Discussing home buying myths, 1 in 3 still hurting from the Great Recession, affordability multifamily style, Fannie sees the economy slowing down and more…
Home Buying Myths
Here is a little infographic with home buying myths that need busting:
1 in 3 Americans Still Feeling the Sting of the Financial Crisis
From Country Financial:
As we approach the 10-year anniversary of the housing market crash of 2007 and financial crisis known as the Great Recession, the COUNTRY Financial Security Index® survey looked at Americans’ views on their personal financial recovery. The study revealed that nearly one-in-three Americans believe they have yet to recover financially or never will, despite signals from the Federal Reserve that the U.S. economy is growing.
According to the survey findings, this is due in large part to the perception that financial recovery has not been uniformly felt by all Americans – with women, African Americans and those earning less than $50,000 annually being most likely to feel financially insecure. Compared to 55 percent of all Americans, only 49 percent of women, 43 percent of African Americans and 42 percent of those making under $50,000 say they are better off now than they were before the recession – a significant difference. A quarter of women (25 percent) and African Americans (26 percent), and 37 percent of those making under $30,000 per year do not think they could still keep up with their bills within a month of being out of work.
So how many of these people will be buying a home in the near future? It is a shame that people that could benefit from the wealth building effect of home ownership are feeling this way…
Attacking the Affordability Crisis
Interesting stuff from Globe Street:
Multifamily is the perennial darling of the CRE industry. But a deeper dive shows a major gap in specific markets between supply and demand.
There’s a downside to the economic upturn, and it comes in a rather odd space–the ever-flush-and-fertile multifamily market. The rush by developers to cash in on upper-scale housing has contributed to a national dearth of product for those who need it most, namely the candidates for affordable and workforce housing. And, of course, a shifting regulatory environment adds fuel to the fire.
Very good stuff. I can see similarities to how the new homes being built are mainly in the upper end of the market.
And this isn’t the first time I have heard about how the Low-Income Housing Tax Credit has been hurting.
Economic Expansion Expected to Decelerate in Second Half
From Fannie Mae:
Expectations for 2017 economic growth remain at 2.0 percent amid a projected second half slowdown, according to the Fannie Mae Economic & Strategic Research (ESR) Group’s July 2017 Economic and Housing Outlook. With the expansion having entered its ninth year, incoming data point to a second quarter economic growth rebound to 2.7 percent annualized, up from 1.4 percent in the first quarter.
Fannie Mae Chief Economist Doug Duncan said:
While second quarter growth is poised to rebound, we expect growth to moderate through the remainder of 2017. Consumer spending, traditionally the largest contributor to economic growth, is sluggish and is lagging positive consumer sentiment and solid hiring.
Construction activity has lost some steam following the first quarter’s weather-driven boost. Meanwhile, very lean inventory continues to act as a boon for home prices and a bane for affordability, particularly among potential first-time homeowners. According to our second quarter Mortgage Lender Sentiment Survey, lenders expect to ease credit standards further. However, we continue to project that the pace of growth in total home sales will slow to 3.3 percent this year, as we believe rapid home price gains amid scarce supply will remain a hurdle for potential homebuyers despite improvements in credit access.
Ouch! Once again we hear about rising home prices and inventory hurting home buyers…
Social Mobility Is On the Decline and With It the American Dream
From Business Insider:
The sharp and steady increase in US inequality in recent decades has been well documented. Less attention has been paid to a potentially even more important and alarming trend — a decline in US social mobility.
After all, this is the very essence of the American Dream, that people can succeed and prosper if they just work and try hard enough. A startling decline in the ability of Americans to climb up the social ladder is documented in a new study published by the Federal Reserve Bank of Minneapolis.
The report, entitled ” The Decline in Intergenerational Mobility After 1980″ finds “mobility declined sharply for cohorts born between 1957 and 1964 compared to those born between 1942 and 1953.”
Very disturbing. But what can be done? I think that ultimately, if your life sucks, it is up to you to do something about it. Sounds easier than it truly is…
Life is hard, it’s unfair and yes some are born with a silver spoon in their mouth. But this doesn’t mean we shouldn’t try to be the best we can.
New U.S. Subprime Boom But From a Different Angle This Time
It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud. Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017.
A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide.
Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis. But since the Great Recession, business has exploded. In 2009, $2.5 billion of new subprime auto bonds were sold. In 2016, $26 billion were, topping average pre-crisis levels, according to Wells Fargo & Co.
Sounds like some are repeating the same mistakes that caused the Great Recession. After what happened with mortgage securities, I would shy away from any thing similar.
But it isn’t just predatory lending and bundling crappy loans into securities. As Gas2.org explains:
Some people say capitalism and alligators have much in common — both eat their young. While the rich get richer (and will get richer still if the #FakePresident has his way), ordinary schlubs who are working one, two, or sometimes three jobs to make ends meet are finding they can no longer afford to buy average new cars.
That’s according to a new study by Bankrate.com. It finds that people living in 24 of the 25 largest metropolitan areas in the US cannot afford the average price of new cars, which was $33,000 in May according to Kelly Blue Book. In six of those cities, people struggle to afford cars cost half that much.
My wife and I have been driving the same cars for many years simply because they are paid for. We could buy news cars but why?
Just like I preach about buying a sensible affordable home, the same goes with ALL of your spending. Learn the difference between what you want, what you need and what is truly affordable.
People Buy Payments & Why Rates Can’t Rise
From Real Investment Advice:
When the average American family sits down to discuss buying a home they do not discuss buying a $125,000 house. What they do discuss is what type of house they “need” such as a three bedroom house with two baths, a two car garage, and a yard.
That is the dream part.
The reality of it smacks them in the face, however, when they start reconciling their monthly budget.
Here is a statement I have not heard discussed by the media. People do not buy houses – they buy a payment. The payment is ultimately what drives how much house they buy. Why is this important? Because it is all about interest rates.
Just a snippet from a must read article. If rates do rise, we could be in for a world of hurt…
Americans Remain Slightly Positive About U.S. Economy
With Gallup’s U.S. Economic Confidence Index standing at +5 last week, U.S. adults remained slightly optimistic about the state of the economy, though this optimism is not as widespread as it was earlier this year. The Economic Confidence Index has remained primarily in the low single digits since peaking at +16 in early March.
While this is good, it sure isn’t great…
Americans’ Massive Disapproval of Both Parties
From Strategic Culture:
The Monthly Harvard-Harris Poll: June 2017 is the latest poll in that series, and it scientifically sampled 2,258 U.S. registered voters, of whom 35% were Democrat, 29% were Republican, and 30% were independent. It indicates that 37% approve and 63% disapprove of the way the Republican Party is handling its job. It also indicates that 38% approve, and 62% disapprove of the way the Democratic Party is handling its job.
Glad to see it isn’t just me that disapproves of how politicians are doing their jobs.
Well that is all I have time for today! Plenty of other goodies saved for tomorrow so be sure to check back!