Here is the real estate, housing and economic news for 1-22-2016
Lead Follow or Get Out of The Way
The Federal Reserve Bank of New York just released their January 2016 Business Leaders Survey. The highlights:
Activity in the region’s service sector marginally improved.
The survey’s headline business activity index edged up two points to 4.1.
The business climate index increased twelve points. This suggests that activity expanded to a small degree. This month, 35 percent of respondents reported that conditions improved, while 31 percent reported that conditions worsened.
The employment index edged up to 8.8. This is a signal employment continued to grow modestly. and the wages index rose nine point, which indicates wage growth was stronger than last month.
Indexes assessing the six-month outlook suggested that firms remained fairly optimistic about future business conditions. However, expectations remained less positive than they had been during the first half of 2015.
FNC on Home Prices
FNC just released their latest Residential Price Index. They said that US home prices were largely flat in November. Nationwide, home prices registered a 0.0% change between October and November BUT compared to a year ago, prices were up 6.0%.
Check out the chart from FNC:
Yanling Mayer, FNC’s housing economist and Director of Research said:
Despite recent months’ more upbeat data on new home sales and residential construction, prices have been relatively stable since August, with month-to-month momentum showing no significant gains, neither decelerating nor accelerating rapidly.
Housing has long been held by low interest rates, but the latest job reports are rather encouraging. If the job market continues to pick up going forward, we may finally begin to see more fundamental demand factors, such as job creation and income growth, step in and drive the housing market in a more sustainable way.
FNC said that in November, foreclosures made up 13.4% of all of the total existing homes sales. This is up from 10.8% in October and largely unchanged when compared to a year ago.
They are reporting that buyers were paying about 96% of asking price for homes. Their preliminary estimates for the % of asking price in December are not showing any of the typical signs of a winter or Holiday decrease. They said this is due to the tight inventory of homes for sale.
Please remember that while I like the FNC Residential Price Index, it is NOT talking about home prices in our area.
The average and median home prices in the Anderson area for the month of November 2015 were up from the previous month and the previous year.
Low End Home Prices Increasing the Fastest
I read a really interesting article over on CoreLogic about how homes in the lower price ranges are rising faster than homes in the higher price ranges.
CoreLogic analyzed four individual home-price tiers that are calculated relative to the median national home price. The four price tiers are as follows: homes priced at 75% or less of the median (low price), homes priced between 75 and 100% of the median (low-to-middle price), homes priced between 100 and 125% of the median (middle-to-moderate price) and homes priced greater than 125% of the median (high price).
The chart below shows the levels of the four price tiers indexed to January 2006, shortly before each of the tiers hit their peak value:
Lower priced homes have shown the most growth in recent months. They have increased 8.2% YoY in November 2015 and 8.4% in 2015 alone. These homes have also recovered 48.8% from their lowest level in March 2009.
CoreLogic does not speculate as to the reason why homes in the lower price range are increasing faster. I would point to the high demand for rental properties by both institutional investors and the local investors.
Look at what the stock market has done lately. Would you rather invest in the stock market or in an asset that has increased in value by 8.4% in 2015?
Since I Mentioned CoreLogic and Home Prices
More tidbits from the latest CoreLogic on house prices:
- South Carolina home prices (including distressed homes) up 6.6% YoY
- US home prices (including distressed sales) up 6.3% YoY
- US home prices have increased on a YoY basis every month since March 2012
- National home prices are still 7.3% below the April 2006 peak
- 8% of homeowners with a mortgage are still underwater
- The number of homeowners who are underwater is about 1/3 of the number during the peak
- Equity in owner-occupied homes is growing at a faster pace than average
The Census Bureau recently reported that retail and food service sales fell 1% in December. Not very encouraging.
This ties in with the Union Pacific CEO saying that Consumers Are Not Showing Up
Producer Price Index
Last week the BLS reported that the Producer Price Index for final demand goods for December declined 0.2%.
However, the core index (prices for final demand goods less foods and energy ) increased 0.1% in December.
Initial Jobless Claims
As I try to kick the blog back into high gear, you will see that one economic indicator I follow is jobs. I look at many different things related to employment, unemployment, etc.
I still believe that we will not see the economy fully recover until more people are making a decent living. A strong housing market and a strong economy go hand in hand. Anyway…
First-time claims for unemployment benefits rose last week. While this is not good, it is well under the 300,000-claim mark that economists say indicate a growing job market.
Jobless claims rising at the fastest rate since the financial crisis and this is a 6 month high that could indicate a recession. Retail sales, exports, inventories and industrial production have also suggested economic growth slowed down at the end of 2015.
The four-week moving average increased also. It is considered a more stable measure of unemployment by many.
Bloomberg Consumer Comfort Index Rises
Public optimism for the economy’s future jumped to its highest in 11 months in the latest Bloomberg consumer survey! 31% percent of Americans now say the economy is getting better.
However, 37% say the economy is getting worse. The pessimists have outnumbered the optimists for 9 months.
The number who say it’s staying the same, 32%, is the fewest in more than three years.
So what do you think?
Metro Vs Rural Areas: Improving Economic Situation
Interesting stuff from the St Louis Fed about the different issues facing low- and moderate-income individuals and households differ in metropolitan and rural areas.
People in metropolitan areas said generational poverty is the issue with the greatest negative impact on low- and moderate-income households and communities. People in rural areas said that job availability is the top issue and generational poverty is the second. Job availability was third for metro respondents, behind education.
This is something that elected officials should think about.
Well that is if they actually care about the people that are not members of their country club…
More Growth for Economy and Housing
A robust U.S. economy and job market, plus low mortgage rates, should help keep the recovery in the new-home market going at a modest pace this year, but a return to pre-housing boom sales and construction levels isn’t imminent
Sounds great! Read about it here
Consider This When Relocating or Buying a Home
To say that 2015 was hot is an understatement. The average recorded temperature across the surface of the planet was so far above normal that it set a record for setting records.
Energy efficiency, a good AC system and a location far from rising oceans popped into my mind when I read this.
Housing Starts Didn’t Start
According to newly released figures from HUD and the U.S. Commerce Department, housing starts increased 10.8% in 2015. Single-family starts posted a yearly gain of 10.4%.
NAHB Chief Economist David Crowe said:
The gradual increase in housing production for 2015 mirrors our forecast and sets the stage for continued growth in 2016. Strong job growth, rising consumer confidence and pent-up demand will keep housing on an upward trend.
In December, single-family starts fell 3.3% from November. Excluding November, this was the highest monthly total for single-family housing starts in 2015.
Permits also increased which is a good sign for the coming year. Single-family permits increased 7.9% and hopefully the increase will help with the tight inventory in some areas.
Existing Home Sales Rebound
Good news from NAR as US Existing Home sales increased despite still tight inventory levels. Existing home sales increased 7.7% YoY.
December’s strong numbers capped off the best year for existing home sales since 2006.
The US median existing-home price for all housing types in December was up 7.6% from December 2014. This is the 46th consecutive month of with a year-over-year increase.
While this great news remember to ALWAYS consult with an experienced local REALTOR to get the REAL scoop on what is happening in your area!
Silver Star Broker Quoted in The Independent
Anderson’s David Phillips enjoyed a real estate agent’s dream this month: A couple bought the first house they viewed.
“It doesn’t usually happen that way,” Phillips said. “The house was only on the market 10 days.”
Read more at Anderson real estate market strong in 2015
Foreclosure Inventory Decreases
Good news from Black Knight in their First Look at Mortgage Data for December 2015 is some improvements in the foreclosure numbers for 2015.
The year-end foreclosure numbers for 2015 are significantly lower than they were at the end of the previous year and at or below pre-crisis levels in some areas.
Foreclosure inventory decreased YoY 22% as of the end of December.
1.38% of all mortgages were in the foreclosure process at the end of November. This is down from 1.81% of all mortgages that were in foreclosure in November of last year.
It is good to see this decrease.
I know many buyers think they want a foreclosure…
I would ask if you want a foreclosure or a good deal…
Speaking of Foreclosures
In November 2015, real-estate-owned (REO) sales as a share of all residential home sales remained steady on a month-to-month basis, moving up slightly to 8.2 percent from 8.0 percent in October on a non-seasonally adjusted basis.
On a year-over-year basis, this was a decrease of 1.2 percentage points when compared to November 2014, which had an REO sales share of 9.4 percent. These gains are encouraging news for the housing industry, showing that the glut of distressed assets created during the aftermath of the Great Recession is finally reaching the market and normality is returning.
But this doesn’t mean that all the foreclosures are gone. In fact, there are plenty of Persistent REOs
Construction Employment Recovery Slower Than Molasses
From Zillow Research:
The number of Americans working residential construction jobs rose 5.8 percent year-over-year in 2015, more than twice the pace of annual growth in employment overall (figure 1). In December alone, more than 23,000 Americans found jobs building homes and apartments nationwide. But even at those prodigious growth rates, it will likely take the rest of the decade or more for construction employment to return to its pre-crash, 2008 levels.
Why for the love of Pete:
According to a report from one of the regulators of national banks, the Office of the Comptroller of the Currency, as of September 30, 2015, insured U.S. commercial banks and savings associations had exposure to $192.2 trillion notional (face amount) of derivatives. (Yes, that’s trillion with a “t”.) The report goes on to terrify with the revelation that only four banks hold 90.8 percent of all derivatives: Citigroup, JPMorgan Chase, Goldman Sachs and Bank of America.
Slowdown in Manufacturing
From the Philly Fed:
Weakness in regional manufacturing conditions continued this month, according to firms responding to the January survey. While indexes for current general activity and new orders remained negative, the indexes increased from lower readings at the end of last year. Firms reported an increase in shipments this month but a modest decrease in employment. Indicators for future conditions remained positive overall but suggested a continuing deterioration in confidence about manufacturing growth for the first half of 2016.
While not a national report, we have to look at all of these types of reports to see what is actually happening with the economy. Can’t depend on the media to do much more than talk about reality TV stars or the latest political circus sideshow…
On the Other Hand
Earlier today, Markit economics’ Flash Manufacturing PMI for January was released and it was really good!
It came in at 52.7 which was much higher than the forecast of 51.
Last month, it 51.2 which was a 38-month low.
Obviously, too soon to say everything is peachy but at least it is headed in the right direction! And the really nice thing is that we saw the fastest rise in new orders for the past 3 months.
Markit chief economist Chris Williamson said:
The US manufacturing sector found a new lease of life at the start of the year, with growth of factory output and orders both picking up after the slowdown seen late last year.
It’s clearly too early to declare that recent slowdown fears are overplayed, but the sector’s resilience in the face of recent financial market volatility is an encouraging omen for growth and employment in the wider economy, especially as sectors such as transport and business services typically move in the same cycle as manufacturing.
The only bad news in this report was that manufacturers indicated a slight slowdown in job creation across the sector in January.
A Spoonful of Sugar Helps the Home Seller?
I know you hate to imagine swallowing 10 tough pills when you’re thinking about selling a home, yet it happens. There can be some tough pills you have to deal with once that sign goes in the front yard and the sale doesn’t go as planned and you weren’t prepared for the outcome. The tough pills and how best to resolve them.
Read the rest at 10 Tough Pills to Swallow when Selling a Home