Discussing the latest construction spending numbers, why selling a home now could be a good idea, another attack on the CFPB, another big bank settlement, rent increases are slowing, the ISM report on manufacturing, a possible repeat of the housing ATM mistake and much more!
Construction Spending Increases
From the Census Bureau:
Construction spending during February 2018 was 0.1% above the revised January estimate. The February figure is 3.0% above the February 2017 estimate. During the first two months of this year, construction spending was 4.4% above the amount for the same period in 2017.
Spending on private construction was 0.7% above the revised January estimate. Residential construction was 0.1% above the revised January estimate.
Good news! While residential construction improved, there is no doubt that there is still limited inventory in many areas of the country. Demand may be strong but supply is limited for now…
NAR said that the number of homes for sale has decreased YoY during the last 32 months and is under the 6-month supply needed for a balanced housing market. Today, there are not enough homes for sale to meet buyer demand.
This is excellent news for home owners who have seen the value of their home increase over the past few years. As we see more new homes starting to hit the market, it will be more competition for home sellers.
If you are thinking about selling a home, you should take advantage of the limited competition and strong demand. The newest Buyer Traffic Report from NAR reveals that home buyer demand is still very good through most of the US.
It isn’t just new homes that sellers need to worry about. Because home values have increased, many home owners that were unable to sell in the past can sell today.
As home prices continue to increase, it means there will be more competition for anyone selling a home!
There is good news for home sellers because the time it takes to sell a home is getting lower! Most buyers understand they must be properly prepared for today’s competitive home buying market.
Home buyers are getting Pre-Approved to ensure they can react quickly. Plus if a buyer is getting a mortgage, it takes less time than it did in the past!
The average time to close a loan has decreased to 45 days according to Ellie Mae’s Origination Insights Report for February 2018.
Mulvaney Proposal to Screw Up the CFPB Even More
From American Banker:
Critics of the Consumer Financial Protection Bureau have supported the acting director’s efforts to restructure the agency, but Mulvaney’s latest salvo — proposing in the agency’s semiannual report that all CFPB rules be subject to congressional approval, among other recommendations — left many observers stumped if not outraged.
In the CFPB’s semiannual report to Congress, released Monday, Mulvaney also called for the CFPB to be funded through congressional appropriations, for the CFPB director to answer to the president, and for the creation of a dedicated inspector general for the agency.
Congress mucks up more than they fix in my opinion so I do not see how this helps fix the problems with the CFPB. But maybe this is all part of a bigger plan to destroy the CFPB?
HSBC Will Pay $100 Million to Settle Libor-Rigging Lawsuit
HSBC Holdings Plc agreed to pay $100 million to settle an antitrust lawsuit by over-the-counter investors, including the city of Baltimore and Yale University, who claimed they were harmed when they bought securities tied to rigged Libor.
The proposed settlement by the London-based bank follows similar agreements the investor group reached with Barclays Plc, Citigroup Inc., and most recently Deutsche Bank AG over similar allegations. The settlement will need to be approved by a federal judge in Manhattan.
Yet another settlement. Sadly, I doubt this type of behavior will change until we see fewer settlements and executives doing hard time.
If someone steals $100 from a local store, they will be hit with jail time. Which is the way things should be…
But banks, Wall Street or big corporations can do just about anything and no one ever goes to jail. Which is why we keep seeing this type of behavior repeated over and over.
Repeating the Home ATM Mistake?
“Cashing out” is shorthand for taking out a new mortgage that’s bigger than the remaining balance on the old one and using the money that makes up the difference for discretionary purchases.
As of the fourth quarter of last year, the share of all refinances that were cash-outs rose to the highest since 2008, according to Freddie Mac data. Rates have churned higher since the presidential election in late 2016, though they spent much of 2017 reversing the immediate post-election surge.
It’s not clear whether the overall volume of cash-out refinances is rising. Right now they’re making up a bigger share of the pie because traditional lower-monthly-payment refis are plunging.
We do not want to see the mistakes of the past repeated BUT there are some good reasons for cash out refinances. During the housing boom, people were draining the equity from their homes with various types of refinances.
Using the equity in your home can be a good financial move if done correctly and sensibly. Speak to your financial advisor, tax person and favorite mortgage lender to thoroughly investigate your options.
Rent Increases Are Slowing
The U.S. apartment market’s performance stumbled during the first quarter of 2018. Occupancy backtracked to 94.5 percent in March, down from 95 percent a year earlier. Annual rent growth cooled to 2.3 percent, the slowest pace of increase since the third quarter of 2010.
The current annual rent growth pace of 2.3 percent is a mild bump down from increases that had hovered between 2.6 percent and 2.9 percent throughout 2017. The market is now more than two and a half years past this economic cycle’s peak rent growth, which was a 5.3 percent annual price increase achieved in the third quarter of 2015.
This slowdown could help renters save to become home owners or to lessen the burden from those paying too much to rent. Remember, rents are STILL increasing.
An Open Mind For a Different View
The story told by politicians (and most pundits) is that, as with all other commodities, the price of housing is set by supply and demand, and the main problem in the housing market is inflexible supply. Here they lay the blame at the feet of local councils (or whoever is responsible for zoning laws) for not allowing more building approvals. If this issue is dealt with, they tell us supply would become more flexible and prices would fall.
And politicians do want house prices to fall don’t they, for the sake of the young people who can no longer afford to buy? Of course not – if they did, the wealth of generally older property owners wealth would decrease, as would their votes for the said politicians at the next election.
Since these older and more economically powerful property owners dominate the electorate, politicians are reduced to doing their best Man of La Mancha impersonations: they “Dream the Impossible Dream”, and aspire to bring about “affordable” expensive housing.
You may remember I shared a study the other day that showed how zoning causes home prices to rise. There are many different things that cause home prices to rise.
We do need to remember that all the talk of politicians about affordable housing is just talk. It is the actual policies that we must pay attention to.
Manufacturing and Economy Continues to Grow
Economic activity in the manufacturing sector expanded in March, and the overall economy grew for the 107th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
Well that is all I have time for today!