– Prices Starting to Out-Pace Value With 50% of the Top 50 Markets Overvalued
– All States Posted Year-Over-Year Price Gains in October 2017
– Home Prices Projected to Increase 4.2% by October 2018
CoreLogic released its CoreLogic Home Price Index (HPI) and HPI Forecast for October 2017, which shows home prices are up both year over year and month over month. Home prices nationally increased year over year by 7% from October 2016 to October 2017, and on a month-over-month basis home prices increased by 0.9% in October 2017 compared with September 2017, according to the CoreLogic HPI. Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 4.2% on a year-over-year basis from October 2017 to October 2018, and on a month-over-month basis home prices are expected to decrease by 0.2% from October 2017 to November 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. “Single-family residential sales and prices continued to heat up in October,” said Dr. Frank Nothaft, chief economist for CoreLogic. “On a year-over-year basis, home prices grew in excess of 6% for four consecutive months ending in October, the longest such streak since June 2014. This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”
According to CoreLogic Market Condition Indicators (MCI) data, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 37% of metropolitian areas have an overvalued housing stock as of October 2017. The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income. Also, as of October, 26% of the top 100 metropolitan areas were undervalued and 37% were at value. When looking at only the top 50 markets based on housing stock, 50% were overvalued, 14% were undervalued and 36% were at value. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level. “The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk,” said Frank Martell, president and CEO of CoreLogic. “However, for entry-level renters and first-time homebuyers, it leads to tougher affordability challenges. According to the CoreLogic Single-Family Rent Index, rents paid by entry-level renters for single-family homes rose by 4.2% from October 2016 to October 2017 compared with overall single-family rent growth of 2.7% over the same time.”
US private sector adds 190,000 jobs in November: ADP
US private employers created 190,000 jobs in November, down sharply from the month before and roughly in line with economists’ expectations, a report by a payrolls processor showed on Wednesday. Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 185,000 jobs, with estimates ranging from 150,000 to 240,000. Private payroll gains in October were unrevised at 235,000. The report is jointly developed with Moody’s Analytics. The ADP figures come ahead of the US Labor Department’s more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists polled by Reuters are looking for US private payroll employment to have grown by 190,000 jobs in November, down from 252,000 the month before. Total non-farm employment is expected to have risen by 200,000.The unemployment rate is forecast to stay steady at the 4.1% recorded a month earlier.
CoreLogic – US single-family rents up 2.9% year over year in September
– Riverside-San Bernardino-Ontario Experienced the Highest Year-Over-Year Rent Growth in September
– Overall Index pulled down by high-end segment
– Rent prices may be showing some early impacts of Hurricane Harvey
– Of 20 select metros analyzed, San Francisco and Miami were the only two to experience a decrease in single-family rent prices in September
National single-family rent prices climbed steadily between 2010 and 2017, as measured by the CoreLogic Single-Family Rent Index (SFRI). However, the Index shows year-over-year rent growth has decelerated slowly since it peaked early last year. In September 2017, single-family rents increased 2.9% year over year, a 1.5-percentage point decline since the growth rate hit a high of 4.4% in February 2016. 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. Analysis is conducted nationally and for 75 Core Based Statistical Areas (CBSAs). Using the Index to analyze specific price tiers reveals important differences. The Index’s overall growth in September 2017 was pulled down by the high-end rental market, which is defined as properties with rent prices 125% or more of a region’s median rent. Rent prices on higher-priced rental homes increased 2.2% year over year in September 2017, unchanged from September 2016. Rent prices in the low-end market, defined as properties with rents less than 75% of the regional median rent, increased 4.5% year over year in September 2017, down from a gain of 5.3% in September 2016.
Rent growth varies significantly across metro areas. Riverside-San Bernardino-Ontario, CA had the highest year-over-year rent growth with an increase of 5.8%. Only two CBSAs among this group of 20 showed a decrease in rent prices: Miami-Miami Beach-Kendall (-0.7%) and San Francisco-Redwood City-South San Francisco (-0.2%). The September 2017 results for Houston are notable with no change in rent prices from September 2016 to September 2017, and it is likely that rents in this market are showing some early impacts from Hurricane Harvey. The year-over-year rent decrease in Houston stopped in September 2017 after 17 consecutive months of declines as Houston rental transactions increased 63.4% year over year. A more pronounced impact is expected in Houston in future months. Rental vacancy rates are available quarterly from the US Census Bureau Housing Vacancy Survey. Metro areas with limited new construction and strong local economies that attract new employees tend to have low rental vacancy rates and stronger rent growth. Minneapolis experienced 4.2% year-over-year rent growth in Q3 2017, driven by employment growth of 2.9% year over year, which was more than double the national growth of 1.4%. In contrast, Tulsa, which has been hit with energy-related job losses since early 2015, experienced a 1.4% year-over-year decrease in rent prices, according to CoreLogic data.
Consumer bureau’s new leader steers a sudden reversal
The defanging of a federal consumer watchdog agency began last week in a federal courthouse in San Francisco. After a nearly three-year legal skirmish, the Consumer Financial Protection Bureau appeared to have been victorious. A judge agreed in September with the bureau that a financial company had misled more than 100,000 mortgage customers. As punishment, the judge ordered the Ohio company, Nationwide Biweekly Administration, to pay nearly $8 million in penalties. Then Mick Mulvaney was named the consumer bureau’s acting director. Barely 48 hours later, the same lawyers filed a new two-sentence brief. Their request: to withdraw their earlier submission and no longer take a position on whether Nationwide should put up the cash. It was a subtle but unmistakable sign that the consumer bureau under Mr. Mulvaney is headed in a new direction — one that takes a lighter touch to regulating the financial industry. The reversal is part of a broad push by the Trump administration to unfetter companies from Obama-era regulations. Inside the agency, change has been swift. Mr. Mulvaney briefly stopped approval of payments to some victims of financial crime, halted hiring, froze all new rule-making and ordered a review of active investigations and lawsuits. Some, he has indicated, will be abandoned. “This place will be different, under my leadership and under whoever follows me,” Mr. Mulvaney said Monday about an agency that he previously denounced as a “sad, sick” example of bureaucracy gone amok.