Real estate housing and economic news round up for November 10 2016…
Small Business Optimism Index Remains Low
Small business owners are rattled by uncertainty and unable to decide whether to expand, whether to hire, or whether to make other important decisions that might boost the economy…
The Index of Small Business Optimism rose 0.8 points to 94.9, still in the 94 range that has bound it for the past five months and well below the 42 year average of 98. It has been a below average recovery. Five of the 10 Index components posted a gain, 3 declined and 2 were unchanged.
NFIB President and CEO Juanita Duggan points out that this is from before the election:
The data contained in this report shows record levels of uncertainty among small business owners, and it is tied directly to the election. The result is economic inertia, with business owners unwilling to make the business decisions that would jumpstart the economy.
No matter how you feel about the results of the election, it is going to mean some of the uncertainty should subside.
The Rate of Layoffs At Record Low
From the Bureau of Labor Statistics:
The number of job openings was little changed at 5.5 million on the last business day of September. Hires edged down to 5.1 million and total separations was little changed at 4.9 million. Within separations, the quits rate was unchanged at 2.1 percent and the layoffs and discharges rate decreased to 1.0 percent.
Most were expecting job openings to rise. The real good news is that layoffs as a share of total employment fell to a record low.
Obviously, people getting laid off can lead to tough financial times. How many foreclosures during the housing market crash were the results of job loss?
One good thing in the latest JOLTS report is that according to the NAHB:
The count of unfilled jobs in the overall construction sector increased in September, as residential construction employment continued to grow.
Over the last 12 months home builders and remodelers have added 140,000 jobs on a net basis. Since the low point of industry employment following the Great Recession, residential construction has gained 632,000 positions.
In October, the unemployment rate for construction workers stood at 6.5% on a seasonally adjusted basis. The unemployment rate for the construction occupation has been on a general decline since reaching a peak rate of 22% in February 2010.
It is a good to see strong growth in construction employment. Not only are these good paying jobs, but it could lead to more homes in areas that facing tight inventory.
U.S. Foreclosure Activity Increases 27 Percent in October
The latest foreclosure report from Attom Data Solutions (RealtyTrac) sounds scary but we need to dig a little deeper.
In October 2016 there were a total of 105,481 U.S. properties with foreclosure filings (default notices, scheduled auctions or bank repossessions). This is up 27% from a 129-month low in September but is down 8% from a year ago.
October was the 13th consecutive month where U.S. foreclosure activity decreased on a year-over-year basis. The month-over-month increase in October was the biggest monthly increase since August 2007.
Daren Blomquist, senior vice president at ATTOM Data Solutions said:
The increase in October isn’t enough evidence to indicate a new foreclosure crisis emerging in these states, but it certainly demonstrates that this housing recovery is not completely devoid of risk.
The report showed a national foreclosure rate of one in every 1,258 U.S. housing units with a foreclosure filing in September. Looking locally, the foreclosure rate in South Carolina was one in every 801 housing units.
U.S. foreclosure starts were up 25% from the previous month but down 11% from a year ago. Despite the scary increase from the previous month, October was the 16th consecutive month with a year-over-year decrease in foreclosure starts.
Scary headline but as with most news stories, it requires digging a little deeper to uncover the truth. Besides, this report is talking about the entire US and not just Anderson County.
Finally Some Positive Changes in Rail Traffic
The AAR just reported that total U.S. weekly rail traffic was UP 0.7 % compared with the same week last year. This is the first time in a long long time that total weekly rail traffic increased. Let’s just hope it continues!
Dodge Momentum Index Moves Higher in October
Good news for commercial real estate from Dodge Data and Analytics:
The Dodge Momentum Index grew 4.1% in October to 133.6 from its revised September reading of 128.3 (2000=100).
The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.
October’s gain nearly reversed the loss in September, and returns the Momentum Index to the rising trend that began earlier in the year. The commercial component of the Momentum Index rose 6.1% in October, and is 20% above last year.
This suggests that despite being in a more mature phase of the building cycle, commercial construction has room for further growth in the coming months. The institutional component of the Momentum Index increased 1.4% in the month, and is now 10% higher than one year ago.
Another positive sign for the economy!
It Was a HOT Summer in Home Sales
A greater share of homes are selling at or above their listing price as healthy housing demand continues to meet a tight inventory of homes for sale. The share of homes selling at or above list price has recovered to early 2006 levels. In August 2016, a third of homes sold for list price or more!
Remember that this is talking about the entire U.S. and does NOT mean that sellers can be unrealistic about the list price of their homes!
PHH Fined $28 Million for Shoddy Mortgage Origination and Servicing
Another week, another fine or settlement. This time it is in NY:
PHH Mortgage Corporation and its affiliate, PHH Home Loans LLC, will pay a $28 million fine and engage a third-party auditor as part of a consent order for violations of federal and New York laws designed to protect homeowners. The consent order between the two companies and the Department of Financial Services was reached following a series of examinations that uncovered persistent shortcomings in their mortgage origination and servicing practices, including discrepancies in how mortgage foreclosures were documented and processed.
Sad that we read story after story about banks or mortgage servicers or some other financial company doing evil stuff.
And yet, no one ever goes to jail…
Weekly Initial Unemployment Claims Decrease
From the DOL:
In the week ending November 5, the advance figure for seasonally adjusted initial claims was 254,000, a decrease of 11,000 from the previous week’s unrevised level of 265,000. The 4-week moving average was 259,750, an increase of 1,750 from the previous week’s revised average.
While the decrease is nice, the 4 week moving average is the number to watch…
McMansions Are Legal But Sustainable Home Aren’t?
From The Daily Sheeple:
As the corporatocracy tightens its grip on the masses – finding ever more ways to funnel wealth to the top – humanity responds in a number of ways, including the rising popularity of tiny houses. These dwellings, typically defined as less than 500 square feet, are a way for people to break free of mortgages, taxes, utility bills and the general trappings of “stuff.” They’re especially attractive to millennials and retirees, or those seeking to live off-grid. Seeking actual freedom through minimalist living should seem like a natural fit for the American dream, but the reality is that many governments around the country either ban tiny homes or force them to be connected to the utility grid.
I really do not understand why so many are opposed to tiny homes. If you think a tiny house sounds attractive, I beg you do some serious research into the local laws and regulations BEFORE you spend any of your hard earned money.
Not everyone’s version of the American Dream is a McMansion…
The Election Results and Real Estate
Honestly, it is way too soon to say with 100% certainty what will happen in real estate. But here are just a few excellent articles to consider:
NAR: How will a Trump presidency impact real estate?
Just remember that no one knows what the future holds…