Discussing housing debt and over extending yourself when buying a home, construction employment improves, rents rise again, the latest Beige Book and much more…
30-Year Fixed Mortgage Rate Moves Lower
Freddie just reported that the 30-year fixed mortgage rate decreased for the third consecutive week and set a new low for 2017. Check it out:
- 30-year fixed-rate mortgages averaged 3.94% with an average 0.5 point
- This is down from last week when it averaged 3.95%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.66%
- 15-year fixed-rate mortgages averaged 3.19% with an average 0.5 point
- This is the same as last week
- Last year at this time, 15-year fixed-rate mortgages averaged 2.92%
As a share of income, household debt is nothing like the threat to the national economy that it was ten years ago. But the new statistic is a good reminder that American households don’t save enough.
Economists hesitate to explain to people that they should borrow less. The advice sounds too “schoolmarmish.” It seems to lack sympathy for those whose incomes are not keeping up with the standard of living that they had expected based on historical trends. But for those concerned with the reach of the nanny state, the state is precisely what encourages citizens to borrow. And it does nobody any favors to get them overly indebted, as the millions of homeowners who went underwater in the housing crisis ten years ago discovered.
Does homeownership have spillover effects?
Owning your own home is said to be an essential part of the American dream. There is nothing wrong with planning for a good future. But there is nothing wrong with renting, either. Buying a house is not a cause of a family’s prosperity, it is typically a consequence. Owning is a blessing; over-indebtedness is a curse.
I know some of this is not going to be popular with some of my fellow Realtors. But it is so important to draw your attention to the last sentence I shared:
Owning is a blessing; over-indebtedness is a curse.
How many times have I warned about spending too much when buying a home? Owning a home can be a great way to build wealth but ONLY if you are smart and ignore your ego.
Buy a home that is VERY affordable. Ensure that you do not overpay and get the best possible deal by working with a buyers agent. You do NOT have to spend the maximum amount that the bank approves you for!
Construction employment increased in 217 out of 358 metro areas between April 2016 and April 2017, declined in 89 and stagnated in 52, according to a new analysis of federal employment data released today by the Associated General Contractors of America. Association officials noted that construction firms in many parts of the country continue to expand headcount amid strong private-sector demand for their services.
Ken Simonson, the association’s chief economist said:
Construction employment continues to expand in the majority of the nation’s metro areas. Many firms are adding new employees as they work to keep pace with demand for new private-sector projects.
Excellent news and hopefully some of the increase in construction employment is related to the building of affordable homes.
Zumper’s National Rent Report showed yet another month of mixed changes. While the top rental market prices did not experience much shuffling in rankings, the mid and lower tier markets continued to be more volatile. Overall, the Zumper National Rent Index reported that one bedroom median rent remained unchanged at $1,169, while two bedroom median rent increased 0.2% to $1,392. Check out the table below to see how prices in your city have changed.
If you rent, you can expect your rent to increase every time you renew your lease. If you own rental properties, rents are still rising and the tenants are paying for your investment properties while you build wealth.
For this week, total U.S. weekly rail traffic was up 6.7 percent compared with the same week last year. Total carloads for the week ending May 27 were up 8 percent compared with the same week in 2016, while U.S. weekly intermodal volume was up 5.4 percent compared to 2016.
Sweet! A good sign for the economy!
Some highlights from recently released Federal Reserve Beige Book:
Overall Economic Activity
Most of the twelve Federal Reserve Districts reported that their economies continued to expand at a modest or moderate pace from early April through late May. Consumer spending softened with many Districts noting little or no change in nonauto retail sales, while auto sales have edged down from last year’s record highs in several Districts; tourism activity has continued to keep pace with the general economy. Meanwhile, the majority of Districts continued to report moderate growth in manufacturing activity and in most nonfinancial service sectors. Construction of new homes and nonresidential structures also continued to grow at modest to moderate rates, as did sales of existing homes; nonresidential leasing picked up a bit.
Employment and Wages
Labor markets continued to tighten, with most Districts citing shortages across a broadening range of occupations and regions. Despite supply constraints impeding the ability of firms to attract and retain qualified workers, most Districts reported that employment continued to grow at a modest to moderate pace. Similarly, most firms across the Districts noted little change to the recent trend of modest to moderate wage growth, although many firms reported offering higher wages to attract workers where shortages were most severe.
On balance, pricing pressures were little changed from the prior report, with most Districts reporting modest increases. Low inventories of for-sale homes were pushing house prices higher in many markets.
Good overall. Which gives the Fed more motivation to raise their benchmark rate…
Interesting that they mentioned some employers are resorting to offering higher wages to find workers! If you want quality, you have to pay for quality.
Doesn’t matter if you are talking about a steak dinner or hiring an employee. While I like cheap or affordable stuff, I know that if you want quality, you have to pay more.
The Conventional Single-Family Serious Delinquency Rate decreased five basis points to 1.07 percent in April 2017. Fannie also reported that their Multifamily Serious Delinquency Rate decreased one basis point to 0.04 percent in April.
While this is great news, the “normal” delinquency rate is under 1%. Still, it is declining so let’s not look a gift horse in the mouth….
Private sector employment increased by 253,000 jobs from April to May!
Ahu Yildirmaz, vice president and co-head of the ADP Research Institute said:
May proved to be a very strong month for job growth. Professional and business services had the strongest monthly increase since 2014. This may be an indicator of broader strength in the workforce since these services are relied on by many industries.
Mark Zandi, chief economist of Moody’s Analytics said:
Job growth is rip-roaring. The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force. Increasingly, businesses’ number one challenge will be a shortage of labor.
Good news but once again we heard about the shortage of labor. It is starting to look like employers are going to have to compete for quality employees.
By 2022, as much as a quarter of the nation’s shopping malls will close, according to a report by Credit Suisse.
Between 20% and 25% of the nation’s shopping malls will close in the next five years, according to a new report from Credit Suisse that predicts e-commerce will continue to pull shoppers away from bricks-and-mortar retailers.
For many, the Wall Street firm’s finding may come as no surprise. Long-standing retailers are dying off as shoppers’ habits shift online. Credit Suisse expects apparel sales to represent 35% of all e-commerce by 2030, up from 17% today.
Ouch! While the report from ADP was good news, stuff like this confirms that retail is seriously hurting. I wrote about what will happen with all the empty retail stores in yesterday’s post…
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