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ATTOM – foreclosure starts increase in 43% of local markets in May, including 153 jump in Houston

Foreclosure starts decreased nationwide in May, but 43% of local markets posted year-over-year increases in foreclosure starts, counter to the national trend, according to an ATTOM Data Solutions analysis of record-level foreclosure data. Markets with increasing foreclosure starts included Houston, Texas (up 153% from a year ago); Los Angeles, California (up 14%); Miami, Florida (up 4%); Dallas-Fort Worth, Texas (up 46%); and Atlanta, Georgia (up 7%). A total of 33,623 US properties started the foreclosure process in May, down 1% from the previous month and down 6% from a year ago — the 35th consecutive month with a year-over-year decrease. Counter to the national trend, 23 states and the District of Columbia posted a year-over-year increase in foreclosure starts in May, including Texas (up 53%), California (up 3%), Georgia (up 15%); Pennsylvania (up 6%); and South Carolina (up 31%). There were a total of 71,949 US properties with foreclosure filings in May 2018, up 12% from the previous month but still down 12% from a year ago — the 32nd consecutive month with a year-over-year decrease and a foreclosure rate of one in every 1,863 US housing units with a foreclosure filing for the month. States with the highest May 2018 foreclosure rates were New Jersey (one in every 643 housing units with a foreclosure filing); Delaware (one in every 874); Maryland (one in every 999), Illinois (one in every 1,180), and Connecticut (one in every 1,236). Among 219 metropolitan statistical areas analyzed in the report, those with the highest foreclosure rates in May were Flint, Michigan (one in every 135 housing units with a foreclosure filing); Atlantic City, New Jersey (one in every 399); Trenton, New Jersey (one in every 519); Philadelphia, Pennsylvania (one in every 805); and Columbia, South Carolina (one in every 889). Lenders repossessed (REO) 21,312 US properties in May, up 50% from the previous month but still down 21% from a year ago — the 16th consecutive month with a year-over-year decrease. Counter to the national trend, 12 states and the District of Columbia posted a year-over-year increase in REOs in May, including Michigan (up 155%); Maryland (up 22%); Alabama (up 10%); Connecticut (up 11%); and Oklahoma (up 26%).

Germany’s largest automakers back abolition of EU-US car import tariffs

The US ambassador to Germany returns to Washington today with a tariff peace offering. Richard Grenell will present a proposal from Germany’s leading automakers, calling for doing away with all import tariffs for cars between the European Union and the US That would mean scrapping the EU’s 10% tax on auto imports from the US and other countries and the 2.5% duty on auto imports in the US, according to Dow Jones. In return, the Europeans want President Trump’s threat of imposing a 25% border tax on European auto imports off the table. Grenell held meetings with the CEOs of Daimler, BMW  and Volkswagen, which operate plants in the US Overall, Germany’s auto makers and suppliers provide 116,500 jobs in the US, according to the Association of German Automotive Manufacturers. The Europeans reportedly also want a 25% US tax on imports of light trucks–pickup trucks, sport-utility vehicles, and big vans–scrapped. That could alienate US auto workers, a core constituency for Trump in the midterms this fall. Berlin has no power to hammer out trade deals–a prerogative of the European Commission. The EU’s executive body would have to persuade fellow EU member states to back a radical free-trade approach many have shown little interest in, said Dow Jones. Trump’s threats to raise tariffs on imported cars could put $54 billion in annual revenue from European passenger car exports to the US at risk, according to data from the European statistics office. Daimler and BMW each generated around 10% of their global unit sales in the first five months of the year through exports to the US, according to Wall Street Journal calculations.

CoreLogic – US single-family rents up 2.7% year over year in March

–  While low-end rents are still increasing faster than high-end rents, high-end segment rent growth accelerated and low-end segment decelerated in March 2018 compared with March 2017

–  Of 20 metros analyzed, only Honolulu experienced a year-over-year decrease in single-family rents in March

Single-family rents climbed steadily between 2010 and 2018, as measured by the CoreLogic Single-Family Rental Index (SFRI). However, the index shows year-over-year rent growth has decelerated slowly since it peaked early last year. In March 2018, single-family rents increased 2.7% year over year, a 1.5-percentage-point decline in the growth rate since it hit a high of 4.2% in February 2016. The SFRI 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 in March 2018 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 2.4% year over year and rents in the lower-priced homes, defined as properties with rents less than 75% of the regional median rent, increased 3.9% year over year. However, rent growth is accelerating for the high end and decelerating for the low end. High-end rent growth was 0.5 percentage points higher than in March 2017, and low-end rent growth was 0.5 percentage points lower than March 2017. Rent growth varies significantly across metro areas. Las Vegas had the highest year-over-year rent growth in March with an increase of 5.5%, followed by Phoenix (+5.4%) and Orlando (+5.2%). Both Phoenix and Orlando had strong year-over-year job growth in March, with job gains of 3.2% and 3.5% respectively. This is compared with national employment growth of 1.6%. Honolulu was the only metro among the 20 analyzed to show a decrease in the rent index, declining 0.4% year over year in March. Rents continue to increase in metro areas such as  Houston and Miami that were hit by hurricanes last year. Houston rents were up 3.4% year over year and Miami was up 2% year over year. Prior to the 2017 late-summer hurricanes, rents had been decreasing in those two metro areas.

Starbucks provides weak sales outlook, will close 150 stores

Starbucks shares fell as much as 3% in after-hours trading Tuesday after the coffeehouse chain provided a weak sales forecast for its upcoming quarter and said it would shutter 150 stores in fiscal 2019. The Seattle-based company said it would close underperforming stores in “densely penetrated markets” and slow its rate of store growth. Starbucks said it traditionally closes about 50 underperforming locations annually. Starbucks said it expects same-store sales to grow 1% in its third fiscal quarter of 2017. Analysts had expected same-store sales to grow 3% in that period. “While certain demand headwinds are transitory, and some of our cost increases are appropriate investments for the future, our recent performance does not reflect the potential of our exceptional brand and is not acceptable,” Starbucks CEO and President Kevin Johnson said in a statement. “We must move faster to address the more rapidly changing preferences and needs of our customers.” Starbucks said it will return an additional $25 billion more to shareholders than initially planned in the form of share buybacks and dividends. The company will hike its dividend 20% to 36 cents per share. The chain, which operates more than 8,000 US stores, said the changes were made to address the weaker-than-expected sales growth, adding that several digital initiatives were expected to add 1% to 2% in comparable sales in fiscal 2019. Starbucks said it would provide additional details on its plans at an investor presentation on Tuesday afternoon. The changes came weeks after Starbucks Executive Chairman Howard Schultz announced he would leave the role in June. Schultz is widely rumored to have political aspirations.

MBA – mortgage applications up

Mortgage applications increased 5.1% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 15, 2018. The Market Composite Index, a measure of mortgage loan application volume, increased 5.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3% compared with the previous week. The Refinance Index increased 6% from the previous week. The seasonally adjusted Purchase Index increased 4% from one week earlier. The unadjusted Purchase Index increased 1% compared with the previous week and was 3% higher than the same week one year ago. The refinance share of mortgage activity increased to 36.8% of total applications from 35.6% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.0% of total applications. The FHA share of total applications decreased to 10.1% from 10.6% the week prior. The VA share of total applications decreased to 10.2% from 10.7% the week prior. The USDA share of total applications decreased to 0.7% from 0.8% the week prior.

NAHB – housing starts reach post-recession high in May as permits soften

Total housing starts rose 5% in May to a seasonally adjusted annual rate of 1.35 million units, according to newly released data from the US Department of Housing and Urban Development and the Commerce Department. This is the highest housing starts report since July 2007. While housing production numbers rose, overall permits — which are a sign of future housing production activity — dropped 4.6% to 1.3 million units in May. Single-family permits fell 2.2% to 844,000 while multifamily permits fell 8.7% to 457,000. “Ongoing job creation, positive demographics and tight existing home inventory should spur more single-family production in the months ahead,” said NAHB Chief Economist Robert Dietz. “However, the softening of single-family permits is consistent with our reports showing that builders are concerned over mounting construction costs, including the highly elevated prices of softwood lumber.” The May reading of 1.35 million is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts rose 3.9% to 936,000 — the second highest reading since the Great Recession. Meanwhile, the multifamily sector — which includes apartment buildings and condos — rose 7.5% to 414,000 units. Year-to-date, single-family and multifamily production are respectively 9.8% and 13.6% higher than their levels over the same period last year. The year-to-date metric can help compare performance data over a specific time period and show growth trends. “We should see builders continue to increase production to meet growing consumer demand even as they grapple with stubborn supply-side constraints, particularly rising lumber costs,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. Regionally, the Midwest led the nation with a 62.2% increase in combined single- and multifamily housing starts. Starts fell 0.9% in the South, 4.1% in the West and 15% in the Northeast. Looking at regional permit data, permits rose 42.1% in the Northeast and 7.2% in the Midwest. They fell 4.6% in the West and 13.9% in the South.

CoreLogic – homebuyer migration to Houston affected by energy industry

The Houston metro has been challenged by natural disasters (three major floods including hurricane Harvey) and an oil price bust during the last few years. Despite these challenges, Houston experienced a home price increase of 3.7% over the year ending April 2018. However, there has been a declining inflow of potential homebuyers from out-of-state the last two years. More homebuyers were moving into the Houston metro area from other parts of the country than homebuyers moving out of Houston before 2016.  But that changed in 2016 with a net outflow of potential homebuyers as the jobs related to oil and gas started to disappear. As a case in point, this blog focuses on homebuyer mobility in the Houston metro area. During 2017 through April 2018, the Houston Core Based Statistical Area (CBSA), which is comprised of nine Texas counties, experienced a slight net loss in mortgage applications from out-of-state: for every 100 mortgage applications submitted by Houston residents who were buying out-of-state, the CBSA received 97 mortgage applications from out-of-state residents looking to buy a home in the Houston area. While migration to and from other states will affect home sales, about 92% of home-purchase mortgage applications in Houston were made by current Houston residents. The Houston metro started to experience a net loss of applications in 2016. Figure 1 shows as the gasoline price dropped drastically in 2015, by the following year there were more Houston residents submitting loan applications to buy homes outside the CBSA than there were homebuyers from outside of the CBSA submitting applications to buy within the Houston metro area (i.e., IN/OUT ratio for home-purchase mortgage loan applications was less than 1 in 2016 and 2017). With the oil price rebound the inflow-to-outflow ratio has started to rise in 2018.

Consistent with the overall Houston metro area, Harris County experienced an overall net loss of potential applicants. Among Harris County residents who applied for mortgage loans during 2017 through April 2018, about 29 out of 100 households were looking to buy outside of the county. Figure 2 summarizes the net flow of Harris County applicants during this time period. Harris County, on net, lost 15% of its residents who wanted to buy a home. More than two-thirds of the net outflow, representing about 11% of current Harris County residents who wanted to buy a home, were looking to buy in the suburban counties of Houston metro (mostly in Fort Bend and Montgomery followed by Brazoria and Galveston). Median home sales price for the properties sold during 2017 through April 2018 in both Fort Bend and Montgomery were higher than in Harris County. In general, the houses sold in both Fort Bend and Montgomery were newer and bigger than the houses in Harris County. Overall, the loan application data show that Harris County residents were buying homes in neighboring suburban counties with additional amenities, such as newer and bigger homes. The data also show that most Millennial and Generation X homebuyers from Harris County were moving to Fort Bend, Montgomery and Brazoria counties whereas most baby boomer and silent generation homebuyers were moving out of Texas, mostly to Florida and Colorado, followed by Montgomery County.

NAHB – builders discuss rising lumber prices with Commerce Secretary Ross

Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La., issued the following statement after the NAHB leadership met today with Commerce Secretary Wilbur Ross to discuss the growing problem of escalating lumber prices that are being exacerbated by tariffs on Canadian lumber imports into the U.S: “Today, we discussed with Secretary Ross our mutual concern that lumber prices have risen sharply higher than the tariff rate would indicate, and that this is hurting housing affordability in markets across the nation. Rising lumber prices have increased the price of an average single-family home by nearly $9,000 and added more than $3,000 to the price of the average multifamily unit. “We applaud Secretary Ross for acknowledging the gravity of this situation and expressing a willingness to look into the possibility that factors other than the tariff may be manipulating the market. “We also encouraged the secretary to return to the negotiating table with Canada. It is essential that the two sides resume talks and hammer out a long-term solution to this trade dispute that will ensure US home builders have access to a stable supply of lumber at reasonable prices to keep housing affordable for hard-working American families.”

Posted by: pharbuck on June 20, 2018
Posted in: Uncategorized