from February 2015, according to the
Zillow Home Value Index. US home values have grown on a
year-over-year basis for 44 straight months.  Home
values in 26 of the nation’s 35 largest metro markets
grew faster year-over-year than the nation’s 4.3%
annual pace in February. Home values grew by more than
10% per year in six of those large metro markets:
Denver (up 14.5% year-over-year), Dallas (13.7%),
Portland (13.4%), San Jose (11.4%), San Francisco
(10.9%) and Miami (10.5%). None of the nation’s largest
metros experienced annual home value declines in
February.  The US median rent in January was $1,383 per
month, up 0.1% from January and 2.6% from February
2015, according to the Zillow Rent Index. US rents have
grown year-over-year for 42 consecutive months.  Median
rents in all but one of the nation’s 35 largest metro
markets grew year-over-year to some extent, with only
Cleveland experiencing an annual decline (-1.2% from
February 2015). Rents grew fastest year-over-year in
the San Francisco (up 10.5% from January 2015),
Portland (up 8.7%) and San Jose (up 8%) metros.

Outlook

Looking ahead, Zillow expects national home values to
continue growing, rising another 2.3% through February
2017. Rents are also expected to keep growing over the
next year, at a 1.7% pace through February 2017.  The
new home value records being set in a number of markets
mean we’re no longer making up ground lost during the
housing recession –we’re laying a new path forward,
based on demand for housing and economic growth
throughout the economy. In some markets, these new
highs are a return to normalcy, and in others are a
reminder that not all markets react the same to broader
economic trends.  Finally, the fact that many other
markets are still off pre-recession peaks by double
digits – places like Las Vegas (down 33.8% from Q2 2006
peaks) and Orlando (off by 29.5% from prior peaks) –
may not even mean those markets are far from full
recovery. Instead, their long path back just highlights
how extraordinarily inflated home values were in those
areas during the housing bubble.

US weekly jobless claims up

The number of Americans filing for unemployment
benefits rose last week while revisions for prior weeks
showed the labor market was much stronger than
previously thought.  Initial claims for state
unemployment benefits increased 6,000 to a seasonally
adjusted 265,000 for the week ended March 19, the Labor
Department said on Thursday. The prior week’s claims
were revised to show 6,000 fewer applications received
than previously reported.  Economists polled by Reuters
had forecast claims rising to 268,000 in the latest
week. The government also revised data going back to
2011, which showed claims trending lower than
previously reported. Claims for the week ended March 5
were the lowest since November 1973.

WSJ – more Americans are again moving to suburbs than
cities

Economists to real-estate agents have debated  whether
the housing boom and bust of the last decade has
dramatically remade the way Americans live or merely
created a temporary disruption.  US Census data
released Thursday provides strong support for the
latter thesis—that shifts in where Americans move were
merely temporary, according to analysis by Jed Kolko, a
senior fellow at the Terner Center for Housing
Innovation at the University of California, Berkeley.
For one thing, the rate at which Americans are moving
to the suburbs is once again outpacing the rate at
which they are moving to cities. That picks up on a
decades long trend that only very temporarily reversed
during the recession.  Urban counties grew by 0.8% in
2015 to roughly 77 million people, compared with
suburban counties, which grew by nearly 1% to 159
million people. Mr. Kolko defines counties as urban
based on how dense they were as of the 2010 census.
Overall, the US population grew by 0.8% from 2014 to
2015, or a difference of about 2.5 million people.
Suburbs have been outpacing cities in population growth
for decades. In 2001, suburbs grew about 1.2% while
cities grew by about 0.7%.  The trend was exacerbated
by the housing boom, when easy mortgages helped buyers
afford homes being built at a rapid pace in far-out
suburbs.  In 2006, suburbs grew by 1.5% while cities
instead actually lost nearly 0.4% of their population.

Cities grew faster than suburbs for one year during the
last decade, in 2011. While much has been written about
the revival of cities, the overall population trends
underscore that people flocking to cities remain a
select class, mostly of the young, educated and
affluent who can afford rising prices. In the meantime,
America overall continues to suburbanize.  “Rich, young
people are outbidding others for urban housing and so
the faster growth in the suburbs certainly reflects
tight housing supply in dense neighborhoods,” Mr. Kolko
said.  Another decades long trend that has re-emerged is
the growth of the South and the West at the expense of
the Northeast and the Midwest. The South and West both
had population growth of 1.2% in 2015, far ahead of
0.2% growth in the Northeast and Midwest.  During the
aftermath of the housing bust, the South and West saw
sharp declines in the rate of population growth, while
the Northeast and Midwest held relatively steady,
although they continued to grow more slowly.  Some
familiar metro areas also emerged as big population
losers and winners. Austin was the biggest population
gainer for four years running from 2011 to 2014. But
this year it was surpassed by Cape Coral-Fort Myers,
Fla.—also the leader in population growth during the
bubble from 2004 to 2006.  Youngstown, Ohio, has been
the biggest population loser since 2010 and continued
to hold that title. It also lost the most population
for most of the boom from 2003 to 2005,  but it was
surpassed for a few years by New Orleans and Detroit.

Categories
Real Estate News

Cash sales share declines moderated in November 2015

Published on: Feb 26, 2016 @ 10:21 am

Cash sales share declines moderated in November 2015

Cash sales accounted for 36.4% of total home sales in
November 2015, down 0.7 percentage points year over
year from 37.1% in November 2014. On a month-over-month
basis, the cash sales share increased by 2.5 percentage
points in November 2015 compared with October 2015. The
cash sales share typically increases month over month
in November, and due to seasonality in the housing
market, cash sales share comparisons should primarily
be made on a year-over-year basis. The November 2015
year-over-year decrease in cash sales share was the
lowest in nearly three years. From January 2013 until
October 2015 decreases in the cash sales share averaged
2.7 percentage points, ranging from -1.4 to -5.1
percentage points. The elevated cash share for November
was most likely related to the new federal mortgage
rules that took effect in October 2015 (TRID) as some
mortgage deals were delayed while the industry adjusted
to the new mortgage rules. These delays are not
expected to carry forward in future months.  The cash
sales share peaked in January 2011 when cash
transactions accounted for 46.6% of total home sales
nationally. Prior to the housing crisis, the cash sales
share of total home sales averaged approximately 25%.

Real estate-owned (REO) sales had the largest cash
sales share in November 2015 at 63.2%. Resales had the
next highest cash sales share at 35.7%, followed by
short sales at 34.3% and newly constructed homes at
16.7%. While the percentage of REO sales that were
all-cash transactions remained high, REO transactions
accounted for only 8.7% of all sales in November 2015.
In January 2011 when the cash sales share was at its
peak, REO sales represented 23.9% of total home sales.
Resales typically make up the majority of home sales
(about 78% in November 2015), and therefore have the
biggest impact on the total cash sales share. Michigan
had the largest cash sales share of any state at 53.4%,
followed by Alabama (51.4%), Florida (50.2%), Kentucky
(49.1%) and New York (47%). Of the nation’s largest 100
Core Based Statistical Areas (CBSAs)[2] measured by
population, Detroit, Mich. had the highest cash sales
share at 61.5%, followed by West Palm Beach-Boca
Raton-Delray Beach, Fla. (53.4%), Miami-Miami
Beach-Kendall, Fla. (52.5%), Fort Lauderdale-Pompano
Beach-Deerfield Beach, Fla. (50.4%) and North
Port-Sarasota-Bradenton, Fla. (50.1%). Syracuse, N.Y.
had the lowest cash sales share at 13.1%.

Oil settles lower, but gains for the week

Oil futures turned lower late Friday, but still
finished the week higher for the second time in a row
as the market continued to mull the likelihood of a
slowdown in global production. West Texas Intermediate
crude “ran into some resistance technically” and pulled
back, said Colin Cieszynski, chief market strategist at
CMC Markets. Prices also likely saw some “profit-taking
ahead of the weekend just like we’ve been seeing in the
Dow today.” April West Texas Intermediate crude fell 29
cents, or 0.9%, to settle at $32.78 a barrel on the New
York Mercantile Exchange. It gained more than 3% for
the week.

NAHB – study reveals the housing preferences of the
boomer generation

The National Association of Home Builders (NAHB) has
had a long history of tracking the evolution of home
buyer preferences. Builders and other industry
professionals now have an opportunity to find out what
baby boomers want compared to other home buyers in
Housing Preferences of the Boomer Generation: How They
Compare to Other Home Buyers, a study recently released
by NAHB’s publishing arm, BuilderBooks.  Based on a
comprehensive, nationwide survey of recent and
prospective home buyers conducted in 2015, the study
discusses how various designs influence the home
purchase decision; the location, features and size of
the homes consumers want, and the influence of certain
events and people on the decision to move to another
home.  “This survey is a great resource for building
professionals, as it provides an inside look at the
things boomers, and other generations, are looking for
in today’s homes,” said Rose Quint, NAHB’s Assistant
Vice President for Survey Research, and one of the
study’s authors. “As the housing market continues to
recover, more consumers are in the position to purchase
a home, and it’s important for builders to have this
knowledge about their customers.”

Here are some of the findings on what home buyers want:
–  The majority of all buyers (65%), and boomers in
particular (63%), would like to buy a single-family
detached home.
–  Most home buyers (64%) prefer a single-story home,
but there is great variation by generation: Millennials
(35%), gen X’ers (49%), boomers (75%) and seniors
(88%).
–  Fifty-eight% of home buyers want a full or partial
basement, but the preference declines with age:
Millennials (77%), gen X’ers (67%), boomers (50%) and
seniors (43%).
–  When asked if they would buy a home without a living
room, 37% of buyers say they would, 42% would not and
21% are not sure. The share of buyers willing to part
with this formal space falls steadily with age:
Millennials (43%), gen X (40%), baby boomers (37%) and
seniors (26%).

And here are some of the findings on what most buyers
do not want:
–  Few buyers (8%) or boomers (7%) prefer a central
city location. About two-thirds prefer a home in the
suburbs (close-in or outlying) and just over a quarter
prefer a rural area.
–  Only 14% of buyers overall (and 13% of boomers) are
willing to pay more for a home out of pure concern for
the environment.

Personal income, spending both up 0.5% in January
The Commerce Department said on Friday consumer
spending increased 0.5% as households ramped up
purchases of a range of goods and the return to normal
winter temperatures boosted demand for heating.
Consumer spending, which accounts for more than
two-thirds of US economic activity, rose by an upwardly
revised 0.1% in December.  The report added to data on
manufacturing and employment that have suggested
economic growth picked up at the start of the year.
Gross domestic product increased at a 1.0% annual pace
in the fourth quarter.  Economists polled by Reuters
had forecast consumer spending rising 0.3% last month
after a previously unchanged reading in December.
There were also signs of price pressures stirring last
month, which will most likely be welcomed by Fed
officials against the backdrop of low inflation
expectations that are threatening to keep inflation
below the US central bank’s 2% target for an extended
period.  A price index for consumer spending edged up
0.1% after dipping 0.1% in December. In the 12 months
through January, the personal consumption expenditures
(PCE) price index increased 1.3%, the largest increase
since October 2014. The PCE index advanced 0.7% in
December.  Excluding food and energy, prices rose 0.3%.
That was the largest increase since January 2012 and
followed a 0.1% gain in December.  The so-called core
PCE price index increased 1.7% in the 12 months through
January, the largest rise since July 2014. The core
PCE, the Fed’s preferred inflation measure, rose 1.5%
in December.  Consumer spending last month was
supported by a 0.5% rise in income. That was the
largest increase since June and added to a 0.3%
increase in December. Wages and salaries shot up 0.6%
also as minimum wage increases came into effect in some
states. Wages and salaries increased 0.2% in December.

Florida single-family home prices up 14% over last year
Florida’s housing market reported rising median prices,
fewer all-cash closed sales and a tight inventory of
for-sale homes in January, according to the latest
housing data released by Florida Realtors.  As
predicted by Florida Realtors, January 2016
single-family home sales rose, totalling 16,529, an
increase of 2.7% from January 2015.  “Florida’s housing
market remains on a steady path,” said Matey Veissi,
Florida Realtors president, broker and co-owner of
Veissi & Associates in Miami. “While inventory levels
are tight, the months’ supply of homes for sale remains
stable and distressed property sales continue to fall.”
Statewide, the median single-family home sales price
was up 13.7% from last year at $199,000, according to
data from Florida Realtors’ industry data and analysis
department. Condo sales prices are also up 10.9% from
last year at $152,000. January marked the 50th month in
a row that statewide median sales prices for both
single-family homes and for townhouse-condo properties
rose year-over-year.  “The current market offers a
great opportunity for sellers, who are getting nearly
94% (for existing single-family homes) of their asking
price at the closing table; existing townhouse-condo
sellers are getting more than 93% of their asking
price,” Veissi said. “And while mortgage rates are
inching higher, they remain historically low, which
gives consumers more buying power.”

Although the townhouse-condo market was down by 4.8%
compared to January 2015, data reflected few short
sales and cash-only sales during January 2016.
“Overall, statewide sales growth remained slow in
January, but it’s important to note that this trend has
not been uniform across all price points,” Florida
Realtors Chief Economist Brad O’Connor said. “Taking a
closer look at the data, what we are seeing are large
year-over-year declines in properties selling for less
than $150,000. Sales in this price range, which
comprised over a third of January’s total sales, were
down by nearly 17% compared to January 2015.”  “Sales
of homes in price tiers of $150,000 or more, on the
other hand, were actually up over 14%, year-over-year,”
he said. “An overall rise in home values is partly
responsible for these contrasting trends, but the real
culprit is a lack of inventory in lower price tiers
that has resulted from high rates of investor activity
and conversions into rentals.”  Inventory was at a
4.5-months’ supply in January for single-family homes
and at a 5.9-months’ supply for townhouse-condo
properties