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ATTOM – US residential loan originations down 19% in Q4 2017 led by 34% drop in refinance originations

–  Santa Rosa, California Posts Biggest Drop Among US Metro Areas;

Median Down Payment on Home Purchases Increases 20% From a Year Ago;

–  Construction Loan Originations Up 33% to Two-Year High, Up 345% in Houston

ATTOM Data Solutions, curator of the nation’s premier property database, today released its Q4 2017 US Residential Property Loan Origination Report, which shows that more than 1.9 million (1,903,364) loans secured by residential property (1 to 4 units) were originated in Q4 2017, down 20% from the previous quarter and down 19% from a year ago. 818,158 of the residential loans originated in Q4 2017 were refinance loans, down 17% from the previous quarter and down 34% from a year ago. 791,637 of the residential loans originated in Q4 2017 were purchase loans, down 22% from the previous quarter and down 1% from a year ago. 293,570 Home Equity Lines of Credit (HELOCs) were originated on residential properties in Q4 2017, down 25% from a nine-year high in the previous quarter and down 7% from a year ago. The loan origination report is derived from publicly recorded mortgages and deeds of trust collected by ATTOM Data Solutions in more than 1,700 counties accounting for more than 87% of the US population. Counts and dollar volumes for the two most recent quarters are projected based on available data at the time of the report (see full methodology below). “The falloff in refinance originations continued for the third straight quarter, but purchase originations held steady compared to a year ago despite ballooning down payment amounts that make it more difficult for first-time homebuyers to compete — as evidenced by the three-year low in the share of FHA buyers,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “And while the rise in construction loans in part reflects homeowners reconstructing in the wake of hurricane Harvey in southeast Texas, the widespread rise in construction loans in other parts of the country indicates that more homeowners are staying put and remodeling rather than trying to move up into another home that comes with a big down payment and probably a higher mortgage interest rate.”

The median down payment on single family homes and condos purchased with financing in Q4 2017 was $18,000, down from a record high $19,100 in the previous quarter but up 20% from $14,950 in Q4 2016. The median down payment of $18,000 was 7.1% of the median sales price of the homes purchased with financing during the quarter, down from a four-year high OF 7.3% in the previous quarter but still up from 6.2% in Q4 2016. “The median down payment in the greater Seattle area of 14.1% is twice the national average and continuing to rise,” said Matthew Gardner, chief economist at Windermere Real Estate covering Seattle. “This is good news for homeowners in our market as it provides them with a layer of protection should home prices see a downturn in the future.” Among 143 metropolitan statistical areas analyzed for down payments, those with the biggest median down payments were San Jose, California ($268,000); San Francisco, California ($174,500); Santa Rosa, California ($123,450); Los Angeles, California ($119,800); and Ventura, California ($107,000). Residential loans backed by the Federal Housing Administration (FHA) accounted for 12.0% of all residential property loans originated in Q4 2017, down from 12.9% in the previous quarter and down from 12.3% a year ago to the lowest share since Q4 2014 — a three-year low. Residential loans backed by the US Department of Veterans Affairs (VA) accounted for 6.6% of all residential property loans originated in Q4 2017, unchanged from the previous quarter but down from 7.6% in Q4 2016.

A total of 29,357 construction loans backed by residential real estate (1 to 4 units) were originated in Q4 2017, up 12% from the previous quarter and up 33% from a year ago to the highest level since Q3 2015 — a more than two-year high. Construction loans are those that finance improvements to real estate. Houston documented the most residential construction loan originations among 42 metropolitan statistical areas analyzed for construction loan data in the report, with 4,241 originated in Q4 2017 — up 345% from a year ago to an all-time high as far back as data was available for the report, Q1 2006. Residential construction loan originations also spiked in the Texas metros of Beaumont-Port Arthur (up 2,135%); El Paso (up 787%); and Corpus Christi (up 126%). Other metro areas with increases in residential construction loan originations included Kansas City (up 104%); San Francisco, California (up 80%); San Diego, California (up 57%); Jacksonville, Florida (up 53%); and Orlando, Florida (up 41%). Among the 120 metropolitan statistical areas analyzed in the report, those with the biggest year-over-year decrease in loan origination volume in Q4 2017 were Santa Rosa, California (down 47%); San Jose, California (down 39%); San Luis Obispo, California (down 38%); Denver, Colorado (down 37%); and Boulder, Colorado (down 37%). Only eight of the 120 metropolitan statistical areas analyzed in the report posted a year-over-year increase in total loan originations in Q4 2017: Lexington, Kentucky (up 40%); Raleigh, North Carolina (up 37%); Huntington, West Virginia (up 27%); Asheville, North Carolina (up 13%); Davenport, Iowa (up 7%); Memphis, Tennessee (up 4%); Dayton, Ohio (up 3%); and Charleston, South Carolina (up 2%).

Tiffany’s same-store sales, forecast disappoint

Tiffany missed analysts’ estimates with quarterly same-store sales numbers on Friday and forecast a full-year profit largely below expectations as the jeweler invests heavily to turn its business around. The company, which has been marred by several quarters of declining sales, has been taking numerous steps to diversify its revenue by introducing cheaper silver jewelry as well as everyday home items to appeal to a wider customer base. But the investments are expected to take a toll on the company’s earnings, Chief Executive Officer Alessandro Bogliolo said. “Increasing investment now in certain areas, such as technology, marketing communications, visual merchandising, digital and store presentations … will hinder pre-tax earnings growth in the near term,” Bogliolo said. Tiffany forecast full-year profit between $4.25 and $4.45 per share, compared with analysts’ estimate of $4.37 per share, according to Thomson Reuters. Same-store sales, on a constantcurrency basis, rose 1% in the reported quarter, missing estimates of a 2.8% rise. In January, the company reported worldwide same-store sales that rose 5% in November and December, prompting a rise in its full-year profit forecast. The company’s net earnings fell to $61.9 million, or 50 cents per share, in the fourth quarter ended Jan. 31, from $157.8 million, or $1.26 per share, a year earlier.

NAHB – multifamily drop pushes total housing starts down as single-family makes gains

A decline in multifamily starts pushed overall housing production down 7.0% in February to a seasonally adjusted annual rate of 1.24 million units, according to newly released data from the US Department of Housing and Urban Development and the Commerce Department. Multifamily production fell 26.1% to a seasonally adjusted annual rate of 334,000 units after an exceptionally high January report. Meanwhile, single-family starts posted a 2.9% gain to 902,000 units. “The uptick in single-family production is consistent with our builder confidence readings, which have been in the 70s for four consecutive months,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, builders must manage rising construction costs to keep home prices competitive.” “Some multifamily pullback is expected after an unusually strong January reading. Multifamily starts should continue to level off throughout the year,” said NAHB Chief Economist Robert Dietz. “Meanwhile, the growth in single-family production is in line with our 2018 forecast for gradual, modest strengthening in this sector of the housing market.” Regionally in February, combined single- and multifamily housing production increased 7.6% in the Midwest. Starts fell 3.5% in the Northeast, 7.3% in the South and 12.9% in the West. Multifamily weakness pushed overall permit issuance down 5.7% in February to a seasonally adjusted annual rate of 1.3 million units. Multifamily permits fell 14.8% to 426,000 while single-family permits were essentially unchanged, edging down 0.6% to 872,000. Permit issuance rose 12.7% in the Northeast and 3.4% in the Midwest. Permits declined 3.4% in the West and 12.4% in the South.

Peter Thiel – Silicon Valley is a ‘totalitarian place’

Billionaire investor Peter Thiel argues Silicon Valley is is a ‘totalitarian place’ where people are not allowed to have dissenting views. Peter Thiel, who cofounded PayPal and was an early Facebook investor, said there are better places than Silicon Valley for technology entrepreneurs to start their businesses. “Silicon Valley will continue producing great companies but perhaps not quite as many,” Thiel said. Silicon Valley has been the motor of innovation for the past 20 years, but Thiel, who spent most of his career there, sees potential in Los Angeles. “It’s a more diversified economy,” he said. “And I think it has much less of a sense of everyone being on top of one another thinking the same way in one place.”

CoreLogic – homeowner equity increased by $908 billion in 2017

–  Negative Equity Share Fell to 4.9% in Q4 2017

–  Quarter Over Quarter, 19,000 Residential Properties Regained Equity in Q4 2017

–  About 2.5 Million Mortgaged Residential Properties Are Still in Negative Equity

CoreLogic released the Home Equity Report for the fourth quarter of 2017, which shows that US homeowners with mortgages (which account for roughly 63% of all properties, according to a 2016 American Community Survey) have seen their equity increase 12.2% year over year, representing a gain of $908.4 billion since the fourth quarter of 2016. Additionally, homeowners gained more than $15,000 in home equity between the fourth quarter of 2016 and the fourth quarter of 2017. While home equity grew nationwide, western states experienced the largest increase. Washington homeowners gained an average of approximately $40,000 in home equity, and California homeowners gained an average of approximately $44,000 in home equity. On a quarter-over-quarter basis, from the third quarter of 2017 to the fourth quarter of 2017, the total number of mortgaged homes in negative equity decreased 1% to 2.5 million homes, or 4.9% of all mortgaged properties (the third quarter of 2017 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.). Negative equity in the fourth quarter of 2017 decreased 21% year over year from 3.2 million homes – or 6.3% of all mortgaged properties – in the fourth quarter of 2016. “Home-price growth has been the primary driver of home-equity wealth creation,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The CoreLogic Home Price Index grew 6.2% during 2017, the largest calendar-year increase since 2013. Likewise, the average growth in home equity was more than $15,000 during 2017, the most in four years. Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to US consumption spending over the next two to three years.”

Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in a home’s value, an increase in mortgage debt or both. Negative equity peaked at 26% of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009. The national aggregate value of negative equity was approximately $283.1 billion at the end of the fourth quarter of 2017. This is up quarter over quarter by approximately $5.7 billion (or 2.1%), from $277.4 billion in the third quarter of 2017 and down year over year by approximately $3.2 billion (or 1.1%), from $286.3 billion in the fourth quarter of 2016. “There are wide disparities in home-equity gains by geographic area, with higher-priced, capacity constrained markets along the East and West Coasts registering the largest increases,” said Frank Martell, president and CEO of CoreLogic. “The average homeowner in California and Washington had a wealth gain of about $40,000, reflecting the high price of homes in California and the rapid appreciation in Washington. In contrast, the average owner in Louisiana had little change in their housing wealth during 2017, given much lower prices and modest price growth.”

NAHB – builder confidence remains on solid footing in March

Builder confidence in the market for newly-built single-family homes edged down one point to a level of 70 in March from a downwardly revised February reading on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) but remains in strong territory. “Builders’ optimism continues to be fueled by growing consumer demand for housing and confidence in the market,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, builders are reporting challenges in finding buildable lots, which could limit their ability to meet this demand.” “A strong labor market, rising incomes and a growing economy are boosting demand for homeownership even as interest rates rise,” said NAHB Chief Economist Robert Dietz. “With these economic fundamentals in place, the single-family sector should continue to make gains at a gradual pace in the months ahead.” Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. The HMI component gauging current sales conditions held steady at 77, the chart measuring sales expectations in the next six months dropped two points to 78, and the index gauging buyer traffic fell three points to 51. Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 57, the South decreased one point to 73, the West fell two points to 79, and the Midwest dropped four points to 68.

MBA – purchase apps up, refis down in latest MBA weekly survey

Mortgage applications increased 0.9% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 9, 2018. The Market Composite Index, a measure of mortgage loan application volume, increased 0.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2% compared with the previous week. The Refinance Index decreased 2% from the previous week. The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase Index increased 5% compared with the previous week and was 3% higher than the same week one year ago. The refinance share of mortgage activity decreased to its lowest level since September 2008, 40.1% of total applications, from 41.8% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.1% of total applications. The FHA share of total applications increased to 10.4% from 10.1% the week prior. The VA share of total applications increased to 10.3% from 9.9% the week prior. The USDA share of total applications remained unchanged at 0.9% from the week prior.

Equifax exec charged with insider trading after massive data breach

By Brittany De LeaPublished March 14, 2018NewsFOXBusiness




Former Equifax executive charged with insider trading

The Securities and Exchange Commission today said it had charged a former business executive from credit reporting agency Equifax with insider trading, in the wake of the massive breach that compromised the personal information of more than 147 million Americans. Jun Ying, who was next in line to be the company’s global CIO, was one of three executives at the company who dumped millions of dollars’ worth of stock after it was discovered that the company had suffered a massive cyberattack, but before that information was publicly disclosed. According to the SEC, Ying used confidential information to reap benefits of around $1 million from the stock sale, and evaded more than $117,000 in losses. “As alleged in our complaint, Ying used confidential information to conclude that his company had suffered a massive data breach, and he dumped his stock before the news went public,” Richard R. Best, director of the SEC’s Atlanta Regional Office, said in a statement. “Corporate insiders who learn inside information, including information about material cyber intrusions, cannot betray shareholders for their own financial benefit.”

The hack was discovered and stopped by Equifax on July 29, while three top executives, including Ying, collectively sold shares worth nearly $2 million on Aug. 1 and Aug. 2. The public was notified about the breach on Sept. 7. Insider trading is generally punishable by both a prison sentence and civil and criminal fines, according to the SEC. The maximum prison sentence is now 20 years, while the maximum criminal fine is $5 million. As for civil penalties, individuals may be required to disgorge as much as three times the amount of profits gained, or losses avoided. During congressional testimony, former CEO Richard Smith said the executives in question had gone through the proper channels to sell company stock. He also said employees were encouraged to sell their shares during a specific window following an earnings report, which is when the stock sale allegedly happened. Equifax revealed earlier this month an addition 2.4 million consumer accounts had been hit during the 2017 data breach, which took place from mid-May through July of last year. The total number of victims has consequently risen to nearly 148 million.

NAR – millennials lead all homebuyers, even as some can’t escape their parents

Home purchases by millennials ticked up over the past year, but inventory constraints and higher housing costs kept their overall activity subdued and prevented some from leaving the more affordable confines of their Gen X and baby boomer parents’ homes. This is according to the National Association of Realtors (NAR) 2018 Home Buyer and Seller Generational Trends study, which evaluates the generational differences1 of recent home buyers and sellers. The survey additionally found that millennial buyers prioritize living close to friends and family over a home’s location and proximity to schools, and an overwhelming majority used a real estate agent to buy or sell a home. Slightly more than a third of all home purchases were made by millennials over the past year (36%; 34% in 2017), which kept them as the most active generation of buyers for the fifth consecutive year. Gen X buyers ranked second (26%; 28% in 2017), followed by baby boomers (32%; 30% in 2017) and the Silent Generation, those born between 1925 and 1945 (6%; 8% in 2017). Revealing the greater purchasing power needed over the past year, the typical millennial buyer in the survey had a higher household income ($88,200) than a year ago ($82,000) and purchased the same-sized home (1,800-square-feet) at a more expensive price ($220,000; $205,000 in 2017). Millennials also had higher student debt balances than in last year’s survey, and slightly more of them said saving for a down payment was the most difficult task in buying a home.

Other key findings and notable generational trends of buyers and sellers in this year’s 144-page survey include:

–  Younger boomers and Gen X buyers increasingly have children and parents living at home

Similar to previous years, younger boomers were the most likely to purchase a multi-generational home (20%), with a noteworthy rise in those indicating the top reason they did was for their adult children (above 18 years old) to live at home (39%; 30% in 2017), as well as their parents (22%; 18% in 2017). The survey also found a growing a share of Gen X buyers buying for multi-generational purposes (15%; 12% in 2017), with a big jump in the top reason being for their adult children (35%; 26% in 2017) and parents living with them (30%; 19% in 2017). “Costly rents and growing student debt balances appear to make living at home more appealing, affordable and increasingly more common among young adults just entering the workforce,” said Yun. “Even in situations where three generations are all cramped under the same roof, it can significantly help some millennials eventually transition straight to homeownership. Eighteen% of millennial buyers in the survey said their family home was their previous living arrangement.”

–  Friends and family matter for buyers both young and old

When deciding where to buy a home, quality of the neighborhood is the factor most influencing buyers of all ages, followed closely by convenience to a job for those up to working age (millennials to younger boomers). Interestingly, even more than the location and quality of a school, recent millennial buyers were just as likely as older boomers and the Silent Generation (at 43%) to consider proximity to friends and family. “The sense of community and wanting friends and family nearby is a major factor for many homebuyers of all ages,” said Yun. “Similar to Gen X buyers who have their parents living at home, millennial buyers with kids may seek the convenience of having family nearby to help raise their family.”

–  Millennials buying condos in the city at a very low rate

The share of millennial buyers with at least one child continues to grow, at 52% in this year’s survey and up from 49% a year ago and 43% in 2015. With the need for a larger house at an affordable price, over half of millennials bought in a suburban location (52%), while also being more likely than Gen Xers and younger boomers to choose a home in a small town. After climbing as high as 21% in 2015, only 15% of recent millennial buyers purchased a home in an urban area. Led by Gen X (86%) and millennial buyers (85%), a detached single-family home continues to be the primary type of property purchased, and older and younger boomers were the most likely to buy a multi-family home. Only 2% of millennial buyers over the past year bought a condo.

–  Regardless of age, most buyers and sellers work with a real estate agent

Buyers and sellers across all age groups continue to seek the assistance of a real estate agent when buying and selling a home. At 90%, millennials were the most likely to purchase a home through a real estate agent, and help understanding the buying process was cited as the top benefit millennials said their agent provided (75%). Overall, at least 84% in every other generation worked with an agent to close the deal. On the seller side, Gen X and older boomers were the most likely to use an agent (91%), followed closely by millennials (90%) and younger boomers (88%). The near universal use of an agent to sell a home helped keep for-sale-by-owner transactions at their lowest share ever for the third straight year (8%). “Especially in today’s fast-moving housing market, consumers of all ages want a Realtor® to guide them through the exhilarating, yet nerve-wracking experience of buying or selling a home,” said NAR President Elizabeth Mendenhall.

US retail sales decline for third straight month in February

US retail sales fell for a third straight month in February as households cut back on purchases of motor vehicles and other big-ticket items, pointing to a slowdown in economic growth in the first quarter. The Commerce Department said on Wednesday that retail sales slipped 0.1% last month. January data was revised to show sales dipping 0.1% instead of falling 0.3% as previously reported. It was the first time since April 2012 that retail sales have declined for three straight month. Economists polled by Reuters had forecast retail sales rising 0.3% in February. Retail sales in February increased 4.0% from a year ago. Excluding automobiles, gasoline, building materials and food services, retail sales edged up 0.1% last month after being unchanged in January. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Consumer spending, which accounts for more than two-thirds of US economic activity, appears to have slowed at the start of the year after accelerating at a 3.8% annualized rate in the fourth quarter. But spending remains underpinned by a strong labor market, which is viewed by Federal Reserve officials as being near or a little beyond full employment. The economy created 313,000 jobs in February.

Consumer spending could also get a lift from a $1.5 trillion income tax cut package. Slower consumer spending supports expectations of modest economic growth in the first quarter. Gross domestic product growth estimates for the January-March quarter are around a 2% annualized rate. The economy grew at a 2.5% pace in the fourth quarter. But revisions to December data on construction spending, factory orders and wholesale inventories have suggested the fourth-quarter growth estimate could be raised to a 3.0% pace. The government will publish its third estimate for fourth-quarter GDP growth later this month. In February, auto sales fell 0.9% after a similar drop in January. Receipts at service stations declined 1.2%, reflecting lower gasoline prices. There were also declines in sales at furniture stores, health and personal care stores and electronics and appliance stores. But there were some pockets of strength in the report. Sales at building material stores increased 1.9% last month. Receipts at clothing stores gained 0.4% and sales at online retailers surged 1.0%. Sales at restaurants and bars rose 0.2%. Receipts at sporting goods and hobby stores jumped 2.2%.

MBA – February new home purchase mortgage applications increased 4.6% year over year

The Mortgage Bankers Association (MBA) Builder Applications Survey (BAS) data for February 2018 shows mortgage applications for new home purchases increased 4.6% compared to February 2017. Compared to January 2018, applications increased by 3%. This change does not include any adjustment for typical seasonal patterns. “Mortgage applications for new homes continued to grow in February on a year over year basis, although at a slower pace of just under 5%, as brisk activity in January likely pulled forward some buyer activity,” said Lynn Fisher, MBA Vice President of Research and Economics. “Combined, applications in January and February were up by 11% relative the same period last year. On a seasonally adjusted annual basis, our February estimate of new home sales based on mortgage applications came in at 632,000, ahead of the January Census estimate of 593,000 new homes sales, and back on trend following an uptick from hurricane-related rebuilding.” By product type, conventional loans composed 70.8% of loan applications, FHA loans composed 15.7%, RHS/USDA loans composed 1.1% and VA loans composed 12.4%. The average loan size of new homes decreased from $338,918 in January to $338,078 in February. The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 632,000 units in February 2018, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. The seasonally adjusted estimate for February is a decrease of 9.7% from the January pace of 700,000 units. On an unadjusted basis, the MBA estimates that there were 55,000 new home sales in February 2018, an increase of 1.9% from 54,000 new home sales in January.

Black Knight announces pricing of secondary offering of common stock and repurchase of common stock

Black Knight, Inc. announced the pricing of the previously announced underwritten public offering by affiliates of Thomas H. Lee Partners, L.P. (together, the “Selling Shareholder”) of 8,000,000 shares of the Company’s common stock at a public offering price of $49.00 pursuant to a shelf registration statement filed with the Securities and Exchange Commission (the “SEC”). The Company has agreed to repurchase from the underwriter 1,000,000 shares of the 8,000,000 shares of common stock being sold by the Selling Shareholder at a per-share purchase price equal to the price payable by the underwriter to the Selling Shareholder. As such, only 7,000,000 shares of the 8,000,000 shares of common stock being sold by the Selling Shareholder will be sold to the public. The Selling Shareholder will receive all of the net proceeds from this offering. No shares are being sold by the Company. The offering is expected to close on March 15, 2018, subject to customary closing conditions. Goldman Sachs & Co. LLC acted as the sole underwriter for this offering.

Housingwire – Sarah O’Brien reports in this CNBC report that mortgage lending from a community bank or credit union could become easier

Housingwire – Sarah O’Brien reports in this CNBC report that mortgage lending from a community bank or credit union could become easier, under a provision included in a banking regulatory bill under consideration in the Senate. “The Senate bill now under consideration (S. 2155) would let those smaller banks and credit unions still qualify for those legal protections without meeting all of the requirements that typically go with underwriting qualified mortgages,” O’Brien writes. However, even if passed, the legislation is unlikely to lead to a meaningful jump in mortgage lending from said institutions. “The lender also would be required to keep the mortgage in its own portfolio instead of selling it to investors. That would mean the risk remains with the bank,” O’Brien writes. The idea is that the loans are safer with 100% risk retention, which actually has no basis of proof anywhere in the current mortgage market. But, I guess it’s a start. Congressional efforts to better the mortgage market aside, the city of Miami is looking at proposals to fix its affordable housing crisis. Every idea is being considered, apparently. And Jerry Iannelli, is even sifting through, pulling out the worst ideas, and publishing them in the Miami New Times. He goes into more detail, but here they are in no particular order:

  1. Letting people live in/on top of parking garages
  2. Building homes out of shipping containers
  3. Cramming the poor into tiny homes
  4. Putting them into dorm rooms
  5. Asking developers to lose money on affordable housing out of the kindness of their hearts

It would be nice to see some of the good ideas, but these points are pretty awful, especially no. 5. “The state hasn’t helped either. Legislators have looted more than $1 billion from Florida’s affordable-housing fund over the last decade and refuse to raise the minimum wage to a livable level,” Iannelli writes. Everyone needs to check out this blog by Mark Fleming, chief economist of First American Financial Corporation and published in Business Insider. It’s titled: “Here’s what faster inflation and rising mortgage rates mean for housing.” Basically we’re in an environment of both and so far, it’s not having a huge impact, but that may change. “The fate of consumer house-buying power in 2018 will depend on the tug-of-war between rising household income and inflation-driven pressure on mortgage rates,” Fleming writes. And when will Millennials begin to start getting into buying houses? Everyone wants to know, and it’s generating some funny results. One is this satirical article that is titled: “Report: Most popular kink among Millennials is role-playing as a couple that owns a house.” It is seems like maybe it isn’t a joke, but be assured it is: “A published study out of Simon Fraser University on generational sexuality has found that the most popular sexual kink among Millennials is roleplaying as a couple that owns a house,” the article states. “While older generations have often used role-play as a way to simulate various power dynamics or unlikely encounters, Millennials are using the popular kink to indulge their own implausible fantasies, both sexually and monetarily.”

Oil, briefly up on lower rig counts, falls on US output outlook

Oil prices fell on Monday on expectations that US output will rise this year, erasing earlier gains buoyed by lower weekly US rig counts and falling US unemployment. Brent crude futures were at $64.93 per barrel at 1233 GMT, down 56 cents from their previous close. US West Texas Intermediate (WTI) crude futures fell 52 cents to $61.52 a barrel. Helping the dip, hedge funds and money managers cut their bullish wagers on US crude oil for the first time in three weeks, data showed on Friday. The reduction came as gross short positions on the New York Mercantile Exchange climbed to their highest level in nearly a month. “Rising production and inventory in the United States has been reducing fund sentiment since it peaked at the end of January,” ING said in a note. Crude prices had risen on Friday and earlier on Monday after the US economy added the biggest number of jobs in more than 1-1/2 years in February. In oil markets, US energy companies last week cut oil rigs for the first time in almost two months, with drillers cutting back four rigs, to 796, Baker Hughes energy services firm said on Friday. Despite the lower rig count, which is an early indicator of future output, activity remains much higher than a year ago. Then, 617 rigs were active, and most analysts expect US crude oilproduction, which has already risen by over a fifth since mid-2016 to 10.37 million barrels per day (bpd), to expand further. “Permian and Bakken shale basins still saw active oil rigs rising by 2 and 3 last week, respectively, and are likely to keep US oil production on (an) increasing trend,” ING said. The United States has become the world’s no. 2 crude oil producer, ahead of top exporter Saudi Arabia. Only Russia pumps more, at nearly 11 million bpd.

23 big retailers closing stores

Toys R’ Us bankruptcy: Is this a retail apocalypse?

Toys R’ Us has filed for bankruptcy right before the holiday shopping season, becoming the latest brick-and-mortar retailer to fall victim to the growth of e-commerce and discount stores. More than 300 companies have filed for bankruptcy in 2017 so far, here’s a look at the most significant casualties. Some of the United States’ most prominent retailers are shuttering stores in recent months amid sagging sales in the troubled sector. The rise of ecommerce outlets like Amazon has made it harder for traditional retailers to attract customers to their stores and forced companies to change their sales strategies. Many companies have turned to sales promotions and increased digital efforts to lure shoppers while shutting down brick-and-mortar locations.

Abercrombie & Fitch

The once-prominent fashion retailer said during its fourth quarter earnings call that it would close as many as 60 US stores in 2018 through expiring leases, while also adding 11 US-based full price store locations. Abercromie has placed an increased emphasis on its direct-to-consumer efforts, with CEO Fran Horowitz called the brand’s “biggest storefront.” Abercromie & Fitch shuttered about 40 store locations in 2017.


The New Jersey-based women’s footwear company filed for bankruptcy last year and announced plans to move forward with a “significant reduction” of its retail locations. While it’s unclear how many of Aerosoles’ 88 locations will be affected, the chain said it plans to keep four flagship stores in New York and New Jersey operational, Opens a New Window.  reported.

American Apparel

A fashion brand known for its edgy offerings, American Apparel shuttered all of its 110 US locations last year after filing for bankruptcy. The brand has since been acquired by Canada-based Gildan Activewear, which acquired its intellectual property in an $88 million deal.


The Los Angeles-based brand listed liabilities of more than $500 million when it filed for bankruptcy last February. The chain closed 118 store locations nationwide last year, though more than 300 remained in operation under a company-wide reorganization.


The women’s apparel chain closed all of its remaining 168 stores by last May, days after it said it was exploring “strategic alternatives for the company” amid plunging sales.

Bon-Ton Stores Inc.

The struggling department store filed for Chapter 11 bankruptcy, according to court papers filed in February. The chain, which operates 256 stores in 23 states, also announced it plans to close 42 stores in 2018 as part of a restructuring plan.

The Children’s Place

A fixture at shopping malls, the children’s clothing retail said it will close hundreds of store locations by 2020 as part of a shift toward digital commerce.


The pharmacy retailer said it would close 70 store locations in 2017 as part of a bid to cut costs and streamline its business. CVS still operates thousands of stores nationwide.

Foot Locker

The sports retailer told investors on March 1 that it would shutter about 110 stores in a push to focus on higher-performing store locations while also opening about 40 new stores. Foot Locker closed more than 140 stores globally last year. “We continue to prune the fleet of under-productive stores and open a few select, high-profile stores,” CFO Lauren Peters said in a call with investors.


Guess announced plans to close 60 of its struggling US store locations in 2017 as part of a plan to refocus on international markets.


The kids clothing retailer confirmed last July that it would close 350  of its more than 1,200 store locations to streamline its business and achieve “greater financial flexibility,” according to CEO Daniel Griesemer.


The electronics retailer said it would close all of its 220 stores and lay off thousands of employees when it failed to find a buyer after bankruptcy proceedings.

  1. Crew

The preppy icon, which once thrived under the direction of retail guru Mickey Drexler, is thriving no more. During a November conference call, COO and CFO Mike Nicholson said the number of planned store closings will move to 50 up from the 20-30 originally announced.  “We are committed to driving outsize growth with strong e-commerce capabilities complemented with a more appropriately sized real estate footprint” said Nicholson as reported by Opens a New Window.

J.C. Penney

The department store chain closed 138 stores last year while restructuring its business to meet shifting consumer tastes. The retailer also announced plans to open toy shops in all of its remaining brick-and-mortar locations.

The Limited

After a brutal holiday season in 2016, the clothing chain closed all 250 of its physical stores last January as part of a bid to focus on ecommerce. The closures reportedly resulted in the loss of about 4,000 jobs.


The major retailer said this month it would shutter an additional seven stores that were previously undisclosed and lay off some 5,000 workers as part of an ongoing effort to streamline its business and adjust to a difficult sales environment. Macy’s says it has now revealed 81 of the 100 store closures it first revealed in an August 2016 announcement.

Michael Kors

With same-store sales plunging, the upscale fashion retailer said it would close as many as 125 stores  to adapt to a difficult, promotional sales environment.


The discount shoe retailer filed for bankruptcy last April and has moved to close about 800 stores this year.


The once-prominent electronics outlet shut down more than 1,000 store locations earlier this year. The brand now operates just 70 stores nationwide, down from a peak of several thousand.


The specialty teen clothing retailer confirmed last April that it would close up to 400 of its more than 1,100 locations and later filed for bankruptcy last May.


Sears Holdings is one of the most prominent traditional retailers to suffer in a challenged sales environment. The brand shuttered 35 Kmart locations and eight Sears stores last July and has closed more than 300 locations last year amid pressure from ecommerce outlets, USA Today Opens a New Window.  reported.

Toys R Us

The venerable toy outlet filed for bankruptcy last September amid mounting debt and pressure from wary suppliers. For now, the company says its 1,600 store locations will remain open and operate “as usual,” with no changes to organization structure or payroll. Following the 2017 holiday season, the future of the stores remains unclear.

Wet Seal

The teen fashion brand shuttered its 171 stores last year after previously filing for bankruptcy in 2015. Declining foot traffic at malls and pressure from competitors like Zara and H&M contributed to Wet Seal’s demise.

Black Knight – Mortgage Monitor: homes in lowest price tiers  continue to see greatest appreciation, tightest affordability

–  ​​​​​30-year fixed mortgage interest rates rose by 43 BPS in the first six weeks of 2018, pushing affordability to its lowest point since 2009

–  Properties in the lowest 20% of home prices (Tier 1) have been the fastest-appreciating quintile for 67 consecutive months

–  Such Tier 1 properties are seeing an annual rate of appreciation of 8.5%; 1.9% higher than the market average, and more than 3.6% above that of Tier 5 properties (those in the highest 20% of home prices)

–  Given the disproportionate appreciation of low-priced homes as compared to income growth, affordability at the lower end of the market remains a challenge

–  Recent affordability reductions from higher rates could put more pressure on lower-income buyers by increasing competition for lower-priced homes, as borrowers’ overall buying power is diminished

–  Recent rate increases have put more pressure on a shrinking refinance market as well, cutting the population of potential refi candidates by 40%

The Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based on data as of the end of January 2018. This month, Black Knight looked at the impact of recent interest rate rises on home affordability. While affordability remains better than long-term averages nationally, home prices at the lower end of the market are less affordable than the national average, particularly for those in lower income levels. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, the root of the issue has been the consistently higher-than-market-average rate of home price appreciation among properties in the lowest 20% of home prices nationally. “Prices on Tier 1 properties – those in the lowest 20% of home values – have been appreciating at a faster rate than all other tiers for 67 consecutive months,” said Graboske. “The annual rate of appreciation for these homes is 1.9% higher than the market average, and more than 3.6% higher than that of properties in the top 20% of prices (Tier 5). Larger overall increases in value among lower-priced homes is not just a recent trend, though; the same dynamic is observed when looking back over the past 15 years. While the nearly 50% increase in the median home price over that period has significantly outpaced the approximately 40% growth in the median income, lower interest rates today have more than offset that difference. However, according to Census Bureau data, income growth in the lower quintiles has not kept up with the higher ends of the market. This has clear implications for home affordability in this segment of the population, even more so in light of the 43 BPS increase in interest rates seen in just the first six weeks of 2018.

“Overall affordability remains better than long-term historical averages, even taking the recent rate jump into consideration. Currently, it takes 23% of the median income to purchase the median home nationally, which is still 1.9% below the averages seen from 1995 – 2003. But those in lower income levels are much closer – if not above – such long-term benchmarks. It seems evident that further affordability reductions from rising interest rates could put more pressure on lower-income buyers by increasing competition for lower priced homes, as borrowers’ overall buying power is diminished.” The spike in 30-year fixed mortgage interest rates also had the effect of cutting the population of borrowers with interest rate incentive to refinance by nearly 40% in 40 days. Approximately 1.4 million borrowers lost the interest rate incentive to refinance in just the first six weeks of 2018. This leaves 2.65 million potential candidates who could still both benefit from and likely qualify for a refinance at today’s rates, the smallest that population has been since late 2008, prior to the initial decline in rates during the recession. This represents another challenge to a consistently shrinking refinance market. Refinance lending declined significantly in 2017, with the total number of originations down 29%, and total volume down by $355 billion, a 34% year-over-year decline.

As was reported in Black Knight’s most recent First Look news release, other key results include:

​-  Total US loan delinquency rate: 4.31%

​-  Month-over-month change in delinquency rate -8.57%

​-  Total US foreclosure pre-sale inventory rate: 0.66%

​-  Month-over-month change in foreclosure pre-sale inventory rate: 1.84%

​-  States with highest percentage of non-current loans: MS, LA, FL, AL, WV

​-  States with lowest percentage of non-current loans: ​ID, WA, OR, ND, CO

​-  States with highest percentage of seriously delinquent loans: ​FL, MS, LA, TX, AL

Oil prices climb ahead of OPEC meeting with US shale firms

Oil prices rose on Monday ahead of a meeting between OPEC and US shale firms in Houston, raising expectations that oil producers would discuss further how to clear a global oil glut. International benchmark Brent crude was up 19 cents, or 0.3%, at $64.56 a barrel by 0752 GMT. US West Texas Intermediate (WTI) crude rose 17 cents, or 0.28%, to $61.42 per barrel. Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) and other global oil players are set to gather in Houston as CERAWeek, the largest energy industry conference, begins on Monday. OPEC Secretary General Mohammad Barkindo and other OPEC officials are expected to hold a dinner on Monday with US shale firms on the sidelines of the conference. “OPEC and Non-OPEC alliance remain at record high compliance, but with Russia continually pressuring for an exit strategy, OPEC will look to offer an olive branch to US shale,” said Stephen Innes, head of trading for the Asia-Pacific region at futures brokerage OANDA in Singapore. “As such, we should interpret any positive developments from the meeting as support for underlying oil price sentiment.”

Suhail Mohamed Al Mazrouel, the United Arab Emirates oil minister and OPEC’s current president, said on Sunday that the oil cartel has not discussed rolling over production cuts until next year. Rising US shale oil production has been a drag on the OPEC’s commitment to erode a prolonged global oil glut and prop up prices. US crude oil production has already risen past that of top exporter Saudi Arabia, to 10.28 million barrels per day (bpd). Only Russia pumps slightly more, but the International Energy Agency (IEA) said last week it expects the United States to take Russia’s seat as the world’s biggest crude oil producer by 2019, at the latest. The number of oil rigs drilling for new production in the United States rose to 800 for the first time since April 2015 in early March, pointing to more increases in output to come.

Trump tariff on steel and aluminum: Winners and losers

President Trump says America’s steel and aluminum industry is at a disadvantage and is considering an import tariff hike. From the beer industry to car makers, here’s a look at the biggest winners and losers of such a proposal.

President Donald Trump reiterated support Friday for steel and aluminum tariffs, saying in a tweet that “trade wars are good, and easy to win.” The message came a day after he announced his plans to impose a tariff of 25% on steel and 10% on aluminum. If president has his way, the effects on business could be widespread. Here are some of the likely winners and losers:


–  US steelmakers and aluminum producers

Top steel producers such as AK Steel, US Steel and Nucor  have for years been aggressively lobbying for trade protection against what they say is unfair competition from such countries as China, Russia and South Korea. If the 25% tariff happens, it is expected to drive up US steel prices. Michael Bless, CEO of Century Aluminum,  the second-largest producer of primary aluminum in the US, told FOX Business on Friday that new tariffs would allow the company to invest a $100 million in new technology and add 200 more jobs. “We are immediately going to go and reopen the shut production plant in Hawesville, Kentucky,” he said on FOX Business’ “Mornings with Maria.” “We think this action is a long time in coming.”


–  US aluminum users

Companies that use aluminum to make beer cans, airplanes, cars and a slew of other products will likely be on the losing side of the tariffs.

–  Beer companies: MillerCoors

MillerCoors tweeted that it was “disappointed” with Trump’s announcement of a 10% tariff aluminum. “Like most brewers, we are selling an increasing amount of our beers in aluminum cans, and this action will cause aluminum prices to rise,” the company said in its posting. “It is likely to lead to job losses across the beer industry. We buy as much domestic can sheet aluminum as is available, however, there simply isn’t enough supply to satisfy the demands of American beverage makers like us. American workers and American consumers will suffer as a result of this misguided tariff.” The Beer Institute, a lobbyist that represents beer producers and importers, including MillerCoors, said the 10% tariff on aluminum could cost the industry $347.7 million and more than 20,000 jobs.

–  US automakers: Ford, General Motors, Fiat Chrysler and Tesla

The announcement of metal tariffs comes at a tough time for US automakers, which have faced flattening sales in recent months. The tariffs will likely create higher prices for steel that could be passed on to customers.The American Automotive Policy Council, a lobbyist that represents General Motors, Ford and Fiat Chrysler, said in a statement last month that tariffs on steel and and aluminum would lead to higher prices. “This would place the US automotive industry, which supports more than 7 million American jobs, at a competitive disadvantage,” Matt Blunt, the council’s president, said in the statement.

–  Canned-food industry

The canned-food industry makes nearly 20 billion cans of food annually using tinplate steel. It employs tens of thousands of American workers. Companies such as Ardagh, Ball, Bush Brothers, BWAY, Conagra Brands, Del Monte Foods and Faribault Foods have all signed a letter to Trump urging him to exclude tinplate steel from any tariffs or trade restrictions to avoid driving up food costs.

Ford to temporarily lay off 2,000 workers as it retools plant for Ranger and Bronco

–  Ford temporarily lays off 2,000 workers at its Michigan Assembly and Stamping plant.

–  The automaker is retooling the plant for the reintroduction of the Ford Ranger and Bronco models.

Ford is temporarily laying off about 2,000 workers as it retools an assembly and stamping plant in Wayne, Michigan, for the Ford Ranger and Bronco models. The layoffs will take place May 7-Oct. 22, and will affect hourly workers, Ford said. “Ford is not eliminating any jobs; this is a temporary measure as we undertake extensive retooling to transform the plant to build the Ford Ranger, followed by the Ford Bronco,” Ford said in a statement. “Employees who are temporarily affected will receive approximately 75% of their take-home pay if they have one year seniority. The affected employees all will return to work — either at Michigan Assembly or at another Ford facility.” The Ranger, a half-sized pickup, is expected later in 2018 and the Bronco, an SUV, in 2020. Ford produced the Bronco for three decades before pulling the model in 1996. It sold the Ranger in North America until 2011, and has since made the truck for some international markets.

Black Knight HPI – December 2017 transactions  

The Data and Analytics division of Black Knight, Inc. released its latest Home Price Index (HPI) report, based on December 2017 residential real estate transactions. The Black Knight HPI utilizes repeat sales data from the nation’s largest public records data set, as well as its market-leading, loan-level mortgage performance data, to produce one of the most complete and accurate measures of home prices available for both disclosure and non-disclosure states. Non-disclosure states do not include property sales price information as part of their publicly available county recorder data. Black Knight is able to obtain the sales price information for these states by combining and matching records across its unique data assets.

–  US home prices edged up slightly in December, closing the year 6.6% above end of 2016

–  December marked 68 consecutive months of annual home price appreciation

–  New York once again led all states in monthly gains, with home prices up 1.71% over last month

–  Ohio experienced the most negative movement, with home prices there falling 1.13% from November, and accounting for seven of the nation’s 10 worst-performing metros of the month

–  Home prices fell in nine of the nation’s 20 largest states, while six others hit new peaks

–  Likewise, while 11 of the 40 largest metros hit new home price peaks in December, prices fell in another 20

Oil steady after hitting 3-week high, Saudi offers support

Oil slipped on Monday but still held close to its highest since early February, supported by comments from Saudi Arabia that it would continue to curb shipments in line with the OPEC-led effort to cut global supplies. Brent crude was down 17 cents at $67.14 a barrel at 1258 GMT, after rising almost 4% last week. US West Texas Intermediate crude was down 3 cents at $63.52 a barrel after rising 3% last week. Both contracts earlier rose to their highest since Feb. 7. A cold snap across Europe has encouraged some refiners to delay maintenance, which could support demand and help end a mild bout of profit-taking, analysts said. “There is a bit of a bearish twinge to everything … but we believe in the second half (of the year), you’ll see demand pull the market back up again,” Natixis oil analyst Joel Hancock said. “Our view is demand will be strong enough, but we don’t see a big breakout,” he said, adding the expected a price in the range of $60 to $70 this year. Prices drew some support from Saudi Energy Minister Khalid al-Falih, who on Saturday said the country’s crude production in January-March would be well below output caps, with exports averaging less than 7 million barrels per day. US energy firms added one oil rig last week, the fifth weekly increase in a row, bringing the total count up to 799, the highest since April 2015, Baker Hughes energy services firm said on Friday. Meanwhile, Libya’s National Oil Corp said on Saturday it had declared force majeure on the 70,000 bpd El Feel oilfield after a protest by guards closed the field.

MBA president slams “defamatory” mortgage industry report

The Mortgage Bankers Association is speaking up against a report from The Center for Investigative Reporting which claims to show a high level of discrimination against people of color in mortgage lending approvals. In a blog, David Stevens, MBA’s president and CEO, responded by sharply criticizing the report, writing: “Make no mistake, discrimination is unacceptable in any way, at any time.  Period.  End of Story. And yes, members of minority communities are being denied mortgage loans at a greater rate than white borrowers.  But it is flat-out incorrect, defamatory and disgraceful to accuse the mortgage lending industry of denying loans to borrowers simply based on the color of their skin. What this group is doing – not just relying on a study that fails to consider many of the key data-based variables that lenders rely on to make an individual loan decision, but also cherry-picking among loan types – is actually counterproductive to the important discussion we are having regarding access to credit challenges in our nation’s communities.” CIR said in its reporting that it used 2016 Home Mortgage Disclosure Act data for its report, but Stevens countered by saying it doesn’t tell the entire story, explaining that the organization only looked at conventional loans, which don’t paint a clear picture of who is borrowing. “There is no rational reason for failing to include FHA loans. They are widely available, allow smaller down payments, and in some ways are more flexible with respect to credit history than conventional programs,” Stevens wrote in the blog.

GE reshapes board after retroactively cutting profits

Days after saying that it would retroactively cut the profits reported over the past two years, General Electric Co. is reshaping its board of directors. One person joining the board chaired the organization that sets accounting standards in the United States.GE said Friday that it must cut its 2016 per-share earnings by 13 cents, and by 16 cents for 2017. It’s adopting new accounting standards for 2018. The Securities and Exchange Commission investigating the Boston company over long-term service contracts and federal regulators are reviewing a $15 billion miscalculation that GE made within an insurance unit. GE disclosed last month that it would take a $6.2 billion charge in its fourth quarter after a subsidiary, North American Life & Health, underestimated how much it would cost to pay for the care of people who lived longer than projected. After cutting the size of its board from 18 to 12 members, GE said Monday that a quarter of that board would consist of new members, including Leslie Seidman, former chairman of the Financial Accounting Standards Board. Also named were former Danaher Corp. CEO Lawrence Culp and one-time American Airlines CEO Thomas Horton. CEO John Flannery, a longtime insider at GE, was tasked last year with reshaping the company, but the proposed changes at GE have grown more radical over the past several months as negative developments emerge. The company has shrunk dramatically since it became entangled in the financial crisis a decade ago and Flannery has vowed to shed $20 billion in assets quickly.


American Banker – The warning signs in consumer credit data

US households are borrowing more than ever to buy homes and cars, pay for college and even finance every day purchases. The Federal Reserve Bank of New York said in September that consumer debt hit a record $12.96 trillion in the third quarter of 2017, as student and auto loan totals reached all-time highs and mortgage and credit card debt crept closer to pre-financial-crisis levels. It’s an eye-popping figure to be sure, but should lenders be spooked by it? The New York Fed has noted that its data is not adjusted for inflation, and the cost of goods and services has risen by more than 10% since 2008, the last time total consumer debt neared the $13 trillion mark. Moreover, the US population has increased by about 7% during that span, which means that, on a per capita basis, consumer debt is actually lower than it was a decade ago. Another sign that households are managing their debt reasonably well: Foreclosures hit a new historical low in the third quarter, according to the New York Fed. Still, there are reasons to be concerned about rising debt levels. The personal savings rate hit a 12-year low at the end of 2017, which means that many households likely do not have enough of a financial cushion to weather sudden economic shocks, like a major medical bill or a busted refrigerator. Delinquencies on all types of consumer loans, while nowhere near 2009 and 2010 levels, have started to tick up in recent quarters. Factor in slow wage growth and high housing costs in many urban markets and it is not hard to imagine many households struggling to keep pace with their monthly bills. It’s too soon to say what this all means for banks, but not too soon point out the warning signs. Here they are.

Trump’s $1.5T infrastructure plan shifts funding burden to states, private sector

The White House released the outline for President Donald Trump’s highly-anticipated infrastructure overhaul on Monday, an effort that places a larger burden on states to fund their own projects. As Trump mentioned during his State of the Union address last month, the plan calls for $1.5 trillion over the course of the next decade to overhaul the nation’s roads, bridges, airports and even broadband distribution. The funds are expected to result from a combination of public and private assistances, with the federal government contributing around $200 billion. Of that $200 billion, half will be dedicated to what the administration is calling an “Incentives Program,” where grants will be awarded to states to fund projects that can spur additional outside investment. For these initiatives, federal dollars are to be used to fund a maximum of 20% of the cost, a big policy reversal from the current funding structure where government money can account for as much as 80% of highway repairs. Twenty-billion dollars will be put toward expanding infrastructure financing programs, including an effort to increase the number of credit programs, and another $20 billion is to be allocated toward innovative, “transformative projects.”To address the needs of rural America, where some believe it could be more difficult to raise funds and attract investment, the White House proposes that $50 billion be awarded to those states’ governors in the form of block grants. With the US government committing just $200 billion to the effort, which the White House has said will come from cuts to other programs, it is largely up to states and localities to work with the private sector to raise the rest of the cash to fund needed infrastructure initiatives. The administration is hopeful the revamp will continue to stimulate economic growth. As previously reported by FOX Business, manufacturers are looking to the plan as not only a way to create direct spending and new jobs, but also to increase intra-industry efficiency.

Equifax breach might have been worse than anyone thought

A new revelation shows Equifax’s massive data breach, which occurred last year and affected about 145.5 million consumers, may have been worse than anyone thought. But this isn’t the first time the credit agency revealed the breach was more damaging than initially announced. Back in October, Equifax revealed the data breach was bigger than they first thought, moving the number of victims up from 143 million to 145.5 million. But now, confidential documents Equifax provided to the Senate Banking Committee showed additional information such as tax IDs and driver’s license details were also accessed during the hack. And now, some interest groups are urging Congress to hold Equifax accountable and pass consumer protection bills. US PIRG, a federation of state public interest research groups, is urging Congress to pass pro-consumer privacy and data security bills introduced in the five months since the breach was first reported. “Why did it take Equifax so long to disclose this additional stolen information?” asked Mike Litt, US PIRG consumer campaign director. “And why hasn’t Equifax directly notified consumers about this yet?” “In addition to raising more questions over Equifax’s many failures, these new revelations show the urgent need for action,” Litt said. “For starters, the Consumer Financial Protection Bureau should complete its investigation into the breach. In the meantime, Congress should pass legislation now.”

US PIRG listed several bills introduced in Congress that it supports, and says would support consumers including S. 2289, the Data Breach Prevention and Compensation Act, S. 1816, the Freedom from Equifax Exploitation Act and S. 2362, the Control Your Personal Credit Information Act. “There are already several good bills just sitting there,” Litt said. “Will it take an even worse breach for Congress to pass them?” And it may take an act from Congress to make any meaningful changes for Equifax as CFPB Acting Director Mick Mulvaney said the agency is enforcing the law but not being aggressive under his leadership. “We’re not pushing the envelope,” Mulvaney said Sunday on CBS. “We’re taking a different attitude toward the job, but the priorities have not changed.” Mulvaney explained he is taking this new approach because the CFPB is “perhaps the most unaccountable bureau or agency there is.” “We want to run that place with a good deal of humility and prudence,” Mulvaney said. “This bureau is unlike any other federal bureaucracy. It’s run by one person. Right now me.”

Elon Musk says the new SpaceX Falcon Heavy rocket crushes its competition on cost

–  SpaceX CEO Elon Musk reveals a new detail about the company’s new Falcon Heavy rocket.

–  A maxed-out version of the rocket would cost $150 million per launch, Musk said in a tweet Monday.

–  That is a quarter of a billion dollars less than SpaceX’s next closest competitor.

SpaceX is even further out in front of the rest of the space industry than previously thought, according to CEO Elon Musk, who claimed on Monday that a “fully expendable” Falcon Heavy would cost only $150 million — about $250 million cheaper than the closest competition. The company’s Falcon Heavy rocket became the most powerful commercial rocket in the world after SpaceX successfully completed its first launch on Tuesday. SpaceX has said previously the cost of each launch Falcon Heavy launch starts at $90 million. But that price tag — a fraction of the cost of the next biggest rockets from competitors United Launch Alliance (ULA) and Arianespace — was a best case scenario. It was unclear how much above the $90 million price tag a fully expendable version of Falcon Heavy would cost. Then, on Monday, Musk tweeted: “A fully expendable Falcon Heavy … is $150 [million],” Musk tweeted. That’s about a quarter of a billion dollars less than the next best thing. A fully expendable rocket is the maxed-out version, in which SpaceX would not try to conserve fuel or weight to recover parts of the rocket. The company built Falcon Heavy out of three of the company’s Falcon 9 rockets, which has now completed dozens of successful launches over the last few years. By landing the rocket’s first stage, SpaceX is able to recover and reuse the largest piece of each vehicle, which had traditionally been discarded after a launch. Part of last week’s successful launch was the recovery of two of Falcon Heavy’s three rocket boosters, which landed side-by-side on concrete pads at Cape Canaveral, Florida. It is unclear how ULA, a Boeing and Lockheed Martin joint venture, will respond to Falcon Heavy. ULA’s most powerful rocket, the Delta IV Heavy, costs upward of $400 million per launch. Musk said after Falcon Heavy’s launch that he wants “a new space race,” saying he thinks the rocket’s success will “encourage other companies and countries” to be ambitious in the same way as SpaceX.

MBA – Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 2.6% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 26, 2018. The Market Composite Index, a measure of mortgage loan application volume, decreased 2.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12% compared with the previous week. The Refinance Index decreased 3% from the previous week. The seasonally adjusted Purchase Index decreased 3% from one week earlier. The unadjusted Purchase Index increased 15% compared with the previous week and was 10% higher than the same week one year ago. The refinance share of mortgage activity decreased to 47.8% of total applications, its lowest level since August 2017, from 49.4% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.7% of total applications. The FHA share of total applications decreased to 10.7% from 11.4% the week prior. The VA share of total applications decreased to 10.1% from 10.9% the week prior. The USDA share of total applications remained unchanged at 0.8%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since March 2017, 4.41%, from 4.36%, with points increasing to 0.56 from 0.54 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

Companies add 234,000 jobs in January, buttressing Trump claim

US companies added 234,000 jobs in January, a report from ADP Research Institute said Wednesday, a day after President Donald Trump touted labor market strength in his first official State of the Union address. Economists surveyed by Thomson Reuters had projected that private payrolls would grow by 185,000. “Since the election, we have created 2.4 million new jobs, including 200,000 new jobs in manufacturing alone,” Trump said Tuesday. The ADP report was published two days before the Labor Department’s payrolls report, which includes data from both the public and private sectors. In addition to pointing to labor market strength, Trump also said in his address that business confidence is high and that the stock market has gained $8 trillion in value. “They are having their best year in their 20-year history,” Trump said in his address. “They are handing out raises.”

Pending Home Sales Tick Up 0.5% in December

Pending home sales were up slightly in December for the third consecutive month, according to the National Association of Realtors®. In 2018, existing-home sales and price growth are forecast to moderate, primarily because of the new tax law’s expected impact in high-cost housing markets. The Pending Home Sales Index moved higher 0.5% to 110.1 in December from an upwardly revised 109.6 in November. With last month’s modest increase, the index is now 0.5% above a year ago. Lawrence Yun, NAR chief economist, says pending sales edged up in December and reached their highest level since last March (111.3). “Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018,” he said. “Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now.” Added Yun, “Sadly, these positive indicators may not lead to a stronger sales pace. Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices — especially at the lower end of the market.” The uninterrupted supply and demand imbalances throughout the country fueled price appreciation to 5.8% in 2017, which was the sixth straight year of gains at or above 5%1. While tight inventories are still expected to put upward pressure on prices in most areas this year, Yun expects overall price growth to shrink, with some states even experiencing a decline, because of the negative effect the changes to the mortgage interest deduction and state and local deductions under the new tax law. See NAR’s 2018 state forecast for a look at home price projections:

“In the short term, the larger paychecks most households will see from the tax cuts may give prospective buyers the ability to save for a larger down payment this year, and the healthy labor economy and job market will continue to boost demand,” said Yun. “However, there’s no doubt the nation’s most expensive markets with high property taxes are going to be adversely impacted by the tax law.” Added Yun, “Just how severe is still uncertain, but with homeownership now less incentivized in the tax code, sellers in the upper end of the market may have to adjust their price expectations if they want to trade down or move to less expensive areas. This could in turn lead to both a decrease in sales and home values.” After expanding 1.1% in 2017 to 5.51 million, Yun does anticipate a slight increase (0.5%) in existing sales this year (5.54 million). Single-family housing starts are forecast to jump 13.3% to 961,000, which will push new home sales up 15.3% to 701,000 (608,000 in 2016). The PHSI in the Northeast dipped 5.1% to 93.9 in December, and is now 2.7% below a year ago. In the Midwest the index decreased 0.3% to 105.0 in December, but is still 0.3% higher than December 2016. Pending home sales in the South grew 2.6% to an index of 126.9 in December and are now 4.0% higher than last December. The index in the West rose 1.5% in December to 101.7, but is still 3.1% below a year ago.

Oil prices fall for 3rd day as US inventory build-up weighs

Oil fell for a third day on Wednesday, but remained on track for its biggest gain in January in five years, in spite of data that showed US crude stocks rose more than expected last week and a broader selloff in other commodities, stocks and bonds. Brent crude, the global benchmark, was down 49 cents at $68.43 a barrel by 1015 GMT, after touching a two-week low earlier in the day. US West Texas Intermediate (WTI) futures were down 39 cents at $64.11. On Tuesday, US crude fell 1.6% to close at $64.50 a barrel, far outpacing a 0.6% drop in the price of Brent. “The extent of the latest pullback in oil prices has taken many by surprise. Whether this weakness will be short-lived or are we witnessing the precursor to a violent downside correction remains to be seen,” PVM Oil Associates strategist Stephen Brennock said. “Still, what is apparent is that positives are increasingly in short supply for skittish buyers and the early-year optimism is hanging by a thread.” Prices of WTI and Brent are still on track for a fifth month of gains and Brent is set for its largest percentage increase in the month of January since 2013, with a rise of 2.7%. But as prices have risen, US producers have increased their rig count. Energy companies added 12 oil rigs last week, the biggest weekly increase since March. “The rig count will only continue to rise and the US system will only become more efficient,” said Matt Stanley, a fuel broker at Freight Services International in Dubai. “I see a correction on the horizon down towards $60 before the inevitable OPEC minister comes out and talks about new cuts,” he added.

Statement from NAHB Chairman Randy Noel on President Trump’s State of the Union Address

Randy Noel, chairman of the National Association of Home Builders and a custom home builder from LaPlace, La., issued the following statement regarding President Trump’s State of the Union address: “President Trump said ‘America is a nation of builders’ and the nation’s home builders wholeheartedly agree. The president knows that housing and homeownership are critical to a strong and prosperous nation. We commend him for working tirelessly to reduce unnecessary regulations that hurt small business owners and impede a more robust housing recovery. And we strongly support the president’s call for more vocational schools to train young workers and prepare them for careers in the construction trades and other industries. Moreover, the landmark tax reform law championed by President Trump will keep housing and the economy moving forward and put more money into the pockets of middle class households. And that’s good for housing. NAHB looks forward to working with the White House to continue to promote policies that will spur job and economic growth and promote homeownership and rental housing opportunities for all Americans.”

CoreLogic – US Economic Observations: January 2018

It is well known that there are affordability issues in the home purchase market, but there is less information on the single-family rental market, which makes up one-half of residential rentals. The CoreLogic Single Family Rental Index reflects rents paid on single-family houses and condos, and using this index we can dissect rent growth by both price tier and metro area. Rents for single-family homes fell during the Great Recession but then bounced back strongly from their low point in mid-2009 and have been trending up, mirroring home price growth. In October 2017, the index measured rent growth of 2.7% from a year ago. We can also show rent changes for the high-end (those rents 25% or more above the median rent in that market) and the low end (those rents 75% or less below the median in that market). The low-end single-family rental tier lagged the high-end tier from mid-2009 to early 2014, but then the low-end began steadily outpacing the high-end and the difference is growing. This mirrors the same high demand, low- supply forces that have caused low-end home prices to outpace high-end prices, as evidenced by shorter days-on-market and tighter inventory for low-end homes. Investors who entered the market to buy up distressed properties during the housing crisis might be exacerbating this trend in the rental market. High-end rents increased 2% in October from a year ago, while low-end rents increased by more than twice as much – 4.2%. We can also look at the difference between low-end and high-end rent growth by metro area. Seattle leads the large metros with the biggest increase in rents at 7.9% in October. Austin had the smallest increase in low-end rents of the large metros. In most of the 20 markets shown in the chart, low-end rents are increasing faster than high-end rents, and the trend is happening all over the country, not just in one region. The one exception is Warren, Mich., where low-end and high-end rents are increasing at about the same rate. The biggest spread in low-end and high-end rent increases was in Charlotte, N.C., where the low-end increased 5.6% and the high-end showed no increase. The single-family rental market is an important and often overlooked segment of the housing market and is affected by rising demand and constrained supply just like the rest of the housing market. The demand and supply pressures are especially apparent for lower-cost homes, for which rents are increasing at a much faster rate than for higher-cost homes.

Tax overhaul means a $4,000-a-year pay raise for the average family, Trump advisor says

About a third of corporate profits from the tax overhaul will eventually go to everyday workers, says Trump advisor Kevin Hassett. Hassett also says he and President Trump were surprised at the speed of the announcements by US companies about employees bonuses and wage increases.

The GOP tax overhaul means a $4,000-a-year pay raise for the average family starting in about 2021, a top economic advisor to President Donald Trump said on Monday. Kevin Hassett, chairman of the Council of Economic Advisers, had projected the $4,000-a-year benefit last October. The tax overhaul was signed into law in late December. “Now we’ve passed the bill, and now we’re expecting in over three to five years, we’ll see the $4,000,” Hassett said. “It’s $4,000 that will be reached in total once the economy reaches [a] steady state, and once you get it, it stays in your pay,” DJ Nordquist, the council’s chief of staff, told CNBC after the interview. Hassett also said Monday he and President Donald Trump were surprised at the speed of the announcements by US companies about employees bonuses and wage increases. “Historically, if you look what happens when after-tax cash flow happens, … then we see about a third of that going to workers,” Hassett said. “It’ll be interesting to come back at the end of the year, watch the wage increases that we’ve seen, watch the profit increases that we’ve seen after tax and compare the two.”

Puerto Ricans face foreclosure wave as post-Maria moratoriums expire

Confusion and panic are spreading across this US territory as the majority of moratorium agreements expire in January, with many people discovering they never qualified for the moratorium in the first place or struggling to obtain extensions because they cannot pay what is owed to the banks. Many Puerto Ricans stopped making payments on their mortgages after the Sept. 20 storm because they thought the moratorium was automatic, though it was not. The storm knocked out power across the island, preventing many from learning that they had to contact their banks to request moratoriums, said Ariadna Godreau, a professor and human rights lawyer. “The big concern now is that mortgage foreclosures are going to spike,” she said. “We’re going to see more homeless people, more homes foreclosed.” Over nearly a decade, the number of repossessed homes in Puerto Rico grew from more than 2,300 in 2008 to above 5,400 in 2016 and an estimated 6,200 or more last year. After the storm, foreclosures were temporarily suspended, and banks in the US territory offered a moratorium on mortgages for those who qualified, as did the federal government. Moratoriums offered by the US government have been extended to March, but banks have ended theirs. Banco Popular — Puerto Rico’s largest bank — said more than 20,500 clients received moratoriums that expired in December and January. Bank executives say they are working with their clients, but emphasize that they still need to collect what is owed. “Those clients that truly are not responding to the bank’s letters are those who really will be at risk of facing a foreclosure,” said Jose Teruel, first vice president of the consumer credit services division at Banco Popular. “The three-month moratorium might have seemed generous at first, but in reality, it’s not,” said Maria Jimenez, director of the legal services clinic at the University of Puerto Rico. “There are still people without power, so the ability to generate revenue is not there.” More than 30,000 jobs were lost after Hurricane Maria, and some 30% of small and medium-size businesses remain closed more than four months after the storm, according to the island’s Treasury Department. Meanwhile, more than 30% of power customers remain in the dark and many struggle to pay utility bills. Puerto Rico’s Office of the Commissioner of Financial Institutions said it is collecting more information to better understand the situation. It recently extended a deadline for all banks on the island to submit data, including exactly how many moratoriums were awarded. It is unclear how banks will handle the mortgages, said Rafael Rodriguez, who oversees a legal aid project involving foreclosures for the nonprofit Legal Services of Puerto Rico. “The expectation we have is that once the moratoriums expire, the massive wave of foreclosures on the island will continue,” he said.

US personal income rose 0.4% in Dec, vs 0.3% increase expected

–  Spending rose solidly in December as demand for goods and services increased.

–  Personal income rose 0.4% last month after advancing 0.3% in November.

The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.4% last month after an upwardly revised 0.8% increase in November. Economists polled by Reuters had forecast consumer spending increasing 0.4% in December after a previously reported 0.6% rise in November. When adjusted for inflation, consumer spending rose 0.3% in December. The figures were included in the advance fourth-quarter gross domestic product report published on Friday. Consumer spending accelerated at a 3.8% annualized rate in the October-December period, the fastest in three years, after rising at a 2.2 pace in the third quarter. Robust consumer spending helped to offset the drag from trade and inventories on the economy, which grew at a 2.6% rate in the fourth quarter. GDP increased at a 3.2% pace in the third quarter. Personal income rose 0.4% last month after advancing 0.3% in November. Wages increased 0.5% last month. Savings fell to $351.6 billion in December, the lowest level since December 2007, from $365.1 billion in the prior month. Last month, spending on long-lasting goods, such as motor vehicles, increased 0.7%. Outlays on services rose 0.5%, reflecting rising demand for utilities. Monthly inflation ticked up in December. The Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, rose 0.2% in December after gaining 0.1% in November. The so-called core PCE increased 1.5% in the 12 months through December after a similar rise in November.

NAR – existing-home sales fade in december; 2017 sales up 1.1%

Existing-home sales subsided in most of the country in December, but 2017 as a whole edged up 1.1% and ended up being the best year for sales in 11 years, according to the National Association of Realtors.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.1% in 2017 to a 5.51 million sales pace and surpassed 2016 (5.45 million) as the highest since 2006 (6.48 million). In December, existing-home sales slipped 3.6% to a seasonally adjusted annual rate of 5.57 million from a downwardly revised 5.78 million in November. After last month’s decline, sales are still 1.1% above a year ago. The median existing-home price for all housing types in December was $246,800, up 5.8% from December 2016 ($233,300). December’s price increase marks the 70th straight month of year-over-year gains. Total housing inventory at the end of December dropped 11.4% to 1.48 million existing homes available for sale, and is now 10.3% lower than a year ago (1.65 million) and has fallen year-over-year for 31 consecutive months. Unsold inventory is at a 3.2-month supply at the current sales pace, which is down from 3.6 months a year ago and is the lowest level since NAR began tracking in 1999. First-time buyers were 32% of sales in December, which is up from 29% in November and unchanged from a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20174 – revealed that the annual share of first-time buyers was 34%. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage inched higher for the third straight month to 3.95% in December from 3.92% in November. The average commitment rate for all of 2017 was 3.99%.

Properties typically stayed on the market for 40 days in December, which is unchanged from November and down from a year ago (52 days). Forty-four% of homes sold in December were on the market for less than a month.’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in December were San Jose-Sunnyvale-Santa Clara, Calif.; San Francisco-Oakland-Hayward, Calif.; Vallejo-Fairfield, Calif.; Colorado Springs, Colo.; and Stockton-Lodi, Calif. NAR President Elizabeth Mendenhall says improving the new tax law is a top priority for Realtors in 2018. “Especially in high-cost, high-taxed markets, there’s still big concern that the overall structure of the final bill diminishes the tax benefits of homeownership in a way that would adversely affect home values and sales over time,” she said. “As the housing market adjusts to the new law, Realtors® will be listening to their clients and communicating to lawmakers ways to ensure owning a home is truly incentivized in the tax code.” All-cash sales were 20% of transactions in December, which is down from 22% in November and 21% a year ago. Individual investors, who account for many cash sales, purchased 16% of homes in December, up from 14% both last month and a year ago. For the year, all-cash sales averaged 21% of sales (23% in 2016), and investor sales were at 15% (14% in 2016).

Distressed sales – foreclosures and short sales – were 5% of sales in December, up from 4% in November but down from 7% a year ago. Four% of December sales were foreclosures and 1% were short sales. Single-family home sales declined 2.6% to a seasonally adjusted annual rate of 4.96 million in December from 5.09 million in November, but are still 1.0% above the 4.91 million pace a year ago. The median existing single-family home price was $248,100 in December, up 5.8% from December 2016. Existing condominium and co-op sales fell 11.6% to a seasonally adjusted annual rate of 610,000 units in December, but are still 1.7% above a year ago. The median existing condo price was $236,500 in December, which is 6.4% above a year ago. December existing-home sales in the Northeast fell 7.5% to an annual rate of 740,000, and are now 2.6% below a year ago. The median price in the Northeast was $261,400, which is 3.0% above December 2016. In the Midwest, existing-home sales dipped 6.3% to an annual rate of 1.33 million in December, but are still 1.5% above a year ago. The median price in the Midwest was $191,400, up 7.8% from a year ago. Existing-home sales in the South decreased 1.7% to an annual rate of 2.30 million in December, but are still 3.1% higher than a year ago. The median price in the South was $221,200, up 5.8% from a year ago. Existing-home sales in the West declined 1.6% to an annual rate of 1.20 million in December, and are now 0.8% below a year ago. The median price in the West was $367,400, up 7.3% from December 2016.

Trump declares America open for business under his tenure

President Trump says there has never been a better time to hire in America during his speech at the World Economic Forum in Davos, Switzerland.

Declaring that America is open for business under his leadership, President Donald Trump told a gathering of political and business elites on Friday that the economic growth taking place in the US due to his “America first” agenda also benefits the rest of the world. Trump told the World Economic Forum in Davos, an incongruous location for a nationalist president, that American prosperity has created countless jobs around the world, but stressed that his priority would always remain on protecting the interests of within his nation’s own borders. “As president of the United States, I will always put American first just as the leaders of other countries should put their countries first,” said Trump. But the president tried to strike a balance, tempering his nationalist agenda with reassurances to the globalist and cooperation-minded audience that his protectionist vision “does not mean America alone.” “When the United States grows, so does the world,” Trump said. “American prosperity has created countless jobs around the globe and the drive for excellence, creativity and innovation in the United States has led to important discoveries that help people everywhere live more prosperous and healthier lives.” As Forum chairman Klaus Schwab introduced Trump, he drew some hisses when he said that the president could be subject to “misconceptions and biased interpretations.” When Trump took the stage, he received modest applause but some people kept their hands at their sides. The crowd was largely subdued as the president spoke but there were boos when Trump took a swipe at the media.

New home sales rise 8.3% overall in 2017

Sales of newly built, single-family homes fell 9.3% in December to a seasonally adjusted annual rate of 625,000 units, according to newly released data by the US Department of Housing and Urban Development and the US Census Bureau. Despite this monthly decline, new home sales rose 8.3% overall in 2017 to 608,000 units. “The number of consumers planning to buy a new home in the near future is trending upward,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Inventory remains low, but its growth in 2017 is an encouraging sign. Our members are also telling us that market conditions continue to improve.” “Some moderation in sales was expected this month after a strong November reading,” said NAHB Senior Economist Michael Neal. “With ongoing job creation and rising home equity, we should see housing demand continue to grow in the months ahead.” The inventory of new home sales for sale was 295,000 in December, which is a 5.7-month supply at the current sales pace. The median sales price of new houses sold was $335,400. Regionally, new home sales decreased 2.4% in the Northeast, 9.5% in the West, 9.8% in the South and 10% in the Midwest.

US durable goods orders rose 2.9% in Dec, vs 0.8% increase expected

The Commerce Department says that orders for long-lasting manufactured goods rose 2.9% in December, the fastest pace since June and another sign of strength for American industry. Orders were lifted by a 15.9% surge in demand for civilian aircraft and aviation parts, which can bounce around from month to month. Excluding the volatile transportation sector, orders increased 0.6% in December. Overall orders for durable goods, which are meant to last at least three years, have risen in four the last five months. Still, a category that measures business investment — orders for nondefense capital goods excluding aircraft — dipped 0.3% in December. American manufacturers are benefiting from a pickup in global economic growth and a weaker dollar, which makes US goods less expensive in foreign markets.

CoreLogic – wildfires and hurricane-related floods were most destructive natural hazards in 2017

CoreLogic released its annual Natural Hazard Risk Summary and Analysis which shows relatively average activity for most US natural hazards with the exception of wildfires in California and flooding as a result of Hurricanes Harvey and Irma. The annual report reviews hazard activity in the US including events for flooding, earthquake, wildfire, wind, hail, tornado and hurricanes, as well as several international events including Hurricane Maria in Puerto Rico, a Magnitude 7.1 earthquake in Mexico and Cyclone Debbie in Australia. Highlights from the analysis include:


–  Flooding from Hurricanes Harvey and Irma resulted in an estimated $69 billion to $105 billion in residential and commercial damage.

–  Flood damage in Texas from Hurricane Harvey is estimated at $40 billion to $59 billion, of which $25 billion to $37 billion is residential damage and $15 billion to $22 billion is commercial damage

–  Approximately 75% of the flood damage to residential properties from Hurricane Harvey was uninsured

–  Flood damage in Florida, Alabama, Georgia, North Carolina and South Carolina from Hurricane Irma is estimated at $29 billion to $46 billion, of which $25 billion to $38 billion is residential damage and $4 billion to $8 billion is commercial damage

–  Approximately 80% of the flood damage to residential properties from Hurricane Irma was uninsured

–  California and the Midwest also experienced significant rainfall that resulted in flooding. According to the National Centers for Environmental Information (NCEI), total property loss from the California winter floods is estimated at $1.5 billion and total property loss from the Midwest (between Oklahoma and Ohio) April/May flooding is estimated at $1.7 billion.

Atlantic Hurricanes

–  Hurricane activity in the Atlantic was higher than average in 2017 with 17 named storms, 10 hurricanes and six major hurricanes, which are identified as Category 3 or greater.

–  Hurricane Harvey, a Category 4 storm that made landfall in Texas, caused an estimated $1 billion to $2 billion in insured wind and storm surge loss to both residential and commercial properties, and Hurricane Irma, a Category 4 storm that made landfall in South Florida, caused an estimated $14 billion to $19 billion in insured wind and storm surge loss to both residential and commercial properties.


–  Due in large part to the strong winds brought by Hurricanes Harvey and Irma, the land area impacted by severe winds (>80 mph) was more than four times greater than in 2016.

–  Port Aransas, Texas recorded the highest wind speed of the year at 131 mph during Hurricane Harvey

–  Western Nebraska recorded the strongest wind gust associated with severe thunderstorms of the year at 115 mph on June 26

–  At 37%, more than one-third of the continental US experienced wind events of 60 mph or higher in 2017.


–  The total number of acres burned (9,791,062, acres) in 2017 is the third highest in US history, preceded by 2015 (10,125,149 acres) and 2006 (9,873,745 acres).

–  The 10 most destructive wildfires in 2017, in terms of structures destroyed, were in California and include:

–  The Tubbs Fire in northern California which burned 36,807 acres and 5,643 structures

–  Until the Tubbs Fire, the two worst wildfires in California history – Tunnel in 1991 and Cedar in 2003 – destroyed 5,720 structures combined

–  The Nuns Fire in northern California which burned 54,382 acres and 1,355 structures

–  The Thomas Fire in southern California which burned 281,893 acres and 1,063 structures

–  The Atlas Fire in northern California which burned 51,624 acres and 781 structures

–  The Redwood Valley Fire in southern California which burned 36,523 acres and 544 structures

–  The Cascade Fire in northern California which burned 9,989 acres and 398 structures

–  The Lilac Fire in southern California which burned 4,100 acres and 157 structures

–  The Detwiler Fire in Mariposa County, California which burned 81,826 acres and 131 structures

–  The Creek Fire in southern California which burned 15,619 acres and 123 structures

–  The Helena Fire in Trinity County, California which burned 21,846 acres and 123 structures


–  As of December 1, there were 818 identified earthquakes of magnitude 3.0 or greater across the country.

–  In 2016, approximately 60% of the total number of earthquakes occurred in Oklahoma compared with only 28% in 2017

The most notable earthquake events in 2017 include:

–  A Magnitude 5.8 earthquake near Lincoln, Montana on July 6

–  A Magnitude 5.3 earthquake near Soda Springs, Idaho on September 2

–  A Magnitude 4.1 earthquake in Delaware on November 30


–  Hail activity for 2017 was near average with 168,905 square miles, or 5.5%, of the continental US impacted by severe hail, defined as 1” or greater.

–  Denver, Colorado experienced the worst of this natural hazard with estimated losses of $1.4 billion from approximately 150,000 auto insurance claims and approximately 50,000 homeowner insurance claims.


–  The number of tornadoes in 2017 was above average with 1,522 recorded tornadoes, making it the third most active year since 2005.

–  With 81 confirmed tornadoes between Mississippi and Georgia, the month of January experienced the most tornado activity in 2017.

Wage growth, tax-bonuses spark shopping in retail stocks

US fund managers are betting that rising wages and the effects of the Republican-led corporate tax cut will prove a lifeline to middle-market retailers who have struggled to remain relevant in the age of Amazon. Wells Fargo, CM Advisors and Plumb Funds are among those asset management firms that are increasing their positions in companies that focus on shoppers who earn near the average family income of $74,000 annually. These include children’s apparel company Carter’s Inc, department store Big Lots Inc, men’s apparel company Tailored Brands Inc and discount retailer Wal-Mart Stores. With unemployment at 17-year lows, companies are having a hard time filling low to middle-income jobs. As a result, wages for those workers are expected to rise more than 3% this year, the largest increase in the category since April 2009, according to data from the Federal Reserve Bank of Atlanta. Given the expected rise in wages and one-time bonuses resulting from the Republican-led tax cut signed into law on Dec. 22, fund managers are betting that workers will spend more, thus helping drive up share prices of retailers. “As capital comes back to the US, labor demand will be stronger and we will see for the first time in a long time wage growth creeping into the US market,” boosting discretionary income and spending, said Jim Brilliant, portfolio manager of the CM Advisors Fixed Income Fund.

The push toward the middle of the pack retailers is a reversal from the early stages of the bull market that began in 2009, when fund managers packed into the shares of luxury companies such as Tiffany & Co and downmarket retailers such as Dollar General as a play on rising income inequality. Shares of high-end fashion company Tapestry Inc – then trading under the name Coach Inc – rose more than 45% in 2010, more than double the 20% return in middle-market stores like Target. Now, fund managers say they are targeting middle-income shoppers as jobless claims currently at 45-year lows and increased corporate spending push companies to increase wages. As a result, they see more dollars flowing to retailers, some of which suffered declines of 25% in their share prices in 2017 on fears that Inc would move into additional business lines and drain business away from them.

ATTOM – US foreclosure activity drops to 12-year low in 2017

ATTOM Data Solutions, curator of the nation’s largest multi-sourced property database, today released its Year-End 2017 US Foreclosure Market Report, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 676,535 US properties in 2017, down 27% from 2016 and down 76% from a peak of nearly 2.9 million in 2010 to the lowest level since 2005. Those 676,535 properties with foreclosure filings in 2017 represented 0.51% of all US housing units, down from 0.70% in 2016 and down from a peak of 2.23% in 2010 to the lowest level since 2005. “Thanks to a housing boom driven primarily by a scarcity of supply, which has helped to limit home purchases to the most highly qualified — and low-risk — borrowers, the US housing market has the luxury of playing a version of foreclosure limbo in which it searches for how low foreclosures can go,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “There are a few notable local market exceptions playing a different version of foreclosure limbo in which a backlog of legacy foreclosure activity left over from the last housing crisis is still winding its way through a labyrinthine foreclosure process, resulting in incongruous jumps in various stages of foreclosure activity in markets such as New York, New Jersey and DC.” Lenders started the foreclosure process on 383,701 US properties in 2017, down 20% from 2016 and down 82% from a peak of 2,139,005 in 2009 to a new all-time low going back as far as foreclosure start data is available — 2006. “Across Southern California, while foreclosures have maintained historically low levels during much of 2017, housing affordability has become the concern that has many watching the market for a potential shift in the near future,” said Michael Mahon, president of First Team Real Estate, covering the Southern California market, which also posted an 11-year low in foreclosure starts in 2017. “With wage growth not meeting equity growth across many Southern California markets — coupled with rising interest rates — there are some concerns that foreclosures could be on the rise in 2018.”

Counter to the national trend, the District of Columbia and five states posted year-over-year increases in foreclosure starts in 2017, including Illinois (up 2%); Oklahoma (up 23%); Louisiana (up 2%); DC (up 54%); West Virginia (up 32%); and Vermont (up 27%). A total of 318,165 US properties were scheduled for public foreclosure auction (the same as a foreclosure start in some states) in 2017, down 27% from 2016 and down from a peak of 1,600,593 in 2010 to a new all-time low going back as far as foreclosure auction data is available — 2006. “The data for the Seattle market tells a very big story, and that is we are not seeing a housing bubble forming,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market, where scheduled foreclosure auctions in 2017 dropped 47% to an 11-year low. “With foreclosure rates at less than 0.4% of total housing units, the market is remarkably stable.  That said, we are certainly suffering from serious affordability issues, but this is not translating into defaults on loans.” The District of Columbia and seven states posted a year-over-year increase in scheduled foreclosure auctions in 2017, including New York (up 9% to the highest level since 2006); Oklahoma (up 4%); Connecticut (up 7%); and Maine (up 2%). Lenders repossessed 291,579 properties through foreclosure (REO) in 2017, down 23% from 2016 and down 72% from a peak of 1,050,500 in 2010 to the lowest level since 2006 — an 11-year low. Counter to the national trend, the District of Columbia and seven states posted a year-over-year increase in REOs in 217, led by New Jersey (19% increase to the highest level since 2006); Delaware (up 16%); Montana (up 12%); DC (up 10%); and Wyoming (up 10%). States with the highest foreclosure rates in 2017 were New Jersey (1.61% of housing units with a foreclosure filing); Delaware (1.13%); Maryland (0.95%); Illinois (0.86%); and Connecticut (0.78%).Rounding out the top 10 states with the highest foreclosure rates were Florida (0.72%); South Carolina (0.70%); Ohio (0.70%); Nevada (0.67%); and New Mexico (0.63%). Among 217 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in 2017 were Atlantic City, New Jersey (2.72% of housing units with a foreclosure filing); Trenton, New Jersey (1.68%); Philadelphia, Pennsylvania (1.26%); Fayetteville, North Carolina (1.17%); and Rockford, Illinois (1.14%). Rounding out the top 10 were Cleveland, Ohio (1.06%); Columbia, South Carolina (1.05%); Baltimore, Maryland (1.05%); Chicago, Illinois (1.04%); and Albuquerque, New Mexico (0.99%).

US properties foreclosed in the fourth quarter of 2017 had been in the foreclosure process an average of 1,027 days, a 14% jump from the previous quarter and a 28% increase from a year ago to the longest since ATTOM began tracking average foreclosure timelines in Q1 2007. States with the longest average time to foreclose in Q4 2017 were Indiana (2,370 days); Nevada (1,933 days); Florida (1,493 days); New Jersey (1,298 days) and Georgia (1,263 days). Among 233 counties nationwide with sufficient data, those with the longest average time to foreclose in Q4 2017 were Queens County, New York; Marion County (Indianapolis), Indiana (2,810 days); Orange County (Orlando), Florida (2,109 days); Henry County (Atlanta), Georgia (2,075 days); and Cherokee County (Atlanta), Georgia (1,988 days). Nationwide, 50% of all loans actively in foreclosure as of the end of 2017 were originated between 2004 and 2008 — down from 55% a year ago. States with the highest number of legacy foreclosures on loans originated between 2004 and 2008 were New York (25,886), New Jersey (20,172), Florida (19,494), California (9,847), and Illinois (8,732). Legacy foreclosures on loans originated between 2004 and 2008 represented 74% of all active loans in foreclosure in the District of Columbia, higher than any state with at least 100 active loans in foreclosure, followed by Hawaii (67%), New Jersey (58%), Massachusetts (58%), Florida (55%), and Nevada (55%). Counties with the highest total number of legacy foreclosures were Nassau County (Long Island), New York (6,782); Cook County (Chicago), Illinois (5,478); Kings County (Brooklyn), New York (4,677); Miami-Dade County, Florida (3,804); and Suffolk County (Long Island), New York (3,417).

Oil prices fall as US output rise outweighs crude stock falls

Oil prices slid on Friday, putting them on course for the biggest weekly falls since October, as a bounce-back in US production outweighed ongoing declines in crude inventories. Brent crude futures were at $68.70 a barrel at 0949 GMT, down 61 cents from their last close. On Monday, they hit their highest since December 2014 at $70.37. US West Texas Intermediate crude futures were at $63.38 a barrel, down 57 cents from their last settlement. WTI marked a December-2014 peak of $64.89 a barrel on Tuesday. The International Energy Agency (IEA), in its monthly report, said that global oil stocks have tightened substantially, aided by OPEC cuts, demand growth and Venezuelan production hitting near 30-year lows. But it warned that rapidly increasing production in the United States could threaten market balancing. “Explosive growth in the US and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico,” the IEA said of 2018 production. US crude oil production stood at 9.75 million barrels per day (bpd) on Jan. 12, data from the Energy Information Administration showed. The IEA said it expects this to soon exceed 10 million bpd, overtaking OPEC behemoth Saudi Arabia and rivaling Russia.

Analysts also pointed to an expected demand slowdown at the end of winter in the northern hemisphere and excessive long positions in financial oil markets as a likely brake on any upward momentum in prices. ANZ bank said “an upcoming soft patch in demand and extreme investor positioning does open up the possibility of some short-term weakness.” Overall, however, oil prices remain well supported, and most analysts do not expect steep declines. The main price driver has been a production cut by a group of major oil producers around the Organization of the Petroleum Exporting Countries (OPEC) and Russia, who started to withhold output in January last year. The supply cuts by OPEC and its allies, which are scheduled to last throughout 2018, were aimed at tightening the market to prop up prices. In the United States, crude inventories fell 6.9 million barrels in the week to Jan. 12, to 412.65 million barrels. That’s their lowest seasonal level in three years and below the five-year average marker around 420 million barrels.

NAHB – single-family sector boosts housing production in 2017, more gains expected this year

Nationwide housing starts fell 8.2% in December to a seasonally adjusted annual rate of 1.19 million units after an upwardly revised November reading, according to newly released data from the US Department of Housing and Urban Development and the Commerce Department. The December numbers show a return to trend after an especially strong November report, but overall 2017 saw significant gains in housing production. Starts rose 2.4% last year, pushed up by an 8.5% jump in the single-family sector. Multifamily starts dropped 9.8%. Looking at the December 2017 report, single-family starts fell 11.8% to a seasonally adjusted annual rate of 836,000 units. However, the three-month moving average for single-family production reached a post-recession high. Meanwhile, multifamily starts ticked up 1.4% to 356,000 units. “There is a pro-business sentiment in Washington right now, and our builders hope to continue receiving relief from overly burdensome regulations,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “This political climate is boosting their optimism in the housing market.” “A return to normal levels of housing production this month is expected after a very strong fall season,” said NAHB Chief Economist Robert Dietz. “We saw a surge of housing activity in the South after hurricane-related delays, and now that region is returning to its positive growth trend.”

NAHB is forecasting continued growth in housing production this year, led by ongoing single-family gains. Total housing starts are expected to grow 2.7% to 1.25 million units. Single-family production should increase 5% to 893,000 units while the multifamily sector is expected to edge 1.6% lower this year to 354,000. Regionally in December, combined single- and multifamily housing production fell 0.9% in the West, 2.2% in the Midwest, 4.3% in the Northeast and 14.2% in the South.Overall permit issuance in December was essentially flat, inching down 0.1% to a seasonally adjusted annual rate of 1.302 million units. Single-family permits rose 1.8% to 881,000 units while multifamily permits fell 3.9% to 421,000. Permits rose 43% in the Northeast, 8.7% in the Midwest and 1.7% in the West. Permits declined 11.1% in the South, led by a drop on the multifamily front.

Congress likely racing toward a government shutdown

A bitterly divided Congress hurtled toward a government shutdown this weekend in a partisan stare-down over demands by Democrats for a solution on politically fraught legislation to protect about 700,000 younger immigrants from being deported. Democrats in the Senate have served notice they will filibuster a four-week, government-wide funding bill that cleared the House Thursday evening, seeking to shape a subsequent measure but exposing themselves to charges they are responsible for a looming shutdown. Republicans controlling the narrowly split chamber took up the fight, arguing that Democrats were holding the entire government hostage over demands to protect “dreamer” immigrants brought to the country illegally as children. “Democratic senators’ fixation on illegal immigration has already blocked us from making progress on long-term spending talks,” said Senate Majority Leader Mitch McConnell, R-Ky. “That same fixation has them threatening to filibuster funding for the government.” President Donald Trump entered the fray early Friday morning, mentioning the House-approved bill on Twitter, adding: “Democrats are needed if it is to pass in the Senate – but they want illegal immigration and weak borders. Shutdown coming? We need more Republican victories in 2018!” In the House, Republicans muscled the measure through on a mostly party-line 230-197 vote after making modest concessions to chamber conservatives and defense hawks. House Speaker Paul Ryan immediately summoned reporters to try to pin the blame on top Senate Democrat Chuck Schumer of New York.

MBA – statement on FHFA’s perspective on housing finance reform

David H. Stevens, President and CEO of the Mortgage Bankers Association (MBA), released the following statement regarding FHFA’s paper entitled, “Federal Housing Finance Agency Perspectives on Housing Finance Reform”:

“MBA applauds FHFA Director Mel Watt for releasing this important paper which reinforces the need for comprehensive legislative housing finance reform.  There are many similarities between this proposal and MBA’s own plan including the need for a government guarantee behind MBS to support single-family and multifamily finance, two or more competing guarantors, the use of a single security in the single family market, and a level playing field for lenders of all sizes and business models. We look forward to continuing to work with Congressional leaders, the Administration, Director Watt, and other stakeholders to create a secondary mortgage market that provides a more stable system and broad, sustainable access to credit for all qualified borrowers.”

NAHB – remodeling market indicators hit high in fourth quarter

The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 60 in the fourth quarter of 2017, up three points from the previous quarter and only the second time since 2001 the reading has reached 60. For 19 consecutive quarters, the RMI has been at or above 50, which indicates that more remodelers report market activity is higher compared to the prior quarter than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity. “A booming stock market and low unemployment continue to fuel consumers’ investment in their homes,” said NAHB Remodelers Chair Joanne Theunissen, CGP, CGR, a remodeler from Mt. Pleasant, Mich. “Natural disaster-related repairs also caused strong demand for maintenance and repair projects.” Current market conditions increased four points from the third quarter of 2017 to 60. Among its three major components, major additions and alterations jumped seven points to 60, minor additions and alterations increased three points to 59, and the home maintenance and repair component rose three points to 61. The future market indicators index rose one point from the previous quarter to 59. Calls for bids decreased two points to 56, amount of work committed for the next three months rose two points to 58, the backlog of remodeling jobs gained a significant six points to 66 and appointments for proposals fell two points to 57. “At a high of 60, the RMI is consistent with the strong growth in home improvement spending in 2017,” said NAHB Chief Economist Robert Dietz. “However, the surge in the backlog of remodeling jobs likely reflects supply-side challenges remodelers are facing in the form of skilled labor shortages and rising material prices.”

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