Pending home sales increased in May, a positive variation from the minor sales dip seen in the previous month, according to the National Association of Realtors®. Three of the four major regions saw growth in contract activity, with the West experiencing a slight sales decline. The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.1% to 105.4 in May, up from 104.3 in April. Year-over-year contract signings declined 0.7%, marking the 17th straight month of annual decreases. Lawrence Yun, NAR chief economist, said lower-than-usual mortgage rates have led to the increase in pending sales for May. “Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates.” Yun said consumer confidence about home buying has risen, and he expects more activity in the coming months. “The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points,” he said. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.” Citing the hottest housing markets from data at realtor.com®, Yun says the year-over-year increases could be a sign of a rise in inventory. Rochester, N.Y., Fort Wayne, Ind., Lafayette-West Lafayette, Ind., Boston-Cambridge-Newton, Mass., and Midland, Texas, were the hottest housing markets in May. Yun said that while contract signings and mortgage applications have increased, there is still a great need for more inventory. “Home builders have not ramped up construction to the extent that is needed,” he said. “Homes are selling swiftly, and more construction will help keep home prices manageable and thereby allow more middle-class families to attain ownership opportunities.” The PHSI in the Northeast rose 3.5% to 92.0 in May and is now 0.5% below a year ago. In the Midwest, the index grew 3.6% to 100.3 in May, 1.2% lower than May 2018. Pending home sales in the South inched up 0.1% to an index of 124.1 in May, which is 0.7% higher than last May. The index in the West dropped 1.8% in May to 91.8 and decreased 3.1% below a year ago.
Oil prices hold near $67 per barrel ahead of G20 talks, OPEC
Oil prices held near $67 per barrel on Friday ahead of talks over the trade dispute between the US and Chinese presidents over the weekend and on production cuts from OPEC on Monday. Brent crude futures were up 7 cents at $66.62 per barrel by 1033 GMT. US West Texas Intermediate (WTI) crude futures were up 12 cents at $59.55 a barrel. Brent was on course for a gain of around 25% in the first half of 2019 and WTI for a 30% gain. The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between US President Donald Trump and Chinese President Xi Jinping on Saturday. A trade dispute between the world’s two biggest economies has weighed on oil prices, fanning fears that slowing economic growth could dent demand for the commodity. “While there are no expectations of a truce between the two parties, it will set the scene for the OPEC meeting a couple of days later,” ANZ Bank said in a note. Trump said on Wednesday a trade deal with Chinese President Xi was possible this weekend but he is prepared to impose US tariffs on most remaining Chinese imports should the two countries disagree. “Even if US-China trade talks turn positive, we think OPEC will extend the current production cuts until the end of the year. However, deeper cuts look unlikely, given the rising supply issues,” ANZ said. The Organization of Petroleum Exporting Countries (OPEC) and some non-members including Russia, known as OPEC+, will hold meetings on July 1-2 in Vienna to decide whether to extend their supply cuts.
Mortgage rates fall to 3-year low
This week, the average US rate for a 30-year fixed mortgage fell to a three-year low, according to the latest Freddie Mac Primary Mortgage Market Survey. According to the company’s data, the 30-year fixed-rate mortgage averaged 3.73% for the week ending June 27 2019, down from last week’s rate of 3.84%. That’s significantly lower than 2018 levels, when the rate averaged a whopping 4.55%. “While the industrial and trade related economic data continues to dominate the news, the drop in mortgage rates over the last two months is already being felt in the housing market,” Freddie Mac Chief Economist Sam Khater said. “Through late June, home purchase applications improved by five percentage points compared to the previous month. In the near-term, we expect the housing market to continue to improve from both a sales and price perspective.” The 15-year FRM averaged 3.16% this week, dropping from last week’s 3.25%. This time last year, the 15-year FRM came in at 4.04%. Lastly, the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.39%, falling from last week’s rate of 3.48%. Unsurprisingly, this rate is much lower than the same time period in 2018 when it averaged 3.87%.
SpaceX raising over $300 million as new Ontario Teachers’ tech fund makes its first
SpaceX is raising yet another round of funding, a month after completing its second fundraising of the year. The latest round, filed on Monday, seeks to raise $314.2 million at a price of $214 a share. The new equity would bring SpaceX’s total 2019 fundraising to $1.33 billion once completed. The company declined to immediately comment on the filing. Part, if not all, of the investment in SpaceX is from the Ontario Teachers’ Pension Plan, which has $191.1 billion in assets under management. The investment is the first by a new technology fund that Ontario Teachers’ launched in April. “SpaceX is the world’s leading private space launch provider, and we are excited to work with the company in the next phase of its growth as it rolls out its Starlink satellite network,” Teachers’ Innovation Platform fund senior managing director Olivia Steedman said in a statement. Ontario Teachers’ said that SpaceX was seen as a “a compelling investment opportunity” for the fund because of “its proven track record of technology disruption in the launch space and significant future growth potential in the satellite broadband market.” SpaceX raised equity rounds of $486 million and $536 million earlier this year. Before this latest round, SpaceX’s valuation had risen to $33.3 billion, people familiar told CNBC in May. Elon Musk’s company is bankrolling two capital intensive projects: Starlink, a network of thousands of small internet satellites, and Starship, a massive rocket to send people and cargo to Mars.
Starlink would consist of 11,943 satellites flying close to the planet in what is called low Earth orbit and is intended to be an interconnected network, called a “constellation.” The satellites would create a web that beams high-speed internet to any place on Earth. The company’s first full mission of 60 Starlink satellites launched in May, making the funds SpaceX has raised this year key to scaling up development and production to meet its ambitious goals. Musk said last month, before this latest round, that SpaceX has “sufficient capital to get to an operational level ” for Starlink. Starship, on the other hand, is the company’s plan for a next generation rocket. Designed to transport up to 100 people at a time to the moon or Mars, Starship is designed to be a fully reusable launch system. Two prototypes are currently in development, one in Texas and the other in Florida, and SpaceX is deep in finalizing the design and production of the Raptor engines that will power Starship. Musk sees Starlink as the way for SpaceX to fund the development of Starship. He estimated recently that SpaceX revenue from launches likely peaks at about $3 billion a year but said he believes internet service revenue is potentially “more like $30 billion a year.”
Here’s what New York real estate will look like in the year ahead
With an estimated population more than 20 million, the New York-Northern New Jersey-Long Island Metropolitan Statistical Area is by far the nation’s largest metro – nearly 50% larger than the runner-up, Los Angeles-Long Beach-Orange County, California. That also means that this metro, home to one in 16 Americans, is the nation’s largest real estate market. Its13,300 square miles cover portions of three states offering a wide range of property types, price tiers, and neighborhoods, from heavily populated urban centers and planned suburban communities to low-density rural areas. So, what’s happening in this market is perhaps a snapshot of things to come for the rest of the nation’s major markets. And, according to the latest VeroFORECAST, it doesn’t look good. The New York metro is predicted to appreciate at an average of 2.6% through February 2020. That is a full percentage point less than the appreciation predicted for the largest 100 MSAs, and places it at No. 269 for price growth out of the 349 markets considered in the report. For this reason, the New York City market will be flat into early 2020. A deeper dive reveals that condos and townhouses will not appreciate as well as their single-family counterparts in this area, with the average projected to be just 1.5%. Among segments predicted to appreciate most are Staten Island’s least-expensive single-family residences, with predicted average appreciation over 5.6%. On the other hand, the highest-priced SFRs in Essex County, New Jersey, are predicted to suffer depreciation of around -2.5%. Our analysis found that the primary drivers behind the lackluster appreciation in this MSA were unemployment, population growth, and the supply of homes for sale. We also found that higher-priced properties will appreciate at a lower rate than those that are more affordable.
The three key market segments within the Greater New York MSA are the five boroughs (Manhattan, Brooklyn, Queens, the Bronx and Staten Island), Long Island, and 12 northern New Jersey counties. Some of the New York boroughs, such as the Bronx with projected appreciation of +3.1%, are solid real estate markets. Others, such as Manhattan, where properties are projected to drop in value over the next year at close to -2%, are not.
Deed theft at crisis level in Brooklyn
There’s a friendly voice on the phone. They offer financial help. Next thing you know, the house you planned to pass down to your family is gone. Homes throughout the borough — mainly in black and brown communities — are increasingly being stolen through a number of predatory schemes. Most of Brooklyn’s deed thefts have been in Bedford-Stuyvesant, Crown Heights, East New York, Canarsie and Flatlands. With more and more elderly people being taken advantage of, Brooklyn Borough President Eric Adams said more needs to be done to fight this systemic problem. “It is clear that the district attorney and the police department should be more aggressive on this topic,” Adams said. “We have called on the city, state and federal government to conduct a forensic investigation.” The most common methods for deed theft in Brooklyn are liens for minor unpaid bills, fraudulent documents, predatory foreclosures and the city’s controversial Third Party Transfer program. Rising real estate values and thousands of foreclosures have helped create a dangerous climate for homeowners in the borough. Rose Marie Cantanno, associate director of the New York Legal Assistance Group’s Foreclosure Prevention Project, said perpetrators in many cases come from within the community, gaining the trust of homeowners. “It’s hard to think that people would take advantage of other people the way they do, but I have seen people take advantage of 95-year-old women. I have seen people take advantage of those who don’t speak English,” Cantanno told Brooklyn This Week. “You’d like to think that that’s not going to happen, but especially in Brooklyn right now, it is such a hotbed. And unfortunately when money is involved, it absolutely brings out the worst in people.” One of the more recent known cases of deed theft in Brooklyn allegedly occurred on the Bed-Stuy doorstep of Dairus Griffiths, a 65-year-old former homeowner of 30 years. Griffiths said that a man named Eli Mashieh of August West Development convinced him — while he was inebriated and anxious over financial hardship — to sign his property away on the hood of a car for $630,000. The actual worth of the family home is between $1 million and $1.5 million, according to Griffith’s daughter, Doris Briggs. “My father tries the best he can. Throughout our lives, he’s been there. He’s been supportive in every aspect of my life,” Briggs said. “To see him once he’s retired and this is supposed to be his days to just enjoy what he’s worked so hard for, and to be taken away from him like that so easily, it’s just ridiculous.”