Discussing where home prices are going, unemployment claims and private sector employment, homelessness, GSE reform, home owner equity and more!
Where Are Home Prices Headed Across the US?
Interesting map from NAR’s October 2017 REALTORS® Confidence Index Survey showing the median expected price change in the next 12 months:
Remember that this is not a guarantee and market conditions vary across each state. If you have questions about your home, it is best to contact a local Realtor to discuss what is happening in your local real estate market.
I would agree with my fellow Realtors that we should see home prices in South Carolina rise 2-3% in the coming year. But no guarantees since we do not know what the future holds. So many variables to consider such as tax reform, the economy, political turmoil etc etc etc.
Home Prices Projected to Rise 4.1% in 2018
Pulsenomics just completed a survey of more than 100 housing experts, market strategists, and economists about their expectations for the U.S. housing market in 2018 and beyond. They expect US home prices to rise 4.1% in 2018 and mortgage rates to increase to around 4.5%.
Increasing home prices and mortgage rates combined with the tight inventory could make 2018 a very interesting year.
Weekly Unemployment Claims Decrease
In the week ending December 2, the advance figure for seasonally adjusted initial claims was 236,000, a decrease of 2,000 from the previous week’s unrevised level of 238,000. The 4-week moving average was 241,500, a decrease of 750 from the previous week’s unrevised average of 242,250.
Remember the 4-week moving average is the number to watch and below 250,000 is a good report. This is the 3rd straight week of decreasing claims.
Private Sector Employment Increased by 190,000 Jobs in November
ADP just reported that private-sector employment increased by 190,000 from October to November, on a seasonally adjusted basis.
Interesting little tidbit is that small businesses (1-19 employees) added more jobs than large businesses (500-999 employees). Once again, we saw more service industry jobs than jobs in manufacturing.
Rail Traffic on Pace to Set New Annual Record
Intermodal rail traffic remains on pace to set a new annual record in 2017 with strong gains in November and last week marking the best rail intermodal week in history, surpassing multiple records set earlier this year.
U.S. railroads originated 1,307,521 carloads in November 2017, down 0.9 percent, or 11,442 carloads, from November 2016. U.S. railroads also originated 1,369,160 containers and trailers in November 2017, up 3.8 percent, or 50,029 units, from the same month last year. Combined U.S. carload and intermodal originations in November 2017 were 2,676,681, up 1.5 percent, or 38,587 carloads and intermodal units from November 2016.
Another good sign for the economy! Let’s hope this continues in 2018!
Homelessness: It’s Everybody’s Problem
Interesting comments from HUD Secretary Ben Carson:
In many high-cost areas of our country, especially along the West Coast, the severe shortage of affordable housing is manifesting itself on our streets. With rents rising faster than incomes, we need to bring everybody to the table to produce more affordable housing and ease the pressure that is forcing too many of our neighbors into our shelters and onto our streets. This is not a federal problem-it’s everybody’s problem.
I must commend Carson for recognizing this issue and hope he can do something about it. I don’t have high hope given the current political environment favors the rich and powerful over those that need help the most…
Hensarling on GSE Reform
Here are a few selected snippets from House Financial Services Committee Chairman Jeb Hensarling:
No matter what some apologists might say, the lesson is clear: housing unsustainability doesn’t just create unaffordability, it creates economic catastrophe.
Looking forward, we simply cannot rely on government promises and schemes, no matter how well-intentioned, to provide long-term, sustainable economic success.
But before our fellow citizens can invest in more homes we need to give them a sustainable housing finance system. We all should know what didn’t work about the old system, but it does bear repeating. The old Fannie Mae, Freddie Mac hybrid public-private chartered system was the basic Let’s Privatize All the Profits and Socialize All the Losses government scheme.
Americans deserve a better system, and if you’ve ever talked to a creditworthy person who was denied a mortgage or someone who went through the pains of foreclosure as the dream of homeownership morphed into the nightmare of financial ruin, you know Americans want a better system.
A better system would give all Americans the chance to become homeowners, if they so choose and are qualified, in a way that encourages responsible mortgage lending and promotes long-term economic growth and stability.
First, to be clear, Fannie and Freddie must be wound down and their charters repealed.
Also, to further protect taxpayers, securitizers will need strong bank-like capital. Barriers to entry will have to be removed and community financial institutions must be able to compete on a level playing field.
Let me, now offer a number of suggestions for how we might develop a smarter government guarantee. One, any new government guarantee must be limited to catastrophic losses within the system only.
That means the government needs to be in the last-loss position, with multiple layers of private capital, as diversified as possible, stacked up before it.
Number two, any new government guarantee should consolidate existing structures and avoid a duplication of efforts.
It appears that Hensarling is leaning towards the Demarco-Bright proposal for GSE reform since his PATH act does not seem to have a chance of ever passing.
We are way overdue for fixing some of the problems with housing finance. It is still way to early to say what may happen but I really hope the old way of tax payers paying for the losses will end.
How to do this while still ensuring that credit worthy people can get a mortgage is the big question…
Home Owner Equity Increased 11.8% YoY
From CoreLogic’s HomeOwner Equity Report:
U.S. homeowners with mortgages (roughly 63 percent of all homeowners*) have seen their equity increase by a total of $870.6 billion since Q3 2016, an increase of 11.8 percent, year over year.
CoreLogic also said that the number of underwater homes in Q3 2017 decreased 22% from the Q3 2016 level. Very good news for home owners!
Will Wells Fargo Get Away With Mortgage Lending Abuse?
The new acting head of the U.S. consumer finance watchdog is reviewing whether Wells Fargo & Co should pay tens of millions of dollars over alleged mortgage lending abuse, according to three sources familiar with the dispute.
The San Francisco-based bank said in October that it would refund homebuyers who were wrongly charged fees to secure low mortgage rates – a black mark against a lender which has already been roiled by scandal over its treatment of customers.
The Consumer Financial Protection Bureau (CFPB) had been investigating the mortgage issue since early this year, said one current and two former officials. The agency accepted an internal review from Wells Fargo and set settlement terms in early November, said the sources, who were not authorized to speak about internal discussions.
But that matter and roughly a dozen others are in question now that Mick Mulvaney, the agency chief tapped by President Donald Trump, has said he is reviewing the CFPB’s prior work.
I just posted about Mulvaney taking over the CFPB yesterday. I wondered if this was going to be good for the banks and Wall Street and bad for the average American.
I guess we may get an answer to that question very soon…
Well that is all I have time for today. I plan on writing about this week’s mortgage rate reports plus lots more tomorrow so check back!
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