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US mall owner GGP rejects Brookfield Property’s $14.8 billion offer

–  GGP rejected a $14.8 billion buyout offer from its biggest shareholder, Brookfield Property Partners, people familiar with the matter said on Sunday.

–  GGP is one of the largest owners and operators of US shopping centers.

–  Brookfield Property made a $23-per-share cash and stock offer last month for the 66% of GGP it does not already own.

GGP, one of the largest owners and operators of US shopping centers, has rejected a $14.8 billion buyout offer from its biggest shareholder, Brookfield Property Partners, people familiar with the matter said on Sunday. Brookfield Property made a $23-per-share cash and stock offer last month for the 66% of GGP it does not already own. A combination of Chicago-based GGP and Brookfield Property would create one of the world’s largest publicly traded property companies. Brookfield Property is considering a new offer for GGP after a special committee of GGP’s board directors turned down its Nov. 11 offer as inadequate, and negotiations between the two companies are expected to continue, the sources said. The companies do not plan to make a new announcement unless their negotiations lead to a deal or end unsuccessfully, the sources added, asking not to be identified because the discussions are confidential. GGP and Brookfield Property did not immediately respond to requests for comment. Brookfield Property’s efforts to buy GGP have come as mall owners across the United States are struggling as a result of many retailers losing out to e-commerce firms such as

Brookfield Property, an owner and operator of office and retail properties, said last month the deal would allow it to grow, transform or reposition GGP’s shopping centers. The acquisition would create a company with an ownership interest in almost $100 billion real estate assets globally and annual net operating income of about $5 billion, according to Brookfield Property. It is not the first time Brookfield Property’s attempt to buy out a real estate investment trust in which it already owns a big stake has been rejected. Last year, Rouse Properties, another US mall owner, rejected an offer by Brookfield Property, its largest shareholder, only to subsequently agree to a sweetened $2.8 billion offer. Other GGP peers are also coming under pressure. Rival mall owner Macerich currently is under pressure from activist hedge fund Third Point Management to explore options including a sale.

Currency expert says there’s one fundamental reason behind bitcoin’s runaway rally

–  Valentin Marinov, head of G-10 FX research at Credit Agricole CIB, says that the “inherent imbalance between demand and supply” is the driving force behind bitcoin’s soaring value

–  Bitcoin bulls have frequently referenced the cryptocurrency’s scarcity value as a primary reason for its staying power

–  Billionaire investor Warren Buffet has previously urged traders to “stay away from it,” calling the rally a “mirage”

Bitcoin’s meteoric price rise has stunned critics and enthusiasts alike, leaving investors scrambling to understand the fundamental reason for the digital currency’s runaway rally. Valentin Marinov, head of G-10 FX research at Credit Agricole CIB, told CNBC on Monday that he was hopeful he now understood the reason behind bitcoin’s soaring value. He predicted further gains for the cryptocurrency before the end of the year. Bitcoin was changing hands about 10.7% higher Monday morning at above $16,642.45, according to CoinDesk’s Bitcoin Price Index. The index tracks prices from digital currency exchanges Bitstamp, Coinbase, itBit and Bitfinex. When asked to explain the driving force behind bitcoin’s unprecedented rally, Marinov said: “It is the inherent imbalance between demand and supply. Supply is inherently fixed; it’s very much like gold if you wish? At the same time… demand is based on hopes that its value will continue to grow.” Marinov also pointed to an unwavering hope among investors that the digital currency’s value appears to be “unlimited”. Bitcoin bulls have frequently referenced the cryptocurrency’s scarcity value as a primary reason for its staying power. Somewhat like gold, bitcoin supply grows at glacial and ever-decreasing fixed rates with only 21 million bitcoins set to be in existence.

Rising interest from institutional and retail investors prompted global exchanges, such as the Cboe, to launch futures contracts. This move is likely to encourage even greater institutional investment, market participants said, while at the same time curbing further volatile price swings. A contract from rival CME is poised to go live next week. Trading of the hotly anticipated futures contract began Sunday on the Cboe, representing a significant step in the legitimization of cryptocurrencies. Futures are derivatives, or financial instruments, that obligate a trader to either buy or sell an asset at a specified time and at a specified price. But, while the trading of bitcoin futures on two of the world’s largest exchanges is expected to provide a layer of official oversight that had not previously existed, several leading voices have expressed skepticism. JPMorgan Chase CEO Jamie Dimon called bitcoin a “fraud” that would eventually blow up, while billionaire investor Warren Buffett urged traders to “stay away from it,” calling the rally a “mirage”. On Friday, Stefan Ingves, chairman of global regulators at the Basel Committee and governor of Sweden’s Riksbank, said investing in bitcoin or other similar digital currencies was a “dangerous” prospect. Ingves cited strikingly high volatility levels and the clear lack of support from either central banks or international regulators as reasons for traders to be cautious. Bitcoin has become one of the hottest trades of 2017, surging more than 1,000% since the start of January.

Orlando shopping center owner files for bankruptcy

International Shoppes shopping center in Orlando (Credit:

A company planning to redevelop an Orlando shopping center and facing two foreclosure lawsuits filed for Chapter 11 bankruptcy. International Shoppes LLC declared $20 million of debt and $6.7 million of assets in its bankruptcy petition. The bankruptcy petition may block foreclosures by Delaware-based Elizon DB, which has a $14.3 million loan secured by the shopping center, and Bank of the Ozarks, which has a $4.3 million loan on the property. International Shoppes LLC, led by developer Abdul Mathin, has owned a shopping center called International Shoppes since 2007 and has planned to redevelop the property since 2014, when he proposed demolition of the 1980s-vintage shopping center and an ambitious redevelopment called iSquare Mall, designed to include a luxury retail center and two hotels.

New York explosion: 1 person in custody, several injured

An explosion rocked New York’s Port Authority Bus Terminal, one of the city’s busiest commuter hubs, on Monday morning and police said one suspect was injured and in custody, with three other injuries reported. Police were not yet identifying the device used. Local television channel WABC cited police sources as saying a possible pipe bomb detonated in a passageway below ground and WPIX cited sources as saying a man with a “possible second device” has been detained in the subway tunnel. The fire department tweeted there were four injuries, all non-life threatening. One of the injured was a Port Authority police officer.

LinkedIn invests in Silicon valley housing

LinkedIn recently invested $10 million into an initiative started by Housing Trust Silicon Valley, a nonprofit community loan fund based that works to increase affordable housing options in Silicon Valley. LinkedIn’s money went to the TECH Fund, a program started by Housing Trust Silicon Valley that aims to get more high-tech organizations, large employers and philanthropists involved with creating affordable housing in the Bay Area. According to details provided by Housing Trust Silicon Valley, TECH Fund was created to “help developers with short-term capital needs to compete more effectively with market-rate developers and purchase property faster.” The nonprofit also said LinkedIn is the first company to “use their investment in the TECH Fund to make additional voluntary contributions to benefit their community.” With LinkedIn’s $10 million, the total investment in the TECH Fund is now $30 million, the nonprofit said. “We see TECH Fund and LinkedIn’s investment as new way to lead change in the affordable housing landscape,” said Kevin Zwick, CEO of Housing Trust Silicon Valley. “We’re happy to create a way for affordable housing developers to access land acquisitions funds quickly, and we thank LinkedIn for being a committed ally to do so.” And it appears that some of LinkedIn’s money is already being put to good use. According to Housing Trust Silicon Valley, a portion of LinkedIn’s investment was used to purchase a site in Mountain View, California that is to be used to build 70 new affordable apartments, with 20 homes dedicated to permanent supportive housing. “We must all take ownership of the affordable housing crisis in the Bay Area, and invest in compassionate solutions,” said Katie Ferrick, head of community affairs at LinkedIn. “This partnership with Housing Trust through the TECH Fund is a creative way to make community impact investing a viable way for companies to address the need for housing.”

Farmer Mac fires CEO

The Federal Agricultural Mortgage Corporation, otherwise known as Farmer Mac, which functions as a secondary market for agricultural credit, abruptly fired its president and CEO, Timothy Buzby, late last week. According to an announcement from the company, Buzby was terminated by the company’s board “solely on the basis of violations of company policies.” But, the company did not provide any more information on what those violations actually were. The company also said that Buzby’s termination was not due to the company’s financial or business performance. Taking over on an interim basis is Lowell Junkins, who becomes acting president and chief executive officer. Junkins has served as Farmer Mac’s chairman of the board since late 2010 and has been a board member since 1996. “My job, as acting CEO, is to make sure nothing gets in the way of this organization’s stellar leadership team and staff and the excellent work they do every single day,” Junkins said. “As our third quarter results demonstrate, we have been performing extraordinarily well and look forward to that continuing without a hitch.” The company said that its board will launch an “immediate and thorough” search to find a new president and CEO and will consider both internal and external candidates.

ATTOM – US home flipping returns drop to two-year low in Q3 2017

ATTOM Data Solutions released its Q3 2017 US Home Flipping Report, which shows that single family homes and condos flipped in the third quarter yielded an average gross flipping profit of $66,448 per flip, representing an average 47.7% return on investment for flippers — down from 48.7% in the previous quarter and down from 51.2% in Q3 2016 to the lowest average gross flipping ROI since Q2 2015. The report also shows that 48,685 single family homes and condos were flipped nationwide in the third quarter, a home flipping rate of 5.1% — down from 5.6% in the previous quarter and unchanged from a year ago. Year-to-date through the third quarter of 2017 a total of 153,727 single family homes and condos nationwide have been flipped, nearly equal with the 153,854 flipped through the first three quarters of 2016, when the number of homes flipped increased to a 10-year high. For the report, a home flip is defined as a property that is sold in an arms-length sale for the second time within a 12-month period based on publicly recorded sales deed data collected by ATTOM Data Solutions in more than 950 counties accounting for more than 80% of the US population. “Home flipping profits continue to be squeezed by a dwindling inventory of distressed properties available to purchase at a discount and increasing competition from fair-weather home flippers often willing to operate on thinner margins,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “A more than nine-year low in the ratio of flips per investor is evidence of this increased competition, which is pushing many investors to new metro areas that often have weaker market fundamentals but also come with a bigger supply of discounted distressed properties to flip.”

The Q3 2017 home flipping rate increased from a year ago in 44 of the 93 metropolitan statistical areas analyzed in the report (47%), led by Baton Rouge, Louisiana (up 140%); Winston-Salem, North Carolina (up 58%); Salem, Oregon (up 51%); Indianapolis, Indiana (up 51%); and Buffalo, New York (up 47%). Along with Indianapolis and Buffalo, metro areas with a population of 1 million or more that posted a year-over-year increase in home flipping rates of at least 10% were Louisville, Kentucky (up 22%); San Antonio, Texas (up 22%); New York, New York (up 21%); Cleveland, Ohio (up 17%); Birmingham, Alabama (up 17%); Charlotte, North Carolina (up 15%); Dallas-Fort Worth, Texas (up 14%); Rochester, New York (up 13%); Detroit, Michigan (up 12%); Hartford, Connecticut (up 11%); and Memphis, Tennessee (up 10%). The Q3 2017 home flipping rate decreased from a year ago in 49 of the 93 metropolitan statistical areas analyzed for the report (53%), including Los Angeles (down 6%); Washington, D.C. (down 6%); Miami (down 15%); Boston (down 5%); and San Francisco (down 2%). “Across Southern California, investors are finding home flips for investment purchases to be a challenge due to an aging housing inventory requiring greater repair cost coupled with higher acquisition costs due to low available inventory,” said Michael Mahon, president at First Team Real Estate, covering the Southern California housing market. ‘That equates to increased risk for return on investment that is keeping many potential investors on the sidelines.” Other major markets where the Q3 2017 home flipping rate decreased from a year ago included Seattle (down 8%), Minneapolis-St. Paul (down 18%); Tampa-St. Petersburg (down 9%); Baltimore (down 2%); and Denver (down 2%). “Although the number of flips in the Seattle market dropped back to levels not seen since early 2016, they are still well above the levels seen before the recession. I anticipate that the number of flips will continue to fall as home price growth eats into profits, which have been on the decline since 2013,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “The Seattle region housing market remains very tight in terms of inventory and this has put substantial upward pressure on prices. Flippers can function to exacerbate this issue, so the sooner we see the number of flips drop back to pre-recession levels, the better.”

Counter to the national trend, average gross home flipping ROI in Q3 2017 increased from a year ago in 34 of the 93 metropolitan statistical areas analyzed in the report (37%), led by Baton Rouge, Louisiana (up 116%); Spokane, Washington (up 46%); Indianapolis, Indiana (up 35%); Fresno, California (up 34%); and Greensboro-High Point, North Carolina (up 34%). Metro areas with the highest average gross home flipping ROI for properties flipped in the third quarter were Pittsburgh, Pennsylvania (147.7%); Baton Rouge, Louisiana (122.2%); Philadelphia, Pennsylvania (114.0%); Baltimore, Maryland (101.5%); and Cleveland, Ohio (98.6%). Metro areas with the lowest average gross home flipping ROI for properties flipped in the third quarter were Austin, Texas (18.7%); Reno, Nevada (22.3%); Dallas-Fort Worth, Texas (22.7%); Kansas City (24.0%); and Salt Lake City, Utah (24.9%). With home flips representing 8.3% of all home sales in Q3 2017, the District of Columbia posted a higher home flipping rate than any state, followed by Nevada (7.6%); Tennessee (7.4%); Louisiana (7.4%); Alabama (7.1%); and Arizona (6.9%). Among 93 metropolitan statistical areas analyzed in the report, those with the highest home flipping rates in Q3 2017 were Memphis, Tennessee (12.0%); Baton Rouge, Louisiana (9.3%); York-Hanover, Pennsylvania (8.7%); Lakeland-Winter Haven, Florida (8.5%); and Tampa-St. Petersburg, Florida (8.5%).

Other high-level takeaways from the report:

–  The 48,685 homes flips in Q3 2017 were completed by 38,928 investors, a ratio of 1.251 flips per investor, the lowest ratio of flips per investor since Q2 2008.

–  The share of homes flipped in Q3 2017 that were purchased by the flipper with financing represented 34.6% of all homes flipped in the quarter, down from 35.5% in the previous quarter but still up from 32.3% in Q3 2016.

–  The share of homes flipped in Q3 2017 that were purchased by the flipper in some stage of foreclosure or as bank-owned homes represented 38.8% of all homes flipped during the quarter, down from 40.2% in the previous quarter and down from 43.9% in Q3 2016.

–  The average square footage of homes flipped in Q3 2017 was 1,405, down from 1,412 in the previous quarter to the smallest average square footage on record for the report, going back to Q1 2000.

–  Homes flipped in Q3 2017 were purchased at an average discount of 23.9% below estimated full market “after repair” value, down from an average discount of 24.2% in the previous quarter to the lowest average discount since Q4 2013.

–  Homes flips completed in Q3 2017 took an average of 181 days, down from 185 days in the previous quarter and down from 182 days in Q3 2016.

Jobs jump by 228K, 86th straight month of gains

US employers added 228,000 jobs in November, beating expectations for an increase of 200,000 jobs after several months of hurricane-related volatility from which the economy is still recovering. The unemployment rate remained unchanged at 4.1%, the lowest rate in nearly 17 years, and the labor force participation rate also stayed at 62.7% during the month. Average hourly earnings meanwhile increased from $26.53 to $26.55. The jobs numbers come on the heels of a report Wednesday from payroll processing firm ADP, which revealed that 190,000 private sector jobs were added in November, down from 235,000 in October. According to the report, manufacturing added 40,000 jobs, the most in the ADP series history, which launched more than 15 years ago. Meanwhile, the construction sector shed 4,000.

CoreLogic – homeowner equity increased by almost $871 billion in Q3 2017

–  260,000 Mortgaged Properties Regained Equity Between Q2 2017 and Q3 2017

–  The Number of Underwater Homes Decreased Year Over Year by 0.7 Million

2.5 Million Residential Properties with a Mortgage Still in Negative Equity

CoreLogic released its Q3 2017 home equity analysis which shows that US homeowners with mortgages (roughly 63% of all homeowners) have collectively seen their equity increase 11.8% year over year, representing a gain of $870.6 billion since Q3 2016. Additionally, homeowners gained an average of $14,888 in home equity between Q3 2016 and Q3 2017. Western states led the increase, while no state experienced a decrease. Washington homeowners gaining an average of approximately $40,000 in home equity and California homeowners gaining an average of approximately $37,000 in home equity. On a quarter-over-quarter basis, from Q2 2017 to Q3 2017, the total number of mortgaged homes in negative equity decreased 9% to 2.5 million homes, or 4.9% of all mortgaged properties. Year over year, negative equity decreased 22% from 3.2 million homes, or 6.3% of all mortgaged properties, from Q3 2016 to Q3 2017. “Homeowner equity increased by almost $871 billion over the last 12 months, the largest increase in more than three years,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This increase is primarily a reflection of rising home prices, which drives up home values, leading to an increase in home equity positions and supporting consumer spending.”

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 Q4 2009 based on CoreLogic equity data analysis, which began in Q3 2009. The national aggregate value of negative equity was approximately $275.7 billion at the end of Q3 2017. This is down quarter over quarter by approximately $9.1 billion, or 3.2%, from $284.8 billion in Q2 2017 and down year over year by approximately $9.5 billion, or 3.3%, from $285.2 billion in Q3 2016. “While homeowner equity is rising nationally, there are wide disparities by geography,” said Frank Martell, president and CEO of CoreLogic. “Hot markets like San Francisco, Seattle and Denver boast very high levels of increased home equity. However, some markets are lagging behind due to weaker economies or lingering effects from the great recession. These include large markets such as Miami, Las Vegas and Chicago, but also many small- and medium-sized markets such as Scranton, Pa. and Akron, Ohio.”

Global banking regulator sends a warning to bitcoin investors

–  Stefan Ingves, chairman of global regulators at the Basel Committee and governor of Sweden’s Riksbank, said investing in bitcoin was a “dangerous” prospect

–  Bitcoin was trading at around $16,029 on Friday morning, according to industry site CoinDesk, after wild price swings in recent days

–  “If you look at what has happened in the past when it comes to reaching those type of heights, being it tulip bulbs or a bunch of other things over the centuries, the odds are against those who actually think that this is going to be the future,” Ingves said

Bitcoin investors could learn a valuable lesson from the Dutch tulip bulb mania of the 1630s, according to a global banking regulator. When asked whether cryptocurrencies, such as bitcoin, had ignited any financial stability concerns, Stefan Ingves, chairman of global regulators at the Basel Committee and governor of Sweden’s Riksbank, told CNBC: “I think it’s wrong to call it a cryptocurrency, it’s crypto-something … Kind of a crypto-asset but definitely not a cryptocurrency.” Ingves said investing in bitcoin — as well as other similar instruments — was a “dangerous” prospect. He urged traders to be cautious because of strikingly high volatility levels and the clear lack of support from either central banks or international regulators. Bitcoin was trading at around $16,029 on Friday morning, according to industry site CoinDesk, after wild price swings in recent days. The digital currency rocketed above $19,000 on Thursday on the Coinbase exchange, before notching a huge decrease. The price on Coinbase, one of the major cryptocurrency exchanges accounting for a third of bitcoin trading volume, is often at a premium over other platforms. “If you look at what has happened in the past when it comes to reaching those type of heights, being it tulip bulbs or a bunch of other things over the centuries, the odds are against those who actually think that this is going to be the future,” Ingves said.

Ingves is not the first to compare bitcoin’s meteoric rise to the tulip craze — widely considered to be one of the first major financial bubbles. In the 17th Century, tulips became such a prized commodity that they were being traded on Dutch stock exchanges. And many people traded or sold possessions in a bid to get in on the action. But it all came to an end as a sudden drop in prices sparked panic selling. Tulips were soon trading at a fraction of what they once had, leaving many investors in financial ruin. Bitcoin’s dramatic uptick in market value means it would currently rank among the 20 largest stocks in the S&P 500 — with an estimated value of more than $250 billion. Meantime, on Thursday, financial regulators reached a long-sought deal to harmonize global banking rules. The Basel Committee — which consists of banking supervisors from the world’s top financial centers — agreed on new regulations to help strengthen banks in the wake of the financial crisis. The rules aim to ensure lenders across the world are consistent with how they manage capital levels and assess the measurement of risk. There is a “very high awareness” among international regulators of developments in the financial technology (fintech) sector “but it is a bit too early to say where that will take us when it comes to regulatory frameworks,” Ingves said. “Let me also stress that sometimes there is a bit of a hype when people talk about fintech, thinking that old fashioned banking is going to go away. But I don’t think that is going to happen because regardless of the technology available, in most countries we have had banks for hundreds and hundreds of years and most likely it is going to continue that way,” he added.

MBA – mortgage applications up

Mortgage applications increased 4.7% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 1, 2017. The prior week’s results included an adjustment for the Thanksgiving holiday. The Market Composite Index, a measure of mortgage loan application volume, increased 4.7% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 47% compared with the previous week. The Refinance Index increased 9% from the previous week. The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index increased 38% compared with the previous week and was 8% higher than the same week one year ago. The refinance share of mortgage activity increased to its highest level since September 2017, 51.6% of total applications, from 48.7% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to its lowest level since January 2017, 5.7% of total applications. The FHA share of total applications increased to 11.1% from 10.8% the week prior. The VA share of total applications decreased to 10.7% from 11.0% the week prior. The USDA share of total applications remained unchanged from the week prior at 0.8%.

CoreLogic – US economic outlook: December 2017

A central theme for the 2018 housing market will be the continuing erosion of housing affordability, an issue that will permeate a growing list of American neighborhoods. Today housing affordability is already a major concern in many high-cost markets, and will spread to more moderate-cost places across the nation. Let’s look at the economic factors that we expect will further weaken affordability in the coming year.One is the projected rise in interest rates. The Federal Reserve has signaled its plan to increase its federal funds target, pushing other short-term interest rates up including initial rates on ARMs, and to reduce its portfolio of long-term Treasury and mortgage-backed securities.  And while fixed-rate mortgage rates remain at historically low levels, they are already up about three-fourths of a percentage point above their record low.  Fixed-rate loans are forecast to rise in 2018 by at least one-half a percentage point to as much as a full percentage point. A second factor is the increasing price of buying a home. CoreLogic’s national Home Price Index has been rising at a 6% or better clip over the past year with less expensive homes rising even faster.  When combined with the rise in mortgage rates, the price increase for lower-priced homes translates into approximately a 15% rise over the last year in the monthly principal and interest payment for a first-time buyer. We expect this trend to continue in 2018, with the CoreLogic Home Price Index for the US up another 5%. Third, we expect the very low for-sale inventory, especially for ‘starter’ homes, to continue.   As low inventory confronts the rising desire for homeownership by a growing number of millennials, home sale conditions will favor the seller with low time-on-market, multiple contracts per home, and more homes that sell at or above list price.  These phenomena will be particularly acute in the first-time buyer segment, where there is already a shortage of for-sale inventory. Declining affordability can be alleviated by new construction and rehabilitation of older housing stock. We expect housing starts to increase 5% in 2018, but more building is necessary to alleviate the affordability challenges in many higher-cost American cities.

CoreLogic – US Home Price Report marks second consecutive month of 7% year-over-year increases in October

– Prices Starting to Out-Pace Value With 50% of the Top 50 Markets Overvalued

–  All States Posted Year-Over-Year Price Gains in October 2017

–  Home Prices Projected to Increase 4.2% by October 2018

CoreLogic released its CoreLogic Home Price Index (HPI) and HPI Forecast for October 2017, which shows home prices are up both year over year and month over month. Home prices nationally increased year over year by 7% from October 2016 to October 2017, and on a month-over-month basis home prices increased by 0.9% in October 2017 compared with September 2017, according to the CoreLogic HPI. Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 4.2% on a year-over-year basis from October 2017 to October 2018, and on a month-over-month basis home prices are expected to decrease by 0.2% from October 2017 to November 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. “Single-family residential sales and prices continued to heat up in October,” said Dr. Frank Nothaft, chief economist for CoreLogic. “On a year-over-year basis, home prices grew in excess of 6% for four consecutive months ending in October, the longest such streak since June 2014. This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”

According to CoreLogic Market Condition Indicators (MCI) data, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 37% of metropolitian areas have an overvalued housing stock as of October 2017. The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income. Also, as of October, 26% of the top 100 metropolitan areas were undervalued and 37% were at value. When looking at only the top 50 markets based on housing stock, 50% were overvalued, 14% were undervalued and 36% were at value. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level. “The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk,” said Frank Martell, president and CEO of CoreLogic. “However, for entry-level renters and first-time homebuyers, it leads to tougher affordability challenges. According to the CoreLogic Single-Family Rent Index, rents paid by entry-level renters for single-family homes rose by 4.2% from October 2016 to October 2017 compared with overall single-family rent growth of 2.7% over the same time.”

US private sector adds 190,000 jobs in November: ADP

US private employers created 190,000 jobs in November, down sharply from the month before and roughly in line with economists’ expectations, a report by a payrolls processor showed on Wednesday. Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 185,000 jobs, with estimates ranging from 150,000 to 240,000. Private payroll gains in October were unrevised at 235,000. The report is jointly developed with Moody’s Analytics. The ADP figures come ahead of the US Labor Department’s more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists polled by Reuters are looking for US private payroll employment to have grown by 190,000 jobs in November, down from 252,000 the month before. Total non-farm employment is expected to have risen by 200,000.The unemployment rate is forecast to stay steady at the 4.1% recorded a month earlier.

CoreLogic  – US single-family rents up 2.9% year over year in September

–  Riverside-San Bernardino-Ontario Experienced the Highest Year-Over-Year Rent Growth in September

–  Overall Index pulled down by high-end segment

–  Rent prices may be showing some early impacts of Hurricane Harvey

–  Of 20 select metros analyzed, San Francisco and Miami were the only two to experience a decrease in single-family rent prices in September

National single-family rent prices climbed steadily between 2010 and 2017, as measured by the CoreLogic Single-Family Rent Index (SFRI). However, the Index shows year-over-year rent growth has decelerated slowly since it peaked early last year. In September 2017, single-family rents increased 2.9% year over year, a 1.5-percentage point decline since the growth rate hit a high of 4.4% in February 2016. The Index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. Analysis is conducted nationally and for 75 Core Based Statistical Areas (CBSAs). Using the Index to analyze specific price tiers reveals important differences. The Index’s overall growth in September 2017 was pulled down by the high-end rental market, which is defined as properties with rent prices 125% or more of a region’s median rent. Rent prices on higher-priced rental homes increased 2.2% year over year in September 2017, unchanged from September 2016. Rent prices in the low-end market, defined as properties with rents less than 75% of the regional median rent, increased 4.5% year over year in September 2017, down from a gain of 5.3% in September 2016.

Rent growth varies significantly across metro areas. Riverside-San Bernardino-Ontario, CA had the highest year-over-year rent growth with an increase of 5.8%. Only two CBSAs among this group of 20 showed a decrease in rent prices: Miami-Miami Beach-Kendall (-0.7%) and San Francisco-Redwood City-South San Francisco (-0.2%). The September 2017 results for Houston are notable with no change in rent prices from September 2016 to September 2017, and it is likely that rents in this market are showing some early impacts from Hurricane Harvey. The year-over-year rent decrease in Houston stopped in September 2017 after 17 consecutive months of declines as Houston rental transactions increased 63.4% year over year. A more pronounced impact is expected in Houston in future months. Rental vacancy rates are available quarterly from the US Census Bureau Housing Vacancy Survey. Metro areas with limited new construction and strong local economies that attract new employees tend to have low rental vacancy rates and stronger rent growth. Minneapolis experienced 4.2% year-over-year rent growth in Q3 2017, driven by employment growth of 2.9% year over year, which was more than double the national growth of 1.4%. In contrast, Tulsa, which has been hit with energy-related job losses since early 2015, experienced a 1.4% year-over-year decrease in rent prices, according to CoreLogic data.

Consumer bureau’s new leader steers a sudden reversal

The defanging of a federal consumer watchdog agency began last week in a federal courthouse in San Francisco. After a nearly three-year legal skirmish, the Consumer Financial Protection Bureau appeared to have been victorious. A judge agreed in September with the bureau that a financial company had misled more than 100,000 mortgage customers. As punishment, the judge ordered the Ohio company, Nationwide Biweekly Administration, to pay nearly $8 million in penalties. Then Mick Mulvaney was named the consumer bureau’s acting director. Barely 48 hours later, the same lawyers filed a new two-sentence brief. Their request: to withdraw their earlier submission and no longer take a position on whether Nationwide should put up the cash. It was a subtle but unmistakable sign that the consumer bureau under Mr. Mulvaney is headed in a new direction — one that takes a lighter touch to regulating the financial industry. The reversal is part of a broad push by the Trump administration to unfetter companies from Obama-era regulations. Inside the agency, change has been swift. Mr. Mulvaney briefly stopped approval of payments to some victims of financial crime, halted hiring, froze all new rule-making and ordered a review of active investigations and lawsuits. Some, he has indicated, will be abandoned. “This place will be different, under my leadership and under whoever follows me,” Mr. Mulvaney said Monday about an agency that he previously denounced as a “sad, sick” example of bureaucracy gone amok.

Black Knight – October Mortgage Monitor: tax reform could further constrict already tight housing inventory, while increasing net housing expenses for many buyers 

–  The House of Representatives’ tax reform plan proposes doubling the standard deduction while capping the mortgage interest deduction (MID) to the first $500K of mortgage debt

–  All else being equal, as a result of doubling the standard deduction, renters would likely see greater overall tax benefits than homeowners who previously had itemized deductions

–  As part of the plan, current borrowers would be exempt from the $500K MID cap, which may create a disincentive for homeowners to sell their homes and sacrifice the larger existing deduction, further tightening available housing inventory

–  Prospective home buyers with new mortgages over $500K could see costs rise an additional $2,600 – $4,200 per year depending on their tax bracket, even if interest rates stayed flat

–  Proceeds on nearly 15% of existing home sales may also face increased capital gains exposure, which could further constrain for-sale inventory

The Data and Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based on data as of the end of October 2017. Given the significant impact proposed changes to the tax code could have on the housing and mortgage markets, this month Black Knight explored the impact from the Senate and House versions of tax reform as currently written. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, proposed changes to the standard deduction, mortgage interest deduction (MID), and capital gains exemptions in particular could put even more pressure on already limited available housing inventory, with ramifications for both current homeowners and prospective buyers. “Both tax reform proposals double the standard tax deduction, which may, in many cases, provide a greater benefit to renters than to homeowners,” said Graboske.  “It may also reduce the tax incentive to purchase a home and generally make the MID less valuable to borrowers. We’ve observed in the past that positive tax incentives can certainly impact home buying decisions – the Black Knight Home Price Index showed clear evidence of this as a result of 2008’s first-time homebuyer tax credit. However, limited data is available to examine the effects of removing an existing tax incentive on borrowers’ purchase behavior. One thing that seems clear is that a reduction of the MID could further constrain available housing inventory, which itself has helped to push home prices even higher in many places. Almost 3 million active first-lien mortgages – current mortgage holders – have original balances exceeding $500K – the cap proposed in the House version of the tax bill. These borrowers would be exempt from the limit. We’ve already seen signs of ‘interest rate lock’ on the market, as homeowners with low interest rate mortgages have a disincentive to sell in a rising rate environment. The question now becomes whether the proposed tax reform adds another layer of ‘tax deduction lock’ on the market. Do these homeowners now also have a disincentive to sell their home in order to keep their current interest rate deduction of up to $1 million? If so, this would potentially add new supply constraints.

“Lower-priced markets may see little effects from these changes, but the most recent Black Knight Home Price Index shows 22 markets nationwide where the median home price is over $500K. Mortgage originations at or above that point have increased by 350% since the bottom of the housing market. At the current rate of growth, we could see approximately 480,000 purchase originations in 2018 with original balances over $500K, with an estimated 2.9 million over the first five years of the tax plan. If home prices continue to rise and the cap is left in place, more families in the upper-middle income range could be impacted. Even if interest rates stayed steady around four%, a $500K MID cap could cost the average homeowner with a larger mortgage an additional $2,600 – $4,200 per year depending on their tax bracket, representing a 6 to 10% increase in housing-related expenses as compared to the average annual principal and interest payment today.”Black Knight also found that proposed changes to the capital gains exemption on profits from the sale of a home (requiring five years of continuous residence as compared to the current two) could impact approximately 750,000 home sellers per year, also potentially increasing pressure on available inventory. Leveraging the company’s SiteX property records database, Black Knight found that on average, over the past 24 months, more than 14% of property sales were by homeowners falling into that two-to-five-year window and who would no longer be exempt from capital gains taxation. On average, $60 billion in capital gains each year could be impacted, with a worst-case scenario (taxing the full amount under the highest tax bracket) putting the cost to home sellers at approximately $23 billion. If such homeowners choose to forego or delay selling to avoid a tax liability, this may also further reduce the supply of homes for sale.

As was reported in Black Knight’s most recent First Lo​ok release, other key results include:

​-  Total US loan delinquency rate:  44%​

​-  Month-over-month change in delinquency rate:  0.94%

​-  Total US foreclosure pre-sale inventory rate:  0.68%

​-  Month-over-month change in foreclosure pre​-sale inventory rate:  -2.84%

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

​-  States with the lowest percentage of non-current loans:  MT, MN, OR, ND, CO

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

Dow opens at new record high, after Senate green-lights tax bill

US stocks jumped at the opening bell, with the Dow Jones Industrial Average adding 238 points, or 0.98% to reach 24,464 points in the first minutes of trading. Stocks were boosted by optimism over tax reform after Senate Republicans passed an overhaul of the US tax code early Saturday, which shifted investors’ minds away from political tensions in Washington and sent stocks on a wild ride on Friday. The Dow industrials could log a new closing record for Monday if the indicated gains come through. Last Thursday, the Dow posted its biggest one-day gain in a year, surging more than 330 points to close above 24,000 for the first time. It was the fifth 1,000-point milestone for the Dow in 2017, the most ever in a calendar year. Then, on Friday, the Dow had its most turbulent session of the year, plunging after former national security adviser Michael Flynn pled guilty to lying to the FBI about conversations with a Russian ambassador. An incorrect ABC report said Flynn would testify that President Donald Trump directed him to make contact with Russian officials while he was a candidate contributed to a steep fall in socks. ABC later clarified and corrected the story, which was reported on air.The Dow’s steep losses were short lived, with stocks paring their losses during the session. The index closed down 40.76 points after falling as much as 350 points during the session.

CoreLogic – shows more than 20% of us properties at risk of flood are outside of designated special flood hazard areas

– Florida has the most properties with flood risk that are not included in special flood hazard areas, Arizona has the highest percentage

According to new data analysis from CoreLogic, an estimated 23% of residential and commercial properties in the US are at High or Moderate risk of flooding, based on CoreLogic proprietary flood analysis, but are outside of designated Special Flood Hazard Areas (SFHA) as identified by the Federal Emergency Management Agency (FEMA). Property owners living within SFHA zones must have flood insurance if there is a federally insured mortgage while those living outside SFHA zones are not required to have flood insurance. Many property owners choose not to carry flood insurance if it is not required even though their property may still be at risk of flood. Nationally, more than 29 million properties (29,437,151), or 23%, are outside a designated SFHA despite being at High or Moderate risk of flooding, according to CoreLogic analysis. At the state level:

–  Florida has the highest number of properties in this category at 5,055,821, or 54% of total properties

–  Texas has 3,292,082 properties, or 31%, and California has 3,114,462 properties, or 29%

–  Looking at only the percentage of properties outside an SFHA, which are at High or Moderate risk, Arizona has the highest at 68%, followed by Florida at 54% and Louisiana at 49%

Oil prices fall after US drillers add rigs

Oil fell on Monday after US shale drillers added more rigs last week, but prices still held close to their highest since mid-2015, supported by an extension to output cuts agreed last week by OPEC and other producers. Drillers in the United States added two oil rigs in the week to Dec. 1, bringing the total count to 749, the highest since September, energy services company Baker Hughes said in its closely followed report late on Friday. February Brent crude futures were down 54 cents at $63.19 a barrel by 1003 GMT, while US West Texas Intermediate was down 61 cents at $57.75. The Brent price hit a two-year high of $64.65 a month ago and has since attracted record investment by fund managers. The US rig count, an early indicator of future output, has risen sharply from 477 active rigs a year ago after energy companies boosted spending plans for 2017. Drillers were encouraged during 2017 to increase activity as crude prices started recovering from a multi-year price slump after the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers, including Russia, agreed to production cuts a year ago. Last week the producers agreed to extend those cuts of 1.8 million barrels per day (bpd) until the end of next year. “Market reaction has been positive so far. There are only two worrying aspects … one is that Iraq’s indiscipline has not been discussed, at least not publicly,” PVM Oil Associates strategist Tamas Varga said, referring to Iraq’s poor compliance with the deal.

MBA applauds Senate for inclusion of rounds amendment in tax bill

David H. Stevens, CMB, President and CEO of the Mortgage Bankers Association, offered the following statement praising efforts by Senate Leadership, Senator Mike Rounds (R-SD), Senate Finance Committee Chairman Orrin Hatch (R-UT), Senate Banking Committee Chairman Mike Crapo (R-ID) and Senator David Perdue (R-GA), to address language in Section 13221 of the Senate Tax Reform Bill relating to mortgage servicing rights (MSRs). “I want to personally thank Majority Leader McConnell, Chairman Hatch, Senator Rounds, Chairman Crapo, and Senator Perdue for working with us and commend them for their efforts on this important issue. Because of the Rounds Amendment, this package will protect the ability of most Americans to obtain safe, decent shelter and affordable home mortgage credit without disruption. Had this language not been included, the change in tax accounting for MSRs would have had a devastating impact on the flow of capital that supports a robust and competitive real estate finance market, both single-and commercial/multifamily. We thank the Senate for its leadership on this issue.”

NAR – Senate-Passed tax legislation bad news for homeowners

The US Senate today passed tax reform legislation that the National Association of Realtors® believes puts home values at risk and dramatically undercuts the incentive to own a home. NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX offered strong concerns over the bill and said Realtors® will continue to work with members of the House and Senate as the process moves forward into a conference committee. “The tax incentives to own a home are baked into the overall value of homes in every state and territory across the country. When those incentives are nullified in the way this bill provides, our estimates show that home values stand to fall by an average of more than 10%, and even greater in high-cost areas. “Realtors® support tax cuts when done in a fiscally responsible way; while there are some winners in this legislation, millions of middle-class homeowners would see very limited benefits, and many will even see a tax increase. In exchange for that, they’ll also see much or all of their home equity evaporate as $1.5 trillion is added to the national debt and piled onto the backs of their children and grandchildren. “That’s a poor foot to put forward, but this isn’t the end of the road. Realtors® will continue to advocate for homeownership and hope members of the House and Senate will listen to the concerns of America’s 75 million homeowners as the tax reform discussion continues.”

ATTOM – markets in Colorado, new Hampshire, Illinois, DC, and Tennessee top list of where homebuyers are most likely to move in Q4 2017

– Top Pre-Mover Markets Post Lower Unemployment Rates, Slightly Weaker Wage Growth

– Hottest Second Home Pre-Mover Markets Myrtle Beach, Asheville, Daytona Beach
ATTOM Data Solutions, curator of the nation’s largest multi-sourced property database, today released its Q3 2017 Pre-Mover Housing Index, which shows that the markets with the highest pre-mover indices during the third quarter — predictive of strong sales activity in the fourth quarter — were Colorado Springs, Colorado; Manchester-Nashua, New Hampshire; Chicago, Illinois; Washington, D.C.; and Nashville, Tennessee. Using data collected from purchase loan applications on residential real estate transactions, the ATTOM Data Solutions Pre-Mover Housing Index is based on the ratio of homes with a “pre-mover” flag during a quarter to total single family homes and condos in a given geography, indexed off the national average. An index above 100 is above the national average and indicates an above-average ratio of homes that will likely be sold in the next 30 to 90 days in a given market. The top five markets — among 123 total metro areas analyzed for the report — all posted a pre-mover index of 196 or higher. Other markets in the top 10 for highest pre-mover index in the third quarter were Reno, Nevada (189); Tampa-St. Petersburg, Florida (188); Las Vegas, Nevada (180); Jacksonville, Florida (179); and Kingsport-Bristol, Tennessee (178). Among the same 123 metro areas analyzed for the report, those with the lowest pre-mover indices in the third quarter were Rochester, New York (35); Akron, Ohio (47); Myrtle Beach, South Carolina (47); Providence, Rhode Island (52); and Cleveland, Ohio (52). “Home buyers are most likely to move — and homeowners are more likely to move up — in markets with plenty of available jobs along with a reasonable supply of homes for sale,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Markets with this enviable and increasingly rare combination of jobs and housing inventory tend to be in secondary and even tertiary markets that are somewhat off the beaten path. Even in more mainstream markets, the counties with the highest pre-mover indices tend to be in outlying areas where more inventory is available or can be built.”

Out of 331 US counties analyzed for the report, 213 posted a pre-mover index above the national average in the third quarter. The average September unemployment rate in those 213 counties was 3.8%, compared to an average unemployment rate of 4.2% in the 118 counties that posted a pre-mover index below the national average in the third quarter. Weekly wages grew 6.4% from a year ago on average in the 213 counties with a Q3 2017 pre-mover index above the national average while average weekly wages grew 6.5% from a year ago on average in the counties with a Q3 2017 pre-mover index below the national average. Among 123 metropolitan statistical areas with at least 100,000 single family homes and condos and at least 100 pre-movers in Q3 2017, those with the highest share of pre-movers indicating interest in second home purchases were in Myrtle Beach, South Carolina (14.2%); Asheville, North Carolina (10.7%); Deltona-Daytona Beach-Ormond Beach, Florida (10.3%); Atlantic City, New Jersey (9.6%); and Cape Coral-Fort Myers, Florida (9.4%). Among 123 metropolitan statistical areas with at least 100,000 single family homes and condos and at least 100 pre-movers in Q3 2017, those with the highest share of pre-movers interested in investment property purchases were Memphis, Tennessee (29.9%); Jackson, Mississippi (13.7%); Boulder, Colorado (12.6%); Indianapolis, Indiana (11.0%); and Kansas City, Missouri (9.2%). Among 331 US counties with at least 50,000 single family homes and condos and at least 50 pre-movers in the third quarter, those with the highest pre-mover index were Loudon County, Virginia in the Washington, D.C. area (304); El Paso County, Colorado in the Colorado Springs metro area (300); Prince William County, Virginia in the Washington, D.C. metro area (298); Will County, Illinois in the Chicago metro area (298); and Champaign County, Illinois (258). Among the 331 counties analyzed for the report, those with the lowest pre-mover index in Q3 2017 were Wayne County, Michigan in the Detroit metro area (32); Queens County, New York (37); San Mateo County, California in the San Francisco metro area (40); Monroe County, New York in the Rochester metro area (42); and Stark County, Ohio in the Canton metro area (44).

Major automakers post mixed November US sales results

Major automakers posted mixed US November new vehicle sales for November on Friday, with General Motors and Fiat Chrysler Automobiles (FCA) down largely on lower fleet sales, while Ford Motor’s sales rose. Automakers are trying to sell down 2017 model year vehicles, offering high discounts to consumers as the year-end nears. Last year the industry hit record annual sales of 17.55 million units and this year analysts expect full-year sales to fall slightly, increasing competition to move vehicles off dealers’ lots. No. 1 US automaker GM said its sales fell 2.9% in November, with sales to consumers flat versus the same month in 2016. Much of the decrease was driven by lower fleet sales to rental agencies, businesses and government agencies. GM said strong SUV and crossover sales pushed its average transaction price for the month above $37,000 for the first time. The company’s level of unsold cars, which has been a concern for analysts and the industry, rose slightly to 83 days supply from 80 days at the end of October. Fleet sales are a low-margin business for automakers. FCA in particular has targeted a significant reduction in this type of sale in 2017. The automaker posted a 4% overall decrease in sales for November, but said fleet sales were down 25% while sales to consumers were up 2% on the year. No. 2 US automaker Ford reported a 6.7% increase in sales in November, with fleet sales up nearly 26% and retail sales 1.3% higher than in November 2016. Ford said SUV sales rose 13.3% in November, while its pickup truck sales were up 4.1%.

NAR – pending home sales strengthen 3.5% in October

Pending home sales rebounded strongly in October following three straight months of diminishing activity, but still continued their recent slide of falling behind year ago levels, according to the National Association of Realtors®. All major regions except for the West saw an increase in contract signings last month. The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 3.5% to 109.3 in October from a downwardly revised 105.6 in September. The index is now at its highest reading since June (110.0), but is still 0.6% below a year ago. Lawrence Yun, NAR chief economist, says pending sales in October were primarily driven higher by a big jump in the South, which saw a nice bounce back after hurricane-related disruptions in September. “Last month’s solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,” he said. “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.”

According to Yun, the supply and affordability headwinds seen most of the year have not abated this fall. Although homebuilders are doing their best to ramp up production of single-family homes amidst ongoing labor and cost challenges, overall activity still drastically lags demand. Further exacerbating the inventory scarcity is the fact that homeowners are staying in their homes longer. NAR’s 2017 Profile of Home Buyers and Sellers – released last month – revealed that homeowners typically stayed in their home for 10 years before selling (an all-time survey high). Prior to 2009, sellers consistently lived in their home for a median of six years before selling. “Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 19991,” said Yun. “Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.” With two months of data remaining for the year, Yun forecasts for existing-home sales to finish at around 5.52 million, which is an increase of 1.3% from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 6%. In 2016, existing sales increased 3.8% and prices rose 5.1%. The PHSI in the Northeast inched forward 0.5% to 95.0 in October, but is still 1.9% below a year ago. In the Midwest the index increased 2.8% to 105.8 in October, but remains 0.9% lower than October 2016. Pending home sales in the South jumped 7.4% to an index of 123.6 in October and are now 2.0% higher than last October. The index in the West decreased 0.7% in October to 101.6, and is now 4.4% below a year ago.

Oil prices rise after OPEC extends output curbs

Oil prices rose on Friday, following an agreement by OPEC and other major producers to extend output curbs until the end of 2018 to try to reduce the global oil glut. The Organization of the Petroleum Exporting Countries and some non-OPEC producers led by Russia agreed on Thursday to keep current limits on output in place until the end of next year, although they signaled a possible early exit from the deal should the market overheat and prices rise too far. Brent was trading at $63.22 by 1202 GMT, up 59 cents on the day. US light crude was up 46 cents at $57.86. “OPEC and the cooperating countries have created a very high level of confidence that they are standing behind the oil market, that they’re going to drive the inventories further down,” SEB Markets chief commodities analyst Bjarne Schieldrop said. “They gave a very serious and trustworthy appearance yesterday and that is taking away a lot of the downside in the market,” he said. The deal, which has been in place since January and was due to expire in March, has seen producers reduce output by 1.8 million barrels per day (bpd), helping to halve global oil oversupply over the past year.

CoreLogic – credit characteristics of renters

Mortgage lenders have known for a long time that debt-to-income (DTI) and credit history (based on credit bureau data), among other factors, are critical for sound underwriting and managing credit risk on a mortgage portfolio. Similar analysis can be used to evaluate a prospective tenant’s likelihood of making the rent payments agreed to in the lease or the share of a building’s rent roll that may go delinquent. This has become increasingly important for rental management companies as the renter share of households has risen to its highest in 50 years. The CoreLogic Rental Property Solutions platform evaluates the credit risk of rental applicants. Information from this platform can be used to examine trends in renter credit quality over time. A higher rent-to-income ratio is generally associated with increased credit risk, as renters devote a higher percentage of their income to paying rent. The rent-to-income ratio has trended upward between 2009 and 2017, as the increase in rents has outpaced income growth. At the national level, it has increased from 25.4% in the second quarter of 2009 to 28.1% in the second quarter of 2017, a 10.6% increase over an eight-year period.

Rent to income is one factor affecting renter payment risk. Additional sources of information, such as credit bureau data, public records, and other information in the renter application, can also provide insight into renter performance risk. The CoreLogic ScorePLUS model is a statistical model that brings together multiple sources of information to predict renter applicant’s risk of lease default. Information related to credit bureau history, subprime loan history, eviction and rental collection history, as well as the renter’s application information all factor in to the SafeRent Score risk score. Similar to a FICO score, a higher SafeRent Score is associated with lower risk. Two trends stand out in the average renter risk scores. First, the scores exhibit a seasonal trend. The seasonal trend is supported by seasonal trends in credit bureau characteristics of rent applicants. Second, the average score has been improving (renter applicant risk has been declining) since 2010. This is consistent with the general improvement of credit performance as borrowers continue to recover from the 2008-2009 recession. The improvement in applicants’ credit characteristics has more than offset the upward trend in rent to income, resulting in an improving rental risk score over time.

Black Knight – Home Price Index report: September 2017 transactions 

The Data and Analytics division of Black Knight, Inc. released its latest Home Price Index (HPI) report, based on September 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.Monthly Appreciation Continues to Slow as US Home Prices Gain 0.16% in September; Year-Over-Year Growth Accelerates Slightly at 6.36%

– The rate of monthly appreciation declined again in September, falling by one-third from August and marking the sixth consecutive month of slowing growth

–  New York home prices led all states for the third month in a row, seeing a 1.08% rise in home prices from August

–  Half of the nation’s 20 largest states and 17 of the largest metros saw prices fall from last month

–  Michigan saw the largest decline of all states at -0.61%, and the Detroit metro’s -0.58% decline led all metros; even so, Detroit home prices are up over 10% since the start of 2017

–  All of the top 10 best-performing metros saw home prices grow by 1.1% or more in September, with Kennewick, Wash., leading the way at 1.99% monthly appreciation

–  San Jose, Calif., continued to show very strong growth, with home prices there up more than 15% year-over-year and an HPI value of just over $1.03 million

–  Seattle, Wash., and Las Vegas, Nev., followed, with home prices up 14 and 11.57% from this time last year, respectively

–  The number of states and metros setting new home price peaks continued to fall, with just six of the 20 largest states and 11 of the 40 largest metros hitting new highs in September

Bitcoin eyes $10,000 as it rockets to new record high

Bitcoin’s vertiginous ascent showed no signs of abating on Monday, with the cryptocurrency soaring to another record high just a few% away from $10,000 after gaining more than a fifth in value over the past three days alone. The digital currency has seen an eye-watering tenfold increase in its value since the start of the year and has more than doubled in value since the beginning of October, lifted by the prospect of crossing over into the financial mainstream, amid a flurry of crypto-hedge fund launches. It surged as much as 4.5% on Monday to trade at $9,721 on the Luxembourg-based Bitstamp exchange <BTC=BTSP>, before easing back to around $9,600 by 1155 GMT. Data compiled by Alistair Milne, the Monaco-based manager of the Altana Digital Currency Fund, showed US bitcoin wallet provider Coinbase added 300,000 users between Wednesday and Sunday, during the US Thanksgiving holiday. The total number of Coinbase users globally now stands at 13.3 million. “The Coinbase data is evidence that adoption is not slowing down,” Milne told Reuters. “Breaking $10,000 seems inevitable following the recent price action.”

​​​​​​​​​​​​​​​Florida housing market remains strong with rising sales and constrained property inventory

The impact of Hurricane Irma on Florida’s housing market resolved by the end of October, according to the latest housing data released by Florida Realtors. Sales, median prices, new listings and new pending sales rose even as the inventory of for-sale properties remained constrained in many areas. Sales of single-family homes statewide totaled 20,543 last month, up 2% compared to October 2016. “Home purchases stalled by Hurricane Irma striking Florida in September resumed – and many of those sales closed in October,” said 2017 Florida Realtors President Maria Wells, broker-owner with Lifestyle Realty Group in Stuart. “Areas hit hardest by the hurricane will still take time to recover, but in other parts of the state, real estate activity has returned. Sellers were ready to put their homes on the market in October, with new listings for single-family existing homes up 9.8% year-over-year; new listings for existing condo-townhouse properties rose 14.6%. “Wherever you are, there is a local Realtor who can help you understand local market conditions and prepare for a successful home sale or home purchase.” The statewide median sales price for single-family existing homes last month was $235,558, up 7.1% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. The statewide median price for condo-townhouse properties in October was $170,000, up 5.2% over the year-ago figure. October was the 70th month-in-a-row that statewide median prices for both sectors rose year-over-year. The median is the midpoint; half the homes sold for more, half for less. According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in September 2017 was $246,800, up 5.6% from the previous year; the national median existing condo price was $231,300. In California, the statewide median sales price for single-family existing homes in September was $555,410; in Massachusetts, it was $380,000; in Maryland, it was $277,746; and in New York, it was $257,500.

Looking at Florida’s condo-townhouse market, statewide closed sales totaled 8,116 last month, up 2.2% compared to October 2016. Closed sales data reflected fewer short sales and foreclosures last month: Short sales for condo-townhouse properties declined 22.5% and foreclosures fell 42.8% year-to-year; short sales for single-family homes dropped 36.7% and foreclosures fell 42.3% year-to-year. Closed sales may occur from 30- to 90-plus days after sales contracts are written. “Last month, we talked about how it’s not uncommon for Florida to see a quick rebound in sales of existing homes the month after a hurricane,” said Florida Realtors Chief Economist Dr. Brad O’Connor. “And, according to the latest data, that’s exactly what happened in the Sunshine State in October. Both single-family home and condo-townhouse sales rose, boosted in part by closings that otherwise would have been completed in September if not for delays brought about by Hurricane Irma. “Because of the length of the home-selling process, we’ll likely see some reverberations of Irma’s impact statewide for a couple more months, but October’s statistics are very encouraging.” October’s for-sale inventory remained tight with a 3.8-months’ supply for single-family homes and a 5.6-months’ supply for condo-townhouse properties, according to Florida Realtors. According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.90% in October 2017; it averaged 3.47% during the same month a year earlier.

Oil falls on US drilling but OPEC cuts support market

Oil prices fell on Monday, with US crude easing from two-year highs on prospects of higher output, but losses were limited before an OPEC meeting that is expected to extend output limits. Brent crude oil was down 10 cents at $63.76 a barrel by 1430 GMT. US light crude was 70 cents lower at $58.25. US crude oil production has risen by 15% since mid-2016 to 9.66 million barrels per day (bpd), not far from top producers Russia and Saudi Arabia. Rising drilling activity means output is likely to grow further. US energy firms added oil rigs last week. The monthly rig count rose for the first time since July, to 747 active rigs, as producers were encouraged by rising crude prices. US crude touched $59.05 a barrel on Friday, its strongest since mid-2015, partly driven by the closure of the 590,000 bpd Keystone pipeline connecting Canada’s oil sand fields with the United States following a spill, which reduced stocks. Oil prices have risen sharply in recent months thanks to efforts to limit output by the Organization of the Petroleum Exporting Countries, Russia and other producers. OPEC and its allies cut production by 1.8 million bpd in January and have agreed to hold down output until March. OPEC meets on Thursday to discuss policy and most analysts expect some form of deal to extend the cuts. “A long-running barrage of bullish rhetoric from the oil cartel has cemented widely-held beliefs that supply curbs will be extended through to the end of next year,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

CFPB thrown into disarray by Cordray

Over the long weekend, the Consumer Financial Protection Bureau erupted into chaos as outgoing CFPB Director Richard Cordray appointed an acting director shortly before President Trump appointed an acting director. Previously, CFPB Director Richard Cordray announced in an email to the bureau’s staff that he will be stepping down from his position before the end of the month. When Cordray made his announcement, many, though not all, within the housing industry rejoiced, saying this meant a step in the right direction. Friday, Cordray announced he would leave the bureau for good by the end of the day, instead of the end of the month. He then promoted his chief of staff Leandra English as deputy director, according to an article by Renae Merle for The Washington Post. Cordray sent a letter to CFPB staff, explaining English would serve as the agency’s acting director until the Senate confirmed a replacement, the article states. From the article: “I have also come to recognize that appointing the current chief of staff to the deputy director position would minimize operational disruption and provide for a smooth transition given her operational expertise,” Cordray said in his letter. The move was widely seen by analysts as an attempt to block Trump from immediately putting a Republican in charge of the agency without Senate confirmation.

Then chaos erupted: Hours later, President Donald Trump appointed Mick Mulvaney, who currently serves as director of the Office of Management and Budget and has long been outspoken about his dislike for the CFPB, as the acting director. “The President looks forward to seeing Director Mulvaney take a common-sense approach to leading the CFPB’s dedicated staff, an approach that will empower consumers to make their own financial decisions and facilitate investment in our communities,” a White House statement said. Press Secretary Sarah Sanders tweeted out this, to back Trump’s right to choose the acting director: “The Vacancies Act gives @POTUS the authority to designate @MickMulvaneyOMB Acting Director of @CFPB, superseding Deputy Director”

The Office of Legal Counsel supported Trump’s right to appoint the acting director, of course: “The CFPB Director is an office filed by presidential appointment, by and with the advice and consent of the Senate,” the office wrote in a letter to the president. More from the letter:  “The Federal Vacancies Reform Act of 1998 provides the President with authority ‘for temporarily authorizing an acting official to perform the functions and duties’ of an officer of an Executive agency whose appointment ‘is required to be made by the President, by and with the advice and consent of the Senate,’ and is the ‘exclusive means’ for authorizing acting service ‘unless’ another statute expressly designates an officer to serve in an acting capacity or provides alternative means for a designation an acting officer.” Trump announced he intends to bring the CFPB back to life, saying it was a “total disaster” under Cordray.

NAHB – multifamily developer confidence weakens in third quarter

The Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB), dropped 10 points to 46 in the third quarter of 2017. This is the lowest reading since the second quarter of 2011. The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse. The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums. Two of the three components decreased in the third quarter: market-rate rental units and for-sale units both fell 17 points to 43 and 40, respectively, while low-rent units edged up one point to 54. The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, increased three points to 41, with lower numbers indicating fewer vacancies. After peaking at 70 in the second quarter of 2009, the MVI first improved dramatically, then edged back up, and has been fairly stable since 2013. “We’re starting to see various markets across the country become oversupplied with multifamily construction, so builders and developers are pulling back a bit,” said Dan Markson, senior vice president of The NRP Group in San Antonio, Texas, and chairman of NAHB’s Multifamily Council. “Multifamily production had been quite strong, although it slowed down in the past three months,” said NAHB Chief Economist Robert Dietz. “And with approximately 600,000 units in the pipeline, builders and developers are taking a cautious approach until they see how the market absorbs these units when they come online.”

US jobless claims fall after two straight weekly increases

The number of Americans filing for unemployment benefits fell last week after two straight weekly increases, pointing to continued steady job growth after recent hurricane-related disruptions. Initial claims for state unemployment benefits declined 13,000 to a seasonally adjusted 239,000 for the week ended Nov. 18, the Labor Department said on Wednesday, reversing the prior week’s increase. Claims had risen in recent weeks as a backlog of applications from Puerto Rico was processed following repairs to infrastructure damaged by Hurricanes Irma and Maria. A Labor Department official said claims-taking procedures continued to be disrupted in the Virgin Islands. The claims report was released a day early because of the US Thanksgiving holiday on Thursday. Economists polled by Reuters had forecast claims falling to 240,000 in the latest week. Last week marked the 142nd straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was smaller.

Black Knight – First Look at October 2017 mortgage data

–  National Delinquency Rate Sees Second Consecutive Annual Rise as Impact from Hurricanes Continues

–  October’s 4BPS increase in the national delinquency rate can be directly linked to continued hurricane impact, while delinquencies fell 14BPS in non-affected areas

–  Though delinquencies were down in all states except Texas and Florida, in FEMA-declared Hurricanes Harvey and Irma disaster areas, they rose another 24% (186BPS) in October

–  The most notable increase was in Florida, where delinquencies spiked 36% from September 2017 in hurricane-affected areas

–  Over 229,000 past-due mortgages can now be attributed to Hurricanes Irma (163,000) and Harvey (66,000)​

–  Total non-current inventories in Florida and Texas (all loans 30 or more days past due or in foreclosure) have risen 79 and 30%, respectively, over the past six months

–  Prepayment activity rebounded in October, up 17% month-over-month, but still 25% below last year’s level

–  The inventory of loans in active foreclosure continues to improve, falling below 350,000 for the first time since 2006

Consumer sentiment hits 98.5 in November vs. 98 estimate

US consumer sentiment saw slight gains in November compared to the mid-month reading, though the index remained below the decade high reached in October. The University of Michigan’s survey of consumer attitudes for November rose to 98.5 in a Wednesday release. The measure was forecast by Reuters economists to hit 98. The indicator has remained largely unchanged in 2017, which reflects American consumers’ increasing confidence and certainty about their income and employment prospects, said Richard Curtin, chief economist for the Surveys of Consumers. “Increased certainty about future income and job prospects has become a key factor that has supported discretionary purchases,” Curtin said in the survey release. While the longevity of the record economic expansion — the second-longest since the mid-1800s, Curtin says — leaves room for caution, he notes that “neither changes in fiscal nor monetary policies have yet had any noticeable impact on consumer expectations.” He also says that the data indicate “the best runup to the holiday shopping season in a decade.” An earlier reading this month saw consumer sentiment tumble to 97.8, a much weaker number than forecast by economists who predicted little change from month to month. The measure soared to 101.1 on Oct. 13 — the highest level since 2004 — but has deflated steadily in subsequent readings. Expected changes in inflation rates for the following year, also tracked in the survey, are expected to creep up to 2.6 after landing at a 10-month low at 2.4 in October. The index measures 500 consumers’ attitudes on future economic prospects, in areas such as personal finances, inflation, unemployment, government policies and interest rates.

NAR – existing-home sales grow 2.0% in October

Existing-home sales increased in October to their strongest pace since earlier this summer, but continual supply shortages led to fewer closings on an annual basis for the second straight month, according to the National Association of Realtors(NAR). Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.0% to a seasonally adjusted annual rate of 5.48 million in October from a downwardly revised 5.37 million in September. After last month’s increase, sales are at their strongest pace since June (5.51 million), but still remain 0.9% below a year ago. The median existing-home price for all housing types in October was $247,000, up 5.5% from October 2016 ($234,100). October’s price increase marks the 68th straight month of year-over-year gains. Total housing inventory at the end of October decreased 3.2% to 1.80 million existing homes available for sale, and is now 10.4% lower than a year ago (2.01 million) and has fallen year-over-year for 29 consecutive months. Unsold inventory is at a 3.9-month supply at the current sales pace, which is down from 4.4 months a year ago. Properties typically stayed on the market for 34 days in October, which is unchanged from last month and down from 41 days a year ago. Forty-seven% of homes sold in October were on the market for less than a month.®’s Market Hotness Index, measuring time on the market data and listings views per property, revealed that the hottest metro areas in October were San Jose-Sunnyvale-Santa Clara, Calif.; Vallejo-Fairfield, Calif.; San Francisco-Oakland-Hayward, Calif.; San Diego-Carlsbad, Calif.; and Boston-Cambridge-Newton, Mass. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage rose to 3.90% in October (matches highest rate since June) from 3.81% in September. The average commitment rate for all of 2016 was 3.65%. First-time buyers were 32% of sales in October, which is up from 29% in September but down from 33% a year ago. NAR’s 2017 Profile of Home Buyers and Sellers — released last month4— revealed that the annual share of first-time buyers was 34%. NAR President Elizabeth Mendenhall says the pending tax reform legislation in both the House and Senate is a direct attack on homeowners and homeownership, with the result being a tax increase on millions of middle-class homeowners in both large and small communities throughout the US “Making changes to the mortgage interest deduction, eliminating or capping the deduction for state and local taxes and modifying the rules on capital gains exemptions poses serious harm to millions of homeowners and future buyers,” said Mendenhall. “With first-time buyers struggling to reach the market, Congress should not be creating disincentives to buy and sell a home. Furthermore, adding $1.5 trillion to the national debt will raise future borrowing costs for our children and grandchildren.” All-cash sales were 20% of transactions in October, unchanged from September and down from 22% a year ago. Individual investors, who account for many cash sales, purchased 13% of homes in October, down from 15% last month and unchanged from a year ago.

Distressed sales — foreclosures and short sales — were 4% of sales in October, unchanged from last month and down from 5% year ago. Three% of October sales were foreclosures and 1% were short sales. Single-family home sales climbed 2.1% to a seasonally adjusted annual rate of 4.87 million in October from 4.77 million in September, but are still 1.0% under the 4.92 million pace a year ago. The median existing single-family home price was $248,300 in October, up 5.4% from October 2016. Existing condominium and co-op sales increased 1.7% to a seasonally adjusted annual rate of 610,000 units in October (unchanged from a year ago). The median existing condo price was $236,800 in October, which is 6.9% above a year ago. October existing-home sales in the Northeast rose 4.2% to an annual rate of 740,000, (unchanged from a year ago). The median price in the Northeast was $272,800, which is 6.6% above October 2016. In the Midwest, existing-home sales inched forward 0.8% to an annual rate of 1.31 million in October, but are still 1.5% below a year ago. The median price in the Midwest was $194,700, up 7.1% from a year ago. Existing-home sales in the South increased 1.9% to an annual rate of 2.16 million in October, but are still 1.8% lower than a year ago. The median price in the South was $214,900, up 4.6% from a year ago. Existing-home sales in the West grew 2.4% to an annual rate of 1.27 million in October, and are now 0.8% above a year ago. The median price in the West was $375,100, up 7.8% from October 2016.

CoreLogic – US home price report reveals nearly half of the nation’s largest 50 markets are overvalued

– National Home Prices Up 7% in September 2017
– Home Prices Projected to Increase 4.7% by September 2018
– West Virginia Was the Only State That Lost Ground, Down 0.3%
CoreLogic released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ for September 2017, which shows home prices are up strongly both year over year and month over month. Home prices nationally increased year over year by 7% from September 2016 to September 2017, and on a month-over-month basis, home prices increased by 0.9% in September 2017 compared with August 2017, according to the CoreLogic HPI. Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 4.7% on a year-over-year basis from September 2017 to September 2018, and on a month-over-month basis home prices are expected to decrease by 0.1% from September 2017 to October 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. “Heading into the fall, home price growth continues to grow at a brisk pace,” said Dr. Frank Nothaft, chief economist for CoreLogic. “This appreciation reflects the low for-sale inventory that is holding back sales and pushing up prices. The CoreLogic Single-Family Rent Index rose about 3% over the last year, less than half the rise in the national Home Price Index.”

According to CoreLogic Market Condition Indicators (MCI) data, an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 36% of cities have an overvalued housing stock as of September 2017. The MCI analysis categorizes home prices in individual markets as undervalued, at value or overvalued by comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income. Also, as of September, 28% of the top 100 metropolitan areas were undervalued and 36% were at value. When looking at only the top 50 markets based on housing stock, 48% were overvalued, 16% were undervalued and 36% were at value. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one in which home prices are at least 10% below the sustainable level. “A strengthening economy, healthy consumer balance sheets and low mortgage interest rates are supporting the continued strong demand for residential real estate,” said Frank Martell, president and CEO of CoreLogic. “While demand and home price growth is in a sweet spot, a third of metropolitan markets are overvalued and this will become more of an issue if prices continue to rise next year as we anticipate.“

1Q will be ‘make or break’ period

Oil prices have finally started to gain a foothold with prices stretching to a two-year high on Monday, supported by geopolitical tensions in the Middle East. While fundamental market changes could mean higher prices are here to stay, the first quarter could prove a “make or break” period. This oil rally is to a certain extent, “very fundamentally based,” Andrew Lebow of Commodities Research Group, told FOX Business. Oil‘s recent crash was caused by a massive market oversupply, but now production cuts have finally started to impact the market’s balance. According to Mr. Lebow, since June there has been a visible draw in oil inventories. He added that: “we are still in a surplus – but things are improving.” This week, in its annual World Oil Outlook, the Organization of the Petroleum Exporting Countries (OPEC) noted the improving market fundamentals, adding that the oil market is finally rebalancing after a period of instability since 2014. Geopolitical price support is fickle, but the fundamental change to the oil market could mean higher prices will be longer term. FOX Business asked Mr. Lebow if oil could hold onto its gains, and he said “it very well could” but cautioned that even though the oil oversupply is abating, we are still in a surplus with inventories above the normal five-year average. Lebow added that a rally in oil prices into Thanksgiving is normal, but oil stocks can build in the first quarter, putting pressure on prices. A potential positive for oil prices in the first quarter would be a cold winter, which would increase demand.

NAHB – house passes joint employer bill, providing certainty for small businesses

The National Association of Home Builders (NAHB) today commended the House for passing the bipartisan Save Local Business Act, legislation that would amend the National Labor Relations Act and Fair Labor Standards Act to restore a common sense joint employer standard for home building firms and other small businesses. “Under current law, it is possible for a home builder to be considered a joint employer through such a basic business act as setting the work schedule of their subcontractor,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “This bill would reinstate the sensible criteria that has worked for the American business community for more than 30 years and provide legal certainty for all business owners.” In 2015, the National Labor Relations Board (NLRB) overturned decades of precedence in the case of Browning-Ferris Industries of California Inc. by affirming that a company could be considered a joint employer if it has indirect control or the potential to determine the key terms of an employee’s employment, including hiring and firing, supervision, scheduling and the means and method of employment.

The question of what can be deemed indirect control and just how much of it could legally constitute joint employment was left open-ended by the NLRB, causing confusion and uncertainty for the housing and small business community. “Since the indirect test is so vague and non-specific, the NLRB has not excluded the possibility that a home building firm could be found to be joint employers of its subcontractors if it merely asked for additional subcontractors to complete a job that is running behind schedule,” said MacDonald. This is especially problematic for the housing industry, given that most home building companies employ fewer than 10 workers and rely on an average of 22 subcontractors to complete a home. The Save Local Business Act offers a common-sense solution to the uncertainty generated since the NLRB’s ruling by proclaiming that a company may be considered a joint employer of a worker only if it ‘directly, actually, and immediately’ exercises significant control over the primary elements of employment. “By codifying this definition, the legislation eliminates the uncertainty that has threatened to upend the residential construction sector and provides employers with a clear standard for joint employment,” said MacDonald. “We urge the Senate to promptly introduce similar legislation.”

A year after the election, small businesses are at near-record optimism

Optimism among America’s small businesses have soared, but a year after President Donald Trump’s election victory, Main Street advocacy groups are giving mixed reviews on his performance. The overall tone of the administration has been one of deregulation, with the president signing an executive order to curb new regulations and repeal older ones in his first month of office. The moves and continued message have sent the stock market and small business optimism to record highs over the past year. However, key campaign promises, such as Trump’s promise to repeal and replace the Affordable Care Act, have stalled. “Small businesses are upbeat and positive about the economy. In general, they think the country is headed in the right direction,” said Todd McCracken, president of the National Small Business Association, a nonpartisan advocacy group. “But in terms of accomplishments, I think they’d also say they had higher hopes on the policy front. They had wanted more pro-growth legislation, and more of the president and Congress working together on things.” Optimism is still near record highs. Wells Fargo/Gallup’s Small Business Index saw its largest increase in a decade in recent months and is holding steady. The National Federation of Independent Business’ monthly read on sentiment peaked postelection to 105.8 in December and 105.9 in January but has since pared back, hitting 103 in September, still well above the historical average of 98. Despite the drop, the conservative lobbying group said its membership is “generally very pleased” with Trump’s performance thus far. “Small business is especially supportive of the president’s actions on regulatory issues,” said NFIB communications director Jack Mozloom. “The Federal Register is nearly empty now, thanks to his efforts to curb regulations. … The cost of regulations is disproportionately heavy for small businesses. They have to spend more than their corporate cousins to comply, so this is a very big deal. Small-business owners supported his efforts to repeal and replace ObamaCare as well. And, they continue to expect substantial tax relief.”

The nonpartisan Small Business & Entrepreneurship Council noted a positive shift deregulation. The council’s president and CEO, Karen Kerrigan, said the shift has enabled small companies to “plan with confidence as a variety of uncertainties have been lifted.” But movement on key issues like taxes and health-care costs will be needed to bolster confidence in the administration, she added. “Small-business owners understand that everything takes longer in Washington, but they did have high expectations for President Trump getting more things done at a faster clip,” Kerrigan said. “That is what he said he would do. They are expecting a signed tax reform bill. With the failure of health-care reform, they are now looking at his executive orders on health coverage to bear some fruit.” McCracken echoed that point, adding that a key focus for 2018 for his group will be health-care reform. “We are hoping we can get the tax bill to where we want it to be, and the highest priority will be getting back to health-care costs to reduce them,” he said. “The piece that can really come back to strangle us is health-care and its costs, so we need to get a handle on that.”

ATTOM – which local housing markets would be most impacted by the GOP tax plan?

The Republican tax proposal unveiled last week includes two changes to the income tax structure that could potentially have significant impacts on homeowners, and by extension the housing market. The first proposed change involves the mortgage interest rate deduction, often touted by many in the industry as an icing-on-the-cake advantage of homeownership. The proposal calls for a reduction in the amount of mortgage interest that can be claimed as a deduction for federal income taxes. Now, homeowners can deduct interest paid on up to $1 million worth of home loans, but under the GOP proposal, homeowners would only be able to deduct interest paid on up to $500,000 worth of home loans. Among 2,294 counties included in this analysis, those with the highest share of loan originations above $500,000 were Teton County (Jackson Hole), Wyoming (49.2%); District of Columbia (35.1%); Falls Church City, Virginia (34.6%); Arlington County, Virginia (29.6%); and Nantucket County (Martha’s Vineyard), Massachusetts (29.2%). Among those same counties, those with the highest volume of loan originations above $500,000 so far in 2017 were Los Angeles County, California (28,523); Orange County, California (15,527); San Diego County, California (12,739); Santa Clara County, California (11,322); and King County (Brooklyn), New York (11,110).

The second proposed change in the GOP proposed income tax plan that impacts homeowners is a new cap on how much homeowners can deduct for property taxes. Under the proposal, homeowners can only deduct up to $10,000 in property taxes from their federal income taxes. Among the 1,731 counties analyzed, those with the highest share of homes with property taxes above $10,000 were Westchester County, New York (73.4%); Luna County, New Mexico (68.7%); Rockland County, New York (60.0%); Mathews County, Virginia (54.4%); and New York County (Manhattan), New York (52.5%). Among those same counties those with the highest volume of homes with property taxes above $10,000 were Nassau County (Long Island), New York (176,946); Los Angeles County, California (165,078); Suffolk County (Long Island), New York (155,592); Bergen County, New Jersey (126,096); and Harris County (Houston), Texas (125,792).

CoreLogic – homebuyers’ “typical mortgage payment” up 10% year over year

While home prices have risen about 6% over the past year, the mortgage payments that recent homebuyers have committed to have risen closer to 10% because of the increase in mortgage rates over the past year. One way to measure the impact of inflation, mortgage rates and home prices on affordability over time is to use something we call the “typical mortgage payment.” It’s a mortgage-rate-adjusted monthly payment based on each month’s US median home sale price. It is calculated using Freddie Mac’s average rate on a 30-year fixed-rate mortgage with a 20% down payment. It does not include taxes or insurance. The typical mortgage payment is a good proxy for affordability because it shows the monthly amount that a borrower would have to qualify for in order to get a mortgage to buy the median-priced US home. When adjusted for inflation, the typical mortgage payment also puts current payments in the proper historical context. The change in the typical mortgage payment over the past year illustrates how it can be misleading to simply focus on the rise in home prices when assessing affordability. For example, in August this year the median sale price was up 6.3% from a year earlier in nominal terms, but the typical mortgage payment was up 10.1% because mortgage rates had increased nearly 0.5 percentage points over that 12-month period.

The inflation-adjusted typical mortgage payment has trended higher in recent years, in August 2017 it remained 34.7% below the all-time high payment of $1,250 in June 2006. That’s because the average mortgage rate back in June 2006 was about 6.7%, compared with 3.9% this August, and the inflation-adjusted median sale price in June 2006 was $242,723 (or $199,900 in 2006 dollars), compared with a median of $216,811 in August 2017. Forecasts from IHS Markit call for inflation and income to rise gradually over the next year, while a consensus forecast suggests mortgage rates will gradually ratchet up about 70 basis points between August 2017 and August 2018. The CoreLogic Home Price Index forecast suggests the median sale price will rise about 3.0% in real terms over the same period. Based on these projections, the inflation-adjusted typical mortgage payment would rise from $816 this August to $908 by August 2018, an 11.3% year-over-year gain (Figure 2). Real disposable income is projected to rise about 3.6% over the same period, meaning next year’s homebuyers would see a larger chunk of their incomes devoted to mortgage payments.

Black Knight – Home Price Index report: August 2017 transactions 

The Data and Analytics division of Black Knight, Inc. released its latest Home Price Index (HPI) report, based on August 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 Hit Another New Peak, Gaining 0.24% in August 2017 With Year-Over-Year Growth Steady at 6.24%

–  August’s rate of monthly appreciation fell to less than half that of July’s, marking five consecutive months of slowing growth

–  New York home prices rose 1.58% in August, leading all states in monthly appreciation for the second consecutive month and accounting for nine of the 10 best-performing metropolitan areas

–  Of the 20 largest states, only Georgia, Maryland and Virginia saw prices fall – very slightly – registering -0.17, -0.05 and -0.23% declines, respectively

–  Twelve of the nation’s 40 largest metros saw slight declines as well, with Denver, Colo., seeing the largest drop at just -0.32%

–  Though remaining flat in August, home prices in Seattle, Wash., have risen 12.02% from the start of 2017 and over 14% since last year

–  Ten of the 20 largest states and 14 of the 40 largest metros hit new home price peaks in August 2017, representing smaller shares of each group than in recent months​

US consumer spending posts largest gain since 2009

US consumer spending recorded its biggest increase in more than eight years in September, likely as households in Texas and Florida replaced flood-damaged motor vehicles, but underlying inflation remained muted. The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of US economic activity, jumped 1.0% last month. The increase, which also included a boost from higher household spending on utilities, was the largest since August 2009. Consumer spending increased by an unrevised 0.1% in August. Economists polled by Reuters had forecast consumer spending increasing 0.8% in September. The data was included in last Friday’s third-quarter gross domestic product report, which showed that growth in consumer spending growth slowed to a 2.4% annualized rate after a robust 3.3% growth pace in the second quarter. The moderation in consumption was offset by a rise in inventory investment, business spending on equipment and a drop in imports, which left the economy growing at a 3.0% rate in the third quarter after the April-June period’s brisk 3.1% pace.​​​​​​​

NAR – first-time buyers stifled by low supply, affordability: 2017 buyer and seller survey

Despite solid interest in buying a home – sparked by steady job gains, record low mortgage rates and higher rents – the severe drought in housing supply in much of the country over the past year accelerated price growth and kept many first-time buyers out of the market. This is according to the National Association of Realtors®’ 2017 Profile of Home Buyers and Sellers, which also identified numerous current consumer and housing trends, including: mounting student debt balances and smaller down payments; increases in single female and trade-up buyers; the growing occurrence of buyers paying the list price or higher; and the fact that nearly all respondents use a real estate agent to buy or sell a home, which kept for-sale-by-owner transactions at an all-time low of 8% for the third straight year. In this year’s survey, the share of sales to first-time home buyers2 inched backward to 34% (35% in 2016), which is the fourth lowest share since 1981. In the 36-year history of NAR’s survey, the long-term average of first-time buyer transactions is 39%. “The dreams of many aspiring first-time buyers were unfortunately dimmed over the past year by persistent inventory shortages, which undercut their ability to become homeowners,” said Lawrence Yun, NAR chief economist. “With the lower end of the market seeing the worst of the supply crunch, house hunters faced mounting odds in finding their first home. Multiple offers were a common occurrence, investors paying in cash had the upper hand, and prices kept climbing, which yanked homeownership out of reach for countless would-be buyers.” Added Yun, “Solid economic conditions and millennials in their prime buying years should be translating to a lot more sales to first-timers, but the unfortunate reality is that the nation’s homeownership rate will remain suppressed until entry-level supply conditions increase enough to improve overall affordability.” Other key findings and notable trends of buyers and sellers in this year’s 144-page survey include:

Student debt balances continue to grow

Highlighting the additional challenges imposed on consumers trying to reach the market, 41% of first-time buyers indicated they have student debt (40% in 2016). The typical debt balance also increased ($29,000 from $26,000 in 2016), and over half owe at least $25,000. Additionally, of the 25% who said saving for a down payment was the most difficult task in the buying process, 55% said student debt delayed saving for their home purchase. “NAR survey findings on student debt released earlier this fall revealed that an overwhelming majority of millennials with student debt believe it’s delaying their ability to buy a home, and typically for seven years,” added Yun. “Even in markets with a plethora of job opportunities and higher pay, steep rents and home prices make it extremely difficult to put savings aside for a down payment.”

Single females make up larger share of sales

Solid job prospects, higher incomes and improving credit conditions translated to continued momentum in the growing share of single female buyers. At 18% (matches highest since 2011), single women were the second most common household buyer type behind married couples (65%). Furthermore, single women purchased slightly more expensive homes than single men despite earning less. The overall share of single male buyers (7%) remained below unmarried couples (8%) for the second straight year.\

Down payment amounts decrease for first-timers, rise for repeat buyers

The ongoing climb in home prices pulled the typical down payment for first-timers to 5% this year (6% in 2016), which matches the lowest since 2013. Meanwhile, higher home values likely gave more sellers the wherewithal to use the cash from their recent sale to make a bigger down payment on their new home purchase (14%; 11% in 2016). Repeat buyers’ sales proceeds from their previous purchase (55%) surpassed their own personal savings (50%) this year as a larger source of their down payment. Personal savings ranked first for first-time buyers as the primary source of their down payment, followed by a gift from a friend or relative (25%; 24% in 2016). Over a half of first-timers said it took a year or more to save for a down payment, and 25% said saving was the most difficult task in the entire buying process.

Age of first-timers stays flat; climbs to new survey high for repeat buyers

For the second straight year, the median age of first-time buyers was 32 years old. First-time buyers had a higher household income ($75,000) than a year ago ($72,000) and purchased a slightly smaller home (1,640-square-feet; 1,650-square-feet in 2016) that was more expensive ($190,000; $182,500 in 2016). Fewer first-time buyers purchased a home in an urban area (17%; 20% in 2016). The age of repeat buyers increased to an all-time survey high this year (54 years old; 52 years old in 2016) as older households, perhaps with plans to stay in the workforce longer but with an eye towards retirement, felt more comfortable about buying. Overall, repeat buyers had roughly the same household income than last year ($97,500; $98,000 in 2016) and purchased a 2,000-square-foot home (unchanged from last year) costing $266,500 ($250,000 in 2016).

Supply scarcity leads to increase in buyers paying list price or higher

Underscoring the supply and demand imbalances prevalent in many parts of the country, 42% of buyers paid the list price or higher for their home, which is up from a year ago (40%) and a new survey high since tracking began in 2007. Buyers in the West were the most likely (51%) to pay at or above list price. “Many of those in the market to buy a home this year had little room to negotiate,” said Yun. “Listings in the affordable price range drew immediate interest, and the winning offer often times had to waive some contingencies or come in at or above asking price to close the deal.”

Buyers report less difficulty obtaining a mortgage

The improving financial health of borrowers and a slight ease in credit standards are leading to a smoother process in obtaining a mortgage. Fewer buyers (34%) compared to a year ago (37%) indicated that the mortgage application and approval process was somewhat or much more difficult than they expected. Fifty-eight% of buyers financed their purchase with a conventional mortgage, and 34% of first-time buyers took out a low-down payment Federal Housing Administration-backed mortgage, which is up from 33% last year but down from 46% five years ago.

Nearly all buyers choose a single-family home in a suburban location

A majority of buyers continue to choose a home in a suburb, small town or rural area (85%) as opposed to an urban one (13%; 14% in 2016). Eighty-three% of buyers purchased a detached single-family home, which for the third straight year remains the highest share since 2004 (87%). Purchases of multi-family homes, including townhouses and condos, were at 11%.

Most buyers search for homes online…and use a real estate agent

This year’s survey data continues to show that the internet (95%) and real estate agents (89%) remain the top two information sources used during buyers’ home search. Overall, 87% of buyers ended up purchasing their home through a real estate agent (88% in 2016), and finding the right property to buy and help negotiating the terms of the sale were the top two things buyers wanted most from their agent. Even for those who found the home they purchased online, nearly all still closed on it with the help of an agent (88%). “It’s no surprise a majority of first-time buyers indicated that the top benefits received from their agent were help understanding the buying process (83%), pointing out unnoticed property features or faults (60%), and negotiating better sales terms (51%),” said President William E. Brown, a Realtor® from Alamo, California. “Realtors® over the past year have helped buyers – and especially first-timers – navigate extremely competitive market conditions where the need to be prepared and act quickly has been paramount to the success of purchasing a home.”

Homeowner tenure at all-time high; equity and share of repeat buyers climbs

The typical seller over the past year was 55 years old, had a higher household income ($103,300) than last year ($100,700) and was in the home for 10 years before selling – matching the all-time high set both in 2014 and a year ago. Prior to 2009, sellers consistently lived in their home for a median of six years before selling. With home values steadily rising over the past several years, sellers realized a median equity gain of $47,500 ($43,100 in 2016) – a 26% increase (24% last year) over the original purchase price. Homes sold after 21 years of ownership had the largest equity gain (104%), while those who purchased six or seven years ago saw a larger return (27%) than those who purchased between eight and 15 years ago (14% to 18%). The% share of buyers trading up increased for the third straight year, rising to 52% from 46% in 2016. In 2014, 40% of buyers purchased a bigger home. “The decline in first-time buyers and uptick in repeat buyers trading up to a larger home reflects the more favorable conditions for home shoppers at the upper end of the market, where listings are more plentiful and sales have been consistently higher over the past year,” said Yun.

Seller use of an agent remains at all-time high; FSBOs at record low

Sellers’ use of a real estate agent this year remained at an all-time high of 89%. This in turn – for the third straight year – held for-sale-by-owner sales to their lowest share (8%) in the survey’s history. An overwhelming majority of sellers were satisfied with the selling process (88%), with most also indicating that they would definitely or probably use their agent again or recommend him or her to others (85%). “Homeowners understand the value, and seek the expertise and guidance Realtors® bring to the table when it’s time to sell their home,” said Brown. “Despite incredibly favorable market conditions for sellers – where finding interested buyers was not a problem – nearly all turned to a Realtor® to help assist them through the intricacies of listing their home on the market, accepting offers, negotiating the sales price and closing the deal.”

US regulator wants to loosen leash on Wells Fargo: Sources

A leading US regulator wants to make it easier for Wells Fargo to pay employees when they leave, loosening a restriction in place since a phony accounts scandal hit the bank last year, according to people familiar with the matter. The initiative comes as President Donald Trump is trying to lighten rules on Wall Street and the bank regulator, Keith Noreika, acting Comptroller of the Currency (OCC), must weigh whether to vet new Wells Fargo executives. If Noreika’s approach prevails, the OCC could go easier on Wells Fargo and any other large banks sanctioned in the future. Since Noreika took control of the OCC in May, he has advocated easing up on sanctions imposed on Wells Fargo in the wake of the scandal over abusive sales practices, according to current and former officials. Wells Fargo reached a $190 million settlement in September 2016 after admitting that its sales staff opened as many as 2.1 million accounts without customers’ consent. Since then the estimate has climbed to as many as 3.5 million. As part of the deal with regulators, incoming Wells Fargo executives can face a vetting from the OCC while severance payouts must be cleared by the OCC and a sister agency, the Federal Deposit Insurance Corporation. But Noreika wants officials to work faster when they review severance pay and the agency can choose to waive its check on incoming executives. Wells Fargo declined comment on the reviews.

Trump touts GOP’s tax reform plan as ‘biggest’ cuts for America

As Republicans inch closer to passing the first comprehensive tax overhaul in nearly 30 years, President Donald Trump touted the legislation as a win for middle-class Americans and brushed off concerns that it could contribute to the United States’ massive debt — which on Friday hit $666 billion — during an exclusive interview with FOX Business’ Maria Bartiromo.  “It’ll be the biggest cuts ever, in the history of this country,” he told Bartiromo during “Sunday Morning Futures.” “And I think that there’s tremendous appetite, this tremendous spirit for it, not only by the people we’re dealing with in Congress, but the people out there who want to see something.” Despite some concerns that party infighting could cause tax reform to meet the same fate as the GOP’s failure to deliver on its seven-year promise to repeal and replace Obamacare, late Thursday evening the Senate passed its 2018 budget blueprint, paving the way for the House Ways and Means Committee to introduce tax reform legislation. Trump has said that the proposed cuts, which he’s said would lower taxes for the middle class and reduce the corporate tax rate from 35% to 20%, would provide an additional influx of savings to nearly $5,000 for the average American family. During an interview on “CBS This Morning” Speaker of the House Paul Ryan, R-Wis., discussed the possibility of the creation of a fourth tax bracket. The GOP initially had planned to collapse the existing seven income brackets into three — at 12%, 25% and 35% individual rates. A fourth bracket, experts anticipated, would likely fall somewhere 35% and 39.6%.

Democrats, led by Minority Leader Sen. Chuck Schumer, D-NY, derided this plan as cuts for the wealthy. Now, the GOP is considering adding a fourth bracket for high-income earners, possibly in order to ensure that the legislation passes. “Here’s the thing,” Trump said. “Schumer — I like Schumer — but before he even knows the plan he’ll say ‘Oh, this is for the rich,’ so he doesn’t even know what the plan is. And he’s screaming for the rich.” If adding an additional bracket would help middle-class Americans, Trump said he would consider it -although he said he’d “rather not” have to do so. In an uncanny reversal of platforms, some have criticized the GOP’s sweeping, nearly $6 trillion cuts for contributing to the national debt. Trump, and members of his cabinet, have maintained that the cuts will fund themselves by unleashing economic growth and encouraging job creation. Last week, for the first time ever, the Dow Jones Industrial Average rallied above the 23,000-mark — an historical moment largely attributed to the business-friendly tax cuts proposed by the Trump administration.

Next Fed Chair?

As President Donald Trump prepares to select the next Federal Reserve chair, experts explained his decision could show what’s most important to the administration: low rates or deregulation. A new report from Capital Economics explains current Fed Chair Janet Yellen is fairly dovish on interest rates, making her presumable favorable to Trump, who describes himself as a “low-interest rate guy.” However, Yellen’s post-crisis tightening of financial regulation seems to be a deal breaker for Trump, the report explained. On the other hand, current Fed Governor Jerome Powell, who the president seems to be leaning toward, could be a good compromise as he aligns with Yellen on the interest rate outlook, but is more open to loosening financial regulation. In the end, Capital Economics explained the final decision will depend on where Trump’s priorities lie. “But there is still uncertainty over exactly what criteria Trump will use to judge his five candidates and it is still possible that Trump will have a late change of heart,” the report stated. “If it turns out that a commitment to deregulation is more important than keeping rates low, then that could open the door to a much more hawkish Fed under the control of either Kevin Warsh or John Taylor. Under those circumstances, we would expect to see an immediate rise in Treasury yields.”

EPA abandons changes to biofuel program, dealing a blow to oil refiners and boosting corn states

The Environmental Protection Agency has backed off a series of proposed changes to the nation’s biofuels policy after a massive backlash from corn-state lawmakers worried the moves would undercut ethanol demand, according to a letter from the agency to lawmakers seen by Reuters. EPA Administrator Scott Pruitt said in the letter dated Oct. 19 that the agency will keep renewable fuel volume mandates for next year at or above proposed levels, reversing a previous move to open the door to cuts.The move marks a big win for the biofuels industry and lawmakers from corn-states like Iowa, Nebraska and Illinois, while dealing a blow to merchant refiners like PBF Energy Inc and Valero Energy Corp who hoped the administration of President Donald Trump would help provide regulatory relief. The White House issued a statement hours after the Pruitt letter was delivered to lawmakers expressing the president’s support for maintaining the renewable fuel plan. “President Donald J. Trump promised rural America that he would protect the Renewable Fuel Standard (RFS), and has never wavered from that promise,” the White House statement said.

The letter could end uncertainty about the future of the US Renewable Fuel Standard that has roiled commodity and energy markets for months. The program, which requires refineries to blend increasing amounts of ethanol and other biofuels into the nation’s fuel supply or buy credits from those who do, appeared on the verge of a massive overhaul. The most popular form of program credits hit two-month highs on Friday on the EPA news, traders said. The so-called D6 credits sunk to 68 cents last month as EPA considered cost-cutting measures, but prices have rebounded in recent weeks and approached 90 cents on Friday, traders said. Pruitt said the EPA would not pursue another idea floated by EPA leadership that would have allowed exported ethanol to be counted toward those volume quotas.Pruitt also said the EPA did not believe a proposal to shift the biofuels blending obligation away from refiners was appropriate. That plan is backed by representatives of a handful of independent refining companies who have warned the cost of the program will bankrupt plants and cost thousands of jobs. Those ideas would have eased the burden on some in the refining industry, who have argued that biofuels compete with petroleum, and that the blending responsibility costs them hundreds of millions of dollars a year.

But Midwestern lawmakers, including Republicans Charles Grassley and Joni Ernst, had vocally opposed all those ideas, calling them a betrayal of the administration’s promises to support the corn belt. They were concerned the moves would undercut domestic demand for ethanol, a key industry in the region that has supported corn growers. Its a great day for Iowa and a great day for rural America. Administrator Pruitt should be commended for following through on President Trumps commitment to biofuels,” Grassley said in a statement.

Hasbro says Toys ‘R’ Us collapse will hit holiday sales

Hasbro warned on Monday of weaker holiday-season sales due to the bankruptcy of its largest customer Toys ‘R’ Us, while reporting higher-than-expected quarterly results on demand for My Little Pony and Transformers toys. The company said its revenue for the current quarter will increase 4% to 7% over last year’s $1.63 billion. That translates to $1.7 billion to $1.74 billion, below the average analyst estimate of $1.82 billion, according to Thomson Reuters I/B/E/S. Toys’R’Us, the largest toy retail chain in the United States, filed for bankruptcy in September with $5 billion due to creditors such as Mattel and Hasbro. The bankruptcy raised fears that the toymakers would be unable to sell inventories during the key holiday season. Hasbro said its third-quarter revenue and operating profit were already affected by the bankruptcy, but still posted a 3% increase in profit and a 7% rise in revenue. The company reported a profit of $265.6 million, or $2.09 per share, for the quarter and revenue of $1.79 billion, helped by strong demand for games such as Monopoly and Magic: The Gathering and toys based on its successful My Little Pony franchise. Analysts on average had expected sales of $1.78 billion and a profit of $1.94 per share.

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