Real estate housing and economic news for 4-21-2016…
No Consequences No Justice
Prepare to be pissed:
The U.S. Department of Justice last week announced with great fanfare a settlement under which Goldman Sachs would ostensibly pay out more than $5 billion for misconduct related to its sales of mortgage securities to investors in the run up to the 2008 financial crisis.
It’s now clear from a review of the settlement that Goldman Sachs likely will pay much less in penalties than the Justice Department claims, due to special credits included in the deal and, unbelievably, tax deductions Goldman Sachs will receive for payments it makes under the settlement.
Disturbing as this may be, what’s most troubling is that this settlement agreement – like previous deals between the Justice Department and big financial institutions – contains no consequences for the executives who drove or condoned wrongdoing.
Get your blood pressure up by reading No consequences, no justice in Goldman Sachs settlement
ICYMI: Housing Starts Fall and Permits Hit 1 Year Low
U.S. housing starts fell more than expected in March and permits for future home construction hit a one-year low, suggesting some cooling in the housing market in line with signs of a sharp slowdown in economic growth in the first quarter.
Folks this ain’t good. We need to build homes that are affordable for the masses and not just for the wealthy.
Read the rest at U.S. housing data adds to signs of weak first-quarter GDP growth
Millennials’ Attitudes Toward Home Buying By Region
I get sick of hearing millennial this and millennial that. But considering how popular this chart/story was when I tweeted it, I thought I would share it here:
Read more at Millennials’ Attitudes Toward Home Buying By Region
Damn the Torpedoes: March Housing Sales Show Slowdown
National not local but still good info:
The REAL Trends Housing Market Report for March 2016 shows that housing sales increased 5.1 percent from the same month a year ago. The year-over-year gain slowed from the strong growth rates seen in January and February 2016.
While the March housing report shows continued growth the year over year increase slipped significantly from prior months. The prior three months had seen unit sales increases nearly double that of the March results.
The annualized rate of new and existing home sales was 6.276 million which was up somewhat from the rate of 5.969 million recorded in March 2015. The results indicated that the housing market slipped into lower growth at least for March.
Read more at REAL Trends: March Housing Sales Show Slowdown
ATL Fed GDPNow Forecast for Real GDP Growth in Q1 2016 is 0.3%
2 Big Housing Affordability Problems
Couldn’t have said it better myself:
The first problem is that some coastal metropolitan areas in the U.S. are generating lots of good jobs but aren’t building enough housing to keep up with employment growth. The main barrier to housing construction in these places is local regulation — zoning ordinances, environmental requirements, even affordable-housing rules.
The second housing affordability problem is less geographically limited, and more chronic: Millions of Americans can’t afford even the cheapest housing.
Read the rest at What Makes Housing Too Expensive
Home Sellers See Highest Home Price Gains Since December 2007
Good news from RealtyTrac:
Home sellers in many markets are now seeing average price gains close to or above what home sellers experienced during the last housing boom. That should encourage more homeowners to take advantage of the prime seller’s market and list their homes for sale this year.
I MUST point out this is talking national and not local so YOU need to rely upon local expertise to determine what is happening in your area!
Conference Board Leading Economic Index for the US Increased
The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.2 percent in March to 123.4 (2010 = 100), following a 0.1 percent decline in February, and a 0.2 percent decline in January.
“With the March gain, the U.S. LEI’s six-month growth rate improved slightly but still points to slow, although not slowing, growth in the coming quarters,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Rebounding stock prices were offset by a decline in housing permits, but nonetheless there were widespread gains among the leading indicators. Financial conditions, as well as expected improvements in manufacturing, should support a modest growth environment in 2016.”
Great news and sounds encouraging! Read the rest at The Conference Board
Woo Hoo: Jobless Claims Hit 42-1/2 year Low
The number of Americans filing for unemployment benefits fell last week. How much?
Well the number hit the lowest level since 1973!
Jobless claims have been below 300,000 for 59 weeks. This is also a record not matched since 1973.
GSEs in the Crosshairs
Appears we may see yet another attempt to snuff out or further weaken the GSEs:
Senate Banking Committee Chairman Richard Shelby on Monday requested the Government Accountability Office and Congressional Budget Office look into practices at the Federal Housing Finance Agency and the government-sponsored enterprises it oversees. “Congress has a responsibility to conduct proper oversight over both the FHFA and the GSEs,” the Alabama Republican said in a statement.
I will let you draw your own conclusions as to whether or not it would be bad for the housing market and the economy if the GSEs cease to exist…
Why Haven’t Bankers Been Punished?
Right after the financial crisis, an SEC lawyer fought a lonely struggle to get his agency to crackdown harder on Goldman bankers. He lost.
While the SEC, as well as federal prosecutors, eventually wrenched billions of dollars from the big banks, a vexing question remains: Why did no top bankers go to prison?
The answer to this question is a MUST read and can be found at Why Haven’t Bankers Been Punished? Just Read These Insider SEC Emails
NAHB’s Remodeling Market Index Dips in 1st Quarter
Bad but not end of the world bad:
NAHB’s Remodeling Market Index (RMI) posted a reading of 54 in the first quarter of 2016, dipping four points below the previous quarter but remaining in positive territory.
An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.
Read more at the NAHB
Failure to Plan Is Planning to Fail
One of the signal, but formerly obscure, achievements of the Dodd-Frank Act, passed in the wake of the financial crisis, was the requirement that big banks write “living wills” in preparation for their eventual deaths. These documents (the technical term is “resolution plans”) specify everything from how subsidiaries might continue to operate after a head office has declared bankruptcy to how I.T.-service contracts can be transferred to new ownership.
Their larger aim is to insure that, in the event of a 2008-level crisis, the big banks can die with dignity, so to speak, instead of requiring taxpayers to bail them out. But, as we discovered last week, when the Federal Reserve and Federal Deposit Insurance Corporation declared the majority of the wills filed last July to be inadequate, large financial institutions can be as reluctant as the rest of us to contemplate their own mortality.
While this might appear to be just the opportunity we want to finally break up the TBTF banks, the truth is our political system is controlled by these behemoths.
Yes there are a few hold outs or politicians with integrity…
Also we are in the middle of the politicians’ busiest BS spreading time, so it is not likely we will see anything substantial happen anyway.
Still check out the must read at Why the Big Banks Can’t Imagine Their Own Demises
Why 47% of Americans Should NOT Buy a Home
Hey I know that is not going to be very popular with my REALTOR brothers and sisters but check this out:
Since 2013, the Federal Reserve Board has conducted a survey to “monitor the financial and economic status of American consumers.” Most of the data in the latest survey, frankly, are less than earth-shattering: 49 percent of part-time workers would prefer to work more hours at their current wage; 29 percent of Americans expect to earn a higher income in the coming year; 43 percent of homeowners who have owned their home for at least a year believe its value has increased.
But the answer to one question was astonishing. The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?
IF an unsuspected $400 could wreck havoc on someone’s finances, then how logical is it for them to buy a home?
Read the entire article on The Atlantic
Good News for Housing and the Economy from the AIA
The American Institute of Architects (AIA) reported the March ABI score increased from the previous month. The Architecture Billings Index reflects consecutive months of increasing demand for design activity at architecture firms. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending.
AIA Chief Economist, Kermit Baker said:
The first quarter was somewhat disappointing in terms of the growth of design activity, but fortunately expanded a bit entering the traditionally busy spring season. The Midwest is lagging behind the other regions, but otherwise business conditions are generally healthy across the country. As the institutional market has cooled somewhat after a surge in design activity a year ago, the multi-family sector is reaccelerating at a healthy pace.
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