Discussing the latest report on US home prices, higher home prices are good for someone besides sellers, the NY Fed on the economy, HUD easing Fair Housing rules for local governments, why we need to prepare for South Carolina’s population growth, small business optimism and more!
US Home Prices Increase 6.8%
National home prices increased 6.8 percent year over year in June 2018, and are forecast to increase 5.1 percent from June 2018 to June 2019. Further, an analysis of the market by price tiers indicates that lower-priced homes experienced significantly higher gains.
After adjusting for inflation, home prices were still 13.3 percent below the 2006 peak.
While inflation-adjusted home prices are still below the 2006 peak, income growth for too many Americans is not growing fast enough. I may not know how to change this is but it is NOT trying the same old things that have been tried in the past…
Is CoreLogic’s prediction of 5.1% home price growth realistic? Hard to say what the future holds…
We all know that the number of homes for sale has been too low for a long time. That could be changing because NAR recently reported that the supply of homes for sale increased for the first time in 3 years!
But it would take a very serious increase in the number of homes for sale to match the demand from home buyers. As long as there is more demand than supply, we will see home prices continue to increase!
Higher Home Prices Are Good for Someone Besides Sellers
Home Depot reported second-quarter 2018 results before markets opened Tuesday. The home improvement superstore posted diluted net earnings per share of $3.05 in the quarter, on revenues of $30.5 billion. In the same quarter last year, the company reported EPS of $2.25 and revenues of $28.11 billion. Consensus estimates had called for EPS of $2.84 and revenues of $30.03 billion for the latest period.
A tight and expensive housing market does not encourage current homeowners to trade up. Instead, they tend to stay put and remodel or renovate. There is little indication that this situation will change this year, and that is good news for Home Depot.
I would argue that the low level of inventory actually encourages home owners to sell since there is less competition and prices are higher. Also, many buyers are purchasing homes that will need work, whether it is light cosmetic updating or extensive renovations because their simply are not enough move in ready homes in their area/price range.
NY Fed on the Economy
Highlights from the August 2018 Economy in a Snapshot report:
Real consumer spending increased in June at a pace similar to that in May, as real spending rose robustly in Q2. The rise in spending for June was led by services and durable goods expenditures.
Housing activity indicators moderated somewhat in June. However, tight housing supply and a strong labor market have the potential to provide support to the housing sector, even with higher mortgage interest rates.
Payroll growth moderated in July. The latest readings of various measures of labor compensation continued to point to modest firming of wage growth.
Labor force participation was unchanged, the unemployment rate ticked down, and the employment-to-population ratio rose slightly.
Core PCE inflation continued to run at a level roughly consistent with the FOMC’s longer-run objective.
I know that I just wrote about how the US housing market could be slowing down and if we are seeing another housing bubble here and here. But I think these 2 charts showing the slow and steady uphill climb of home sales and housing starts shows we have come a long way but still have a long way to go:
We may be seeing a cool down compared to the previous year in some ways, BUT long as we see progress, it is not the end of the world. Both of those charts are tracking the national statistics so as always, consult with a local Realtor to determine what is happening in your market.
HUD Easing Fair Housing Burden on Local Government
From HUD Secretary Ben Carson:
HUD believes very deeply in the purposes of the Fair Housing Act and that states, local governments, and public housing authorities further fair housing choice. HUD’s 2015 rule often dictated unworkable requirements and actually impeded the development and rehabilitation of affordable housing.”
It’s ironic that the current AFFH rule, which was designed to expand affordable housing choices, is actually suffocating investment in some of our most distressed neighborhoods that need our investment the most. We do not have to abandon communities in need. Instead we believe we can craft a new, fairer rule that creates choices for quality housing across all communities.
Today we begin the formal process of examining how we can get this regulation right by first listening and learning from those who must put these rules to work and live with its impact.
Remember this is coming from the same guy that wanted to raise rents on the elderly and the disabled. So we will have to wait to see what BS they actually have up their sleeve…
2 Groups Dominate South Carolina’s Population Growth
From The Post and Courier:
Two very different demographic groups dominate South Carolina’s growing population, bringing with them implications for the state’s home building industry.
People in their 30s — millennials — and in their late 60s and early 70s — baby boomers — are by far the largest growth segments in the Palmetto State, according to a new report from the University of South Carolina.
“They are going to have different housing needs,” USC economist Joey Von Nessen told a gathering of Charleston-area home builders recently, citing U.S. Census figures collected between 2010 and 2017.
Definitely something we need to get ahead of the curve on to ensure the economy and housing market remains healthy. Our elected officials and policy makers need to address these issues now!
Small Business Optimism Very Strong in July
The Small Business Optimism Index marked its second highest level in the survey’s 45-year history at 107.9, rising to within 0.1 point of the July 1983 record-high of 108. The July 2018 report also set new records in terms of owners reporting job creation plans and those with job openings. A seasonally-adjusted net 23 percent are planning to create new jobs, up three points from June. Thirty-seven percent of all owners reported job openings they could not fill in the current period, a one-point increase from June.
NFIB President and CEO Juanita D. Duggan said:
Small business owners are leading this economy and expressing optimism rivaling the highest levels in history. Expansion continues to be a priority for small businesses who show no signs of slowing as they anticipate more sales and better business conditions.
Very good news, especially about job creation! However, they said that business owners are still having a hard time finding qualified workers.
Large Scale Hacking Scheme Could Hit ATMs
From Krebs on Security:
The Federal Bureau of Investigation (FBI) is warning banks that cybercriminals are preparing to carry out a highly choreographed, global fraud scheme known as an “ATM cash-out,” in which crooks hack a bank or payment card processor and use cloned cards at cash machines around the world to fraudulently withdraw millions of dollars in just a few hours.
If you are smart enough to hack ATMs, couldn’t you find a legal, moral, ethical way to make money? What is wrong with the world today?
Well that is it for today! As always, if you have any questions about real estate in the Anderson SC area, contact me!