Talking about the investor share of home sales, Trump and the mortgage market, robots building homes, home builder confidence and much more!
From Atlanta Fed:
In early February, our monthly Construction and Real Estate Survey came back with a few comments that called attention to increasing investor home buying activity in certain Southeast markets.
In our March 2017 poll, we asked residential brokers and homebuilders to indicate whether home sales to investors had increased, remained unchanged, or decreased over the course of the previous year. While some respondents did see an increase in investor buying in their markets, the majority of builders indicated no change. Broker responses came in mixed. Interestingly, more brokers than builders indicated that investor activity was down.
To conclude, certain areas around the Southeast may have seen an increase, but investment activity does not appear to have increased in a material way across the nation. Although the measures we refer to above do not necessarily provide an apples-to-apples comparison, they independently but collectively provide some reassurance that investor activity has not returned to where it was at the height of the bubble (which of course is hard to pinpoint exactly because few of these more robust measures date back that far). The hope, of course, is that one or more of these measures would provide some type of signal if investment activity were heading in that direction again.
Well that seems to answer that question. Of course, there are still plenty of opportunities in the Anderson SC for investors. Both for rentals or to flip.
The key to success in any real estate market is to have experience in that market or to utilize a local REALTOR that does. Forget what you see on the infomercials, real estate investing is not a get rich quick game. There are rewards but there are risks as well.
From Julian Hebron at The Basis Point:
Rates spent months about .5% above pre-election levels after Trump won the presidency, and are now falling on bond buying as Trump wakes up and/or listens to his economic team.
Will rates rise again? Or will the Debtor In Chief champion lower rate policy that gave him his wealth and power?
You can’t make a reality show cliffhanger better, especially when the main character is so unpredictable.
I know half of you will ignore this because you hate Trump and the other half will take it as the Gospel simply because it sounds positive about Trump. Why not take a chance and read this excellent article
Years ago, housing experts predicted a housing crisis brought on by “the great senior sell-off.” But the seniors aren’t selling—yet.
A recent report from Harvard’s Joint Center for Housing Studies forecasts that the remodeling industry will remain robust over the next ten years. The growth will be driven, as ever, by the Baby Boomer generation, 80 percent of whom own homes, and two-thirds of whom have expressed a desire to “age in place.” This means that many of them are modifying their living quarters to include such “universal design” features as wider doors and hallways to accommodate wheelchair use.
But Millennials are a big question mark. The generation, born between 1985 and 2004 according to Harvard’s Joint Center, has been slower to buy houses than previous ones, including the smaller Generation X. This isn’t from a lack of desire but of affordability…
Interesting to consider some of the differences in demographics. We may find many homes in the future that are not as desirable simply because buyer tastes have changed.
For all the concern over automation removing jobs from the workforce, companies like Blueprint are actually helping to ease a labor shortage that has crimped construction of residences and commercial properties across the country. The plants enable developers to fill the gap by having houses and apartment buildings manufactured off-site, for less money and in a fraction of the time. Even Marriott International Inc., the world’s biggest hotel operator, is increasingly turning to modular construction for some of its properties.
There is no doubt that modular homes and even manufactured homes could have some advantages over traditional site built homes if robots are building them.
Builder confidence in the market for newly-built single-family homes remained solid in April, according to the latest NAHB/Wells Fargo Housing Market Index. Even with this month’s modest drop, builder confidence is on very firm ground, and builders are reporting strong interest among potential home buyers.
I wonder what these confident home builders would say about robots building homes? I think IF robots are used in factories, it means that construction workers will become like true artists creating unique one of a kind detail work.
The housing and neighborhood location choices of immigrants will have a significant impact on urban growth in the U.S. for decades to come, particularly as more foreign-born residents seek to own homes in suburban communities.
Immigrants have strong aspirations for single-family homeownership, and homeownership rates for immigrants rise with their length of time in the U.S. This suggests that immigrants will be a key driver for owner-occupied housing for years to come.
Immigrants seeking to own homes as well as those renting homes are increasingly drawn to the suburbs in search of employment opportunities, lower-cost housing and a higher quality of life. Suburbs are home to high-income, high-skilled immigrants as well as lower-income, lesser-skilled immigrants.
While immigrants represent a key source of demand for new housing, a substantial share of immigrant housing demand will be met through purchases of existing homes. Sellers of these homes – many of whom will be baby boomers seeking to downsize – will create a strong market for smaller units.
Just as housing demand by immigrants was a key factor in tempering the worst impacts of the housing collapse, this demand is now helping to build housing market momentum. Demand for homeownership and for single-family housing, as well as the continued growth of both urban and suburban communities throughout the country, will depend on the trajectory of U.S. immigration policy.
Something to think about when it comes to the future of home ownership. Maybe we need to consider how America became the greatest country in the world because of immigrants…
There are a few important things to know about Gary Cohn. Until Donald Trump tapped him to be the Director of the National Economic Council, he had worked at Goldman Sachs for a quarter century, rising to the position of President of the firm and second only to its CEO, Lloyd Blankfein. Cohn walked out of Goldman in December with approximately $285 million, comprised mainly of Goldman stock, some of which had been granted early vesting. Since his exit from Goldman, Cohn has wasted no time in selling large chunks of his Goldman shares according to his financial disclosures. While this serves to reduce his conflicts of interest with Goldman, it also provides a face-saving means of exiting a massive position in a Wall Street bank without the appearance of panic or disloyalty.
Against this backdrop comes the widely reported news that on April 5 Cohn met with Senators serving on the Senate Banking Committee and expressed support for bringing back a modern-day version of the depression era Glass-Steagall Act – legislation which was passed as a result of the Wall Street collapse of 1929 to 1933, which erased 90 percent of the market’s value. (Yes, 90 percent.) That legislation created Federally-insured deposits and barred insured commercial banks from being affiliated with Wall Street investment banks. It protected the U.S. financial system for 66 years until its repeal in 1999 under the Bill Clinton administration. It took only nine years after its repeal for Wall Street to implode in the same epic fashion as the ’29 crash.
Cohn had better be careful about angering his former employer. He may find himself wearing some concrete galoshes…
Is the Credit Cycle Turning?
The contours of a typical economic expansion and recession are strongly driven by loan performance. When times are good, lenders expand loan production to more marginal borrowers but when loan performance begins to deteriorate, lenders become more conservative, which often exacerbates an economic downturn.
Therefore, an understanding of the credit cycle is important to understanding the economic cycle. While loan performance improved across various loan types throughout the first five years of the expansion, over the last year three of the four major types of loans began experiencing a deterioration in loan performance. The exception to the deterioration in credit performance was real estate, which continues to improve. However, a closer look reveals performance is deteriorating, albeit from pristine levels of performance.
Interesting but I wouldn’t panic yet. Keep your eyes and ears open but don’t freak out.
From NY Fed:
Real consumer spending fell in February for a second consecutive month, suggesting a marked slowdown in Q1 PCE growth. A delay in tax refund disbursements may be a factor behind weak consumer spending so far in 2017.
February data suggested some improvement in business equipment spending conditions and a continued slow uptrend in single-family housing starts.
Surveys continued to indicate sizable improvement in manufacturing conditions, with production data showing a rebound in the sector’s activity.
Payroll growth was softer in March, partly due to weather effects, but other indicators pointed to ongoing labor market improvement. The unemployment rate fell, the employment-population ratio rose, and the labor force participation rate held steady in the month.
February data suggest that headline inflation is close to the FOMC’s longer-run objective, while core inflation is still running modestly below the objective.
U.S. equity indexes and nominal long-term Treasury yields moved lower. Oil prices retraced most of the decline that occurred in the first half of March, while the broad dollar foreign exchange index moved lower.
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