Builder confidence in the single-family 55+ housing market remained solid in the second quarter with a reading of 71, edging down one point from the previous quarter due to softness in traffic of prospective buyers, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today. The 55+ HMI measures two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each segment of the 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic). “Although the single-family HMI fell slightly, builder sentiment still remains strong for this segment of the market,” said Karen Schroeder, chair of NAHB’s 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “In fact, the reading of 71 is just one point off from the all-time high of 72 from the previous quarter. We expect the 55+ housing market to continue on a positive path moving forward.” For the three index components of the 55+ single-family HMI, present sales remained even at 76, expected sales for the next six months increased one point to 78 and traffic of prospective buyers fell five points to 56. The 55+ multifamily condo HMI rose two points to 59. Two of three index components posted increases from the previous quarter: Present sales and expected sales for the next six months increased three points to 61 and 65, respectively, while traffic of prospective buyers dropped two points to 50. All four components of the 55+ multifamily rental market went up from the first quarter: Present production and future expected production both increased six points to 64, while present demand jumped 12 points to 73 and future expected demand rose 10 points to 73. “Demand for 55+ housing remains solid, as demonstrated in the surge for 55+ rental demand,” said NAHB Chief Economist Robert Dietz. “Builder sentiment for the for-sale 55+ housing market also remains in positive territory, supported by low inventory of existing homes. However, it is being constrained by development costs and their impact on affordability.”
Unemployment rate holds at 3.7% in July as hiring slows
The U.S. economy added 164,000 jobs in July, fewer than June’s downwardly revised 193,000 hirings, according to the Bureau of Labor Statistics. The unemployment rate was 3.7%, matching last month’s rate. Economists expected the so-called nonfarm payroll number to rise by 165,000 and the unemployment rate to drop to 3.6%, as measured by a Bloomberg poll, which would have tied the 50-year low set in April and May, but the addition of 370,000 new workers to the labor force brought the participation rate up to 63%, the highest in four months. July’s hiring pace was close to the monthly average for 2019, though slower than last year’s 223,000 a month. “If job growth stabilizes at the current pace, we’re OK, but if it doesn’t, if it continues to slow, the chance of a recession rises,” said Mark Zandi, chief economist of Moody’s Analytics. Professional and business services led the job gains with the addition of 31,000 positions, while health care added 30,000, according to the BLS report. Industries that saw little change during the month included construction, manufacturing, retail trade, transportation and warehousing, leisure and hospitality, and government. “The economy continued to create jobs, but at a pace that’s a little slower than it has been,” said Robert Dietz, chief economist of the National Association of Home Builders. The numbers in the report were “consistent with our forecast that economic growth is going to continue to decelerate a little bit, which is why we saw the Federal Reserve reduce its rate this week.” Average hourly earnings in July rose by 8 cents to $27.98, matching the gain in June, the report said. Over the past 12 months, wages rose 3.2%. The average workweek contracted by six minutes to 34.3 hours.
ATTOM – grocery store impact on the U.S. housing market
ATTOM Data Solutions, curator of the nation’s premier property database and first property data provider of Data-as-a-Service (DaaS), today released its 2019 Grocery Store Battle analysis, which examines whether living near a Trader Joe’s, a Whole Foods or an ALDI can affect a home’s value – as a homebuyer based on seller ROI and home equity, or as an investor looking for the best home flipping returns and home price appreciation. For this analysis, ATTOM looked at current average home values, 5-year home price appreciation from YTD 2019 vs. YTD 2014, current average home equity, home seller profits, and home flipping rates on 1,859 zip codes nationwide with a least one Whole Foods store, one Trader Joe’s store and one ALDI store. Homes near a Trader Joe’s realized an average home seller ROI of 51 percent, compared to homes near a Whole Foods with an average home seller ROI of 41 percent and ALDI at 34 percent. The average home seller ROI for all zip codes with these grocery stores nationwide is 37 percent. Homes near a Trader Joe’s have added equity, owning an average 37 percent equity in their homes ($247,445), while homes near Whole Foods had an average of 31 percent equity ($187,035) and homes near ALDI had average 20 percent equity ($53,650). The average equity for all zip codes with these grocery stores nationwide is 25 percent. Properties near an ALDI are an investor’s cornucopia with an average gross flipping ROI of 62 percent, compared to properties near a Whole Foods which had an average gross flipping ROI of 35 percent and Trader Joe’s at 31 percent. The average gross flipping ROI for all zip codes with these grocery stores nationwide is 52 percent. Properties near an ALDI have seen an average 5-year home price appreciation of 42 percent, compared to 33 percent appreciation for homes near a Trader Joe’s, and 31 percent appreciation for homes near a Whole Foods. The average appreciation for all zip codes with these grocery stores nationwide is 38 percent.
Trump: ‘We will be taxing the hell out of China’ until a trade deal is reached
President Trump stood fast by his decision to implement 10 percent tariffs on an additional $300 billion worth of goods coming into the U.S. from China on Thursday, saying the pain will continue for Beijing until an agreement is struck. “Until such time as there is a deal, we will be taxing the hell out of China,” Trump said during a campaign rally in Cincinnati. The U.S. announced the latest round of tariffs as negotiations between the world’s two largest economies have stalled – and as U.S. representatives returned home from meeting with the delegation in Shanghai. Trump said earlier on Thursday that China decided to renegotiate the deal before signing, and had agreed to buy more agricultural products from the U.S. – but has yet to follow through on that promise. And 10 percent could just be the beginning, Trump warned. He told reporters on Thursday that he could “always do much more” or he could “do less” with respect to tariffs, depending on what happens with the trade negotiations. He added the 10 percent rate could be lifted in stages to “well beyond 25 percent,” though his administration is not necessarily looking to do that. The U.S. has already imposed 25 percent tariffs on $250 billion worth of Chinese goods. The new round is scheduled to go into effect on Sept. 1. In reaction to the tariffs, Chinese sources exclusively told FOX Business that the directive in Beijing is to “decouple” from its reliance on the U.S. economy. When it comes to intellectual property, U.S. representatives were told that they would have to trust that China would honor its promise to protect it – but the U.S. wants an enforceable deal. Trump also said that because China devalues their currency and “pours money into their system,” Americans aren’t paying for the tariffs; the Chinese are instead.
The U.S. housing market’s evolution during the current economic expansion
Homeownership is considered a crucial step to wealth accumulation. However, the Great Recession tested this long-held belief. From the start of the Great Recession in April 2006 to the first signs of economic revival in March 2011, the CoreLogic Home Price Index (HPITM) declined 33%. Thanks to stable job growth, mortgage funding and underwriting, the housing market has recovered from its historic crash. The latest CoreLogic special report, “The Role of Housing in the Longest Economic Expansion,” digs further into these factors and analyzes the housing market’s performance during the current economic expansion. The total number of U.S. residential properties in negative equity has dropped by more than 21 percentage points since the first quarter of 2010. The period between 2012 and 2013 was a turning point for the market when the percentage of homes in negative equity went from 22.4% to 15.5%. During this time, the average homeowner gained $35,100 in home equity – a welcome reprieve after seeing negative returns in 2011. By the first quarter of 2019, total home equity had reached a record $15.8 trillion, compared to just $6.1 trillion 10 years prior. The recession led to an influx in renters as homeowners grappled with home value loss. From the third quarter of 2009 to the fourth quarter of 2012, the homeowner population plummeted, while 12.9 million households joined the rental market. Fast forward to the end of the first quarter of 2019, and the tables have turned with 1.1 million new homeowners and only 458,000 new renters. However, the lack of inventory continues to drive up home prices throughout the country with increasing costs of labor and materials further compounding the issue. In the first quarter of 2006, flipped homes made up 11.3% of the market. However, by the end of the recession, the share of flipped homes dropped to just 4.9%. The flip rate has increased since this time and reached its highest point (11.4%) in the first quarter of 2018. In addition to a more encouraging market, changes in homes and buyers have made flipping more sustainable – professionals are flipping older homes with the median age of the homes being 39 years. While the U.S. economy at large looks positive, experts are split on whether another recession is on the horizon. However, most signs point to continued good news for the housing market. The CoreLogic HPI Forecast predicts a moderate but healthy 5.6% acceleration in annual home price growth from June 2019 to June 2020.