Discussing the latest unemployment report, high rents, the high cost of regulations hurting multifamily construction and more!
Weekly Unemployment Claims
In the week ending June 9, the advance figure for seasonally adjusted initial claims was 218,000, a decrease of 4,000 from the previous week’s unrevised level of 222,000. The 4-week moving average was 224,250, a decrease of 1,250 from the previous week’s unrevised average of 225,500.
Check out the chart showing the 4-week moving average:
This is the lowest level of people on unemployment since 1973! This is great news BUT as we saw yesterday, the Fed raised their benchmark rate and hinted at 2 more increases this year.
Positive economic news such as this will only motivate the Fed even more to raise rates. We could see some of the “expert” predictions of much higher mortgage rates this year prove to be true!
Be sure to check back tomorrow when I share this week’s mortgage rates reports!
The Rent Is Too Damn High… Or Is It?
From The Washington Post:
The economy’s booming. Some states have raised minimum wages. But even with recent wage growth for the lowest-paid workers, there is still nowhere in the country where someone working a full-time minimum wage job could afford to rent a modest two-bedroom apartment, according to an annual report released Wednesday by the National Low Income Housing Coalition.
My God that sounds awful! But I dug a little deeper and checked out the data for South Carolina. Then I downloaded their report and looked at their data for Anderson County.
They are saying that you would need to pay $740 in Anderson County for a 2 bedroom at Fair Market Rent. Which is a bit high but they may be interpreting what a modest apartment is differently than you or I.
A quick glance at Craigslist shows plenty of apartments that are higher and a few that are lower in Anderson. If someone is paying $740 to rent a 2 bedroom, I have to wonder why they wouldn’t investigate buying a home?
I know the current rent for the modest 1 bedroom apartment that I rented years ago is higher than my current mortgage payment is. And I have a much bigger, nicer home…
This also shows why homes from the $100,000 to $150,000 price range are very popular in our area. You could own for about the same as it costs to rent in Anderson County.
And have much larger, nicer home while building up wealth….
Of course, the monthly mortgage payment depends on your credit, down payment, interest rate, etc etc etc. Sitting down with a local mortgage lender to discuss your options could be a smart thing to do before you signed another lease.
Over 30% of Multifamily Development Cost Due to Regulation
Regulation imposed by all levels of government accounts for an average of 32.1 percent of multifamily development costs, according to new research released today by the National Association of Home Builders (NAHB) and the National Multifamily Housing Council (NMHC). In fact, in a quarter of cases, that number can reach as high as 42.6 percent.
Wow! IF we really want to address the affordable housing problem, it appears that some state and local governments could lower the extremely high cost of regulations when building apartments for lower income renters.
More Communication From the Federal Reserve
From Business Insider:
Federal Reserve Chairman Jerome Powell announced Wednesday that starting in January, he will hold press conferences after every policy meeting.
“I want to point out that having twice as many press conferences does not signal anything about the timing or pace of future interest-rate changes,” Powell said. “This change is only about improving communications.”
I guess this is an improvement but why don’t they just unleash a tweet storm like Trump?
Very interesting that he said this is NOT so they can increase how often they raise interest rates. I wonder if this is simply misdirection to prevent the market from over reacting like it did during the “taper tantrum”?
Why The Fiduciary Rule for Financial Advisors Should Be Reinstated
From Wall Street on Parade:
Yesterday the Securities and Exchange Commission (SEC) quietly dropped a bomb on the relationship that the behemoth Wall Street firm Merrill Lynch has with its institutional clients. For those willing to skip past the timid press release from the SEC and dig carefully through the Administrative Proceeding Order, there was this startling revelation: Merrill Lynch had charged obscene markups (profits for the house) on bond trades over a three and a half-year period that were in two cases cited 23 times and 3 times the industry prescribed legal limit of less than 5 percent.
Merrill Lynch agreed to settle the charges by paying $10.5 million in disgorgement to its ripped-off customers and to pay penalties of $5.2 million to the SEC.
The charges relate to conduct that occurred between June 2009 through December 2012. Let those dates sink in for a moment. It’s nine years since the start of this ripoff and the SEC is just now fining Merrill Lynch, raising the question as to whether the SEC lacks the will, or the staff, or the resources to do its job in a timely manner. It also gives Merrill the ability to tell customers that this all happened under trading supervisors who are long gone.
You may remember just a few days ago that I wrote about the fiduciary rule for advisors being eliminated. While that rule was specifically about brokers working with retirement planning, this article is an excellent example of why we do need this rule.
Not only should the fiduciary rule for retirement financial advisors be reinstated, it appears it should be expanded to cover ALL investment brokers.
Well that is all I have time for today!