Talking about home prices, bank and financial regulations, renter and home owner behavior, consumer confidence and more…
US Home Prices Up 7.2 Percent in December 2016
Home prices nationwide, including distressed sales, increased year over year by 7.2 percent in December 2016 compared with December 2015 according to CoreLogic. US home prices increased month over month by 0.8 percent in December 2016 compared with November 2016.
They also said that home prices will increase by 4.7 percent on a year-over-year basis from December 2016 to December 2017. According to CoreLogic, home prices are still 3.9 percent below the peak reached in April 2006.
Remember that CoreLogic is talking about U.S. home prices. Their prediction about the increase in home prices in 2017 does NOT mean your home will increase in value by the same amount.
Tasty tidbits from a speech by Patrick T. Harker, President and Chief Executive Officer Federal Reserve Bank of Philadelphia:
At its most basic, the financial system exists to keep savings safe; to ensure that people and businesses can easily price, buy, and sell things; and to make certain that we can all use our financial resources to their best advantage, whether that means paying for food and housing, getting an education, expanding businesses, or investing our assets.
This is critical for all of us because a strong and sound economy can only exist when it’s underpinned by a strong and sound financial system. And what underpins a strong and sound financial system is trust.
“Regulation” being the great bogeyman of the industry, I’d like to note that regulation is necessary for a functioning system. The trust that underpins the financial system is either earned or guaranteed by people or institutions. One of the ways of conferring that trust is the promise that mechanisms are in place to safeguard the system.
For me, regulation is not just a question of protecting consumers; it’s a question of protecting the innovators as well. It’s in their best interest to have an established framework in which to operate. In part because the trust it engenders will underpin their essential role in the financial system.
As much as I do not like or trust the Fed, I do agree with these parts of Harker’s speech. It scares me that we may see banks running wild again due to the repeal of regulations.
In the past, sharp demand increases and declines led prices.
This time around – even after 7-years and TRILLIONS in .gov debt, ZIRP; QE; mods; and continual easing of FHA, Fannie & Freddie guidelines – demand is only back to early 1990 levels. But, house prices have gone up more, over a shorter period than any time before, and are bouncing off record highs.
Bottom line: Suddenly, demand and house prices aren’t too correlated any longer? Have house prices somewhat “de-coupled” with demand? That’s a profound housing economy development, if true.
Remember that Hanson is talking about the big picture. In some areas/price ranges in the Anderson SC area, demand is outpacing supply and sales volume has been increasing for the past 7 years!
Software that works on Wall Street is changing how business is done and who profits from it. At its height back in 2000, the U.S. cash equities trading desk at Goldman Sachs’s New York headquarters employed 600 traders, buying and selling stock on the orders of the investment bank’s large clients.
Today there are just two equity traders left. Automated trading programs have taken over the rest of the work, supported by 200 computer engineers.
If you work for the Vampire Squid, should anyone be surprised if your job is automated? A heartless soulless corporation is going to do everything and anything to increase profits and increase the dividends paid to stock holders.
If that means screwing over employees or being a cesspool of slimy rule breaking cheaters, then so be it.
Being evil and highly profitable means sacrifices must be made…
In theory, renters and homeowners disagree about proposals to build new housing in their communities, particularly if that housing is close to where they live. Driving this appreciation is an inability of new housing supply to keep up with demand. Even accounting for the cost of materials and natural geographic constraints on supply, the dominant factor behind this decoupling of supply and demand is political regulation, such as limits on the density of new housing developments and caps on the number of permits issued by a localities’ government.
A very interesting study and does not surprise me that some renters feel about their neighborhoods in the same way as owners.
After all, people are people.
Americans’ confidence in the U.S. economy remained strong in January. Gallup’s U.S. Economic Confidence Index averaged +11, the highest monthly average in Gallup’s nine-year trend. This is the third consecutive month the index has been in positive territory. This is a new feat for an index that has had mostly negative monthly measures since its inception, except for January and February 2015.
Great news IF it leads to more economic growth for the average American.
Evidence that Dodd-Frank Act regulation is making lending conditions tighter is thin on the ground, at least for the vast majority of the U.S. economy.
Banks, of course, are lending money to companies, as a quick look at the statistics bears out; commercial and industrial (C&I) loans are now higher as a percentage of economic output than they’ve been since the 1980s, when the capital markets were far smaller and the economy more reliant on direct finance via banks.
Credit card and auto lending is at or near record highs and mortgage loans outstanding are in shouting distance of their pre-crisis high.
That my friend’s is today’s Ugly But Honest Truth. The push to repeal or neuter financial regulations is not going to be a good thing if the big banks and Wall Street are left to run wild.