Discussing this week’s big employment reports, bad news about mobile home mortgage delinquencies, property taxes and much more!
Mobile Home Loan Delinquencies Increase
From Business Insider:
The delinquency rate on mobile-home loans has increased by 200 basis points, or 2 percentage points, over the past year, according to research cited by UBS. The 30-day-plus delinquency level is now about 5%, the highest level since 2005.
The increase in the number of struggling mobile-home borrowers suggests that a large chunk of these people haven’t benefitted from the economic growth of the past few years, despite the low unemployment level.
A really scary statistic. They go on to explain that we are not seeing the same increase in single-family residential delinquencies.
Is this a sign that the economy is not doing as well as many think or say? Hard to determine that now but it is something to consider.
There is one silver lining to this gray cloud: there could be more opportunities for investors to scoop up cheap properties in the coming year.
Where Are We Headed?
Thirty-eight percent (38%) of Likely U.S. Voters now think the country is heading in the right direction, according to a new Rasmussen Reports national telephone and online survey for the week ending March 29.
This contradicts the report I shared yesterday that Americans are more optimistic about the future of the next generation. We can always find something to be negative about or a reason to feel optimistic about the future.
The key is to be realistic without being overly negative or irrationally optimistic. I know it can be hard with the constant barrage of distractions on social media but you can do it…
Single Family Home Property Taxes 2017 Increased 3% in 2017
ATTOM Data Solutions just reported that property taxes levied on single family homes in 2017 totaled $293.4 billion, up 6 percent from $277.7 billion in 2016 and an average of $3,399 per home.
The average property taxes of $3,399 for a single family home in 2017 was up 3 percent from the average property tax of $3,296 in 2016.
While I often talk about how having a fixed monthly mortgage payment beats the uncertainty of renting. But it would be irresponsible to forget about how taxes and insurance can and will increase each and every year.
Attom reported the states in the top 10 for lowest effective property tax rates:
- Hawaii (0.34 percent)
- Alabama (0.49 percent)
- Colorado (0.51 percent)
- Tennessee (0.56 percent)
- West Virginia (0.57 percent)
- Utah (0.58 percent)
- Delaware (0.61 percent)
- South Carolina (0.66 percent)
- Arkansas (0.68 percent)
- Arizona (0.68 percent)
I must point out that South Carolina’s very low property taxes are just one of the reasons that people relocate here.
CMBS Delinquency Rate Increases for First Time Since June
The overall Trepp CMBS Delinquency Rate posted a rare increase in March, albeit a modest one. This is the first time the rate has ticked up since June 2017. The overall delinquency rate for US commercial real estate loans in CMBS is now 4.55%, an increase of four basis points from the February level. We noted last month that we felt the rate could potentially break the post-crisis low from February 2016 at some point this year. The March uptick represented a small speed bump in that prediction.
Not good but as they said, this is a rare increase.
ADP Reports Private Sector Employment Increased
ADP just reported that private-sector employment increased by 241,000 from February to March, on a seasonally adjusted basis.
Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said:
We saw impressive momentum in the first quarter of 2018 with more jobs added per month on average than in 2017. Midsized businesses added nearly half of all jobs this month, the best growth this segment has seen since the fall of 2014. The manufacturing industry also performed well, with its strongest increase in more than three years.
Mark Zandi, chief economist of Moody’s Analytics, said:
The job market is rip-roaring. Monthly job growth remains firmly over 200,000, double the pace of labor force growth. The tight labor market continues to tighten.
Very good news for the economy! But this is not all of this week’s news on jobs…
March Employment Report
In the week ending March 31, the advance figure for seasonally adjusted initial claims was 242,000, an increase of 24,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 215,000 to 218,000. The 4-week moving average was 228,250, an increase of 3,000 from the previous week’s revised average. The previous week’s average was revised up by 750 from 224,500 to 225,250.
This was somewhat bad but not super bad since wages rose according to the BLS:
In March, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.82. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent. Average hourly earnings for private-sector production and nonsupervisory employees increased by 4 cents to $22.42 in March.
Not a super huge increase but any increase in wages is good.
U.S. Secretary of Labor Alexander Acosta said:
The American economy remained strong in March. For the sixth month in a row, the unemployment rate was at a 17-year low of 4.1%. Steady job growth continued, with 103,000 jobs created in March. Since President Trump’s election, the American economy has added nearly 3 million new jobs. As we have seen in recent months, manufacturing and mining and logging in particular experienced significant gains. The unemployment rate among both adult men and adult women was 3.7%.
Average hourly earnings in March rose by 2.7% over the previous 12 months, and the 3-month average increase in earnings is the highest since 2009. This trend is welcome news to American families. As job creators compete to hire American workers, we hope wage growth continues.
NAR Chief Economist Lawrence Yun said:
The March jobs report was a bit soft, and first quarter GDP growth rate also looks to be weak. Heavy snow in parts of the country, and the uncertainty related to potential trade war, may be (as of now) hindering companies from hiring.
Although fewer people worked in construction in March because of the unusually cold wintry weather, job openings in the construction industry do remain at a historic high. If home builders can readily fill those jobs, then home construction significantly ramps up, and thereby brings more housing inventory to the market.
Looking ahead, 3% GDP growth does look easily possible in upcoming quarters, with more construction jobs leading to more job creations in other segments of the economy.
I know that we could focus on the weakness of this report. While weak, we must remember that this is the 6th consecutive month of a historically low unemployment rate. The increase in wages is the icing on top of the cake!
That is all I have time for today! Be sure to check back tomorrow as I will be sharing this week’s reports on mortgage rates!