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New York City foreclosures are back to financial crisis levels

–  Foreclosure rates in New York City are climbing to heights not seen since the recession.

–  There were 920 NYC foreclosures in the first quarter, up a 31% year-over-year.

–  The number of foreclosures in the city continued to climb this year, with Staten Island and Brooklyn seeing the largest upticks in scheduled auctions.

In the first quarter of 2018, 920 homes were slated for foreclosure for the first time — a 31% year-over-year increase, according to a new report by PropertyShark. This represents the largest number of foreclosures seen in any quarter since 2009. New foreclosures in Staten Island jumped 226% to 189, compared to 58 in the first quarter of 2017, according to the report. Brooklyn experienced a 64% increase year-over-year, logging 275 scheduled foreclosures. The Bronx followed with 113 foreclosures — a 33% increase — and Queens had 303, representing a 13% decrease year-over-year. Manhattan had just 38, compared to 2017’s 36. Foreclosures reached 3,306 citywide in 2017, marking the highest volume seen since 2009, according to a separate report by PropertyShark. It should be noted, however, that the number of lis pendens filed — the first step in the foreclosure process — was down 13% this quarter compared to the same time last year. So, while scheduled foreclosures continue to rise, a slowdown may be in sight.

Americans face highest pump prices in years

Americans are spending more at the pump than they have in years. Prices could rise even higher just as drivers hit the road for family vacations. “This summer, in terms of average gas prices, will likely be the highest since 2014,” said Patrick DeHaan, petroleum analyst at GasBuddy, a fuel-tracking app. “There’s been very little question about that.” Crude prices have jumped thanks to continuing production cuts by major exporters. As a result, gasoline is also becoming more expensive. According to the US Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week — the highest level since 2015. While higher fuel prices could herald an end to the glut that has plagued the energy market since 2014, they also threaten to dampen demand and hit consumers in their pocketbooks. Since the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, agreed to collectively limit output two years ago, US oil futures have risen about 40%, closing at $62.06 a barrel on Friday. Gasoline futures are up 8.6% this year. “What we’re seeing now at the pump is reflective of OPEC’s decision in 2016 to cut back on oil production,” said Mr. DeHaan.

Part of gasoline’s price increase has also been seasonal, as refiners tend to process less crude oil into fuel during maintenance and are starting to transition to summer-grade gasoline, which is more expensive to make. Prices will likely climb further as the weather warms and driving picks up, according to energy analysts. OPEC’s production cuts have helped offset growing output from US shale, which has repeatedly reached new record weekly highs this year. In January, US crude stockpiles fell to the lowest level since 2015, and are below the five-year average, a closely watched measure of excess supply. Analysts expect global crude inventories to fall to their five-year average this year as well. Gasoline stockpiles have fallen for five consecutive weeks, according to EIA data ended March 30. In recent months, the US has also exported record amounts of gasoline, mostly to Latin and South America. In January, exports totaled more than 33 million barrels, near an all-time monthly high set in November. “That’s a big difference from a decade ago, or even a few years ago,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “We’re kind of refiners to the entire Western Hemisphere right now.” Strong global demand has kept oil prices lifted, as synchronized economic expansion has contributed to increased fuel consumption.

ATTOM – the promise and pitfalls of ADUs as affordable housing panacea |

The following is an excerpt from a 9-page white paper published by ATTOM Data Solutions with more in-depth statistics on ADU building permit trends (displayed in easy-to-read charts) along with numerous interviews with real estate investors , developers and innovators across the country who are working with ADUs. Download the full white paper. A paucity of affordable housing that threatens to inflame a burgeoning homelessness crisis and trigger an exodus of well-paying jobs is forcing local governments to consider creative solutions to this intractable problem. One such solution is to streamline the development of accessory dwelling units (ADUs) in the hopes that real estate developers and single-family homeowners can create more affordable housing inventory one granny flat at a time. A trio of California laws that took effect in January 2017 is one of the examples of such attempt to streamline ADU development. The laws (SB 1069, AB 2299, and AB 2406), encourage cities to ease some of the common hurdles to the permitting and building of accessory dwelling units (ADUs) — also known as granny flats, in-law units or just second units — most notably parking requirements, setback requirements, and utility connection fees. An Accessory Dwelling Unit Memorandum published in December 2016 by the California Department of Housing and Community Development claims that these “changes to ADU laws will further reduce barriers, better streamline approval and expand capacity to accommodate the development of ADUs.”

The legislation certainly appears to be accomplishing its goal of accommodating the development of ADUs. Statewide in California, building permits for ADUs increased 63% in 2017 compared to 2016, the biggest increase among 20 states with at least 100 ADU building permits issued in 2017, according to an ATTOM Data Solutions analysis of building permit data from Buildfax. Nationwide, building permits for ADUs were unchanged in 2017 compared to 2016. California had the most ADU building permits issued in 2017 of any state, with 4,352, followed by Oregon (1,682), Washington (1,110), Florida (944) and Maryland (872). “As affordability worsens, the incentive for homeowners to build ADUs becomes greater. But the cities just have to let them. That’s the only barrier,” said Holly Tachovsky, CEO at Buildfax, who noted that the rise in ADU building permits in some inventory- and affordability-challenged cities reflects a larger trend she has noticed in remodeling in the wake of the Great Recession. “Americans are now spending more money remodeling homes than they are building new ones. This flipped in 2009 and it has stayed flipped since then. The previous trend in all of recorded data before that — decades and decades — was new construction dollars were more than remodeling dollars.”

Cryptocurrencies slide, shed hundreds of billions in market cap

The last 24 hours have seen big sell-offs in the major cryptocurrencies, with bitcoin falling as low as $6,630, according to CoinDesk, before rebounding a bit to trade above $7,000. Bitcoin peaked just below $20,000 in December. It isn’t just the largest cryptocurrency by market capitalization that is falling ether, Ripple XRP and bitcoin cash have all dropped to fresh lows for the year. There wasn’t any apparent trigger to the sell-off. The cryptocurrencies have struggled since they hit record highs that spread from late 2017 through January. According to data from CoinMarketCap, in the first week of January the major cryptocurrencies hit an overall market capitalization that exceeded $800 billion. As of Friday, the total market cap had dropped to about $275 billion.

Delaware foreclosures among highest in nation

As of February one of every 1,012 “units” in the state was a foreclosure, said Bayard Williams, president of the Delaware Association of Realtors. This puts Delaware among the top five states in the nation in terms of high foreclosure rates. Despite the dubious ranking, Mr. Williams believes there is reason for optimism. “It’s starting to pick up,” he said. “The number of properties that received a foreclosure filing in February was 19% lower than the previous month and that’s down 35% from the same time last year.” Mr. Williams believes that many factors play into the state’s high foreclosure rate. “It’s taken a long time to recover from the 2008 recession, and I don’t think we’ve recovered as quickly as some other parts of the country,” he said. “There’s been lag effect due to the local economy.” The damage caused by the recession appeared for many in the loss of home equity, said Mr. Williams. Homeowners who may haverefinanced on their homes before the recession hit found themselvesin a particularly bad position. “When they refinanced, they pulled as much equity back out as they were allowed prior to the downturn in the market — when the market went south, they ended up upside down on their loans,” he said. “We’re even seeing some people who’ve been in their homes for 20 or 30 years trying to sell and you’d think that they’d have a lot of equity at that point to put toward closing costs and the purchase of their next house. But, that’s not always the case anymore. It’s tighter now.”

On the purchasing end both the housing inventory is low and first time home buyers struggle more than they have in the past, noted Mr. Williams. “We don’t have a ton of high paying jobs in the state, many of the first time home buyers are suffering from stagnant wages and also have to work through heavy student loan debt,” he added. Although it’s too early to tell, Mr. Williams speculates that the state’s increase in the transfer tax rate last year has also had a negative effect on home sales. The rate was hiked 1% in July during the thick of the state’s budget negotiations. Before, the state had split the 3% transfer tax with counties, but the new revenue from the increase to 4% has been added to the state’s general fund. At the time, the change was estimated to take in another $45 million for state coffers during the remainder of 2017 and a possible $71 million this year. “It’s still early to know what the effect has been, but common sense tells you that both sellers and buyers have had to bring more money to the table to close — it’s just another contributing factor working against the market,” said Mr. Williams. Despite the downward pressures, Mr. Williams expects conditions to continue to improve, but not “overnight.” “We’re climbing out,” he said. “As the economy improves in the country and we pick up some extra jobs here in the state, things will likely continue to improve, but there are a lot of factors at play.

The rash of foreclosures isn’t as bad in Kent County (one in 1,221 units) as it is in New Castle County (one in 838 units). Cynthia Witt of Woodburn Realty in Dover, who’s been tracking foreclosures in Kent County for many years, said the rate remains high, but does seem to be slowly improving. “Last year, 11% of total real estate sales were sheriff sales,” she said. “We averaged almost 27% of sales that were either bank owned or sheriff sales. But, back in 2012 that was 37%, so numbers have been improving.” However, Ms. Witt points out that the character of the foreclosures seems to be changing. While in the wake of the recession many foreclosures seemed to be a product of lost equity, many of the newer foreclosure filings seem to be related to poorly timed refinancing and sluggish appreciation. “Shortly after 2008, a lot of sheriff sales went through because someone had bought something they could barely afford before the recession, and then they lost their job, got pregnant, got sick or divorced and wound up upside down on their mortgage,” said Ms. Witt. “Now, there are a lot of people who refinanced and just can’t get their money back out of the house. The rate at which houses appreciate has taken a dive, so that only makes it harder. “Back in the ‘80s we used to be able to confidently tell people if they stayed in a house for 3 years, they could sell it and walk away. “Now, someone may have bought a house for $259,000 five years ago and they’re selling it for $262,000. That’s not even enough to cover transfer taxes and closing costs.”

Heirs inheriting houses with more debt against them than they’re worth has also kept the foreclosure rate high, Ms. Witt thinks. Reverse mortgages, where a home owner agrees to sell back their home equity to a lender for regular payments usually to supplement retirement income, have been particularly pernicious in this respect. “There’s been a tremendous increase in the amount of sheriff sales for the property of deceased owners,” said Ms. Witt. “Lots of times an heir will inherit a property and they just don’t see the point of trying to go through the process of selling it because it isn’t worth what’s owed on it. It doesn’t hurt their credit to let it get foreclosed on, so that’s often what they do.” Kent County Sheriff Jason Mollohan noted that he’s seen a significant rise in the number of estates being represented by next of kin during recent auctions — usually indicating an inheritance of the property. However, like Mr. Williams, Ms. Witt sees room for hope. “Based on raw numbers I’d say the market is still healthy,” she said. “Numbers are still being bolstered up because there is still a lot of new construction being sold — particularly in the Smyrna, Camden and Magnolia areas. Many of the buyers seem to be out- of- staters possibly retiring here.”

Another encouraging trend Ms. Witt sees is that a scrappy cohort of contractors seem to be taking advantage of cheap real estate being foreclosed on. “I’m seeing a lot of this happening in Dover, some in Harrington and Smyrna too — it’s usually concentrated in the urban areas,” she said. “There are probably a dozen or so small contractors that are very active in picking up property that goes at a sheriff sale for way below what you’d expect. “They buy it, fix it up and flip it. There is a lot of this going on — probably about eight to ten houses per month. “They’re playing a very necessary role in the market right now. These houses would probably just be sitting and crumbling otherwise.” Through their activities, Ms. Witt says the contractors are upgrading housing stock that first time home buyers might have been steered away from by their realtors or home inspectors because of the upfront costs of renovation. “When I started this business, and old house was something built before 1800, but now, an ‘old house’ is something built over five years ago,” she laughed. “The work these contractors are doing, though, is bringing these older homes and neighborhoods downtown to a more desirable level. I believe if it continues, it may get to the point in five years where you drive through these neighborhoods and really notice the difference.” Sheriff Mollohan agrees, noting that he’s started to see a greater number of “familiar faces” at auctions. “That’s absolutely going on at our foreclosure sales. We’re seeing a good number of the same people come in,” he said. “Not only that, but the level of interest between both foreclosures and tax sales has been increasing on the bidder side. It’s tricky to judge because we don’t preregister people, but I can tell there is more interest lately.”

Housing obstacles can’t hold back homebuyer demand

It’s no secret that affordable housing continues to be more difficult to find, and competition among first-time homebuyers continues to remain fierce. Now, some cities are beginning to take action against the affordable housing crisis. Over the weekend, a 130-unit housing project in San Francisco will be the first to take advantage of a new law that allows developers to skip expensive and lengthy environmental reviews in exchange for building a certain amount of affordable apartments, according to an article by J.K. Dineen for the San Francisco Chronicle. From the article: “Under the law by state Sen. Scott Wiener, D-San Francisco, developers of certain projects can bypass the environmental analysis typically required. In exchange for expedited approvals the developer must commit to a certain percentage of permanently affordable units. The amount of affordable units ranges from 10 to 100%, depending on the community and how much housing it produces. In San Francisco, a developer looking to take advantage of SB35 must commit to making at least 50% of the units affordable.” Mission Economic Development Agency and the Tenderloin Neighborhood Corp. submitted an application to invoke Senate Bill 35. Developers explained this legislation could cut the process by six months to a year, and allows them to build an extra two stories. However, some say the legislation doesn’t go far enough, claiming that the minimum requirement of 10% doesn’t go far enough for the affordable housing needs of San Francisco.

MBA – mortgage applications up

Mortgage applications increased 4.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 23, 2018. The Market Composite Index, a measure of mortgage loan application volume, increased 4.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 5 percent compared with the previous week. The Refinance Index increased 7 percent from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 8 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 39.4 percent of total applications from 38.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.0 percent of total applications. The FHA share of total applications decreased to 9.9 percent from 10.3 percent the week prior. The VA share of total applications decreased to 10.3 percent from 10.7 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

GDP jumps to 2.9%, stocks mixed

GDP grew by 2.9% according to the third revision, above the previously reported 2.5%, while surpassing the Thomson Reuters analyst consensus of 2.7%. The final reading on fourth-quarter GDP was a slight moderation from the third-quarter’s brisk 3.2% pace. For 2017, economic growth was 2.3%, well above the 1.5% experiences in 2016. Traders also digested the latest home sales data, which showed pending home sales snapped back in much of the country in February, with the National Association of Realtors’ Pending Home Sales Index increasing by 3.1% to 107.5. this data as well as an upcoming reading on home sales to try and pull stocks higher following Tuesday’s session which saw the Dow’s early triple-digit gain turn into a triple-digit loss. The Dow posted a triple-digit advance out of the gate while the Nasdaq Composite and S&P 500 were flat. Tuesday saw a topsy-turvy session, as technology shares took a hit on concerns about future regulation. The Dow was up by 244 points at one point, only to reverse course, plunging by 300 points as technology names such as Twitter and Facebook dragged on the market. The sell-off came a day after the Dow recorded its best single-day point gain since 2008 on fading fears of a U.S.-China trade war.

NAR – pending home sales reverse course in February, rise 3.1 percent

Pending home sales snapped back in much of the country in February, but weakening affordability and not enough inventory on the market restricted overall activity compared to a year ago, according to the National Association of Realtors. The Pending Home Sales Index grew 3.1 percent to 107.5 in February from a downwardly revised 104.3 in January. Even with last month’s increase in activity, the index is 4.1 percent below a year ago. Lawrence Yun, NAR chief economist, says the housing market has gotten off to an uneven start so far in 2018. “Contract signings rebounded in most areas in February, but the gains were not large enough to keep up with last February’s level, which was the second highest in over a decade (112.1)1,” he said. “The expanding economy and healthy job market are generating sizeable homebuyer demand, but the miniscule number of listings on the market and its adverse effect on affordability are squeezing buyers and suppressing overall activity.” Added Yun, “Expect ongoing volatility in the Northeast region at least through March. Although pending sales there bounced back in February following January’s cold weather-related decline, the multiple winter storms over these last few weeks likely put a chill on contract signings once again this month.”

With the start of the spring buying season in full swing, Yun believes that one of the top wild cards for the housing market in coming months will be how both buyers and potential sellers adjust to the steady climb in mortgage rates since late last year. Prospective buyers continue to feel the strain of swift price growth – up 5.9 percent so far in 2018 – and the higher borrowing costs will only add to the pressures placed on their budget. Meanwhile, more would-be sellers deciding to balk at listing their home for sale out of uneasiness of losing their low mortgage rate – especially if they refinanced in recent years – would not be good news for any alleviation of the ongoing supply shortages in much of the country. “Homeowners are already staying in their homes at an all-time high before selling2, and any situation where they remain put even longer only exacerbates the nation’s inventory crunch,” said Yun. “Even if new home construction starts picking up at a faster pace this year, as expected, existing sales will fail to break out if these record low supply levels do not recover enough to meet demand.” For the year, Yun now forecasts for existing-home sales to be around 5.51 million – flat from 2017. The national median existing-home price is expected to increase around 4.2 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.8 percent. The PHSI in the Northeast surged 10.3 percent to 96.0 in February, but is still 5.1 percent below a year ago. In the Midwest the index inched forward 0.7 percent to 98.9 in February, but is 9.5 percent lower than February 2017. Pending home sales in the South rose 3.0 percent to an index of 125.7 in February, but are 1.5 percent lower than last February. The index in the West climbed 0.4 percent in February to 96.9, but is 2.2 percent below a year ago.

Will Buffett rescue GE?

General Electric’s (GE) shares jumped by the most in three-years on Tuesday amid a rumor that Warren Buffett could take a stake in the ailing industrial conglomerate. As reported by Bloomberg, an analyst at William Blair & Co. said the sudden increase in GE’s share price on Monday is due to chatter that that Buffett is interested in a position in the company.“It may be a plausible theory, given Buffett had recently spoken to the press that he might be interested in GE at the right price,” Nicholas Heymann said in a telephone interview with Bloomberg. Buffett has previously stated that he would be interested in GE or its assets for the right price. If it ends up being true, it won’t be the first time that Buffett has invested in the company. He helped inject capital into the company during the financial crisis, but in February he noted that his Berkshire Hathaway had mostly sold its GE stock. The latest 13f filing for Berkshire Hathaway shows no new positions in GE. GE’s share were climbing on Tuesday, but the stock’s value still reflects the financial struggles the company has been facing. Year-to-date shares are down almost 22% while over the past 12 months they have declined by almost 54%.

MBA – MBA releases 2017 rankings of commercial/multifamily mortgage firms’ origination volumes

According to a set of commercial/multifamily real estate finance league tables prepared by the Mortgage Bankers Association (MBA), the following firms were the top commercial/multifamily mortgage originators in 2017:

HFF

Wells Fargo

PNC Real Estate

Eastdil Secured

JP Morgan Chase & Company

CBRE Capital Markets, Inc.

Key Bank

Capital One Financial Corp.

Meridian Capital Group

Walker & Dunlop.

The MBA study is the only one of its kind to present a comprehensive set of listings of 131 different commercial/multifamily mortgage originators, their 2017 volumes and the different roles they play.  The MBA report, Commercial Real Estate/Multifamily Finance Firms – Annual Origination Volumes, presents origination volumes in more than 140 categories, including by role, by investor group, by property type, by financing structure type, and by the location of the originating office. By dollar volume, the top five originators for third parties in 2017 were:

HFF

Eastdil Secured

CBRE Capital Markets, Inc.

PNC Real Estate

Meridian Capital Group.

The top five lenders in 2017 were:

Wells Fargo

JP Morgan Chase & Company

Key Bank

Capital One Financial Corp.

Bank of America Merrill Lynch.

Ten different companies were at the top of the 11 lists reporting total originations by investor groups:

–  Deutsche Bank Securities, Inc., JP Morgan Chase & Company, and Eastdil Secured were the top originators for commercial mortgage-backed securities (CMBS)

–  PNC Real Estate, JP Morgan Chase & Company, and Key Bank were the top originators for commercial bank loans

–  HFF, MetLife Investment Management, and PGIM Real Estate Finance were the top originators for life insurance companies

–  Walker & Dunlop, Berkadia, and Wells Fargo were the top originators for Fannie Mae

–  CBRE Capital Markets, Inc., Walker & Dunlop, and Berkadia were the top originators for Freddie Mac

–  Greystone, Red Mortgage Capital, LLC, and Berkadia were the top originators for FHA/Ginnie Mae

–  TH Real Estate, CBRE Capital Markets, Inc., and HFF were the top originators for pension funds

– HFF, CBRE Capital Markets, Inc., and Marcus & Millichap Capital Corporation were the top originators for credit companies

–  Eastdil Secured, Capital One Financial Corp., and Meridian Capital Group were the top originators for REITS, Mortgage REITS, and Investment Funds

–  JLL, PCCP, and Walker & Dunlop were the top originators for specialty finance;

Wells Fargo, HFF, and Deutsche Bank Securities Inc. were the top originators for the “other investors” category

NAHB – February new home sales flat after upward revisions to prior months

Sales of newly built, single-family homes remained virtually unchanged, inching down 0.6% in February to a seasonally adjusted annual rate of 618,000 units after upward revisions to the January, December and November reports, according to newly released data by the US Department of Housing and Urban Development and the US Census Bureau. “New home sales are at a steady level, which is consistent with our measures of solid builder confidence in the housing market,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “As housing demand grows, builders need to manage increasing costs for labor, lots and building materials to keep their homes competitively priced.” “The recent upward revisions to the sales numbers reflect our forecast for a gradual strengthening of the single-family housing sector in 2018,” said NAHB Chief Economist Robert Dietz. “Demographic tailwinds point to higher demand for single-family homes in the months ahead. Combined with solid job market data, we expect more consumers to enter the housing market this year.” The inventory of new home sales for sale was 305,000 in February, which is a 5.9-month supply at the current sales pace. The median sales price of new houses sold was $326,800. Regionally, new home sales rose 19.4% in the Northeast and 9% in the South. Sales decreased 3.7% in the Midwest and 17.6% in the West.

China investigation underway by House Intelligence Committee

House Intelligence Committee chair Devin Nunes on Sunday said the committee is investigating “many aspects” of China, due to its growing worldwide military presence and potential threats to global trade. “We believe that they are looking at investing in ports and infrastructure around the globe, not just for military capabilities but also to control those governments, to have the ability to lobby and manipulate governments,” Nunes, R-Calif., told Maria Bartiromo on “Sunday Morning Futures.” President Donald Trump signed an executive memorandum last Thursday, calling it the “first of many,” which would impose tariffs on up to $60 billion in Chinese imports to penalize the country for what the administration calls “unfair” trade practices, and its alleged theft of American intellectual property. “Either it’s through the internet or it’s through investing in educational systems here or think tanks,” Nunes said. “They’re bringing people here. I believe that they are stealing Silicon Valley blind and in just a few years, the American people are gonna possibly be looking to China for new coding and new programs because of everything that the Chinese are stealing from here in America.”

However, the California Republican said he wasn’t sure if recently-imposed tariffs on steel and aluminum would be the best way to take on China, though he suggested the US strike trade deals with other Asian countries. “Japan, possibly Vietnam, the Philippines, other places in Asia so that if China does want to get into a trade war that we can actually begin to open up more trade with their neighbors, where they’ll take some of our products that we grow here in America,” Nunes said. In response to Trump’s actions, China announced retaliatory tariffs last Friday against $3 billion in American products, including steel, aluminum, pork and fruit. As a result, global stocks tumbled, including US markets, where the S&P 500 saw its worst week in more than two years. The S&P 500 fell 55.43 points, or 2.1%, to 2,588.26. The Dow Jones Industrial Average plunged 424.69 points, or 1.77%, to 23,533.20. The Nasdaq Composite closed 174.01 points, or 2.43%, lower at 6,992.67. “I do think it was an overreaction based on incomplete information,” White House National Trade Council Director Peter Navarro told Bartiromo on Sunday. Navarro, a trade hawk known for designing the president’s “America First” economic strategy, told Bartiromo last week that he didn’t expect China to “jeopardize” its trade relationship with the US by reacting with tariffs of its own. However, Navarro on Sunday said the retaliation from China is “muted.” “At the end of the day, China’s a sovereign nation. It has to make a choice about how it wants to proceed in the global economy,” he said.

Home construction crisis: Why builders aren’t building

A decade after a construction bubble produced a massive amount of excess housing supply and helped to precipitate the financial crisis, Americans now face with the opposite problem: a shortage of homes. It’s a crisis – especially in the lower price-point housing market – that’s not expected to go away anytime soon, experts say. Home construction per household is near its lowest level in 60 years, according to the Kansas City Fed, as reported by The Wall Street Journal. The National Association of Home Builders predicts there will be fewer than 900,000 new home starts this year, even though the market could easily absorb 1.2 million to 1.3 million, indicating yet another year of underbuilding. “I think we can expect that inventory of single-family homes will continue to be tight. Prices will continue to go up,” Robert Dietz, chief economist at the National Association of Home Builders, told FOX Business. Here’s a look at the various factors that are contributing to both diminished supply and builder incentives.

The post-financial crisis era

In the aftermath of the Great Recession multi-family construction was the first part of the market to recover, Dietz noted. However, single-family construction did not follow, and the types of homes being built began to change. After the crash in 2007-2008, it was easier for wealthy buyers to qualify for mortgages and it was also easier for builders to pass increased costs along to these individuals. Therefore, the homes that were built catered to this demographic, and were large and expensive. In the years that followed, the Obama administration began to implement a series of regulations that affected builders. From environmental policies to land use and labor policies, Dietz noted that there has been a definitive increase in the regulatory burden for homebuilders and contractors throughout recent years. Dodd-Frank, which aimed to protect taxpayers from another crisis, also made it harder for contractors to get loans from smaller financial institutions. The NAHB estimates that regulatory costs increased 29% between 2011 and 2016. These regulations have not only increased costs, but slowed permitting processes.

Complicating factors

The Trump administration has enacted a number of tariffs that have deterred builders from constructing affordable, single-family homes. From the duties imposed on Canadian softwood lumber, a big source of material for US homebuilders, to the more recently announced steel and aluminum tariffs, higher costs have weighed heavy on the industry. “The only thing that makes sense with higher material costs is higher-end [price points],” Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors (NAR), said. Interest rates are also on the rise as the Federal Reserve continues on the path toward monetary policy normalization. That means mortgage rates will also increase, making the situation especially challenging for buyers who are on the precipice of being able to afford a home.

Why it won’t improve in the near-term

The construction industry is suffering from a shortage of workers, potentially facing a 1.5 million shortfall in personnel by 2020. That is restricting the number and type of jobs that companies are willing to take on. Despite an improving economic picture, diminished inventory means home prices are still rising faster than income. Also complicating the inventory picture is the fact that following the housing bubble burst, a lot of real estate investors jumped in and bought up properties at lower entry points, Yun said. Many of these investors are still sitting on those properties. bWhile both Dietz and Yun agree there are some steps that can be taken in the near-term to alleviate some of these damaging factors, the inventory crunch is unlikely to resolve in the near future.

China’s oil futures: what this means for the US

FBN’s Jeff Flock talks to PRICE Futures Group’s Phil Flynn about the prediction that the US could soon become the largest oil producer in the world.

China made its long-anticipated oil futures debut on Monday, and the yuan-denominated futures surges. The contract was planned as Beijing hopes to have an oil benchmark to rival the US’ West Texas Intermediate crude oil futures as well as Europe’s North Seas Brent crude oil contract. China, the world’s fourth-largest producer,  overtook the US last year as the world’s largest oil importer. This contract will be more in-line with local supply and demand fundamentals. Another advancement, the Shanghai oil futures contract will be open to foreign investors, this is the first time China has allowed foreigners to trade domestic commodities this way. The most actively traded futures contract, for September delivery, closed up 3.3% at 429.9 yuan ($68.07) per barrel on the Shanghai International Energy Exchange, having cooled a bit after initially jumping 6%. Over 21 million barrels of oil valued at $2.9 billion changed hands on the first trading day, according to Wind Information Co.

CFPB losing interest in payday lenders?

The Consumer Financial Protection Bureau’s acting director, Mick Mulvaney, has stopped the agency’s pursuit to sue a payday lender and is mulling over dropping the cases against three more payday lenders, according to an exclusive report by Reuters’ Patrick Rucker. The cases, according to the report, are part of about a dozen that Richard Cordray, the bureau’s former director, approved for litigation before his resignation in November. Cordray was ready to sue Kansas-based National Credit Adjusters, which primarily collects debt for online lenders operating on tribal land, according to the article. Cordray’s CFPB concluded that NCA had no right to collect on such online loans, no matter where they were made. A lawyer for NCA, Sarah Auchterlonie, told Reuters this week that Mulvaney has dropped the matter and the case is “dead.” The report also said she noted the agency appeared to be backing off issues involving tribal sovereignty. Meanwhile, Mulvaney is also reviewing three cases against lenders based in southern states, where high-interest loans are permitted. He must eventually decide whether to sue the companies, settle with a fine or scrap the cases, according to the report.

From the article: “Lawyers working for Cordray had concluded that Security Finance, Cash Express LLC and Triton Management Group violated customer rights when attempting to collect, among other lapses. Spokespeople for the companies declined to comment. A spokesman for the CFPB did not respond to a request for comment. None of the sources wished to be identified because they are not authorized to speak about the cases.” The CFPB concluded that debt collectors working for Security Finance, which offers loans at rates that often climb into triple-digits, harassed borrowers at home and work, violating federal laws, and the company had faulty recordkeeping that could hurt borrowers’ credit scores. The CFPB database shows customers complained that Cash Express used high-pressure collection tactics and Cordray was prepared to sue the company on those grounds, sources told Reuters. Mulvaney previously announced that the CFPB would “reconsider” its payday lending rules, as well as quietly dropped a case the agency had against South Carolina-based payday lender World Acceptance Corporation, which has donated at least $4,500 to Mulvaney’s previous congressional campaigns.

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

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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.

Aerosoles

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, NJ.com 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.

BCBG

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.

Bebe

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.

CVS

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

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

Gymboree

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.

Hhgregg

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 Fashionista.com. 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.

Macy’s

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.

Payless

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

RadioShack

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.

Rue21

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/Kmart

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:

Winners:

–  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.”

Losers:

–  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: http://economistsoutlook.blogs.realtor.org/2018/01/09/tax-reform-impact-and-home-price-outlook/.

“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.”

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