Shifting the blog back into high gear with over 2400 words on housing, the economy, home prices and more!
Wow it has been way too long since I really wrote on a regular basis. Hopefully I can keep this up. For the new readers, buckle up because you are about to get a big dose of real estate, housing and economic news with my unique Ugly But Honest views thrown in for good measure!
Will the Election Help Housing and the Economy?
First, if it is possible, let’s try to look beyond the normal political finger pointing blame game. Instead I ask that you consider some of the stuff that a recent article that shows what Americans want:
After returns from Tuesday’s midterm elections confirmed that the Republicans will maintain control of the House and take control of the Senate, attention now turns to what actions the new Congress should take. Nearly a third of Americans, 31%, say their newly elected representatives should not focus on a specific issue, but rather on fixing the way Congress operates, including paying more attention to constituents, compromising and getting things done.
Beyond the general issues relating to how members of Congress do their jobs, 20% of Americans want their elected congressional representative to focus on some aspect of the economy — including creating jobs and increasing employment, raising wages, balancing the budget and lowering taxes.
Yes, it is the way that things tend to NOT get done that is the real problem. Notice that creating jobs, increasing employment and raising wages are ALL things that I have said we need to get the real estate market 100% healthy.
Sadly, many people are skeptical according to an exit poll after Tuesday’s election:
Many American voters are wary of the current economic recovery, voicing concerns that an economy they find not so great won’t improve or could worsen in the next year…
Voter concerns about the economy’s long-term trajectory were even more severe. Roughly half of the people interviewed as they left the polls said they expected life for the next generation of Americans to be “worse than life today.”
Those trends could help explain why more than 60% of voters polled said they felt the U.S. economic system “favors the wealthy.” Roughly four out of every five America voters were either “very worried” or “somewhat worried” about the direction of the economy in the next year, and just 22% said they were “not at all worried” or “not too worried,” the results show.
Certainly makes it hard to sell real estate when so many people are feeling pessimistic about the future.
Republicans might have control of Congress BUT voters don’t have faith in either party. Voters said they don’t have much trust in government and feel the nation is on the wrong track. They were twice as likely to predict life will be worse for the next generation than to say it will get better.
Pretty pessimistic, isn’t it?
It’s not a surprise that the Democrats got crushed. Last night’s big win for the Republicans is because the US economy is still hurting. While the US economy looks strong from 30,000 feet, (5.9% unemployment, record high industrial production, 14 year lows in jobless claims, recent GDP of 3.5%, etc) the economy looks and feels very different for much of America.
The problems go WAY beyond Democrat versus Republican political BS. Consider this little set of facts I found:
- Since the Recession, America’s Richest 1% Have Made More Than the Cost of All U.S. Social Programs
- Almost None of the New 1% Wealth Led To Innovation and Jobs
- Just 47 Wealthy Americans Own More Than Half of the U.S. Population
- Upper Middle Class of America Owns a Smaller Percentage of Wealth Than the Corresponding Groups in All Major Nations Except Russia and Indonesia.
- 10% of the World’s Total Wealth Was Taken by the Global 1% in the Past Three Years
OK But What About Real Estate?
One issue that NEEDS to be resolved is housing finance reform. I think it safe to say that no one should be happy with the housing finance status quo.
I worry that taxpayers are STILL responsible for potentially large losses in the housing market. On the other hand, I am also concerned about how hard it is for some low- and middle-income borrowers to get mortgages. And it really isn’t getting any better according to the Mortgage Bankers Association (MBA).
The MBA’s Mortgage Credit Availability Index ( a gauge of credit access based on borrower traits and underwriting trends ) fell 2.5% last month. The icing on the bad news cake from the MBA is that mortgage applications fell last week as interest rates increased. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.6% in the week ended Oct. 31.
CoreLogic on Home Prices
US home prices are continuing to rise but at a slower pace. Nothing wrong with slower as long as house price appreciation doesn’t slow down too much. Anyway, CoreLogic said that US home prices increased 5.6% in September compared to the same month a year ago.
This is 31 consecutive months of YoY increases.
Home price appreciation was positive for all 50 states in September. CoreLogic is predicting that home prices will increase about 4.6%, year over year, from September 2014 to September 2015. Excluding distressed sales, prices were up 0.1%, month over month, and were up 5.2%, year over year.
Anand Nallathambi president and CEO of CoreLogic said:
Home prices continue to rise compared with this time last year but the rate of growth is clearly slowing as we exit 2014. With more positive macro-economic trends emerging in the U.S., we are forecasting moderate price growth for 2015.
Remember this is talking about home prices for huge areas such as the entire US. You should always consult with a local REALTOR to determine exactly what is happening with real estate prices and market conditions in your area!
Leader of Foreclosure Rescue Scam Sentenced to 10 Years
I always think there is a special place in Hell for the scumbags that prey on distressed home owners:
A man who federal authorities say played a significant role in a nationwide foreclosure scam has been sentenced to 10 years in prison. Jeremy Michael “Mike” Head, 34, was sentenced Wednesday in Sacramento, according to a U.S. Attorney’s Office news release. Head’s brother and co-defendant Charles Head, 40, was sentenced by Judge Mueller in September to 35 years in prison.
The Head brothers and their associates substituted straw buyers for the victim homeowners on the titles of properties without the homeowners’ knowledge. Once the straw buyers were on the title to the homes, the defendants applied for mortgages to extract the maximum available equity from the homes, then shared the proceeds from the equity and the “rent” the homeowners paid them.
If you are having problems making your mortgage payments, be very careful about who you put your trust in. Read more at Key leader in foreclosure rescue scam sentenced to 10 years in prison
Neither! It is Income and Jobs!
Realtytrac has an article about whether it is the amount of down payments or debt that is stopping people from buying a home. I say it is neither and it is the stagant income for the middle class and lack of good paying jobs. Anyway, RealtyTrac says:
For borrowers without additional debt, monthly house payments are affordable in more than 90 percent of U.S. housing markets whether they make a 20 percent or 3 percent down payment.
RealtyTrac recently analyzed affordability in more than 500 counties nationwide, looking at the impact of lowering the down payment for conventional loans from the traditional 20 percent to as low as 3 percent — as has been suggested recently by FHFA director Mel Watt as a way to “increase access for creditworthy but lower-wealth borrowers”.
While lower down payments may help pave a quicker path to homeownership for some prospective homebuyers, a bigger obstacle to homeownership is the additional non-mortgage debt many borrowers bring to the table. For borrowers without additional debt, monthly house payments are affordable in more than 90 percent of U.S. housing markets — whether they make a 20 percent or 3 percent down payment. But for borrowers with the additional debt burden of student loans and car payments, monthly house payments are affordable in less than half of U.S. housing markets with a 3 percent down payment.
Interesting article but what do you think?
U.S. Manufacturing Activity Expands
Economic activity in the manufacturing sector expanded in October for the 17th consecutive month, and the overall economy grew for the 65th consecutive month according to ISM
Manufacturing expanded in October as the PMI® registered 59 percent, an increase of 2.4 percentage points when compared to September’s reading of 56.6 percent. This is the same reading as reported in August 2014, which is the highest reading for the index since March of 2011 when it registered 59.1 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
Services Sector in Great Shape!
According to new purchasing manager surveys from the ISM and Markit, the US services sector is in great shape. Economists noted the unusually strong ISM employment sub-index which jumped to 59.6, the highest level since August 2005. h/t businessinsider.com
ADP on Employment / Jobs
Private sector employment increased by 230,000 from September to October, according to the ADP National Employment report. The September total of jobs added was revised from 213,000 to 225,000. In addition, financial activities industry increased by 4,000, with professional/business services recording the largest growth of 53,000. This falls in line with the economists surveyed by Econoday. h/t housingwire.com
Gallup on Jobs
Gallup’s U.S. Job Creation Index averaged +27 in October, down from the record high in the six-year trend of +30 in September. Despite the decrease, the index remains on the high end of what it has been since 2008.
Americans are more positive in their views of the national economy now than they have been at any point in the past year. This, paired with comparatively high job creation scores — provided both measures continue their upward trek — could mean a favorable start to 2015. h/t gallup.com
Gallup’s U.S. Economic Confidence Index jumped to a monthly reading of -12 in October. This is the most positive score since July 2013. The three-point increase from September is the largest monthly improvement seen this year so far. Gallup’s Economic Confidence Index is the average of two components: how Americans view current economic conditions, and their perceptions of whether the economy is getting better or worse. h/t gallup.com
NAHB: Single-Family Production Poised to Take Off in 2015
A growing economy, rising household formations, low mortgage rates and pent-up demand will help single-family housing production to rev up in 2015 while a growth in renters will keep the multifamily market at cruising altitude or higher, according to the National Association of Home Builders (NAHB).
NAHB is forecasting 991,000 total housing starts in 2014, up 6.6 percent from 930,000 units last year. Single-family production is expected to rise 2.5 percent this year to 637,000 units, increase an additional 26 percent next year to 802,000 and reach 1.1 million in 2016.
Construction Spending Slips in September
Construction spending decreased for the second consecutive month in September as declines in public and private nonresidential construction, as well as multifamily projects, offset growth in single-family home building, according to an analysis by the Associated General Contractors of America. Association officials said the new spending figures underscore how challenges current market conditions are for many firms.
Construction spending in September totaled $951 billion at a seasonally adjusted annual rate, down 0.4 percent from the August total but 2.9 percent higher than in September 2013. Private residential spending edged up 0.4 percent from August and 0.7 percent from a year earlier, while private nonresidential spending dropped 0.6 percent for the month but rose 6.3 percent year-over-year. The third component of the total-public construction spending-decreased 1.3 percent from August but increased 1.7 percent from a year ago.
Stealing is Wrong… Unless It is the Government
In August 2013, the federal government used civil forfeiture to obtain a secret warrant to seize Carole Hinder’s entire bank account—totaling nearly $33,000—even though she did nothing wrong. Using civil forfeiture, law enforcement agencies can take cash, cars and other property without so much as charging the property owner with a crime. Shockingly, the agencies that seize the money can use the proceeds of forfeiture to pad their own budgets. h/t ij.org