Discussing the latest employment information, ISM report on the service sector, middle class net worth, less people moving and more…
Total nonfarm payroll employment increased by 227,000 and the unemployment rate was little changed at 4.8%. Job gains occurred in retail trade, construction, and financial activities. The U6 was still way too high at 9.4%.
Check out the chart:
I would call this a win.
Economic activity in the non-manufacturing sector grew in January for the 85th consecutive month according to the latest Non-Manufacturing ISM® Report On Business®.
Check out the chart:
Still growing but just slower. I would call this a win…
It’s not only income inequality that’s on the rise, it’s also wealth inequality. A new study shows a disturbing increase in wealth inequality in America.
Wealth is easily confused with income, but the two are by no means the same. Income is what people earn — it is a flow of incoming value. Wealth is a stock of value. The arguments about widening income inequality have, up to now, not applied to wealth. But the newest Federal Reserve survey shows dramatically widening wealth inequality.
Between 2007 and 2010, wealth declined from $73 trillion to $62 trillion, and then rose slightly to $65 trillion in 2013. While all income classes saw lower levels of wealth, middle-income Americans were hit the hardest, mostly because of declines in home ownership and the value of their homes.
Interesting but I am not sure there are any easy answers.
The Census reports that a record-low share of Americans are moving. A recent paper suggests government policies might be curbing mobility. Our ability to move to opportunity—our mobility—is a key factor in our own and our nation’s economic success.
There is no doubt Americans are not moving like they once did. Sometimes, you have to move to get a better job or education. That is why this decrease is a very bad trend…
More first-time home buyers use a low down payment loan compared to all home buyers. Among first-time home buyers who obtained a mortgage and whose transactions closed in October—December 2016, 81% made a down payment of less than 20%. In comparison, 62% of all buyers who obtained a mortgage and whose transaction closed in December 2016 made a down payment of less than 20%.
Check out the chart:
I recently wrote about down payments in Home Buying 101
The Mortgage Bankers Association (MBA) released a paper outlining its recommended approach for secondary mortgage market reform, with the objective of ending the conservatorship of Fannie Mae and Freddie Mac (the GSEs) and establishing a new, durable foundation for the secondary mortgage market. Specifically, this paper outlines a preferred end-state, the principles that should be incorporated in any future system, the key components and guardrails of the end-state, and emphasizes the need to ensure a smooth transition to a reformed secondary mortgage market.
The paper is derived from the work of MBA’s Task Force for a Future Secondary Mortgage Market. The Task Force considered the benefits and drawbacks of many potential models in developing its recommendation. It concluded by reaffirming an end-state that would encourage multiple guarantors, which is consistent with MBA’s previous recommendation. The guarantors would be organized as privately-owned utilities with a regulated rate of return. Guarantors could purchase from a newly created insurance fund an explicit federal guarantee on a defined class of eligible securities. The guarantee would only be for the securities and not the entities issuing them. The entities would have a public purpose of providing sustainable credit availability to the conventional single family and multifamily mortgage market and providing equitable access to lenders of all sizes and business models. To address underserved markets nationwide, the entities would be responsible for executing an affordable housing strategy to ensure broad access to credit.
I like that they propose that MBS have a government guarantee at only the MBS level. I would like to know all the details as I hate to see another bailout like the last one…
I suggest reading it here
The long-defunct securities market for subprime U.S. home loans has begun to re-emerge, according to Fitch Ratings. In the past 18 months, 10 “non-prime” securities deals totaling $1 billion were offered to investors by five issuers, the rating agency said. Meanwhile, lenders have been roughly doubling the volume of subprime home loans each year, according to the rating agency. Subprime originations have risen from near zero in 2013 to just under $3 billion in 2016, of which a percentage were securitized and the rest remained in portfolio.
Those that forget the past are doomed to repeat it…
I am not sure how it got started, but the idea of a ‘Dream Home’ has come to mean the biggest most beautiful home you can afford. As it turns out, this isn’t the path to happiness. A ‘Dream Home’ should be the home most compatible with the life you dream of living.
I could not agree more! Affordable and easy to maintain is better when it comes to a home in my opinion.
You really need to think long and hard about what is truly important to you. You need to think about what is really affordable for you.
Just because you can, does not mean you should!