Talking about home prices, new home sales, economic growth, rising mortgage payments, demand is higher than inventory and what that means for sellers plus more!
Home Prices Still Increasing
From Black Knight:
US home prices increased 0.5% in July from the June level and increased 6.2% compared to last July. While home prices are STILL increasing, the pace of the increases seems to be slowing.
The rate of growth in year-over-year price appreciation stabilized in July after accelerating throughout every month of 2017. Also the month-over-month increases has steadily been slowing since March 2017.
Remember Black Knight is talking about US home prices. Despite being great news, it is not the local info that buyers and sellers must have to make informed decisions. For those interested, you can read the Anderson County SC Market Reports
Slower Economic Growth in August
Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to –0.31 in August from +0.03 in July. Two of the four broad categories of indicators that make up the index decreased from July, and two of the four categories made negative contributions to the index in August. The index’s three-month moving average, CFNAI-MA3, decreased to –0.04 in August from a neutral reading in July.
Not good but not cause to panic either…
Homebuyers’ Mortgage Payments Rising Faster Than Prices
Low mortgage interest rates helped soften the blow of rising prices for homebuyers over the past six years. But with prices still rising and mortgage rates running about half a percentage point higher than last summer the mortgage payments that many homebuyers face have increased at roughly double the rate of home prices over the past year.
I hate to say I told you so but… I told you so.
The American Dream Is Changing As Savings Stagnates
From PurePoint Financial:
71 percent of Americans feel the American Dream has changed, and the majority of Americans (64 percent) say they define financial success as not living paycheck-to-paycheck. 1 in 3 Americans save 10 percent or less of each paycheck. While Americans openly admit to being concerned about the future, almost half don’t have money saved in a retirement account.
Not surprising since so many are living paycheck to paycheck. But for those that are financially sound, buying a home or investing in real estate is a great way to build wealth…
This survey does somewhat contradict the survey I wrote about yesterday that revealed owning a home is still the number 1 thing people feel they need to achieve the American Dream.
Home Buying Demand Continues to Outpace Supply
In a monthly survey of REALTORS®, respondents reported that buyer traffic conditions in August 2017 were stable to very strong compared to conditions one year ago in all states except Delaware, according to the August 2017 REALTORS® Confidence Index Survey.
Meanwhile, supply was weaker or unchanged in many states in August 2017 compared to conditions in the same month last year. Seller conditions were “strong” only in nine states and the District of Columbia.
Check out the map showing the traffic of home buyers in each state:
Not exactly a surprise and in the Anderson SC area, you will find homes in certain areas or price ranges will sell quickly IF they are priced right, marketed correctly, etc etc…
New Home Sales Hit New Low for 2017
From HUD and Census Bureau:
Sales of new single-family houses in August 2017 were at a seasonally adjusted annual rate of 560,000. This is 3.4 percent below the revised July rate of 580,000, and is 1.2 percent below the August 2016 estimate of 567,000.
The median sales price of new houses sold in August 2017 was $300,200. The average sales price was $368,100.
The seasonally-adjusted estimate of new houses for sale at the end of August was 284,000. This represents a supply of 6.1 months at the current sales rate.
This is the second consecutive month of decreasing home sales for the entire U.S. We can expect to see more decreases due to the hurricanes Harvey and Irma.
Looking locally, there are 146 homes in the MLS under the new, under construction or to be constructed categories. Only 54 of these homes are under $200,000 and only 16 are under $150,000.
Pending Home Sales Fall Again
The Pending Home Sales Index retreated 2.6 percent to 106.3 in August from 109.1 in July. The index is now at its lowest reading since January 2016 (106.1), is 2.6 percent below a year ago, and has fallen on an annual basis in four of the past five months. Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year.
While this is a national report, there is not doubt that there are not enough affordable homes for sale…
Why Aren’t There More Homes for Sale?
Anyone keeping track of the housing market will already be aware of the tight inventory problem. In most areas, the real inventory shortage is starter or affordable homes.
Well, First American recently released a survey that talks about the lack of homes for sale. First American asked real estate professionals to name the top reasons for the inventory shortage.
- 47% – existing homeowners are worried that they will not be able to find a home to buy
- 26.5% – first-time buyer demand is absorbing a large share of available homes
- 11.3% – existing homeowners’ mortgage rates are lower than the current rates
- 10.6% – insufficient or negative equity in the home
- 4.6% – foreign buyer demand is absorbing a large share of available homes
As you can see, 3 of the top reasons could cause home owners to shy away from putting their home on the market.
But this actually gives some home owners a great opportunity! If you’re able to list your home now, there are significantly fewer homes for sale. Less competition could mean that your home will sell quickly and for the best price.
If you are one of the lucky home owners that is able to sell now, it could be a great time to sell your home!
Need for Third Major Party Remains High in U.S.
About six in 10 Americans continue to say a third major political party is needed, while 34% say the Republican and Democratic parties adequately represent the people.
Nearly twice as many Americans today think a third major party is needed in the U.S. as say the existing parties do an adequate job of representing the American people. The 61% who contend that a third party is needed is technically the highest Gallup has recorded, although similar to the 57% to 60% holding this view since 2013.
I think that “none of the above” should always be on the ballot. If “none of the above” receives the most votes, none of the candidates may run for that office again.
You may remember in yesterday’ post, I wrote about another Gallup poll that showed only 33% of likely US voters think the country is headed in the right direction.
Owning Beats Renting Again
From the latest FAU Buy vs rent Index:
U.S. homeowners are still coming out ahead of their friends who rent, but just barely. According to the latest national index produced by Florida Atlantic University and Florida International University faculty, owning and renting are in a virtual tie in terms of wealth creation.
The Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index score for the U.S. as a whole of -.065 indicates that, on average, owning and building wealth through equity buildup narrowly outpaces renting a comparable property and investing in a portfolio of stocks and bonds. While the results vary widely by city, the last time the national BH&J score was at this point in a real estate cycle was right before the run-up in housing prices began in 1999.
Ken Johnson, Ph.D., a real estate economist and one of the index’s creators in FAU’s College of Business said:
While the index gives consumers additional information over the age-old question of buy versus rent, it also tends to signal a directional change in housing pricing. The last 30-plus years of data suggests that scores approaching 1 tend to signal a housing price downturn, while scores approaching -.30 usually signal an upturn in prices.
I am glad that they pointed out how the results vary widely by city. Something else to consider is whether or not buying makes sense for you based upon your lifestyle, career, budget, income, credit, etc etc.
Fifth District Service Sector Firms Remained Upbeat in September
From Richmond Fed:
Reports from the Fifth District service sector remained generally upbeat in September, according to the latest survey by the Federal Reserve Bank of Richmond.
The revenues index held steady at a relatively high level of 22 in September. The index for expected demand also rose from 40 to 45 in September, which was one of the highest readings of that index in the last few years.
Although service sector labor reports remained positive, readings softened slightly in September. The employment index edged down from 22 to 20 and the wage index declined from 23 to a reading of 21.
According to our survey measures, price growth softened slightly in the overall service sector in September, with firming retail price growth offset by a decline in the average price growth reported by services firms.
Manufacturing Activity Improved in September in the Fifth District
Also from the Richmond Fed:
Reports on Fifth District manufacturing activity improved in September, according to the latest survey by the Federal Reserve Bank of Richmond.
The composite manufacturing index rose from 14 to 19, supported by a sizable increase in the index for shipments — which, at a reading of 22, is the highest it has been since December 2010 — and a smaller rise in the index for new orders. The third component of the composite index, the employment index, fell slightly. Although the wages index also declined very slightly, there was a notable increase in the average workweek indicator.
Manufacturing expectations were stable across most measures this month, and continued to indicate overall optimism. The only notable changes in expectations were in the index for expected average workweek, which rose from 16 to 25, and the index for expected capital expenditures, which fell from 30 to 18.
Even nicer! In case you do not understand why I share these Richmond Fed reports, South Carolina is in the Fifth District.
Consumer Confidence Index Declined Slightly in September
From The Conference Board:
The Conference Board Consumer Confidence Index®, which had improved marginally in August, declined slightly in September. Despite the slight downtick in confidence, consumers’ assessment of current conditions remains quite favorable and their expectations for the short-term suggest the economy will continue expanding at its current pace.
While a decrease in consumer confidence is never good, we can at least feel good about how consumers are feeling about current conditions. Of course, there are so many variable and unknowns that it is hard to say if the economy will continue to expand.
Throw a couple of hurricanes and an evil dictator with a 3 Stooges haircut into the mix, and it is anyone’s guess what the future holds…
Zillow Shows It’s True Colors Once Again
Online real estate company Zillow is after Henry County and the Henry County State’s Attorney, alleging a violation of the Freedom of Information Act.
Zillow maintains that even for voluminous requests from commercial firms, the Freedom of Information Act caps permissible charges at $100 for more than four megabytes of data.
Henry County is already providing Zillow with information about parcels’ assessments, pictures and other data through the assessor’s office. Supervisor of assessments Lindi Kernan said she believes the data goes to commercial users who sell it to make money.
“The frustrating part is all this information is gathered basically on the backs of taxpayers,” she said. “We’re constantly updating information and improving, and we have been complying with those things frustratedly.”
This is not surprising since Zillow’s business model is making money off the hard work of others…
JP Morgan Ordered to Pay More Than $4 Billion to Widow and Family
From The AntiMedia:
A Dallas jury ordered JP Morgan Chase to pay more than $4 billion in damages for mishandling the estate of a former American Airlines executive.
Jo Hopper and two stepchildren won a probate court verdict over claims that JP Morgan mismanaged the administration of the estate of Max Hopper, who was described as an airline technology innovator by the family’s law firm. The bank, which was hired by the family in 2010 to independently administer the estate of Hopper, was found in breach of its fiduciary duties and contract. In total, JP Morgan Chase was ordered to pay at least $4 billion in punitive damages, approximately $4.7 million in actual damages, and $5 million in attorney fees.
“The nation’s largest bank horribly mistreated me and this verdict provides protection to others from being mistreated by banks that think they’re too powerful to be held accountable,” said Hopper in a statement. “The country’s largest bank, people we are supposed to trust with our livelihood, abused my family and me out of sheer ineptitude and greed. I’m blessed that I have the resources to hold JP Morgan accountable so other widows who don’t have the same resources will be better protected in the future.”
Something to think about if you are thinking about getting a mortgage or doing some other business with JPMorgan Chase…
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