Resale inventory is at the lowest level in more than 18 years and continues to decrease. New home construction hasn’t kept pace with demand, and the result is an inventory shortage at a time when demographic and economic indicators are moving upward for the housing market. One way to measure for-sale housing inventory is with “months’ supply,” which shows how many months it would take to sell the available inventory at the current sales pace, as if no other homes came on the market, which is unlikely but it is a good snapshot to measure health. The housing market is seasonal, so when comparing the data over time we look at these numbers for the same month of each year. In March 2018, the months’ supply was approximately 3.8 months measured across the country, which means it would take only 3.8 months to sell all the existing houses listed for sale at the March 2018 sales pace. The March 2018 supply was about the same level as in March 2017, but well below where it was during the Great Recession, and tighter than it was before the housing boom. By this measure, inventory is the tightest it’s been in over 18 years.
When we dig deeper into inventory at different price levels we see that inventory for entry-level homes is even tighter. Using the median price as the reference, we look at months’ supply for homes listed at different price points, for those homes listed at the entry-level (priced from 50% of median sale price up to 25% above) there was only a 3-month supply available for sale. There is more supply at higher price points – close to 7 months for homes listed for more than twice the median sale price. Areas of the country with strong job growth have even lower supply. Denver, Seattle, and San Francisco have about 2 months of supply, making each of those cities a sellers’ market. Miami, with a supply made up mostly of condos, has the highest supply of the largest metros at 9 months. The incredibly tight inventory on the low end has pushed prices up for that segment of the market. As measured by the CoreLogic Home Price Index, prices for lower-end homes increased by almost 10% year over year in March 2018, while prices for higher-priced homes increased by 6%. Increases for lower-end homes can price entry-level buyers out of the housing market, keeping a lid on overall home sales.
John Williams assumes influential role at most powerful regional Fed bank
John Williams assumed his new role as head of the New York Fed on Monday, after being appointed to the powerful post in early April replacing longtime president William Dudley who is retiring. As he takes over the second most influential position within the US central banking system, Williams will be awarded a permanent seat – and vote – on the Federal Open Market Committee (FOMC). He has served as president at the San Francisco branch since 2011, where he succeeded former Federal Reserve chair Janet Yellen. Prior to 2011, Williams served as executive vice president and director of research for the San Francisco Fed. In a statement issued on Monday, Williams said he will remain committed to transparency, independence of thought and building a diverse workplace at the New York Fed. “I start my first day with a deep commitment to securing the stability of our financial system and prosperity for our economy,” Williams added. In an outgoing interview with Dow Jones, Dudley noted the culture at the New York Fed “is not perfect” while indicating he and Williams are on the same page. The Federal Reserve raised its benchmark interest by a quarter percentage point on Wednesday, and is expected to raise rates two more times this year. As the central bank brings interest rates closer to “neutral” levels, meaning they are neither accelerating nor slowing economic growth, Williams suggested in an interview with Reuters this month that rates may even exceed neutral, which he defined around 2.5%, for a period of time. “I don’t view our policy path as just getting to neutral and saying, ‘okay we’re done’” he said. The Fed funds rate is currently in the 1.75% to 2% range. Williams started his career with the Federal Reserve System as an economist at the Board of Governors in 1994.
Orlando home prices continue to rise in May as sales tumble
The Orlando Regional Realtor Association is reporting the inventory of homes available for purchase in the Orlando area dropped to its lowest point this year in May 2018, dampening sales at the time when buyers traditionally ramp up their efforts to secure and move into a new home in time for the start of school. That demand is continuing to squeeze prices upward. The overall median price of Orlando homes (all types combined) sold May is $234,000, which is 7.3% above the May 2017 median price of $218,000 and 1.7% below the April 2018 median price of $238,000. Year-over-year increases in median price have been recorded for the past 83 consecutive months; as of April 2018, the overall median price is 102.60% higher than it was back in July 2011. The median price for single-family homes that changed hands in May increased 8.5% over May 2017 and is now $255,000. The median price for condos increased 6.1% to $125,250. The Orlando housing affordability index for May is 126.45%, up a bit from 126.13 last month. The first-time homebuyers affordability index increased to 89.92%, from 89.69% last month.
Members of ORRA participated in 3,407 sales of all home types combined in May, which is 11.4% less than the 3,845 sales in May 2017 but 1.1% more than the 3,371 sales in April 2018. “We are experiencing an unusual market filled with buyers who want to buy but sellers who don’t want to sell out of concern that there is no place for them to go,” explains ORRA President Lou Nimkoff. “Many would-be sellers aren’t moving because they worry about finding another home to buy in such a tight-inventory environment. In addition, the median length to stay in a home by recent sellers has now swelled to 10 years (historically, it was about six to eight years), which is further reducing inventory turnover.” Homes of all types saw sales decline in May. Sales of single-family homes (2,657) in May 2018 decreased by 12.4% compared to May 2017, while condo sales (410) decreased 3.1% year over year but actually increased 12.6% compared to last month. Sales of distressed homes (foreclosures and short sales) reached 120 in May and are 70% less than the 282 distressed sales in May 2017. Distressed sales made up just 3.5% of all Orlando-area transactions last month. The overall inventory of homes that were available for purchase in May (7,486) represents a decrease of 14.7% when compared to May 2017, and a 3.3% decrease compared to last month. There were 10.5% fewer single-family homes and 25.4% fewer condos. Current inventory combined with the current pace of sales created a 2.2-month supply of homes in Orlando for May. There was a 2.8-month supply in May 2017 and a 2.3-month supply last month. The average interest rate paid by Orlando homebuyers in May was 4.64, up from 4.51% the month prior. Pending sales in May are down 11.4% compared to May of last year and are down 7.4% compared to last month.
Amazon Prime members who shop at Whole Foods: You’re in luck
Amazon cuts Whole Foods prices for Prime members while Target slashes the delivery fee for loyalty members. FBN’s Gerri Willis with more.
It’s been a year since Amazon.com Inc. agreed to buy Whole Foods for $13.5 billion. The biggest beneficiaries of the deal might be Amazon Prime members. Sky-blue signs advertising discounts for Prime members greet shoppers in some Whole Foods parking lots. Inside the stores, blue placards spotlight lower prices for Prime members on organic nectarines and sausage. “Blue signs mean special deals just for you. Yes, you,” declared leaflets that were arranged on a display table at a large Whole Foods in Oakland, Calif. Amazon last week expanded free two-hour delivery of Whole Foods groceries for Prime subscribers to 14 cities, including Baltimore, Boston, Philadelphia and Richmond, Va. More than half of Whole Foods stores now offer a 10% discount on sale items to Prime members. Whole Foods’ new delivery service has led some customers to gripe. Some parking spots now are reserved for delivery drivers, and store sections have been converted to busy order-assembly areas. Some store entryways and service counters now are crowded with workers picking up orders, customers said. “It can almost feel like mayhem,” said Julie Gelfat, a 57-year-old communications consultant who stopped going to her local Whole Foods in San Diego after it added delivery. “There’s no protocol to make the in-store customer feel relaxed.” Amazon and Whole Foods spokeswomen declined to comment.
Amazon is also making a hard sales pitch to get Whole Foods shoppers to sign up for Prime memberships. “It was funny to be standing in a grocery store and hear, ‘Would you like to be a Prime member?’ ” said Talia Smith, 25 years old, who lives in San Francisco. Ms. Smith said she is considering paying the $119 annual fee for Prime perks, now that they include lower Whole Foods prices. Some analysts expect Amazon to use Whole Foods discounts as a way to capture even more retail spending by the grocery chain’s largely urban clientele. Some 60% of Whole Foods shoppers are Prime members, Morgan Stanley analysts estimate. Meanwhile, more Amazon products are turning up in Whole Foods stores. At some locations, Echo speakers, Fire tablets and Fire TVs are for sale alongside Amazon lockers where customers can pick up their e-commerce orders. Customers browsing Amazon’s website now are likely to see Whole Foods beans, baking soda and other store-brand goods displayed prominently. Amazon also appears to be giving a boost to Whole Foods’ “365 Everyday Value” products. The chain’s private-label sales have grown as a percentage of store purchases since the deal, according to advertising firm inMarket.
Trump to nominate Kathy Kraninger to lead CFPB
On Saturday, Reuters reported that the White House will name Kathy Kraninger as its nominee to permanently lead the Consumer Financial Protection Bureau (aka BCFP). Mick Mulvaney’s appointment as the acting director of the consumer watchdog is set to end on June 22. Last week, there were reports that President Donald Trump would announce a nominee to lead the agency this week. In those initial reports, sources familiar with the matter batted around potential nominee names, such as National Credit Union Administration Chairman J. Mark McWatters as permanent director, but not until close to June 22, according to an article by Kate Berry for American Banker. Another article said Trump was considering outgoing Rep. Darrell Issa, R-Calif. But Saturday, the White House confirmed Trump will name Kraninger to lead the agency, drawing fast criticism from both consumer advocates and dividing conservatives, who were quick to call out Kraninger’s lack of experience in the consumer finance arena. Kraninger currently works as a deputy in the Office of Budget and Management, which is also led by Mulvaney. According to the Reuters article, she does not have much experience in consumer finance but does have experience managing large teams.
Zillow facing lawsuit
Zillow and its subsidiary Trulia have been hit with a patent infringement lawsuit over real estate information search applications. According to reporting from GeekWire, the lawsuit alleges that the real estate tech companies’ mobile home search apps violate a patent for “real estate information search and retrieval system” and seeks to block Zillow and Trulia from using location-based mobile search apps that display information about homes. The suit, filed in the US District Court in Seattle, was brought against Zillow Group by Corus Realty Holdings, a Virginia-based brokerage that was acquired by real estate company Long & Foster in 2009. In the court filing, Corus says that in 2001 it developed and patented a “mobile device that used location technology to identify and obtain relevant information about real estate near a user’s location.” According to GeekWire’s coverage, Zillow addressed the suit with the following statement: “We are aware of the lawsuit recently filed. While we won’t discuss pending litigation, we believe the claims are without merit and intend to vigorously defend ourselves against the lawsuit,” the company said.