Talking about the latest on home prices and 100 experts predictions on home prices in the future, mortgage rates and much more…
U.S. Home Prices Have Increased YoY for 61 Consecutive Months
- U.S. Home Prices Increased by 7% Between February 2017 and February 2016
- U.S. Home Prices Increased by 1% between January and February 2017
- U.S. Home Prices Expected to Rise by 0.4% Between February 2017 and March 2017
- U.S. Home Prices Expected To Increase 4.7% by February 2018
Awesome news from Corelogic. But that is only one opinion so wouldn’t it be nice to hear from more housing experts? Let’s look at what 100 real estate experts think in the latest Home Price Expectation Survey.
Every quarter, Pulsenomics reports what a nationwide panel of more than 100 economic experts, housing experts, and investment & market strategists regarding what they think house values are going to do in the next 5 years. Then they average the forecasts of all 100+ industry experts into the results that they report in the Pulsenomics report.
The final results of the most recent Pulsenomics report:
House values will increase by 4.4% during 2017, 3.4% in 2018, 2.8% in 2019, 2.7% in 2020, and 2.8% in 2021. This means the average yearly appreciation will be 3.22% in the next five years.
Their forecast for cumulative appreciation decreased from 21.4% to 17.3% by 2021. The most bearish experts are predicting a cumulative appreciation of 6.3%, which is still quite respectable!
In general, I like this survey because it takes the opinions of a large group instead of just one person. The only thing I do not like is that Zillow somehow paid to have their name attached to the Pulsenomics report. I guess this is Zillow’s attempt to make up for their extremely unreliable and inaccurate Zestimates.
If someone is thinking that waiting to buy a home is a good idea, here are over 100 experts telling you to get your butt in gear!
Growth of the US service sector was maintained during March, albeit to a lesser degree than in the previous month as volumes of incoming business rose at a slower rate.
- Demand reported to be rising at slower rate
- Companies able to comfortably deal with new and existing business
- Modest expansion of payroll numbers
Chris Williamson, Chief Business Economist at IHS Markit said:
The March PMI numbers add to the picture of a relatively modest opening quarter to 2017 for the US economy. The surveys of manufacturing and services are running at levels consistent with GDP expanding by 1.7% in the first quarter.
Growth of business activity appears to have peaked in January, sliding to a six-month low in March.
While slowing down is not good, at least we are still seeing growth. Weak growth but hey, at least we are not moving backwards…
Economic activity in the non-manufacturing sector grew in March for the 87th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.
The NMI® registered 55.2 percent, which is 2.4 percentage points lower than the February reading of 57.6 percent. This represents continued growth in the non-manufacturing sector at a slower rate.
The majority of respondents’ comments indicate a positive outlook on business conditions and the overall economy. There were several comments about the uncertainty of future government policies on health care, trade and immigration, and the potential impact on business.
You may remember yesterday’s post had ISM and Markit manufacturing reports that were different. Well today they are similar: growing but the pace of growth is slowing.
In March, Americans’ confidence in the economy was higher earlier in the month and lower later on, averaging out to be essentially the same as in February.
Americans remained about as upbeat about the economy in March as they were in February, with Gallup’s U.S. Economic Confidence Index averaging +9 for the third month of 2017. 49% of U.S. adults said economic conditions were “getting better,” while 45% said they were “getting worse.
I wonder if confidence would be higher if there wasn’t so much political bickering and partisan politics.
Tenant demand for U.S. office space continued to cool off in the first quarter of 2017. Occupancy levels remained stable, though, and rents continued to rise in most market.
Kevin Thorpe, Cushman & Wakefield Global Chief Economist:
To be sure, the economy continues to add jobs, and most U.S. markets remain fundamentally healthy. But the combined pressures of slower job creation and rising office construction is beginning to place upward pressures on vacancy rates, particularly in the larger U.S. cities. Although absorption levels are expected to remain healthy, given the growing supply pipeline, it is likely that we have reached an inflection point in the cycle where we will observe a gradual uptrend in U.S. vacancy rates for the next 12-18 months.
Remain calm. Also see U.S. office vacancy rate flat in first quarter
Our economy has been growing much more slowly in the last decade or two than in the 50 years before then. From 1948 to 2000, real per capita GDP grew 2.3%; from 2000 to 2016, it grew 1%. Had it grown at 2.3% instead of 1% in those 17 years, our GDP per capita would be 24%, or more than $12,500 per person higher than it is. U.S. productivity growth tells much the same story.
Our nation’s lower growth has been accompanied by – and may be one of the reasons why – real median household incomes in 2015 were actually 2.5% lower than they were in 1999. In addition, the percentage of middle class households has actually shrunk over time. In 1971, 61% of households were considered middle class, but that percentage was only 50% in 2015. And for those in the bottom 20% of earners – mainly lower skilled workers – the story may be even worse. For this group, real incomes declined by more than 8% between 1999 and 2015. In 1984, 60% of families could afford a modestly priced home. By 2009, that figure fell to about 50%.
Scary stuff but the really interesting thing is who said this: Jamie Dimon, JPMorgan CEO. I was shocked to say the least to hear one of the biggest of the Wall Streeters admit to the problems in the U.S.
Now, what can be done? My only suggestion is to not try any of the crap that has been tried in the past 20 or so years as it has not been working for ALL Americans.
According to the ADP National Employment Report for March 2017, private-sector employment increased by 263,000 from February to March, on a seasonally adjusted basis.
Ahu Yildirmaz, vice president and co-head of the ADP Research Institute said:
The U.S. labor market finished the first quarter on a strong note. Consumer dependent industries including healthcare, leisure and hospitality, and trade had strong growth during the month.
Mark Zandi, chief economist of Moody’s Analytics said:
Job growth is off to a strong start in 2017. The gains are broad based but most notable in the goods producing side of the economy including construction, manufacturing and mining.
Very encouraging! The only negative is that wage growth is still weak according to Zandi in a Reuters article.
By many measures, the U.S. housing market seems in very good shape. The National Association of Realtors in Washington said last week that contracts to buy existing homes jumped 5.5 percent in February, the biggest increase since July 2010. Fannie Mae’s National Housing Survey showed that Americans expect home prices to rise a robust 3.2 percent over the next year as its sentiment index reached a record high.
So, are boom times ahead for housing? Not quite.
To understand why, it helps to revisit recent history. The housing bubble of the early 2000s was driven by subprime mortgages and other loose-lending practices. The subsequent collapse left many potential new homeowners with inadequate credit scores, not enough money for a down payment and insufficient job security to buy a house. They also saw, for the first time since the 1930s, that not only house prices fall nationwide, but nosedive by a third. Homeownership plunged and those who did form households moved into rental apartments instead of single-family houses.
Housing has recovered from the depths, and a shift from rental apartment buildings to single-family construction is under way. But don’t look for anything like the boom of the early 2000s, and the stimulating effects it had on the overall economy.
Somewhat pessimistic but also true in some ways. I am not sure I would say that home ownership has lost it’s appeal so much as it has become too hard for many Americans to buy a home.
Low inventory, stagnant incomes, fear and uncertainty are some of the reasons that people are not taking advantage of the opportunity in today’s real estate market. Whether you want to buy a home to live in or start buying rental properties, the window of opportunity is still open!
Construction Unemployment Rates Improve in 25 States
Construction unemployment rates were down in 25 states and unchanged in four in February on a year-over-year basis, according to analysis released today by Associated Builders and Contractors (ABC).
Despite the slight downturn in the year-over-year NSA national construction unemployment rate, half the states had a reduction in their rates from a year ago. Overall, the construction sector remains healthy even as employers struggle against the headwind of mounting shortages of skilled construction workers.
Good news and hopefully we will see more homes being built in 2017 in the areas that are suffering from low inventory. Buyers must be ready and working with a buyer’s agent to be successful in today’s market.
Mortgage applications decreased 1.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 31, 2017.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.34% from 4.33%, with points decreasing to 0.31 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to 4.24% from 4.26%, with points decreasing to 0.24 from 0.26 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.57%, with points decreasing to 0.38 from 0.43 (including the origination fee) for 80 percent LTV loans.
A mixture of up, down and more of the same. Remember this is the average mortgage rates and does not reflect what is realistic or possible for every home buyer.
Well that is it for today! Hit that subscribe button and be just like all the other cool kids!