Discussing home prices, increasing construction spending, home price increases compared to rising rents, corporate welfare, if the American Dream is in danger, and good news for manufacturing and the economy!
US Home Prices Increase 6.2%
Home prices increased nationally by 6.2 percent year over year from July 2017 to July 2018. On a month-over-month basis, prices increased by 0.3 percent in July 2018 compared with June 2018.
Looking ahead, the CoreLogic HPI Forecast indicates that the national home-price index is projected to continue to increase by 5.1 percent on a year-over-year basis from July 2018 to July 2019.
CoreLogic also said that lower priced homes are increasing at a faster pace than higher priced homes. CoreLogic said:
The lowest price tier increased 8.9 percent year over year, compared with 7.4 percent for the low- to middle-price tier, 6.5 percent for the middle- to moderate-price tier, and 5 percent for the high-price tier. Appreciation in the low-price tier began pulling ahead of the other price tiers in 2013, and appreciation in the low-price tier has been steady since then. The five-year appreciation rate (from July 2013 to July 2018) for the low-price tier was 48 percent, compared with five-year appreciation of 38 percent for the low- to middle-price tier, 33 percent for the middle- to moderate-price tier, and 25 percent for the high-price tier.
Rising mortgage rates combined with the way that lower priced homes are increasing will not be good for first time home buyers. Waiting or failing to be properly prepared to buy a home could prove to be costly or disastrous!
As always, this report is talking about US home prices and may not reflect what is happening in your local market. If we look at the average sold home price for Anderson County SC using data from the WUAR MLS, we see that July 2018 was 2% higher than July 2017.
Of course, that is all price ranges and all types of homes or areas in our area and won’t tell you what is possible/realistic for a specific home. If you have any questions about buying or selling real estate in the Anderson area, Contact Me!
Construction Spending Increases
From the Census Bureau:
Construction spending during July 2018 was estimated at 0.1% above the revised June 2018 estimate and 5.8% above the July 2017 estimate. During the first seven months of 2018, construction spending was 5.2% higher than the same period in 2017.
Spending on private construction was 0.1% below the revised June 2018 estimate. Residential construction was 0.6% above the revised June 2018 estimate.
Private residential spending has been increasing but is STILL below the bubble peak despite the current issue of low inventory in some areas of the country. Private residential construction is up 7% year-over-year!
Home Prices Rise Three Times Faster than Rents
Only 41 percent of the U.S. population lives in a county where a median-income household can afford to buy a median list price home.
As home prices rise across the U.S., choosing to rent has become increasingly popular. New analysis by realtor.com® reveals the monthly costs of buying a home have risen by 14 percent over the past year. This is more than three times the 4 percent increase in monthly rental costs. Additionally, this analysis found that the number of places where it is cheaper to buy has significantly declined in the past year.
Not good news for those wanting to buy a home! You can imagine that we will hear that renting is beating owning because of this report.
BUT this NOT taking into account the benefits of owning a home that has nothing to do with money…
Plus you really should consider this quote from the article 12 Practical Steps to Getting Rich in Entrepreneur:
While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.
Maybe you are not ready for the serious financial commitment of owning a home. Or it simply does not make sense for you to buy today.
However, unless you are not paying rent, you are paying someone’s mortgage: yours or your landlords!
Welfare for Corporations
The typical American believes CEO pay should run no more than six times average worker pay. Top business experts, meanwhile, have shown that much wider income divides undercut efficiency by lowering employee morale and boosting turnover. And yet every year billions of dollars in taxpayer-funded federal contracts and subsidies continue to flow to corporations with extremely wide pay gaps.
More than two-thirds of the top 50 federal contractors and the top 50 federal corporate subsidy recipients paid their CEO more than 100 times their median worker pay in 2017. By contrast, the U.S. president’s salary equals just five times the pay of the average federal government employee.
In 2017, 34 of the 50 publicly held U.S. firms that received the most lucrative federal contracts paid their CEOs over 100 times the pay of their median employee. Federal contracts to these 34 firms totaled $167 billion.
Among the 50 publicly held firms that received the largest federal subsidies last year, 33 paid their CEO more than 100 times as much as their median worker. Federal subsidies to these 33 firms totaled $1.4 billion. All but three of the 50 firms had ratios larger than 25 to 1.
Disgusting! Just like it is our fault for re-electing crappy politicians, it is our fault for shopping or using businesses that do not pay ALL of their workers a decent wage. The power of the informed and concerned consumer can make a big difference.
1 out of 3 Believe the American Dream Could Be Disappearing
From Mass Mutual:
The vast majority (82 percent) of Americans describe the American Dream as financial security for both themselves and their family, three-quarters say it is owning a home, and 71 percent believe it is achieving financial independence. Despite agreeing on the definition, one-third (33 percent) of Americans believe the American dream is disappearing.
It is good to see 75% still consider owning a home is part of the American Dream. BUT what can/should be done about the 33% that think the American Dream is disappearing?
Obviously, we cannot depend on the government to do the right thing for the average American or a vanishing American Dream.
Well, Mass Mutual may have one part of the solution:
In other recent research and indicative of Americans’ community values, nearly seven in 10 Americans said community involvement is important to their overall well-being and nearly half agreed that being involved in communities improves their finances. In fact, more than half (53 percent) reported that they have supported someone in their community in a time of financial stress, and a quarter have been supported by others in their community during a time of need.
The solution is helping ourselves AND helping each other! Whether that means friends, family or your neighbors – it is up to us to help each other in whatever way we can.
Sometimes that may mean practicing tough love. For those that have hit tough times despite working hard and not making bad decisions, try to help those close to you as you can.
I know that some people are still facing tough times despite the economy being pretty good right now. If you are facing a tough time, work as hard as you can and keep plugging away.
Do what you can each and every day to reach your dreams and live the life you deserve. Work hard, save as much as you can while paying down debt and stop spending money on stuff you don;t need!
Manufacturing Increased in August
Economic activity in the manufacturing sector expanded in August, and the overall economy grew for the 112th consecutive month.
Excellent news for the economy!
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