Talking about self driving cars and real estate, the man in charge of fixing the GSEs, housing market prediction for 2017 from Veros, economic confidence and more…
A century ago, America’s metropolitan areas featured dense central cities and suburbs built along streetcar and rail lines. As for what this means about where we’ll all live, answers are all over the place—literally. “Even if their trip takes longer, the ability to sit in your car and watch a video, spend time with your kids playing games—that’s a very real counterforce.” Forward-thinking developers and architects are also considering whether the trend of densely packed urban areas and mixed-use downtowns will reverse.
While ultra long commutes are not common in our area, the rise of self-driving cars could seriously impact where people live. Add this to the predictions of job losses due to robots and AI, and it appears that society is going to see tremendous changes in the coming years.
You may not know much about Craig S. Phillips, special counselor to Steven Mnuchin, the United States Treasury secretary. Because Mr. Phillips was not a political appointee, he did not face congressional scrutiny before he began directing our nation’s housing policy, one of his main tasks.
Getting to know Mr. Phillips and his background is a worthwhile exercise, especially because he’s determining the Trump administration’s path forward on Fannie Mae and Freddie Mac, the mortgage finance giants that remain in conservatorship.
First of all, are the GSEs broken? Or just not running right? There is a difference…
While Phillips does have an extensive background in the mortgage industry, I am not sure if this is a good thing. I fear he will take the side of Wall Street and the banks instead what is best for average Americans. Read it and decide for yourself…
The problem with science fiction is that it assumes human behavior will remain static, even as the technology around them changes. Star Trek and Star Wars are two great examples of this bad sci-fi thinking.
It’s also why I dislike most of technology futurism in the real estate industry.
So much of what technology enthusiasts put forth imagines the real estate process as static. There’s this belief that society will remain the same – despite the advent of massive technological change. Like, “AI will change real estate, because it makes finding a home easier to do!”
Ahhh yes two of my favorite subjects combined in a must read from Notorious Rob.
Veros Real Estate Solutions (Veros) reports that residential market values will continue their overall upward trends during the next 12 months, with overall annual forecast appreciation of +3.5% which is slightly lower than last quarter’s forecast appreciation of +3.7%. Only 4% of markets nationwide are expected to depreciate.
The Q1 VeroFORECAST shows general market strength for the overall U.S. residential real estate market with the same markets forecast to continue to do well as compared to last quarter’s report.
I agree but only with the caveat that home prices will continue increasing if nothing causes the economy to hit the fan.
Americans remained slightly positive in their views of the U.S. economy last week. Gallup’s U.S. Economic Confidence Index was at +6, similar to the readings of +5 in the two previous weeks.
Americans are about as likely to say the economy is getting better (46%) as they are to say it is getting worse (47%). As a result, the economic outlook component of Gallup’s index remains at -1 for the third week in a row.
How someone views the economy and where it is headed plays a big part in their decision to buy or sell IMHO. However, I have not seen a study that shows a direct relationship between consumer confidence and the housing market.
The Dodge Momentum Index increased by 0.9% in March to 144.4 (2000=100) from its revised February reading of 143.2. 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.
The Momentum Index has now risen for six consecutive months, with much of the gain being driven by institutional projects entering planning while commercial projects so far in 2017 have receded slightly. The institutional portion of the Momentum Index rose 3.7% in March, and is 23.0% higher than the end of 2016. Commercial planning meanwhile fell 1.2% in March and is down 2.9% from December 2016.
However, the overall Momentum Index, as well as the commercial and institutional components, are well above their year-ago levels. This continues to signal the potential for increased construction activity in 2017 despite the short-term setbacks that are inherent in the volatile month-to-month planning data.
Good news and rising for 6 straight months is a very encouraging trend.
More Renters Happy to Remain Renters
More renters are optimistic about their financial situations and expect to stay where they are even if their rents increased. Meanwhile, a declining number of renters say they are working toward homeownership, expect to buy a home, or move within the next few years.
Disturbing news from a Freddie Mac survey. I am the first to say that owning is not always the correct choice for everyone…
But never say never…
In the middle of an economic recovery, hundreds of shops and malls are shuttering. The reasons why go far beyond Amazon. From rural strip-malls to Manhattan’s avenues, it has been a disastrous two years for retail.
There have been nine retail bankruptcies in 2017—as many as all of 2016. J.C. Penney, RadioShack, Macy’s, and Sears have each announced more than 100 store closures. Sports Authority has liquidated, and Payless has filed for bankruptcy. Last week, several apparel companies’ stocks hit new multi-year lows, including Lululemon, Urban Outfitters, and American Eagle, and Ralph Lauren announced that it is closing its flagship Polo store on Fifth Avenue, one of several brands to abandon that iconic thoroughfare.
A must read that touches upon some different changes happening in our society. I wonder what is going to happen with all the empty stores, malls and out of work retail workers?
A popular narrative over the past decade has been U.S. manufacturing’s precipitous decline. But has manufacturing really become an afterthought in the U.S. economy?
At first glance, the numbers seem to paint a bleak picture for the health of the manufacturing sector. After holding fairly steady through the 1990s, the number of manufacturing jobs in the U.S. dropped from over 17 million in 2000 to just over 12 million in 2015.
Also, manufacturing’s share of nominal gross domestic product (GDP) has dropped from 28.1 percent in 1953 to just 12 percent in 2015, as seen in the next figure.
However, these numbers exaggerate manufacturing’s decline. To see why, we need to measure the manufacturing sector’s share of real GDP. Manufacturing’s share of real GDP has been fairly constant since the 1940s, ranging from 11.3 percent to 13.6 percent. It sat at 11.7 percent in 2015.
Thus, in real terms, growth in manufacturing has kept up with growth in the rest of the economy over the past 70 years.
It never ceases to amaze me how smart people can miss the point sometimes. Manufacturing jobs have decreased. Manufacturing jobs have been historically, good paying jobs.
Fewer good paying jobs is a serious problem. I think about former blue collar workers that are hurting because they are working 2 part time jobs that don’t pay half what they used to make in 1 job.
I am not saying GDP isn’t important. But the ability for the average American to earn a decent living is important also…
From U.S. Bureau of Labor Statistics:
The number of job openings was little changed at 5.7 million on the last business day of February, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.1 million, respectively. Within separations, the quits rate was little changed at 2.1 percent, and the layoffs and discharges rate was unchanged at 1.1 percent.
While not great, it certainly isn’t bad. Job openings increased to a 7 month high but the hiring rate decreased. I guess employers are being pickier or having a harder time finding the right people.
The Index of Small Business Optimism fell 0.6 points to 104.7, sustaining the remarkable surge in optimism that started November 9, 2016, the day after the election. Three of the 10 Index components posted a gain, five declined, all by just a few points, and two were unchanged. It is encouraging that the Index has held at historically high levels for five months. Optimism has not faded much and there is growing evidence that this optimism is being translated into more spending and hiring, although not at explosive rates. Consumer confidence is hitting new high levels and small business owners have not given up hope that their optimism will be rewarded with performance.
The surge in small business owner optimism was maintained in March, the fifth month of historically “off-the-charts” readings. Unfortunately, the expectation for economic growth is not off the charts. Official forecasts from the New York and Atlanta Federal Reserve Banks put first quarter growth at 0.9 percent or 2.9 percent as of March 31, hugely disparate estimates. Domestic spending, which excludes exports but includes imports will be a more important measure for small business owners. That should look better with consumer confidence surging, supported by solid job growth.
On the job side, the NFIB indicators are consistent with another low 200k job month. Hiring plans are strong and reports of past hiring solid. However, the inability of owners to find applicants that can satisfactorily fill open positions will become more of a headwind to job growth.
Over all, not bad. Almost like magic, this confirms the previous story that indicates employers are having a tough time finding qualified applicants.
You might say employers should offer more money but this is not always possible.
Mortgage Delinquencies Improving
In January 2017, 5.3 percent of home mortgages were in some stage of delinquency, down from 6.4 percent a year earlier, according to the latest CoreLogic Loan Performance Insights Report. The measure includes all home loans 30 days or more past due, including those in foreclosure.
The share of mortgages that were 30- to 59-days past due – considered “early-stage” delinquencies – fell to 2.1 percent in January 2017 from 2.4 percent in January 2016. While the share of mortgages 60 to 89 days past due was 0.7 percent in January 2017, down from 0.8 percent in January 2016.
A very encouraging report from CoreLogic. They also said the number of delinquent mortgages that are getting further behind decreased.
The March 2017 Survey of Consumer Expectations shows a decline in both short-term and medium-term inflation expectations. Labor market expectations generally improved, with a rise in earnings growth expectations and a decline in the mean expected probability of losing one’s job. Notably, the mean perceived probability of finding a job increased to its highest level since the series’ start in June 2013. Expectations about increases in interest rates on savings accounts and in U.S. stock prices rose sharply, reaching new series’ highs.
Good to see consumer expectations strengthen. I hope this will translate into more economic growth and home sales.
This marks the fourth consecutive month the gap between homeowner estimates and appraiser opinions of value widened. Home values continued the upward movement of the last few months and maintained its positive trend which began in early 2012. March is the fourth consecutive month of this growing trend, with appraisals 1.77 percent lower than homeowners’ estimates.
Home values rose 0.66% nationally in March, with a 3.30% year-over-year increase, according to the Quicken Loans Home Value Index (HVI).
Remember, the appraiser’s opinion can make or break a sale. Not the Zestimate or what you want or what you need or what you think…
Last year’s strongest pace of home sales in a decade included a sizeable drop in activity from vacation buyers and a jump from individual investors, according to the National Association of Realtors. NAR also said that vacation and investment buyers in 2016 were more likely to take out a mortgage and use their property as a short-term rental.
NAR’s 2017 Investment and Vacation Home Buyers Survey revealed that vacation home purchases last year decreased 21.6% from 2015 and hit the lowest level since 2013. Investment-home sales in 2016 rose 4.5% from the 2015 level.
Owner-occupied purchases jumped 12.5% last year from the 2015 level. This is the highest level since 2006 for owner occupied purchases.
Interesting that fewer vacation homes are selling while the number of investment home sales increased. Could it be that more people are buying rentals instead of vacation homes?
Well that is it for today!