Discussing the latest report on home prices, Freddie helping nonbank lenders on the down low, how people feel about buying or selling a home now, the best months to sell a home, what the change in 10 year Treasury notes means for mortgage rates, small business optimism, retail is hurting, job openings and the number of people quitting their jobs
US Home Price Up 6.65%
From Black Knight:
- Median home prices rose by 1.24% nationally since the start of 2018
- Both January and February had their strongest respective single-month growth rates since 2005
- The inventory of loans in active foreclosure fell to its lowest level since September 2006
- Low-priced homes continue to lead with an annual appreciation rate of 8.4%
Black Knight Executive Vice President Ben Graboske said:
As of the end of February, home prices had risen 6.65 percent from a year ago, a metric that continues to increase. The rate of appreciation has accelerated by 42 basis points over the past six months and by 72 basis points over the past 12 months. This acceleration, combined with a nearly 40 basis point increase in the prevailing 30-year fixed interest rate during that same time frame, is creating a tighter affordability climate. We have now seen monthly increases in the national median home price for 27 of the past 28 months, and annual gains for 70 consecutive months.
Remember this is a national report and does not reflect what is happening in every local market. Sadly, the national trend of lower priced homes appreciating faster than homes in other price ranges continues.
Looking locally at data from the WUAR MLS, in Anderson County SC, the median sold home price in March 2018 was 7.33% higher than the previous month and 1.04% higher than March 2017. Of course, this is for all types of homes sold in Anderson County and will not tell you what is happening with a specific home.
Freddie Mac Quietly Helping the New Mortgage Kings
Freddie Mac has quietly started extending credit to nonbanks that issue mortgages, a move it says will help the companies maintain access to a crucial stockpile of cash if their home loans go sour.
But critics say the financing could create an unfair market advantage that allows preferred lenders to muscle out competitors.
The new Freddie credit lines, which haven’t been publicly announced, are meant to support nonbanks’ mortgage-servicing operations. That’s the lucrative business of managing a home loan after it’s been issued.
It is pretty strange that this change was not publicly announced. Usually, government agencies and businesses will release controversial stuff late Friday afternoon to try to sneak it out.
In the Bloomberg article, Freddie CEO Don Layton said this is to fill in gaps not served by the private market and if it works it will means there is another lender in the marketplace. Which sounds great BUT why the lack of publicity?
Housing Confidence Hits New High
The Fannie Mae Home Purchase Sentiment Index® (HPSI) rose 3.4 points in April to 91.7, marking a new all-time survey high. The increase can be attributed to increases in five of the six HPSI components.
Good news but this will not help with the shortage of homes for sale UNLESS the people that think it is a good time to sell actually list their homes with a Realtor.
The Best Month to Sell Your Home
Since I just mentioned how we need more people to list their homes, let me slide this in: May is the best month to sell your home according to a recent study by ATTOM!
ATTOM said that selling your home in the month of May will net you an average of 5.9% above estimated market value for your home! ATTOM looked at 14.7 million home sales between 2011 to 2017 and found the average seller premium achieved for each month of the year.
Check out this chart made with ATTOM’s data that shows the best months to sell a home:
Don’t let today being the 9th of May fool you as market conditions mean we are still firmly in a seller’s market in most areas/price ranges of the US. Homes are selling quickly and we are smack dab in the middle of the best time to sell a home!
What the Change in the 10-Year Treasury Note Means for Home Buyers
The recent increase in the 10-year Treasury yield indicates higher mortgage rates are likely in the very near future. But, even as mortgage rates increase, we remain well below the historical average of about 8 percent for a 30-year, fixed-rate mortgage – and house-buying power remains strong.
It amazes me how many people freak out about mortgage rates increasing slightly. Mortgage rates were much higher in the past.
It is almost like how people think you have to put 20% down to buy a home OR that you get a better deal by going to the listing agent. So many false beliefs about buying a home floating around that need to be debunked on a regular basis!
There is NO Escape from Forced Arbitration
The Supreme Court will soon decide whether employers can lawfully require workers to sign mandatory arbitration agreements that include class and collective action waivers. A ruling in NLRB v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris will have significant impacts on working people. If the Court sides with employers and the Trump administration, it is likely that the majority of workers in this country will be required, as a condition of employment, to sign away their right to pursue workplace disputes on a collective or class basis. In fact, available data suggest that it may take only six years for more than 80 percent of workplaces to adopt mandatory arbitration with class and collective action waivers.
I guess it isn’t just our elected officials that are owned by the big corporations…
Small Business Optimism Still at Record High Levels
The Small Business Optimism Index sustained record-high levels increasing to 104.8 in April, driven by reports of improved profits, the highest in the NFIB Small Business Economic Trends Survey’s 45-year history. Additionally, the number of small businesses reporting poor sales fell to a near record low. April is the 17th consecutive month of historically high readings, according to the survey that was released today.
NFIB President and CEO Juanita Duggan said:
Never in the history of this survey have we seen profit trends so high. The optimism small businesses owners have about the economy is turning into new job creation, increased wages and benefits, and investment.
This is really really REALLY good news. Small businesses drive much more of the economy and job market than many people realize.
U.S. Retail Sector Continues To Weaken
The long-term forecast concludes that retail’s long and slow recovery, already a laggard compared to other CRE segments, is definitively sputtering to a halt. Overall investment in retail properties fell to $15.3 billion in the fourth quarter of 2017, a 19 percent plunge from a year earlier.
E-commerce, which has steadily chipped away at the retail sector’s fundamentals throughout this cycle, now comprises 14.2 percent of total non-auto retail sales, up from 5.5 percent just five years ago. It is likely to continue rising in the coming years as consumers expand the scope of their online purchases to new types of products. The warehouse and distribution sector has been the biggest beneficiary of this transformation, as sales are increasingly fulfilled from warehouses instead of retail stores.
Ten-X Chief Economist Peter Muoio said:
In terms of brick-and-mortar stores and the real estate that supports it, the phrase ‘retail apocalypse’ is no hyperbole. Store footprints are continuing to shrink, and we are seeing droves of traditional retail assets being repurposed or simply demolished. Headlines of store closings and bankruptcies of household names like Toys “R” Us and Radio Shack are some of the most visible signs of the massive reordering taking place in the retail space. While there are some markets that have managed to stay afloat and even thrive, the national retail picture is decidedly bleak.
Ouch! Remember that the shrinking number of retail stores means lots of jobs lost. While there would be some jobs created by E-commerce, it will not be as many as those eliminated when brick and mortar stores disappear.
Job Opening Hits Record High
The number of job openings increased to 6.6 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.4 million and 5.3 million, respectively. Within separations, the quits rate was little changed at 2.3 percent and the layoffs and discharges rate was unchanged at 1.1 percent.
A very strong report with job openings hit a record high and quits increased YoY. Quits measures the number of people that quit their job voluntarily and shows how strong the job market is. The low level of hiring may be due to the limited number of qualified workers.
The tight labor market could lead to wage growth and inflation. Wage growth would be nice but higher inflation means we should see the Fed raise their benchmark rate at least 2 more times this year.
Trump Administration Proposes $42 Million in Cuts to Rural Housing
The Trump administration has proposed a $15.4 billion package of spending cuts that includes a $40 million reduction for the Rural Housing Service (RHS).
The White House has said this proposed cutback is carryover funding that would not affect RHS’s ability to fully pay for rental assistance contracts through fiscal 2018.
Ouch! This is not good as the USDA’s Rural Housing Service helps people buy homes in rural areas across the US. Including many parts of Anderson County SC!
While this is only a proposal, it would not surprise me that this happens. The people that are helped by these programs are not the super rich elite and Washington seems only interested in doing what is best for them.
Well, that is all I have time for today! If you have any questions about buying or selling a home in Anderson County SC, please Contact Me!