Discussing why banks are making fewer loans, mortgage credit availability, home prices, improving equity, the July jobs report and much more…
Payouts, NOT Capital Requirements, To Blame for Fewer Bank Loans
Federal Deposit Insurance Corporation Vice Chairman Thomas Hoenig, frequently a Wall Street gadfly, has long said the biggest banks should be required to set aside more capital so they can weather a crisis without devastating the financial system.
Banks contend the Dodd-Frank Wall Street reforms resulting from the 2007-09 financial crisis, including heightened capital requirements, are too constricting and force them to pull back on loans.
Hoenig, who was a high-ranking Federal Reserve official during the crisis, cautioned Senate Banking Committee Chairman Mike Crapo and the committee’s senior Democrat, Sherrod Brown, “against relaxing current capital requirements and allowing the largest banks to increase their already highly leveraged positions.”
Using public data to analyze the 10 largest bank holding companies, Hoenig found they will distribute more than 100 percent of the current year’s earnings to investors, which could have supported to $537 billion in new loans.
Hoenig is putting himself in the bank’s cross hairs by telling the truth…
Mortgage Credit Availability Increases Slightly in July
Mortgage credit availability increased slightly in July according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) which analyzes data from Ellie Mae’s AllRegs® Market Clarity® business information tool.
Good news and hopefully this will mean we will see more people buying homes. Of course, we still have the issue of low inventory to contend with in many areas.
But at least one potential problem is getting better…
US Home Prices
Interesting stuff from Fannie Mae’s Q2 2017 Credit Supplement:
Remember there is a huge difference between what is happening nationally, on a state level and in your area. Just a few blocks can make a huge difference in how a real estate market is performing. It is ALWAYS best to consult with an experienced local REALTOR.
And it isn’t just Fannie Mae that has reported how home prices are increasing. The average home owner in the US saw a $14,000 increase in equity during the last year according to the latest Equity Report from CoreLogic.
How could you take advantage of this situation?
With the increased value of your home and today’s low mortgage rates, it is possible that you could move to a better home or location.
Home Selling Tips
Since I just mentioned selling your home, here are a few easy simple tips that pack a punch:
Low Home Ownership Levels for African Americans
Some remarks from Melvin L. Watt, Director of FHFA in a speech at the NAREB Convention:
The truth is that the egregious historical forms of housing discrimination, such as racially restrictive covenants and overt racist attitudes, have largely given way to other intractable obstacles that negatively impact African American homeownership. The numbers don’t lie. In 2004, prior to the economic and housing meltdown, African Americans enjoyed a homeownership rate of almost 50 percent. By 2017 the African American homeownership rate had declined to 42 percent, almost back to 1994 levels. So, on the criteria of homeownership, we are worse off today than we were 20 years ago. Because equity in homes has always represented a major part of African American assets, the impact of the economic and foreclosure crisis on African American wealth has been substantial.
We all know well the historical reasons for low African American homeownership rates: disproportionate African American unemployment and under-employment, low and stagnant wages, non-existent and depleted savings, and lower wealth in general. We also know well the unsavory practices that set the stage for our homeownership rates to get worse, especially subprime and predatory lending that disproportionately targeted minorities with mortgages that were designed to fail. We also know about the generally irresponsible practices in the real estate and mortgage finance sector that ultimately led to the meltdown. And then, of course, the meltdown resulted in disproportionate reductions in housing values, a disproportionate number of foreclosures, abandoned properties, destabilization, disinvestment and much slower rates of recovery in most African American neighborhoods.
It’s good to see Watt talking about this since it obviously needs improvement. The big question is how to improve it in a sustainable manner without repeating any of the mistakes that lead to the housing melt down…
Have Smartphones Destroyed a Generation?
From The Atlantic:
More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.
I’ve been researching generational differences for 25 years, starting when I was a 22-year-old doctoral student in psychology. Typically, the characteristics that come to define a generation appear gradually, and along a continuum. Beliefs and behaviors that were already rising simply continue to do so. Millennials, for instance, are a highly individualistic generation, but individualism had been increasing since the Baby Boomers turned on, tuned in, and dropped out. I had grown accustomed to line graphs of trends that looked like modest hills and valleys.
Around 2012, I noticed abrupt shifts in teen behaviors and emotional states. The gentle slopes of the line graphs became steep mountains and sheer cliffs, and many of the distinctive characteristics of the Millennial generation began to disappear. In all my analyses of generational data—some reaching back to the 1930s—I had never seen anything like it.
Someday will we look back at smart phones as being a HUGE mistake? Or will it be social media that we say was a mistake?
Very interesting must read article despite not being about real estate.
July Jobs Report
Highlights from the July 2017 BLS Jobs Report:
Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 4.3 percent. Employment increased in food services and drinking places, professional and business services, and health care.
The labor force participation rate, at 62.9 percent, changed little in July and has shown little movement on net over the past year. The employment-population ratio (60.2 percent) was also little changed in July but is up by 0.4 percentage point over the year.
Over the year, average hourly earnings have risen by 65 cents, or 2.5%.
U-6 (Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force) was stuck at 8.6%.
393,000 part time jobs were added and there was a decrease of 54,000 full-time workers.
So while this report looks pretty good, it is that last little tidbit that concerns me. I guess as long as Wall Street and the Dow is kicking butt, the politicians won’t be concerned…
Voters Remain Unconvinced There is a ‘Party of the People’
Even as partisan tension continues to rise in Washington, slightly fewer voters now say neither Republicans nor Democrats are the party of the American people. A new Rasmussen Reports national telephone and online survey finds that 46% of Likely U.S. Voters think it’s fair to say that neither party in Congress is the party of the American people.
Not a big fan of the phrase “Party of the People” since it sounds too much like some old Soviet propaganda. Still, we need elected officials that that have our backs…
Not that we can ever depend on anyone but ourselves for improving our lives.
Foreign Buyer Residential Purchases Increases
Foreign buyers purchased $153 billion of U.S. residential property in April 2016–March 2017, an increase from the $102.6 billion of property purchased in the previous 12-month period, according to NAR’s recently released 2017 Profile of International Activity in U.S. Residential Real Estate. Non-resident foreign buyers purchased $78.1 billion of property, while resident foreign buyers purchased $74.9 billion of property. In terms of units sold, foreign buyers purchased 284,455 residential properties, an increase from 214,885 during the previous 12-month period. Foreign buyer purchases accounted for five percent of existing home sales, and the dollar volume of sales accounted for 10 percent of the dollar volume of existing home sales.
If buyers from other countries recognize the value of owning real estate in the US, why would anyone living here NOT feel the same way? Just saying…