Discussing the latest Federal Reserve Beige Book, home ownership and racial wealth,foreclosures, regrets about real estate and much more…
Highlights from Latest Beige Book
Highlights from the Federal Reserve’s latest Beige Book:
Economic activity expanded across all twelve Federal Reserve Districts in June, with the pace of growth ranging from slight to moderate.
Residential and nonresidential construction activity was flat to expanding in most Districts. Most Districts cited low home inventory levels in certain market segments which were constraining home sales in many areas.
Employment across most of the nation maintained a modest to moderate pace of expansion
Wages continued to grow at a modest to moderate pace in most Districts, and many firms attributed these wage gains to tighter labor market conditions.
Wage pressures generally trended with employment conditions, and rising wage pressures were noted among both low- and high-skilled positions.
Prices continued to rise modestly in the majority of Districts, and a few Districts noted that price pressures had eased slightly.
Good but not great. But at least it wasn’t bad…
Homeownership and the Racial Wealth Divide
From St. Louis Fed :
Homeowners‘ equity (HOE)—the market value of residential real estate minus the value of home-secured debt—has long been the single largest component of wealth for black and Latino families.2 On average during the past quarter-century, HOE accounted for nearly half of black and Latino families‘ wealth, compared with roughly a third for Asian or other families and about a quarter for white families (Figure 1).3 During peaks in 1989 and around the financial crisis starting in 2007, HOE accounted for more than half of the wealth of the average black and Latino family.
After 2007, large price declines and the loss of many homes through foreclosure or other distressed transactions served to reduce the 2013 share of wealth attributed to HOE to 40 percent for black families and to 42 percent for Latino families. This same share declined to 25 percent for white families and to 32 percent for Asian or other (henceforth, ”Asian“) families.
Very disturbing change. What can or should be done?
We certainly want every credit worthy American to be able to become a home owner but we do not want to repeat the mistakes of the past. Complicated situation with no easy fast solutions to my knowledge…
SC Ports Achieves Record Year
South Carolina Ports Authority moved a record 2.14 million twenty-foot equivalent units in fiscal year 2017, an increase of 10 percent over the previous year’s container volumes.
A recent article in Upstate Business Journal said:
According to a study by the American Association of Port Authorities, the Port of Charleston ranked first among the country’s top 10 ports in terms of the percentage of volume grow between 2011 and 2016.
There is no doubt we are blessed by the Port of Charleston, even in the Upstate. Combine the Port of Charleston with Anderson’s location between Atlanta and Charlotte, and you can see we have everything we need to see serious economic growth.
FHFA Foreclosure Report for April 2017
Not sure why FHFA is so far behind with this report since July is already half over. Still, there is some interesting stuff in it:
- The Enterprises completed 16,521 foreclosure prevention actions in April, bringing the total to 3,898,985 since the start of the conservatorships in September 2008. Over half of these actions have been permanent loan modifications.
- There were 11,328 permanent loan modifications in April, bringing the total to 2,065,576 since the conservatorships began in September 2008.
- The share of modifications with principal forbearance accounted for 32 percent of all permanent modifications in April. Modifications with extend-term only increased to 38 percent during the month due to continuing improvement in house prices.
- There were 1,650 short sales and deeds-in-lieu completed in April, down 10 percent compared with March.
- The serious delinquency rate fell further from 1.04 percent at the end of March to 1.01 percent at the end of April.
- Third-party and foreclosure sales decreased 16 percent from 6,581 in March to 5,523 in April.
- Foreclosure starts increased 10 percent from 15,478 in March to 17,056 in April.
I commend the FHA and the GSEs on their hard work in foreclosure prevention. Very good news that the serious delinquency rate and foreclosure sales decreased BUT foreclosure starts increasing is perplexing.
Even better news that total delinquent loans, the serious delinquency rate, number of short sales, foreclosure sales and foreclosure starts ALL decreased YoY.
Real Estate Regrets
But the market’s wild ride has left scars since we last asked Americans what they shoulda, coulda and woulda done about their real estate decisions in 2013. Today, 44% of Americans have a regret about their current home or the process they went through to when choosing it, a slight decrease from 46% five years go. According to our June 2017 survey, conducted online by Harris Poll among 2,264 U.S. adults ages 18 and older:
- A majority of Americans, 62%, believe housing costs have become less affordable since 2012 – of which 26% say it is much less affordable.
- More than one in five Americans, 21%, say a housing purchase mistake they made in the past is now holding them back from changing their current housing situation.
- Even 26% of those with an annual household income of $100,000 or more – a level roughly 50% more than the median U.S. household income of $73,298 – believed they could not afford to buy a home in the current market.
- Among Americans who were involved in choosing their current home, the top regret among renters was deciding to rent instead of buying a home, 41%, while more homeowners wished they had chosen a larger home, 33%, – which are the same top regrets they had in 2013.
Contrary to what you may read in other Realtor blogs, I preach about how serious buying a home is and how everything isn’t always perfect. Yes it is a great way to build wealth but it is also a great way to screw yourself.
I have written many home buying articles that I strongly suggest you read!
The Secret Reason for America’s White-Hot Political Rhetoric
From Fabius Maximus:
There is a secret to US politics that explains the white-hot rhetoric that now dominates it. If many Americans saw this, the political system would change. There are three hundred thousand entries on Google for “political polarization”, mostly whining about its awfulness and pining for the bipartisanship of the days of yore.
Oh I am not going to tell you the secret. You have to follow the link to find out the secret…
The Unhappiness of the US Working Class
Snippets from another must read article:
The US is in crisis. The political divisions are crippling; income and opportunities are as unequally shared as they have ever been; and society is divided in terms of the different lives, hopes, and dreams that the rich and the poor have. The starkest marker of this crisis of societal ill-being is the rising rate of mortality due to premature deaths (suicide, opioids, and alcohol poisoning, among others) primarily among less educated whites. The trend of rising rather than falling mortality rates among an important demographic group is unique to the US among rich countries.
A critical factor is the plight of the white blue-collar worker, for whom hopes for making it to a stable, middle-class life have largely disappeared. Due in large part to technology-driven growth, blue-collar jobs in the traditional primary and secondary industries—such as coal mines and car factories—are gradually disappearing. Not coincidentally, the typical working-class, two-parent household is also disappearing.
I never thought I would see what has happened to America come to pass. Remember that failing to plan is planning to fail…
Dodge Momentum Index Moves Higher in June
From Dodge Data & Analytics:
The Dodge Momentum Index took another step forward in June, increasing 1.1% to 141.1 (2000=100) from its revised May reading of 139.6. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. June’s lift was due to a 4.8% advance by the institutional component of the Momentum Index, while the commercial component fell 1.3%. The Momentum Index has exhibited substantial strength since mid-2016, with the institutional and commercial components trading off as the driver of growth almost on a month-to-month basis. Although the commercial component of the Momentum Index declined in the latest month it is 11.8% higher than it was in June 2016, while the institutional component is 9.5% above a year ago. The overall rising trend for both sectors continues to suggest that construction activity will remain healthy through the end of the year.
While this is talking about nonresidential construction, it is a seriously good sign for the economy. Remember, we need a healthy economy for a healthy housing market and a healthy housing market for a healthy economy…
Without Glass-Steagall America Will Fail
From Paul Craig Roberts:
For 66 years the Glass-Steagall act reduced the risks in the banking system. Eight years after the act was repealed, the banking system blew up threatening the international economy. US taxpayers were forced to come up with $750 billion dollars, a sum much larger than the Pentagon’s budget, in order to bail out the banks. This huge sum was insufficient to do the job. The Federal Reserve had to step in and expand its balance sheet by $4 trillion in order to protect the solvency of banks declared “too big to fail.”
Folks, this is the Ugly But Honest Truth. I beg you to check out this must read article!
U.S. Consumer Comfort Slumps to Lowest Level Since January
A sudden downturn in American households’ optimism about the economy and less-favorable views of personal finances sent the Bloomberg Consumer Comfort Index reeling to its lowest point since January, a potentially adverse sign for spending, figures showed Thursday.
The root of the biggest two-week decline in the measure of confidence about the economy since 2011 and less optimism about households’ financial well-being may lay in subdued wage growth and disappointment in Washington politics. While stocks are hovering close to record highs, sentiment weakened particularly among those making more than $50,000 a year, indicating respondents are increasingly doubtful Congress and President Donald Trump will pass economy-enhancing legislation, including tax reductions. While the post-inauguration bump in sentiment has evaporated, low inflation and cheap borrowing costs remain sources of support for consumer spending.
Sigh… so do you feel more or less comfortable? More importantly, are you doing everything you can to ensure you will have food and shelter if or when the economy hits the skids again?
Always hope for the best but plan for the worst!
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