The headstrong supply and demand imbalances in much of the country slightly tempered the pace of sales and caused home prices to maintain their robust growth in the second quarter, according to the latest quarterly report by the National Association of Realtors (NAR). The national median existing single-family home price in the second quarter was $255,600, which is up 6.2% from the second quarter of 2016 ($240,700) and surpasses the third quarter of last year ($241,300) as the new peak quarterly median sales price. The median price during the first quarter increased 6.9% from the first quarter of 2016. Single-family home prices last quarter increased in 87% of measured markets, with 154 out of 178 metropolitan statistical areas (MSAs) showing sales price gains in the second quarter compared with the second quarter of 2016. Twenty-three areas (13%) recorded lower median prices from a year earlier. Twenty-three metro areas in the second quarter (13%) experienced double-digit increases, down from 30 areas in the first quarter (17%). Overall, there were slightly more rising markets in the second quarter compared to the first quarter, when price gains were recorded in 85% of metro areas. Total existing-home sales, including single family and condos, slipped 0.9% to a seasonally adjusted annual rate of 5.57 million in the second quarter from 5.62 million in the first quarter, but are still 1.6% higher than the 5.48 million pace during the second quarter of 2016. At the end of the second quarter, there were 1.96 million existing homes available for sale4, which was 7.1% below the 2.11 million homes for sale at the end of the second quarter in 2016. The average supply during the second quarter was 4.2 months — down from 4.6 months in the second quarter of last year.
Last quarter, a rise in the national family median income ($71,529)5 was not enough to offset weaker affordability from the combination of higher mortgage rates compared to a year ago and rising home prices. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $56,169, a 10% down payment would require an income of $53,213, and $47,300 would be needed for a 20% down payment. The five most expensive housing markets in the second quarter were the San Jose, California, metro area, where the median existing single-family price was $1,183,400; San Francisco, $950,000; Anaheim-Santa Ana, California, $788,000; urban Honolulu, $760,600; and San Diego, $605,000. The five lowest-cost metro areas in the second quarter were Youngstown-Warren-Boardman, Ohio, $87,000; Cumberland, Maryland, $98,200; Decatur, Illinois, $107,400; Binghamton, New York, $109,000; and Elmira, New York, $111,600. Metro area condominium and cooperative prices — covering changes in 61 metro areas — showed the national median existing-condo price was $239,500 in the second quarter, up 5.4% from the second quarter of 2016 ($227,200). Eighty-seven% of metro areas showed gains in their median condo price from a year ago.
Total existing-home sales in the Northeast rose 1.3% in the second quarter and are 0.4% above the second quarter of 2016. The median existing single-family home price in the Northeast was $282,300 in the second quarter, up 3.2% from a year ago. In the Midwest, existing-home sales increased 4.2% in the second quarter but are 0.5% below a year ago. The median existing single-family home price in the Midwest increased 6.6% to $204,000 in the second quarter from the same quarter a year ago.Existing-home sales in the South dipped 3.0% in the second quarter but are 2.5% higher than the second quarter of 2016. The median existing single-family home price in the South was $229,400 in the second quarter, 6.7% above a year earlier. In the West, existing-home sales decreased 3.7% in the second quarter but are 3.1% above a year ago. The median existing single-family home price in the West increased 7.5% to $372,400 in the second quarter from the second quarter of 2016.
Chinese takeovers of US companies plummet this year amid tough Trump talk
– As of early August, Chinese dealmaking in the US has dropped by 65% this year, according to Dealogic.
– The sharp decline comes amid greater uncertainty around whether the Trump administration will allow the deal to be completed.
– The Dealogic report estimated a further drop in Chinese deals in the US, putting $75 million in advisor fees at risk.
As the Trump administration looks to take a tougher stance against Beijing, Chinese investments into the US have more than halved this year, according to Dealogic. “Amid growing regulatory scrutiny of China outbound M&A targeting the US, volume has seen a 65% year-on-year decline in 2017 year-to-date,” Nicholas Farfan and Karl But of Dealogic Research said in an Aug. 8 note. “In comparison, such deals peaked at $65.2 billion last year, with high-profile deals including HNA’s acquisition of 25% of Hilton Worldwide.” “With tightening restrictions, Chinese buyers may look to stop pursuing or shelve potential acquisitions in the US,” the note said. The pressure and uncertainty is coming from both countries. On Beijing’s side, authorities are reportedly targeting some of the largest Chinese dealmakers to try to keep capital from fleeing the country and contributing to yuan weakness. On the American side, reports indicate the Committee on Foreign Investment in the United States is looking to use national security concerns to prevent more Chinese purchases of US firms, especially in technology. Anecdotally, Gregory Husisian, chair, export controls and national security group at law firm Foley & Lardner, noted that an increasing number of clients are concerned about working with Chinese buyers due to the potential for regulatory intervention. The dealmaking industry could also suffer some significant business setbacks. The Dealogic analysts estimate about $9.7 billion in pending Chinese deals to buy US firms could fall under regulatory scrutiny, potentially putting $75 million in advisor fees at risk.
NAHB – single-family starts hold steady in July after upward June revision
Nationwide housing starts fell 4.8% in July to a seasonally adjusted annual rate of 1.16 million units, according to newly released data from the US Department of Housing and Urban Development and the Commerce Department. Single-family production slipped 0.5% in July to a seasonally adjusted annual rate of 856,000 after a strong, upwardly revised June reading. Year-to-date, single-family starts are 8.6% above their level over the same period last year. Multifamily starts dropped 15.3% to 299,000 units. “The overall strengthening of the single-family sector is consistent with solid builder confidence in the market,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “The sector should continue to firm as the job market and economy grow and more consumers enter the housing market.” “New-home production numbers this month are in line with our forecast for a slow and steady recovery of the housing market,” said NAHB Chief Economist Robert Dietz. “We saw multifamily production peak in 2015, and this sector should continue to level off as demand remains solid.” Regionally in July, combined single- and multifamily housing production rose 0.6% in the South, and fell 1.6% in the West, 15.2% in the Midwest and 15.7% in the Northeast. Overall permit issuance in July was down 4.1% to a seasonally adjusted annual rate of 1.22 million units. Single-family permits held steady at 811,000 units while multifamily permits fell 11.2% to 412,000. Regionally, overall permits rose 19.2% in the Northeast. Permits fell 1.4% in the South, 7.9% in the West, and 17.4% in the Midwest.
Fiat Chrysler joins BMW, Intel in developing self-driving cars
Fiat Chrysler (FCAU) said Tuesday it will partner with BMW and Intel (INTC) to develop a platform for self-driving cars. The Italian-American automaker will contribute engineering and other technical resources to the existing BMW-Intel alliance, which launched in July 2016 to create an automated driving system for global manufacturers. Fiat Chrysler also said its involvement in the group will accelerate product development. Earlier this year, the alliance announced its plan to test 40 autonomous cars on public roads by the end of 2017. The companies, including Intel-owned Mobileye, expect to offer solutions for fully automated driving by 2021. The alliance’s goal is to create the “most relevant” self-driving platform that automakers can adopt while maintaining their brand identities. “In order to advance autonomous driving technology, it is vital to form partnerships among automakers, technology providers and suppliers,” said FCA CEO Sergio Marchionne. “Joining this cooperation will enable FCA to directly benefit from the synergies and economies of scale that are possible when companies come together with a common vision and objective.” In a joint announcement, the companies said they invite other automakers and technology firms to adopt their platform. Financial terms of the Fiat Chrysler deal weren’t disclosed.
CoreLogic – US single-family rents up 2.8% year over year in June
– National rent growth decelerated in June 2017 compared with June 2016
– Low-end rent growth more than doubled high-end rent growth
– Orlando had the highest year-over-year rent growth in Q2
Single-family rents, as measured by the CoreLogic Single-Family Rental Index (SFRI), climbed steadily between 2010 and 2016. However, the index shows year-over-year rent growth has decelerated slowly since February 2016, when it peaked at a 4.4%. As of June 2017, single-family rents increased 2.8% year over year, a 1.6 percentagepoint decline since the February 2016 peak. The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. Using the index to analyze specific price tiers reveals important differences. The index’s overall growth was pulled down by the high-end rental market, defined as properties with rents 125% or more of a region’s median rent. Rents on higher-priced rental homes increased 1.9% year over year in June 2017, down from a gain of 3% in June 2016. Growth in the low-end market, defined as properties with rents less than 75% of the regional median rent, increased 4.4% in June 2017, down from a gain of 5.5% in June 2016.
Rent growth varies significantly across metro areas. Rental vacancy rates are available quarterly from the US Census Bureau Housing Vacancy Survey. Figure 3 shows the relationship between the rent growth and rental vacancy rates for 37 metro areas that are available for both CoreLogic’s rental index and the Census’s vacancy survey in Q2 2017. Cities with limited new construction and strong local economies that attract new employees tend to have low rental vacancy rates and stronger rent growth. Orlando experienced 4.5% year-over-year rent growth in Q2 2017, driven by employment growth of more than 3% year over year and a rental vacancy rate of 7.1%, slightly lower than the 7.3% national single-family rental home vacancy rate in Q2 2017. In contrast, Oklahoma City, which has been hit with energy-related job losses since early 2015 and a rental vacancy rate of 11.5% in Q2 2017, experienced a 3% year-over-year decrease in rents, according to CoreLogic data.
DSNews – further simplifying foreclosures
Foreclosures can be a messy process for all involved—from the homeowner that loses their home, to the servicers that eventually take care of the property—it is anything but a pleasant experience. In addition, the entire process can be complicated by a slew of paperwork, payments, and transfers with many moving parts that are easy to miss. But, according to The Journal Times, one county in Wisconsin is making a small change to its foreclosure procedure that could go a long way in ensuring smooth transitions of title, one that the rest of the country could possibly benefit from if it goes as planned. The proposed change is as simple as removing a middle-man, the article notes. In Racine County, as of now, when a foreclosure is sold through the sheriff’s office the buyer receives a copy of the deed and is required to take that deed down to the Register of the Deed’s office to get it filed. However, this little step is often overlooked, according to the Racine County Register of Deeds, which can cause big problems for borrowers and the state, since the tax bill will continue to be sent to the old owner to never be paid. This can lead to further complications, like tax interception. The proposed bill, Senate Bill 175, would allow the Clerk of Courts Office to simply take the deed directly to the Register of Deeds Office, and eliminate the middle man, who has little incentive to make sure the task gets accomplished.
Currently, this practice has been implemented in Milwaukee County, but if passed would become state-wide practice. Critical and constant examination of foreclosure requirements and best practices are vital to streamlining and simplifying the industry, and taking a look at what certain states and municipalities are doing is just one of the many ways for the industry to stay ahead of the curve.