Discussing the latest construction spending numbers, how people are feeling about the coming year, land is proven to be a good investment and much more!
Construction Spending Increased
Good news from the Census Bureau:
Construction spending during November 2017 was 0.8% above the revised October estimate. The November figure is 2.4% above the November 2016 estimate. During the first eleven months of this year, construction spending was 4.2% above the amount for the same period in 2016.
Both private and public spending increased from the previous month. Residential construction also increased from the previous month.
This is a good report but we could use more residential construction in some areas because of the high demand and limited inventory.
Will 2018 Will Be a Good Year?
From Rasmussen Reports:
While more than half of Americans are feeling good about 2018, they aren’t as high on the upcoming year as they have been in recent years.
A new Rasmussen Reports national telephone and online survey finds that 56% of American Adults think 2018 will be at least a good year. That includes 14% who expect it to be one of the best years ever, 17% who feel it will be an excellent year and another 25% who say it will be a good year. Only 18% expect 2018 to be a poor year.
While only 56% think 2018 will be a good year, it is much higher than the 18% that think 2018 will be a poor year. It is understandable that some people may not be feeling confident since the media focuses on the negative.
Sometimes, I worry about sharing real estate or economic news that isn’t positive. I feel it would hurt my credibility to only share things that are positive.
That being said, I am pretty positive about 2018 other than the possibility that our elected officials do something especially boneheaded…
Americans Confident They Are on Track to Realize Financial Goals
From Morgan Stanley:
Americans are confident that they are on track to achieve their long-term financial goals, according to the latest Investor Pulse Poll by Morgan Stanley. Many also want a comprehensive financial plan to help them achieve these goals, and professional help to create that plan.
Top long-term goals were saving for retirement (35%), transitioning wealth to the next generation (33%), and paying off a mortgage (32%).
All of the top long term financial goals are great, especially paying off your mortgage. I strongly suggest finding a professional financial advisor to assist you in achieving your financial goals.
Land Is Underrated as a Source of Wealth
When most people think of wealth in the modern economy, they tend to think of stocks and bonds. The word “capital” is often synonymous with corporate ownership. Land wealth, meanwhile, is often relegated to a footnote. Yes, people own houses, but vast fortunes are made in the stock market, while the fates of nations rise and fall with the bond market.
But ignoring land is a mistake. Despite the explosive growth of corporations since the Industrial Revolution, land still represents a huge percent of all the wealth in the economy. What’s more, focusing only on capital gains neglects the extremely important fact that land earns income from rent. If you live in your own house, this income is implicit — living in your own home means you don’t have to pay rent to someone else. But if you’re a landlord, you get checks every month, just like stockholders receive quarterly dividends. And in the same way that a stockholder can use dividends to buy more shares, a landlord can use rental income to buy more property — thus, rent needs to be counted in the return to housing.
And that total return is higher than people realize. According to new research, the return on residential real estate has been as high as or higher than the return on equity. As modern economies have grown and developed, owners of the ground on which we live have been steadily enriched.
A must read for sure! Investing, whether it is stocks and bonds or real estate, means there will be risk. You need to understand the risks and have professional guidance to maximize your returns and minimize the risks.
61% of First-time Buyers Made a Low Downpayment in November 2017
Among first-time buyers who purchased a property through a mortgage in December 2016–November 2017, 61 percent, on average, made a zero to six percent downpayment, according to the November 2017 REALTORS® Confidence Index Survey. The share of first-time buyers who made a zero to six percent downpayment decreased from an average of 70 percent in the 12 months ended June 2010, to a low of 60 percent in mid-2014, then rose in 2014‒2015 to 63 percent, but the share appears to have slightly edged down in 2016 and 2017.
So is this good or bad news? There are trade offs to putting less money down such as a higher monthly payment.
Understanding all the different options available to you is part of the home buying process that should come long before you start looking at homes. A GOOD mortgage professional will be able to explain the differences between different mortgages and the pros and cons of each.
Getting the best deal when you buy a home goes far beyond just the price. It also includes making sure you select the right mortgage!
Why the Global Economy Could Top Out in 2018
Joachim Fels at PIMCO recently wrote about 3 reasons why the economic growth could hit the peak in 2018. I want to focus on just one of the things he says to watch:
First, the prospective U.S. fiscal expansion in 2018 appears dictated by the political cycle rather than the economic cycle. Fulfilling 2016’s presidential election campaign promises and delivering tax cuts and spending increases ahead of 2018’s congressional midterm elections makes political sense but could have detrimental longer-term economic consequences. Why?
Arguably, the last thing an economy operating at close to full employment in the ninth year of an economic expansion needs is a shot in the arm from fiscal policy. Adding around $1 trillion to the public debt over 10 years without adding much to potential growth and thus future tax revenues could come back to haunt the public coffers if rates rise in the future. And most importantly, depleting the fiscal toolkit while the economy is good comes at a price: Higher fiscal deficits and debt levels imply that the room for fiscal stimulus in the next recession will be more limited.
I can’t help but think about the saying “If it ain’t broke, don’t fix it“…
While cutting taxes sounds great, adding to the already huge deficit may not be the best thing to do at this time.
Manufacturing Grew in December
Economic activity in the manufacturing sector expanded in December, and the overall economy grew for the 103rd consecutive month.
Comments from the panel reflect expanding business conditions, with new orders and production leading gains; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow in December. Supplier deliveries continued to slow (improving) at a faster rate, and inventories continued to contract at a slower rate during the period. Price increases continued at a faster rate. The Customers’ Inventories Index declined and remains at low levels.
A very good report!
The Institute for Supply Management (ISM) also said national factory activity hit the second-highest reading in six years. While manufacturing is not the biggest part of the economy anymore, it is still very important.
Well that is it for today! Check back as I ran out of time before I ran out of stuff to talk about such as the latest FOMC minutes, mortgage rates and much much more!
If you enjoyed this post, it would be awesome if you would share this post on Facebook, Twitter or Google!