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NAHB – 55+ housing market remains solid in second quarter

Builder confidence in the single-family 55+ housing market remained solid in the second quarter with a reading of 71, edging down one point from the previous quarter due to softness in traffic of prospective buyers, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today. The 55+ HMI measures two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each segment of the 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic). “Although the single-family HMI fell slightly, builder sentiment still remains strong for this segment of the market,” said Karen Schroeder, chair of NAHB’s 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “In fact, the reading of 71 is just one point off from the all-time high of 72 from the previous quarter. We expect the 55+ housing market to continue on a positive path moving forward.” For the three index components of the 55+ single-family HMI, present sales remained even at 76, expected sales for the next six months increased one point to 78 and traffic of prospective buyers fell five points to 56. The 55+ multifamily condo HMI rose two points to 59. Two of three index components posted increases from the previous quarter: Present sales and expected sales for the next six months increased three points to 61 and 65, respectively, while traffic of prospective buyers dropped two points to 50. All four components of the 55+ multifamily rental market went up from the first quarter: Present production and future expected production both increased six points to 64, while present demand jumped 12 points to 73 and future expected demand rose 10 points to 73. “Demand for 55+ housing remains solid, as demonstrated in the surge for 55+ rental demand,” said NAHB Chief Economist Robert Dietz. “Builder sentiment for the for-sale 55+ housing market also remains in positive territory, supported by low inventory of existing homes. However, it is being constrained by development costs and their impact on affordability.”

 Unemployment rate holds at 3.7% in July as hiring slows

The U.S. economy added 164,000 jobs in July, fewer than June’s downwardly revised 193,000 hirings, according to the Bureau of Labor Statistics. The unemployment rate was 3.7%, matching last month’s rate. Economists expected the so-called nonfarm payroll number to rise by 165,000 and the unemployment rate to drop to 3.6%, as measured by a Bloomberg poll, which would have tied the 50-year low set in April and May, but the addition of 370,000 new workers to the labor force brought the participation rate up to 63%, the highest in four months. July’s hiring pace was close to the monthly average for 2019, though slower than last year’s 223,000 a month. “If job growth stabilizes at the current pace, we’re OK, but if it doesn’t, if it continues to slow, the chance of a recession rises,” said Mark Zandi, chief economist of Moody’s Analytics. Professional and business services led the job gains with the addition of 31,000 positions, while health care added 30,000, according to the BLS report. Industries that saw little change during the month included construction, manufacturing, retail trade, transportation and warehousing, leisure and hospitality, and government. “The economy continued to create jobs, but at a pace that’s a little slower than it has been,” said Robert Dietz, chief economist of the National Association of Home Builders. The numbers in the report were “consistent with our forecast that economic growth is going to continue to decelerate a little bit, which is why we saw the Federal Reserve reduce its rate this week.” Average hourly earnings in July rose by 8 cents to $27.98, matching the gain in June, the report said. Over the past 12 months, wages rose 3.2%. The average workweek contracted by six minutes to 34.3 hours.

 ATTOM – grocery store impact on the U.S. housing market

ATTOM Data Solutions, curator of the nation’s premier property database and first property data provider of Data-as-a-Service (DaaS), today released its 2019 Grocery Store Battle analysis, which examines whether living near a Trader Joe’s, a Whole Foods or an ALDI can affect a home’s value – as a homebuyer based on seller ROI and home equity, or as an investor looking for the best home flipping returns and home price appreciation. For this analysis, ATTOM looked at current average home values, 5-year home price appreciation from YTD 2019 vs. YTD 2014, current average home equity, home seller profits, and home flipping rates on 1,859 zip codes nationwide with a least one Whole Foods store, one Trader Joe’s store and one ALDI store. Homes near a Trader Joe’s realized an average home seller ROI of 51 percent, compared to homes near a Whole Foods with an average home seller ROI of 41 percent and ALDI at 34 percent. The average home seller ROI for all zip codes with these grocery stores nationwide is 37 percent. Homes near a Trader Joe’s have added equity, owning an average 37 percent equity in their homes ($247,445), while homes near Whole Foods had an average of 31 percent equity ($187,035) and homes near ALDI had average 20 percent equity ($53,650). The average equity for all zip codes with these grocery stores nationwide is 25 percent. Properties near an ALDI are an investor’s cornucopia with an average gross flipping ROI of 62 percent, compared to properties near a Whole Foods which had an average gross flipping ROI of 35 percent and Trader Joe’s at 31 percent. The average gross flipping ROI for all zip codes with these grocery stores nationwide is 52 percent. Properties near an ALDI have seen an average 5-year home price appreciation of 42 percent, compared to 33 percent appreciation for homes near a Trader Joe’s, and 31 percent appreciation for homes near a Whole Foods. The average appreciation for all zip codes with these grocery stores nationwide is 38 percent.

 Trump: ‘We will be taxing the hell out of China’ until a trade deal is reached

President Trump stood fast by his decision to implement 10 percent tariffs on an additional $300 billion worth of goods coming into the U.S. from China on Thursday, saying the pain will continue for Beijing until an agreement is struck. “Until such time as there is a deal, we will be taxing the hell out of China,” Trump said during a campaign rally in Cincinnati. The U.S. announced the latest round of tariffs as negotiations between the world’s two largest economies have stalled – and as U.S. representatives returned home from meeting with the delegation in Shanghai. Trump said earlier on Thursday that China decided to renegotiate the deal before signing, and had agreed to buy more agricultural products from the U.S. – but has yet to follow through on that promise. And 10 percent could just be the beginning, Trump warned. He told reporters on Thursday that he could “always do much more” or he could “do less” with respect to tariffs, depending on what happens with the trade negotiations. He added the 10 percent rate could be lifted in stages to “well beyond 25 percent,” though his administration is not necessarily looking to do that. The U.S. has already imposed 25 percent tariffs on $250 billion worth of Chinese goods. The new round is scheduled to go into effect on Sept. 1. In reaction to the tariffs, Chinese sources exclusively told FOX Business that the directive in Beijing is to “decouple” from its reliance on the U.S. economy. When it comes to intellectual property, U.S. representatives were told that they would have to trust that China would honor its promise to protect it – but the U.S. wants an enforceable deal. Trump also said that because China devalues their currency and “pours money into their system,” Americans aren’t paying for the tariffs; the Chinese are instead.

 The U.S. housing market’s evolution during the current economic expansion

Homeownership is considered a crucial step to wealth accumulation. However, the Great Recession tested this long-held belief. From the start of the Great Recession in April 2006 to the first signs of economic revival in March 2011, the CoreLogic Home Price Index (HPITM) declined 33%. Thanks to stable job growth, mortgage funding and underwriting, the housing market has recovered from its historic crash. The latest CoreLogic special report, “The Role of Housing in the Longest Economic Expansion,” digs further into these factors and analyzes the housing market’s performance during the current economic expansion. The total number of U.S. residential properties in negative equity has dropped by more than 21 percentage points since the first quarter of 2010. The period between 2012 and 2013 was a turning point for the market when the percentage of homes in negative equity went from 22.4% to 15.5%. During this time, the average homeowner gained $35,100 in home equity – a welcome reprieve after seeing negative returns in 2011. By the first quarter of 2019, total home equity had reached a record $15.8 trillion, compared to just $6.1 trillion 10 years prior. The recession led to an influx in renters as homeowners grappled with home value loss. From the third quarter of 2009 to the fourth quarter of 2012, the homeowner population plummeted, while 12.9 million households joined the rental market. Fast forward to the end of the first quarter of 2019, and the tables have turned with 1.1 million new homeowners and only 458,000 new renters. However, the lack of inventory continues to drive up home prices throughout the country with increasing costs of labor and materials further compounding the issue. In the first quarter of 2006, flipped homes made up 11.3% of the market. However, by the end of the recession, the share of flipped homes dropped to just 4.9%. The flip rate has increased since this time and reached its highest point (11.4%) in the first quarter of 2018. In addition to a more encouraging market, changes in homes and buyers have made flipping more sustainable – professionals are flipping older homes with the median age of the homes being 39 years. While the U.S. economy at large looks positive, experts are split on whether another recession is on the horizon. However, most signs point to continued good news for the housing market. The CoreLogic HPI Forecast predicts a moderate but healthy 5.6% acceleration in annual home price growth from June 2019 to June 2020.

Reno looking at tax-delinquent, abandoned homes for affordable housing

With housing affordability continuing to be an issue in Reno’s hot real estate market, the city of Reno is considering an idea first floated during the recession — turning abandoned properties into affordable housing. More specifically, the Reno City Council is looking into acquiring tax-delinquent properties and rehabilitating them so they can be used as affordable or workforce housing. The program will only apply to properties that are delinquent on property taxes, not foreclosures for which the owner failed to pay the mortgage lender. Homes that might look abandoned but are not tax delinquent will not be part of the proposed program. The city also can’t just scoop up a house if the tax payment is 30 days overdue. Reno can only acquire the property once Washoe County exhausts all efforts to collect payment and the house would otherwise go into auction. The mayor and council members last month tasked the community development department with preparing a draft for the program. The draft ordinance should be ready for council review and possible approval in the next few months, said Cylus Scarbrough, a management analyst for the department. Under the program, the city will not be responsible for paying any delinquent taxes on the property, essentially getting it for free. State law, however, requires the city to rehabilitate the property, though it does not define what standards should be met for the rehabilitation. Property improvements should not be an issue, with the city able to tap into several sources such as community development block grants, Scarbrough said. “Funding is wide open,” he said.

Nevada law already allows the city to acquire properties for a public good such as street or drainage development. In such cases, however, the city typically retains ownership of the property in question. Turning property into affordable housing is different because ownership will be conveyed or transferred to a non-public entity. Under the city’s new plan, acquired homes could potentially be donated to a land trust or even new homeowners or households who satisfy income requirements. In Reno, the qualifying annual income is $62,000 for a family of four or $50,000 for a two-person household, Scarbrough said. For such an arrangement to be legal, the city must pass an ordinance that details how the program works, how it will run and who will operate it. The city is considering whether to run the program itself or delegate it to an agency with expertise in affordable housing matters such as the Reno Housing Authority. The RHA oversees about 150 houses acquired through the Neighborhood Stabilization Program and are being rented out at affordable rates. That program, created through the Obama administration’s American Recovery and Reinvestment Act of 2009, allowed the RHA to acquire houses in high-foreclosure neighborhoods during the recession. The city of Reno has also donated properties to the RHA in the past, which the organization is renting out.  “We would be more than happy to work with the city,” said RHA spokesman Brent Boynton. “We’re always looking for any opportunity to increase our stock of affordable housing because it’s a major need for our community.”

Boeing loses order to Airbus in latest fallout from Max grounding

Saudi Arabia’s flyadeal is terminating a prior order for Boeing’s 737 Max jet and switching to European rival Airbus, in the latest blow to the Chicago-based manufacturer as it seeks to return the beleaguered fleet to flight after two fatal crashes. The budget airline, which in December said it would purchase 50 Max jets, will instead purchase 50 Airbus A320neo narrow-body jets, a direct rival to Boeing’s update to the popular 737 airliner. Deliveries for the nearly $6 billion deal will begin in 2021, flyadeal said in a statement, and will eventually lead to Airbus A320 being the exclusive jet for the carrier. A Boeing spokesperson said the firm is focused on “safely returning the 737 Max to service and resuming deliveries.” “We wish the flyadeal team well as it builds out its operations,” they said in an emailed statement. While orders for Boeing’s Max jet have been stagnant since the fleet was grounded earlier this year following the Ethiopian Airlines crash, the company notched a key order from British Airways parent International Consolidated Airlines Group SA in June. Boeing previously cut monthly production rates for the Max airliner as it works with the Federal Aviation Administration and global regulators to obtain approval for a software update that would allow the fleet to begin flying again. The Department of Justice, which was reportedly probing the approval process for the Max, is now said to be investigating the certification for the 787 Dreamliner, according to the Wall Street Journal.

Morgan Stanley downgrades global stocks: Weak growth to trump easier monetary policy

Morgan Stanley downgraded its global stocks on fears that slowing GDP growth around the world will offset central banks support. Chief cross-asset strategist Andrew Sheets told clients in a note that despite Wall Street’s confidence in a more accommodating Federal Reserve, investors haven’t fully appreciated the odds of weaker economic growth in the months to come. “Over recent weeks, you’ve heard us discussing why we think investors should fade the optimism from recent G20,” Sheets wrote in the July 7 note. “Why we think bad data should be feared rather than cheered because it will bring more central bank easing. Why we think the market is too optimistic on 2019 earnings and is underestimating the pressure from inventories, labour costs and trade uncertainty.” “The time has come to put our money where our mouth is,” he said. “The positives of easier policy will be offset by the negatives of weaker growth.” The strategist noted that over the next 12 months, there is now just 1% average upside to Morgan Stanley’s price targets for the S&P 500, MSCI Europe, MSCI EM and Topix Japan. The S&P 500 clinched all-time and closing highs on July 3 on the back of investor hopes that the Fed will ease interest rates at its two-day policy meeting at the end of the month. The Morgan Stanley strategist argued that investors still haven’t learned that when easier policy meets weaker growth, the latter tends to matter more for stock market returns. That, in turn, suggests that stocks could be set for poor returns given global trade worries, softening PMI data and diminished inflation expectations. Putting it all together, Sheets said that second-quarter earnings could prove painful for investors, who remains overly confident in current 2019 projections. “The market is underpricing the risk that companies lower full-year guidance. Just think about how much has changed since 1Q reporting in mid-April,” he wrote. “A US-China trade deal that was widely expected to be resolved led instead to a new round of tariffs. Global PMIs have continued to fall. And Morgan Stanley’s Business Conditions Index, a survey of how our equity analysts feel about their companies, suffered its largest one-month decline ever in June. ” To that end, Morgan Stanley is underweight both equities and credit, equal-weight government bonds and overweight cash. Sheets wrote that the brokerage’s favorite asset class remains emerging market fixed income.

NAR – pending home sales bounce back 1.1% in May

Pending home sales increased in May, a positive variation from the minor sales dip seen in the previous month, according to the National Association of Realtors®. Three of the four major regions saw growth in contract activity, with the West experiencing a slight sales decline. The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.1% to 105.4 in May, up from 104.3 in April. Year-over-year contract signings declined 0.7%, marking the 17th straight month of annual decreases. Lawrence Yun, NAR chief economist, said lower-than-usual mortgage rates have led to the increase in pending sales for May. “Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates.” Yun said consumer confidence about home buying has risen, and he expects more activity in the coming months. “The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points,” he said. “Job creation and a rise in inventory will nonetheless drive more buyers to enter the market.” Citing the hottest housing markets from data at®, Yun says the year-over-year increases could be a sign of a rise in inventory. Rochester, N.Y., Fort Wayne, Ind., Lafayette-West Lafayette, Ind., Boston-Cambridge-Newton, Mass., and Midland, Texas, were the hottest housing markets in May. Yun said that while contract signings and mortgage applications have increased, there is still a great need for more inventory. “Home builders have not ramped up construction to the extent that is needed,” he said. “Homes are selling swiftly, and more construction will help keep home prices manageable and thereby allow more middle-class families to attain ownership opportunities.”  The PHSI in the Northeast rose 3.5% to 92.0 in May and is now 0.5% below a year ago. In the Midwest, the index grew 3.6% to 100.3 in May, 1.2% lower than May 2018. Pending home sales in the South inched up 0.1% to an index of 124.1 in May, which is 0.7% higher than last May. The index in the West dropped 1.8% in May to 91.8 and decreased 3.1% below a year ago.

Oil prices hold near $67 per barrel ahead of G20 talks, OPEC

Oil prices held near $67 per barrel on Friday ahead of talks over the trade dispute between the US and Chinese presidents over the weekend and on production cuts from OPEC on Monday. Brent crude futures were up 7 cents at $66.62 per barrel by 1033 GMT. US West Texas Intermediate (WTI) crude futures were up 12 cents at $59.55 a barrel. Brent was on course for a gain of around 25% in the first half of 2019 and WTI for a 30% gain. The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between US President Donald Trump and Chinese President Xi Jinping on Saturday. A trade dispute between the world’s two biggest economies has weighed on oil prices, fanning fears that slowing economic growth could dent demand for the commodity. “While there are no expectations of a truce between the two parties, it will set the scene for the OPEC meeting a couple of days later,” ANZ Bank said in a note. Trump said on Wednesday a trade deal with Chinese President Xi was possible this weekend but he is prepared to impose US tariffs on most remaining Chinese imports should the two countries disagree. “Even if US-China trade talks turn positive, we think OPEC will extend the current production cuts until the end of the year. However, deeper cuts look unlikely, given the rising supply issues,” ANZ said. The Organization of Petroleum Exporting Countries (OPEC) and some non-members including Russia, known as OPEC+, will hold meetings on July 1-2 in Vienna to decide whether to extend their supply cuts.

Mortgage rates fall to 3-year low

This week, the average US rate for a 30-year fixed mortgage fell to a three-year low, according to the latest Freddie Mac Primary Mortgage Market Survey. According to the company’s data, the 30-year fixed-rate mortgage averaged 3.73% for the week ending June 27 2019, down from last week’s rate of 3.84%. That’s significantly lower than 2018 levels, when the rate averaged a whopping 4.55%.  “While the industrial and trade related economic data continues to dominate the news, the drop in mortgage rates over the last two months is already being felt in the housing market,” Freddie Mac Chief Economist Sam Khater said. “Through late June, home purchase applications improved by five percentage points compared to the previous month. In the near-term, we expect the housing market to continue to improve from both a sales and price perspective.” The 15-year FRM averaged 3.16% this week, dropping from last week’s 3.25%. This time last year, the 15-year FRM came in at 4.04%. Lastly, the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.39%, falling from last week’s rate of 3.48%. Unsurprisingly, this rate is much lower than the same time period in 2018 when it averaged 3.87%.

SpaceX raising over $300 million as new Ontario Teachers’ tech fund makes its first

SpaceX is raising yet another round of funding, a month after completing its second fundraising of the year. The latest round, filed on Monday, seeks to raise $314.2 million at a price of $214 a share. The new equity would bring SpaceX’s total 2019 fundraising to $1.33 billion once completed. The company declined to immediately comment on the filing. Part, if not all, of the investment in SpaceX is from the Ontario Teachers’ Pension Plan, which has $191.1 billion in assets under management. The investment is the first by a new technology fund that Ontario Teachers’ launched in April. “SpaceX is the world’s leading private space launch provider, and we are excited to work with the company in the next phase of its growth as it rolls out its Starlink satellite network,” Teachers’ Innovation Platform fund senior managing director Olivia Steedman said in a statement. Ontario Teachers’ said that SpaceX was seen as a “a compelling investment opportunity” for the fund because of “its proven track record of technology disruption in the launch space and significant future growth potential in the satellite broadband market.” SpaceX raised equity rounds of $486 million and $536 million earlier this year. Before this latest round, SpaceX’s valuation had risen to $33.3 billion, people familiar told CNBC in May. Elon Musk’s company is bankrolling two capital intensive projects: Starlink, a network of thousands of small internet satellites, and Starship, a massive rocket to send people and cargo to Mars.

Starlink would consist of 11,943 satellites flying close to the planet in what is called low Earth orbit and is intended to be an interconnected network, called a “constellation.” The satellites would create a web that beams high-speed internet to any place on Earth. The company’s first full mission of 60 Starlink satellites launched in May, making the funds SpaceX has raised this year key to scaling up development and production to meet its ambitious goals. Musk said last month, before this latest round, that SpaceX has “sufficient capital to get to an operational level ” for Starlink. Starship, on the other hand, is the company’s plan for a next generation rocket. Designed to transport up to 100 people at a time to the moon or Mars, Starship is designed to be a fully reusable launch system. Two prototypes are currently in development, one in Texas and the other in Florida, and SpaceX is deep in finalizing the design and production of the Raptor engines that will power Starship. Musk sees Starlink as the way for SpaceX to fund the development of Starship. He estimated recently that SpaceX revenue from launches likely peaks at about $3 billion a year but said he believes internet service revenue is potentially “more like $30 billion a year.”

Here’s what New York real estate will look like in the year ahead

With an estimated population more than 20 million, the New York-Northern New Jersey-Long Island Metropolitan Statistical Area is by far the nation’s largest metro – nearly 50% larger than the runner-up, Los Angeles-Long Beach-Orange County, California. That also means that this metro, home to one in 16 Americans, is the nation’s largest real estate market. Its13,300 square miles cover portions of three states offering a wide range of property types, price tiers, and neighborhoods, from heavily populated urban centers and planned suburban communities to low-density rural areas. So, what’s happening in this market is perhaps a snapshot of things to come for the rest of the nation’s major markets. And, according to the latest VeroFORECAST, it doesn’t look good. The New York metro is predicted to appreciate at an average of 2.6% through February 2020. That is a full percentage point less than the appreciation predicted for the largest 100 MSAs, and places it at No. 269 for price growth out of the 349 markets considered in the report. For this reason, the New York City market will be flat into early 2020. A deeper dive reveals that condos and townhouses will not appreciate as well as their single-family counterparts in this area, with the average projected to be just 1.5%. Among segments predicted to appreciate most are Staten Island’s least-expensive single-family residences, with predicted average appreciation over 5.6%. On the other hand, the highest-priced SFRs in Essex County, New Jersey, are predicted to suffer depreciation of around -2.5%. Our analysis found that the primary drivers behind the lackluster appreciation in this MSA were unemployment, population growth, and the supply of homes for sale. We also found that higher-priced properties will appreciate at a lower rate than those that are more affordable.

The three key market segments within the Greater New York MSA are the five boroughs (Manhattan, Brooklyn, Queens, the Bronx and Staten Island), Long Island, and 12 northern New Jersey counties. Some of the New York boroughs, such as the Bronx with projected appreciation of +3.1%, are solid real estate markets. Others, such as Manhattan, where properties are projected to drop in value over the next year at close to -2%, are not.

Deed theft at crisis level in Brooklyn

There’s a friendly voice on the phone. They offer financial help. Next thing you know, the house you planned to pass down to your family is gone. Homes throughout the borough — mainly in black and brown communities — are increasingly being stolen through a number of predatory schemes. Most of Brooklyn’s deed thefts have been in Bedford-Stuyvesant, Crown Heights, East New York, Canarsie and Flatlands. With more and more elderly people being taken advantage of, Brooklyn Borough President Eric Adams said more needs to be done to fight this systemic problem. “It is clear that the district attorney and the police department should be more aggressive on this topic,” Adams said. “We have called on the city, state and federal government to conduct a forensic investigation.” The most common methods for deed theft in Brooklyn are liens for minor unpaid bills, fraudulent documents, predatory foreclosures and the city’s controversial Third Party Transfer program. Rising real estate values and thousands of foreclosures have helped create a dangerous climate for homeowners in the borough. Rose Marie Cantanno, associate director of the New York Legal Assistance Group’s Foreclosure Prevention Project, said perpetrators in many cases come from within the community, gaining the trust of homeowners. “It’s hard to think that people would take advantage of other people the way they do, but I have seen people take advantage of 95-year-old women. I have seen people take advantage of those who don’t speak English,” Cantanno told Brooklyn This Week. “You’d like to think that that’s not going to happen, but especially in Brooklyn right now, it is such a hotbed. And unfortunately when money is involved, it absolutely brings out the worst in people.” One of the more recent known cases of deed theft in Brooklyn allegedly occurred on the Bed-Stuy doorstep of Dairus Griffiths, a 65-year-old former homeowner of 30 years. Griffiths said that a man named Eli Mashieh of August West Development convinced him — while he was inebriated and anxious over financial hardship — to sign his property away on the hood of a car for $630,000. The actual worth of the family home is between $1 million and $1.5 million, according to Griffith’s daughter, Doris Briggs. “My father tries the best he can. Throughout our lives, he’s been there. He’s been supportive in every aspect of my life,” Briggs said. “To see him once he’s retired and this is supposed to be his days to just enjoy what he’s worked so hard for, and to be taken away from him like that so easily, it’s just ridiculous.”

MBA – mortgage applications down

Mortgage applications decreased 0.6% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 10, 2019. The Market Composite Index, a measure of mortgage loan application volume, decreased 0.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1% compared with the previous week. The Refinance Index decreased 1% from the previous week. The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 7% higher than the same week one year ago. “Purchase applications declined slightly last week but still remained almost 7% higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite the third straight decline in mortgage rates, refinance applications decreased for the fifth time in six weeks, albeit by less than 1%.” Added Kan, “It’s worth watching if ongoing global trade disputes lead to increased anxiety about the economy, which could cause some potential homebuyers to put off their home search until the uncertainty is resolved.” The refinance share of mortgage activity remained unchanged from the previous week at 37.9% of total applications. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3% of total applications. The FHA share of total applications increased to 10.1% from 9.5% the week prior. The VA share of total applications decreased to 10.6% from 11.1% the week prior. The USDA share of total applications remained unchanged from 0.6% the week prior.

New York, California get ‘aggressive’ when residents try to flee high taxes

As an increasing number of residents are looking to leave high-tax  states, such as California and New York, some of these state and local governments are not making the process easy. The Tax Cuts and Jobs Act introduced a number of reforms, including a $10,000 cap on state and local tax deductions, which have caused Americans to look into establishing legal primary residences in states where they can limit their liabilities. But some states give taxpayers a hard time when they are trying to change their domicile – thereby establishing their permanent residency elsewhere. “California … they don’t particularly like when people that were large taxpayers … leave,” Marc Minker, lead managing director at accounting provider and consulting firm CBIZ MHM, told FOX Business. “The state becomes very aggressive with respect to making you prove that you essentially changed your domicile.” Changing a domicile requires an individual to physically move with the intent to stay either permanently or indefinitely. The state of domicile determines your income, estate and other taxes. Even when you change your domicile, that is not always enough, Minker added. If you own a property in the old state, you must be able to prove that you resided in the new domicile for more than 183 days out of the year. In addition to California, Minker said New York is “equally aggressive,” as are New Jersey, Connecticut and Ohio, among others. Lance Christensen, a partner at accounting firm Margolin Winer & Evens, agreed that New York State and New York City are aggressive when it comes to allowing taxpayers to leave. He said individuals must be ready to “withstand New York State and New York City challenges.”

To prove where they were throughout the year, Christensen recommends people keep a detailed diary. He also said taxpayers should keep items like receipts, plane tickets – even EZ pass receipts. “The burden of proof is on the taxpayer to prove where he is, or she is, and it can be very close,” Christensen said. “We’ve seen this come down to where your pet is.” He added that taxpayers should make sure they have thoroughly planned and are prepared for the move, adding for some clients with a lot of taxable income during a certain year it may be cheaper to take a trip around the world than it would be to return to New York and be hit with those taxes. Christensen has seen an increasing number of people in New York looking to domicile in Florida as a consequence of the new tax law – which he says is especially common among people who already have a second home there. While Florida received more movers than any other state last year, New York’s outflows to the Sunshine State were the highest – 63,772 people. New York had the third-largest outflows of any state, with 452,580 people moving out within the past year. California, another high-tax state, had the largest outflow of domestic residents – with the highest proportion of people headed to Texas, Arizona and Washington. Washington and Texas collect no state income tax. New York was found to have the highest state and local tax burden Opens a New Window.  of any of the 50 states, with the average individual paying nearly 13% of income toward those obligations. President Trump said last month that residents were “fleeing” New York over high taxes, which he suggested were “oppressive.”

CoreLogic – US overall delinquency rate lowest for a February in nearly two decades (monthly)

–  Elevated delinquency rates persist in some regions impacted by natural disasters

–  No state logged an annual gain in its overall delinquency, serious delinquency or foreclosure rate in February

–  Overall US foreclosure and delinquency rates were the lowest for a February in at least 20 and 19 years, respectively

CoreLogic released its monthly Loan Performance Insights Report. The report shows, nationally, 4% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in February 2019, representing a 0.8 percentage point decline in the overall delinquency rate compared with February 2018, when it was 4.8%. This was the lowest for the month of February in at least 19 years. As of February 2019, the foreclosure inventory rate – which measures the share of mortgages in some stage of the foreclosure process – was 0.4%, down 0.2 percentage points from February 2018. The February 2019 foreclosure inventory rate tied the November and December 2018 and January 2019 rates as the lowest for any month since at least January 1999. Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market. To monitor mortgage performance comprehensively, CoreLogic examines all stages of delinquency, as well as transition rates, which indicate the percentage of mortgages moving from one stage of delinquency to the next.

The rate for early-stage delinquencies – defined as 30 to 59 days past due – was 2% in February 2019, down from 2.1% in February 2018. The share of mortgages 60 to 89 days past due in February 2019 was 0.6%, down from 0.7% in February 2018. The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.4% in February 2019, down from 2.1% in February 2018. The serious delinquency rate of 1.4% this February was the lowest for that month since 2001 when it was also 1.4%. Since early-stage delinquencies can be volatile, CoreLogic also analyzes transition rates. The share of mortgages that transitioned from current to 30 days past due was 1% in February 2019, unchanged from February 2018. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2%, while it peaked in November 2008 at 2%. “The persistently impressive economic expansion continues to drive down housing market distress, with delinquencies and foreclosures hitting near two-decade lows,” said Dr. Ralph McLaughlin, deputy chief economist at CoreLogic. “Furthermore, with unemployment at a 50-year low, wage growth nearing double inflation and a positive demographic structure that will drive housing demand upwards, the future of US housing and mortgage markets look bright even if short term indicators suggest cooling.” The nation’s overall delinquency rate has fallen on a year-over-year basis for the past 14 consecutive months. Fewer delinquencies attribute to the strength of loan vintages in the years since the residential lending market has recovered following the housing crisis. In February, 11 metropolitan areas experienced annual gains – mostly very small – in their serious delinquency rates. The largest gains were in four Southeast metros affected by natural disasters in 2018. “We are on track to test generational lows as delinquency rates hit their lowest point in almost two decades. Given the economic outlook, we are likely to see more declines over the balance of this year,” said Frank Martell, president and CEO of CoreLogic. “Reflective of the drop in delinquency rates, no state experienced a year-over-year increase in its foreclosure inventory rate so far in 2019.”

Treasury yields move lower after weak Chinese economic data

US government debt prices rose on Wednesday as disappointing economic data led investors to seek safety in Treasurys. At around 8:36 a.m. ET, the yield on the benchmark 10-year Treasury note was lower at around 2.368%, while the yield on the 30-year Treasury bond was also lower at around 2.818%. Yields move inversely to prices. The 10-year yield was also about three basis points from hitting its 2019 low. Retails sales in the US fell 0.2% last month, while economists polled by Dow Jones expected an increase of 0.2%. Chinese industrial production rose 5.4% in April, well below a Refinitiv estimate of 6.5%. The print was also the weakest since May 2003. “I think the weak Chinese data is kind of confirmation the trade war matters, which is more fuel on the fire of the worries we’ve seen over the past two weeks,” said BMO Treasury strategist Ben Jeffrey. The slowdown in Chinese industrial production comes as trade tensions between China and the US have reignited. Earlier this week, China hiked tariffs on $60 billion worth of US goods. The move came after the US raised levies on $200 billion worth of Chinese imports. President Donald Trump said in a tweet Tuesday that the US is in a “much better position now than any deal we could have made.” Fed Vice Chair Richard Clarida is due to speak at 9:30 a.m. ET and Richmond Fed President Thomas Barkin will also give a speech at 10 a.m. ET.

MBA – mortgage delinquencies rise in the first quarter of 2019 (quarterly)

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 4.42% of all loans outstanding at the end of the first quarter, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. Despite an uptick of 36 basis points on a quarterly basis, the delinquency rate was still down 21 basis points from one year ago. The percentage of loans on which foreclosure actions were started last quarter fell by 5 basis points from a year ago and 2 basis points from last quarter (to 0.23%). “The national mortgage delinquency rate in the first quarter of 2019 was down on a year-over-year basis, which is another sign of a very strong economic environment, bolstered by low unemployment and rising wage growth,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Moreover, the serious delinquency rate – the percentage of loans that are 90 days or more past due or in the process of foreclosure – dropped across all loan types from the previous quarter and a year ago to its lowest overall level since the second quarter of 2006.” Walsh noted that early 30-day delinquencies rose in the first quarter of 2019 on a seasonally-adjusted basis across all loan types. The rise in early delinquencies resulted in the overall mortgage delinquency rate climbing by 36 basis points. While higher than several quarters in 2017 and 2018, it is still the fourth lowest overall mortgage delinquency rate in the past 12 years.

Key findings of MBA’s First Quarter of 2019 National Delinquency Survey:

  • – Compared to last quarter, the seasonally adjusted mortgage delinquency rate increased for all loans outstanding. By stage, the 30-day delinquency rate increased 29 basis points to 2.58%, the 60-day delinquency rate increased 7 basis points to 0.81%, and the 90-day delinquency bucket remained unchanged at 1.03%.
  • – By loan type, the total delinquency rate for conventional loans increased 27 basis points to 3.46% compared to the last quarter of 2018. The FHA delinquency rate increased 28 basis points to 8.93%, and the VA delinquency rate increased by 66 basis points to 4.37%.

– On a year-over-year basis, the seasonally adjusted overall delinquency rate decreased for all loans outstanding. The delinquency rate decreased by 32 basis points for conventional loans, decreased 9 basis points for FHA loans and increased 5 basis points for VA loans.

– The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 0.92%, down 3 basis points from the fourth quarter and 24 basis points lower than one year ago. This is the lowest foreclosure inventory rate since the fourth quarter of 1995.

– The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was at 1.96% – a decrease of 10 basis points from last quarter and a decrease of 65 basis points from last year. The serious delinquency rate decreased by 6 basis points for conventional loans, 31 basis points for FHA loans, and 9 basis points for VA loans from the previous quarter. Compared to a year ago, the serious delinquency rate decreased by 67 basis points for conventional loans, 77 basis points for FHA loans and 35 basis points for VA loans.

NAR – metro home prices see 3.9% increase in 2019’s first quarter

Inventory increased and metro market prices rose in the first quarter of 2019, but at a slower pace than the previous quarter, according to the latest quarterly report by the National Association of Realtors®. The national median existing single-family home price in the first quarter was $254,800, up 3.9% from the first quarter of 2018 ($245,300). Single-family home prices increased in 86% of measured markets last quarter, with 153 of 178 metropolitan statistical areas showing sales price gains compared to the first quarter of a year ago. Thirteen metro areas (7%) experienced double-digit increases, down from 14 in 2018’s fourth quarter. Lawrence Yun, NAR chief economist, says the first quarter has been beneficial to US homeowners. “Homeowners in the majority of markets are continuing to enjoy price gains, albeit at a slower rate of growth. A typical homeowner accumulated $9,500 in wealth over the past year,” he said. Total existing-home sales, including single family homes and condos, increased 1.2% to a seasonally adjusted annual rate of 5.207 million in the first quarter, up from 5.143 million in the fourth quarter of 2018. That is 5.4% lower than the 5.507 million-pace in the first quarter of 2018. At the end of 2019’s first quarter, 1.68 million existing homes were available for sale, 2.4% up from the 1.64 figure at the end of 2018’s first quarter. Average supply during the first quarter of 2019 was 3.8 months – up from 3.5 months in the first quarter of 2018. National family median income rose to $77,752 in the first quarter, while higher home prices caused overall affordability to decrease from last year. A buyer making a 5% down payment would need an income of $60,143 to purchase a single-family home at the national median price, while a 10% down payment would require an income of $56,978, and $50,647 would be necessary for a 20% down payment.

The five most expensive housing markets in the first quarter were the San Jose-Sunnyvale-Santa Clara, Calif., metro area, where the median existing single-family price was $1,220,000; San Francisco-Oakland-Hayward, Calif., $930,000; Anaheim-Santa Ana-Irvine, Calif., $800,000; Urban Honolulu, Hawaii $794,100; and San Diego-Carlsbad, Calif., $620,000. “There are vast home price differences among metro markets,” Yun says. “The condition of extremely high home prices may not be sustainable in light of many alternative metro markets that are much more affordable. Therefore, a shift in job search and residential relocations into more affordable regions of the country is likely in the future.” The five lowest-cost metro areas in the fourth quarter were Decatur, Ill., $80,800; Youngstown-Warren-Boardman, Ohio, $89,200; Elmira, N.Y., $90,400; Cumberland, Md., $99,300; and Binghamton, N.Y., $107,200. Yun continues to call on the construction industry to develop more affordable housing units, which he says will combat slower price gains and buyer pullback. “More supply is needed to provide better homeownership opportunities, taming home price growth and widening the inventory choices for consumers. Housing Opportunity Zones could provide the necessary financial benefits for homebuilders to construct moderately priced-homes,” Yun said. Total existing-home sales in the Northeast sat at an annual rate of 683,000 (down 1.4% from last quarter) and are down only 1.0% from a year ago. The median existing single-family home price in the Northeast was $277,200 in the first quarter, up 3.7% from a year ago. In the Midwest, existing-home sales fell 4.0% in the first quarter and are 5.5% below a year ago. The median existing single-family home price in the Midwest sat at $194,100, a 3.9% increase from the first quarter of 2018. Existing-home sales in the South increased 4.3% in the first quarter but were 4.0% lower than the first quarter of 2018. The median existing single-family home price in the South was $225,700 in the fourth quarter, 2.5% above a year ago. In the West, existing-home sales in the first quarter grew by 2.8% and are 10.7% below a year ago. The median existing single-family home price in the West increased 3.5% year-over-year to $384,300.

MBA – commercial/multifamily originations increase 12% in the first quarter

Commercial and multifamily mortgage loan originations rose 12% in the first quarter compared to the same period last year, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. In line with seasonality trends, originations the first three months of the year were 34% lower than the fourth quarter of 2018. “The momentum seen in 2018’s record year of borrowing and lending continued in the first quarter of this year,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “First quarter volumes were higher for nearly every property type, and double-digit growth in loan volume for Fannie Mae and Freddie Mac led the increase among capital sources. Low interest rates and strong property values continue to make commercial real estate an attractive market for borrowers.” Compared to a year earlier, a rise in originations for industrial, health care and hotel properties led the overall increase in commercial/multifamily lending volumes. By property type, industrial (73%), health care (41%), hotels (14%), retail (9%) and multifamily (9%) all saw year-over-year gains by dollar volume. The dollar volume of office property loans was unchanged.

Among investor types, the dollar volume of loans originated for Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) increased by 14% year-over-year. Life insurance company loans increased 7%, commercial bank portfolios increased 6%, while loans originated for Commercial Mortgage Backed Securities (CMBS) decreased 4%. As is typical in the first quarter, originations decreased in comparison to last year’s fourth quarter, with total activity falling 34%. Among property types, declines were seen in health care (49%), hotels (45%), multifamily (40%), retail (32%) and office space (30%). Industrial properties bucked the overall trend, rising 17% from the fourth quarter of 2018. Among investor types, the dollar volume of loans for GSEs decreased 43%, originations for commercial banks decreased 34%, loans for life insurance companies decreased by 28%, and loans for CMBS decreased 22%.


CoreLogic – California home sales slowest for a march in five years as price growth moderates

Despite lower mortgage rates and higher inventory early this year, California home sales fell 13% from a year earlier this March and were the lowest for that month in five years. The median price paid for a home in March inched up 0.6% from a year earlier, the lowest annual gain in seven years, while Southern California and the San Francisco Bay Area logged tiny annual declines in their regionwide medians – the first declines in seven years. An estimated 34,926 new and existing houses and condos sold statewide in March 2019 (Figure 1), the lowest sales tally for a March since 2014. March 2019 sales rose 32.5% from February 2019 and fell 13.2% from March 2018, CoreLogic public records data show. Sales this March represented a slight improvement in the sense each of the prior three months had the lowest sales for that month in 11 years. Sales normally jump up between February and March, and since 2000 the average change between those two months is a gain of 34.0%. Sales have fallen year over year for the last eight consecutive months, with those declines ranging from 6.1% in October 2018 to 19.4% in December 2018. March 2019 sales declined at all price levels. Deals below $500,000 fell 13.7% year over year, while sales of $500,000 or more declined 13.2% and $1 million-plus deals fell 17.8%. Sales of $2 million or more fell 20.6% in March 2019 compared with a year earlier. Starting in late spring 2018, some potential homebuyers got priced out of the market by the double whammy of rising prices and mortgage rates, while others simply stepped out of the market amid concerns prices were near a peak. The sales trends for April and May this year will likely begin to clarify whether many of those who put plans on hold in 2018 are being lured back into the market by this year’s lower mortgage rates, higher inventory and the resulting improvement in buyers’ negotiating position. March 2019 sales reflect deals recorded in the public record that month, meaning most buyers’ purchase decisions would have been made in February, before mortgage rates had hit their low point for this year.

The median price paid for all new and existing houses and condos sold statewide in March 2019 was $483,000 (Figure 2), up 2.8% from February and up 0.6% from March 2018. An uptick in the median sale price between February and March is normal for the season and on average since 2000 the median has increased 3.8% between those two months. This March’s sub-1% annual gain compares with an annual increase of 7.9% in March last year (Figure 3) and marks the lowest gain for any month since the median rose 0.4% in March 2012. Slowing sales and rising inventory since last spring has moderated home price growth statewide. To a lesser extent the small annual gain in the state’s March median sale price reflects a subtle shift in market mix, where a slightly lower share of all sales occurred in high-cost coastal regions. In nominal terms California’s median sale price hit an all-time high of $500,000 in June 2018. Adjusted for inflation, however, the median has not returned to its pre-housing-bust peak in March 2007, and the March 2019 median was 16.8% below that peak. Other March 2019 highlights:

–  In the six-county Southern California region, 17,960 new and existing houses and condos sold in March, down 14.1% year over year. March’s median sale price was $518,500, down 0.1% year over year. It was the first annual decline since March 2012, when the median dipped 0.2%. Of the six counties, only Orange County logged an annual decline – a decrease of 0.7% – this March.

–  In the nine-county San Francisco Bay Area, 6,124 new and existing houses and condos sold in March 2019, down 14.8% year over year. March’s median sale price was $830,000, down 0.1% year over year. It was the first annual decline in the median since it dipped 0.6% in March 2012. Three counties – Marin, Santa Clara and Sonoma – posted annual declines in their median sale prices and one – San Mateo – experienced no annual change.

–  Some of the state’s more affordable inland counties logged annual gains in total sales this March. Two examples were Butte (+35.4%) and Shasta (+8.7%). Butte County is home to last year’s devastating “Camp Fire” that destroyed thousands of homes in the town of Paradise, boosting housing demand in some other Butte County communities.

China vows retaliation against US for higher tariffs as talks continue

China vowed to retaliate against the United States for President Trump on Friday sharply hiking tariffs on exports from the world’s second-biggest economy, as trade negotiations between the two nations resumed. One minute after midnight the US increased tariffs on $200 billion worth of Chinese exports to 25% from 10%. Trump tweeted Friday that the US only sells China approximately $100 billion in goods and products, which he said is a “very big imbalance.” He also tweeted that if “we bought 15 Billion Dollars of Agriculture from our Farmers, far more than China buys now, we would have more than 85 Billion Dollars left over for new Infrastructure, Healthcare, or anything else.” Beijing promptly vowed to retaliate with “necessary countermeasures” in a major escalation of the year-old trade conflict that has roiled global stock markets and increased costs for consumers. “China deeply regrets that it will have to take necessary countermeasures,” China’s Commerce Ministry said in a statement. The newly increased tariffs took effect on goods that left China on Friday, meaning that because of the roughly three weeks it takes ocean-going freighters to cross the Pacific Ocean American consumers will not feel the effect until the end of this month or early next month. The drama unfolded against the backdrop of China’s top trade negotiator, Vice Premier Liu He, set to resume talks with his American counterparts at 9 a.m. ET in Washington. White House officials have stressed that both sides are eager to wrap up talks; last week, Treasury Secretary Steven Mnuchin told FOX Business that although they still had “more work to do,” enforcement mechanisms were “close to done.” “If we get to a completed agreement it will have real enforcement provisions,” he said at the time. The latest increase extends 25% duties to about $250 billion of Chinese imports. On Sunday Trump said he might also expand penalties to all Chinese goods shipped to the United States. Previous tariffs against Chinese goods have prompted Beijing to retaliate by hiking duties on $110 billion of US imports.

MBA – mortgage credit availability increased in April

Mortgage credit availability increased in April according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from Ellie Mae’s AllRegs® Market Clarity® business information tool. The MCAI rose 2.1% to 186.0 in April. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI increased (4.3%), while the Government MCAI was unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 6.8%, and the Conforming MCAI increased by 1.2%. “Credit supply increased 2% in April and was driven by a 7% gain in the jumbo index, which reached its highest level since the beginning of the MCAI in 2011,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Additionally, investors continued a trend from March of further increasing their willingness to purchase more non-QM and non-agency jumbo loans. The high-end of the purchase market had shown weakness earlier this year, before the recent decline in mortgage rates, and it appears investors are trying to remain competitive in that segment of the market.”

Treasury yields slip as increased tariffs on China begin

US government debt yields ticked lower on Friday after American tariffs on $200 billion worth of Chinese imports rose to 25%, a development some investors viewed as a sign that trade relations between Washington and Beijing won’t be remedied soon. At around 8:29 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.449%, while the yield on the 2-year Treasury note was also lower at around 2.252%. The yield on the 3-month bill hovered at 2.431%. The yield on the 10-year Treasury note briefly dipped under that of the 3-month Treasury bill on Thursday, inverting part of the yield curve. An inversion has been a reliable recession indicator in the past, though there is a debate over which segment of the curve is most important. Investors were again on edge Friday amid heightened trade tensions between the US and China. At midnight Friday, higher US tariffs were imposed on $200 billion of Chinese goods. Though Trump said his decision could be reversed if there is progress in the trade talks held by both nations, China has announced it will retaliate. Despite the heated rhetoric, the fixed-income response Friday morning was largest contained, suggesting to some that the market had already foreseen a scuttled deal. “The muted overnight response to Trump’s latest round of tariffs suggests the eventuality was fully priced in,” Ian Lyngen, head of US rate strategy at BMO Capital Markets, said in a note. “The White House’s 15% add-on to the present tariff structure has left us to ponder how that will translate into realized inflation during the balance of the year.” The Labor Department said its consumer price index, a gauge of the prices Americans pay for everything from toaster ovens to gasoline, rose 0.3% in April, falling just short of economist expectations. The government said in a release Friday that much of the tick upward in consumer prices in April was due to higher gasoline and rent costs. The department’s gasoline index continued to increase, rising 5.7% and accounting for over two-thirds of the seasonally adjusted all items monthly increase. Excluding volatile food and energy categories, prices rose 0.1%, the same pace as in March. Overall prices rose 2% on a year-over-year basis, the first time CPI inflation has been at or above the 2% mark since November.

NAHB – housing affordability holds steady on a year-over-year basis

Lower home prices, declining mortgage rates and solid income gains contributed to a rise in housing affordability in the first quarter of 2019, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) released today. However, the HOI was little changed on a year-over-year basis, as home buyers continue to face ongoing challenges in terms of limited inventory, especially among starter homes for prospective first-time buyers. In all, 61.4% of new and existing homes sold between the beginning of January and end of March were affordable to families earning the US median income of $75,500. This is up from the 56.6% of homes sold in the fourth quarter of 2018 that were affordable to median-income earners and relatively unchanged compared to a first quarter 2018 reading of 61.6. As home price gains slowed during 2018, the national median home price moved down from $262,500 in the fourth quarter of 2018 to $260,000 in the first quarter. At the same time, average mortgage rates fell by 25 basis points in the first quarter to 4.64% from 4.89% in the fourth quarter. “While the recent rise in affordability is welcome news, builders continue to struggle with rising construction and development costs stemming from excessive regulations, a lack of buildable lots and a shortage of construction workers,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “This means that housing affordability is going to continue to be a challenge throughout 2019, particularly in high-cost markets.” “Though the Federal Reserve’s more dovish monetary policy stance has lowered interest rates, income growth still has not kept up with rising construction costs and home price appreciation in recent years,” said NAHB Chief Economist Robert Dietz. “Today four out of every 10 new and existing home sales are not affordable for a typical family. Considering recent income gains due to tax reform and a tight labor market, these affordability concerns become even more pronounced.”

For the second consecutive quarter, Youngstown-Warren-Boardman, Ohio-Pa., remained as the nation’s most affordable major housing market. There, 93.3% of all new and existing homes sold in the first quarter were affordable to families earning the area’s median income of $59,800. Meanwhile, Fairbanks, Alaska, was rated the nation’s most affordable smaller market, with 94.7% of homes sold in the first quarter being affordable to families earning the median income of $92,400. Rounding out the top five affordable major housing markets in respective order were Indianapolis-Carmel-Anderson, Ind.; Buffalo-Cheektowaga-Niagara Falls, N.Y.; Syracuse, N.Y.; and Scranton-Wilkes Barre-Hazleton, Pa. Smaller markets joining Fairbanks at the top of the list included Elizabethtown-Fort Knox, N.Y.; Kokomo, Ind.; Elmira, N.Y.; and Cumberland, Md.-W.Va. San Francisco, for the sixth straight quarter, was the nation’s least affordable major market. There, just 6.9% of the homes sold in the first quarter of 2019 were affordable to families earning the area’s median income of $122,200. Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and San Diego-Carlsbad. All five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, where 12.6% of all new and existing homes sold were affordable to families earning the area’s median income of $74,100. In descending order, other small markets at the lowest end of the affordability scale included Santa Cruz-Watsonville; San Luis Obispo-Paso Robles-Arroyo Grande; San Rafael; and Santa Maria-Santa Barbara.

ATTOM – the ever-expanding iBuyer footprint

iBuyers have been expanding at breakneck speeds. What started as a moonshot idea six years ago has now blossomed into a massive, billion-dollar homebuying market in its own right — and it’s not showing any signs of slowing. Opendoor brought the idea to life in 2014, followed by competitor Offerpad. Since then, countless others have hit the scene — including Redfin (via RedfinNow) and Zillow (via Instant Offers) and even brokerage- and market-specific ones like Door and Offerdepot. But it’s not just more players that are getting in on the game. There’s also a footprint expansion happening, too. And though most of the major iBuyers got their start in the Phoenix area, this new-age home selling option has reached far beyond the borders of Arizona’s biggest city. By the looks of it, that reach is going even further as we head into 2019. Regionally, the South has the most iBuyer action, with Phoenix essentially the epicenter of it all. Two of the big players launched there (Opendoor and Offerpad). Zillow’s Instant Offers also now operates in the city. Texas also has a big iBuyer presence. Dallas-Fort Worth, Austin, Houston and San Antonio all have at least one iBuyer in each of those markets, and a few players have plans to expand further into the Lone Star State later this year. North Carolina (specifically Raleigh and Charlotte), as well as Florida, California and Georgia also have decent iBuying activity as well. Atlanta is one of the few cities to have most of the big players in the market. Opendoor, Offerpad and Zillow are all on the ground in ATL. For the most part, iBuyers are shying away from markets in the North and Northeast parts of the country. Housing affordability (and availability) likely plays a role in this, as does overall consistency of existing housing stock. iBuyers rely heavily on data and algorithms when evaluating potential properties. Areas with inconsistent and highly unique housing makes this approach less reliable (and less profitable).

For the most part, iBuying is going to be much of the same this year: more Southern and suburban markets with largely affordable housing inventory. Offerpad just expanded into Houston at the start of the year, and more recently also announced launching in San Antonio and Austin (Opendoor is currently operating in those cities as well). Opendoor has also recently expanded their presence in Southern California to buying and selling homes in the Los Angeles market. They’ve been operating in the nearby Inland Empire region of Riverside-San Bernardino since 2018. With the number of investments being made into this iBuyer movement (not to mention the institutional interest in it), we can likely expect some serious growth on the horizon. Offerpad is currently available in more than 700 cities across the country. “We’re excited to soon share more options for consumers to help them buy and sell the best way possible,” said Cortney Read, director of communications & outreach. Where will this money take them, though? Only time will tell. In many of the markets where iBuyers are present, we are seeing home prices reach their peaks in 2018. For instance, the Atlanta market, where Opendoor, Offerpad and Zillow are currently present, prices of homes for sale have increased 62% in 5 years and reached their peak in 2018. Other markets to reach their peak in 2018, where iBuyers are present include: Charlotte, Dallas-Fort Worth, Denver and Houston. Those markets, where the iBuyer footprint is casting a wider net with the presence of Opendoor, Offerpad and Zillow include; Las Vegas, Raleigh, and Phoenix, all of which have seen double digit increases in home prices.

NAR – Realtors survey shows median income jumped 5%, more women joining industry

Realtor® median net income increased 5% from 2017 to 2018, and 67% of all Realtors® were female, an increase from 63% last year, according to key findings in the 2019 National Association of Realtors® Member Profile. While overall membership grew from 1.23 million in 2016 to 1.36 in 2018, membership remained steady at 1.32 million as of April 2019, according to the report. The median tenure in real estate decreased from 10 to eight years and the median time spent at a real estate firm was recorded at four years, the same as 2018. “As the real estate industry continues to feel the impact of limited inventory, the typical number of transactions Realtors® make in a year remained at 11 in 2018, the same as in the previous report. In addition, because of rising home prices across the country, the median brokerage sales volume increased to $1.9 million in 2018 from $1.8 million in 2017,” Lawrence Yun, NAR chief economist, stated. The survey’s results are representative of the nation’s 1.3 million Realtors®; members of NAR account for about half of all active real estate licensees in the US Realtors® go beyond state licensing requirements by subscribing to NAR’s Code of Ethics and standards of practice while committing to continuing education. The report identified the typical Realtor® as a 54-year-old white female who attended college and was a homeowner. Sixteen% of Realtors® had a previous career in management, business, or finance, and 15% worked in sales or retail. Realtors® continue to see an overall growth in diversity of membership while a growing number of women are entering the profession. Since 2001, there has been a 20% increase in females and a 120% increase in minorities. Only 4% of Realtors® reported real estate was their first career. Seventy-two% of Realtors® said that real estate was their only occupation, and that number increased to 82% among members with 16 or more years of experience.

“Limited inventory continues to cause headaches in markets across the country and is preventing potential homebuyers from finding a home. For the sixth year in a row, Realtors® cited the difficulty in finding the right property surpassed the difficulty of obtaining a mortgage. “However, rental business has been strong with more members involved in property management,” said Yun. The typical property manager supervised 47 properties in 2018, up from 35 properties in 2017. The typical Realtor® earned 13% of their business from repeat clients and customers and 17% through referrals from past clients and customers. Sixty-eight% of Realtors® were licensed sales agents, 20% held broker licenses and 14% held broker associate licenses. Fourteen% of members had at least one personal assistant. Fifty-one% of Realtors® reported having a website for at least five years, 9% reported having a real estate blog, 73% of members were on Facebook and 58% are active on LinkedIn for professional use. The most common information found on Realtor® websites was the member’s own listings and home buying and selling information. The median gross income of Realtors® was $41,800 in 2018, an increase from $39,800 in 2017. Realtors® with 16 years or more experience had a median gross income of $71,000-down from $78,800 in 2017. In comparison, Realtors® with two years or less experience had a median gross income of $9,300, a slight increase from $8,330. Median business expenses were reported at $4,600 in 2018, similar to the $4,580 recorded last year. In 2018, 36% of Realtors® were compensated under a fixed commission split (under 100%), followed by 23% with a graduated commission split (increases with productivity). The survey looked at office and firm affiliation for members and found that over half of Realtors® were affiliated with an independent company. Nearly nine in ten 10 members were independent contractors at their firms. The median tenure for Realtors® with their current firm was four years again in 2019. Nine% of Realtors® worked for a firm that was bought or merged in the past two years.

ATTOM – top markets with greatest seller gains

ATTOM Data Solutions just released its Q1 2019 Home Sales Report and the data shows that US homeowners who sold in the first quarter of 2019 realized an average home price gain since purchase of $57,500, down from an average gain of $60,000 in Q4 2018 but up from an average gain of $56,733 in Q1 2018. The average home seller-gain of $57,500 in Q1 2019 represented an average 31.5% return as a percentage of original purchase price. While the% of gains dropped both quarterly and annually, homeowners are still reaping some nice profits. The data is derived by looking at what a homeowner originally paid on their property versus what they sold it for. For a historical snapshot of historical seller gains, check out the chart below. Our seller gains data stretches back to Q1 2005 but can go further upon request. The peak quarter when seller dollar gains were at their highest occurred in the fourth quarter of 2005, with $81,006 being made on average, while home sellers selling in the first quarter of 2019 were losing around $53,500…on average. ATTOM Data wanted to showcase those markets, where home sellers are acquiring some serious gains. Among the 124 metropolitan statistical areas with a population greater than 200,000 and with at least 1,000 single family home and condo sales in the first quarter of 2019, those with the greatest dollar gain occurred mainly on the West coast. The market to top the dollar gains for sellers occurred in San Jose, California with home sellers seeing almost a half-million gain ($479,500). Markets to follow include San Francisco ($336,000); Los Angeles ($217,000); Oxnard ($178,000); and a non-California market, Honolulu, Hawaii ($171,563).

Recession fears diminish as the nation approaches a Goldilocks economy

For months, several reports indicated the U.S economy was quickly approaching what many feared to be a recession. After all, America’s looming trade war with China ignited geopolitical headwinds that posed a significant threat to the nation’s economy. In fact, a poll of economists conducted by Reuters revealed that the median probability of a recession within the next year rose to 25% in January. Additionally, a survey produced by the National Association for Business Economics, which detailed the economic predictions of 281 members, determined that 75% of its economists expected the economy to slip into a recession by the end of 2021. “Three-fourths of the NABE Policy Survey panelists expect an economic recession by the end of 2021,” said NABE President Kevin Swift, CBE, chief economist at the American Chemistry Council. “While only 10% of panelists expect a recession in 2019, 42% say a recession will happen in 2020, and 25% expect one in 2021.” These economic projections paired with mounting evidence that the nation’s housing market was slowing down pointed to the probability of an approaching recession. However, Friday’s Gross Domestic Product report produced by the Bureau of Economic Analysis signaled the economy was strengthening. In fact, Q1’s readings even surpassed the 2.4% growth estimate produced by a poll of economists conducted by CNBC and Moody’s analytics.

According to the Bureau’s advanced estimate, real GDP increased at an annual rate of 3.2% in the first quarter of 2019, compared with a gain of 2.2% in the prior three months. This marks the first acceleration of growth since mid-2018, highlighting economic improvement. “Although this advance estimate is subject to revision, if it holds up, this faster growth should continue to provide strong support for the job and housing markets,” Mortgage Bankers Association Chief Economist Mike Fratantoni said. “Growth was driven in the first quarter by an increase in inventories and a strong reading on net exports, two factors which could be reversed in the second quarter. Household spending growth actually slowed a bit in the first quarter, which is a bit contrary to recent strong readings on retail sales. Overall, a solid start of the year for the economy.” Although Fratantoni said Q1’s results were strong, Navy Federal Credit Union Corporate Economist Robert Frick claims they are actually skewed. “GDP stomped estimates, coming in at 3.2%, but the first quarter report was market by unusual data that inflated it temporarily–mainly short-term boosts from higher inventories and from trade (which added one percentage point alone),” Frick said. “If you factor out those one-offs, you get GDP rising at just 1.3%, as measured by final sales to private domestic purchasers.”

If GDP growth did rise at 1.3% this means Q1’s acceleration falls behind the fourth quarter of 2018, signalling the economy still has a tangible risk of an oncoming recession. That being said, Frick notes that the economy can still find its way out of the woods as the likeliness of a recession may be a long way off. The data may be showing that the economy is growing, but not fast enough to spark a level of inflation that would force the Fed to hike rates. That balanced state of “not too hot, not too cold” is known as a “Goldilocks economy,” a phrase coined by economist David Shulman in the 1990s. “First, inflation was low, indicating that the Fed had no reason to raise rates that could tip the economy into a contraction. Second, while the headline number was 3.2%, after backing out trade and inventories the number was just 1.3%, showing the economy isn’t overheating, which again could prompt the Fed to raise rates,” Frick said. “Finally, while the 1.3%, as measured by ‘final sales to privated domestic purchasers’ is a low number, it will rise with the recovery of consumer spending and some other factors. So a reasonable forecast for GDP this year is 2% to 2.5%, which, together with a strong jobs market and rising wages, point to a healthy Goldilocks economy with no looming economic issues in sight.”

US stocks edge up to new record highs; consumer spending up

US stocks edged up to new record highs on the open Monday, as Wall Street nvestors waited to see how earnings pan out with the busiest week of the reporting season ahead, and five Dow Jones Industrial Average components and approximately a third of the S&P 500 index companies issuing results. Dow component Disney continued its run to all-time highs in reaction to record ticket sales for “Avengers: Endgame”.  The latest Marvel super-hero movie broke box office records with a $350 million opening weekend in North America and $1.2 billion worldwide. The main focus will be on Alphabet, the parent of Google, which reports after the closing bell on Monday. Restaurant Brands reported weaker-than-expected earnings after a drop in Tim Hortons sales, sending its shares down in early trade. Spotify posted a bigger-than-forecast loss, but its stock rose as the company also said it reached 100 million subscribers for its premium service. Earnings reports pushed the S&P 500 and Nasdaq Composite indexes to record closing highs last week. US consumer spending recovered in March, the Commerce Department reported early Monday, while the Federal Reserve’s preferred underlying inflation gauge slipped to a one-year low. Consumer spending rose 0.9% for the month, up from a gain of only 0.1% in February. Personal income rose 0.1% in March, less than forecast. The Federal Reserve meets this week but with inflation below 2.0% policy makers on Wednesday are expected to hold interest rates steady. Investors are also watching for developments in trade talks between the US and China. US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are expected to meet Chinese Vice Premier Liu He on Tuesday.

CoreLogic – 2019 mortgage fraud consortium connects leading industry fraud experts for 11th year

—Company announced its latest Fraud Risk Score Model for the LoanSafe product suite during the event—

CoreLogic shared details from its 2019 Mortgage Fraud Consortium, the leading event for mortgage fraud risk professionals. During the invitation-only event, open only to CoreLogic Fraud Consortium members, CoreLogic announced its newest version of the Fraud Risk Score Model— version 4.0. Delivered within the LoanSafe® product suite, the new model accounts for recent changes in mortgage fraud trends while leveraging new data assets. Drawing experts from more than 25 top financial institutions, this year’s exclusive event was held in San Diego, California, and featured speakers from the FBI, Fifth Third Bank, Cognizant, Fannie Mae, Freddie Mac and more. The event revolved around the theme of current fraud trends and what they mean for the future market. Program discussions ranged from procedures to improve fraud detection to the impact eroding housing affordability has on fraud risk to how law enforcement officials are working to identify and combat the latest fraud schemes. Additional insights included case studies and best practices to help improve mortgage fraud prevention practices. “This year’s Mortgage Fraud Consortium was another success, providing leading industry professionals with the opportunity to learn about the latest mortgage fraud trends while collaborating on ways to reduce future risk,” said Bridget Berg, principal, Fraud Solutions at CoreLogic. “According to our latest research, the United States has seen a 10% increase in fraud risk from Q1 2018 to Q1 2019. This continual increase reinforces the need for this annual event and we’re proud to continue helping mortgage loan providers mitigate risk and fight back against fraud.” During the event, CoreLogic shared details of the LoanSafe Fraud ManagerTM roadmap and announced version 4.0 of its Fraud Risk Score Model. Integrated into the LoanSafe solution, the updated model provides more transparency into how the Fraud Risk score is calculated through an integration of alerts predictive of fraud risk. The updated score was designed based on feedback from CoreLogic clients to help make lenders more efficient in their fraud detection practices, ultimately saving them time and money. The latest version of the Fraud Risk Score will be released in the summer of 2019.

US ending Iranian oil waivers sends crude oil prices soaring

The US announced Monday that it will not extend waivers to buy Iranian crude oil for five countries –Turkey, South Korea, China, India and Japan — when those waivers expire in early May. The announcement, made by Secretary of State Mike Pompeo, reflects the White House goal of getting Iranian oil exports to zero and was couched as a way of supporting. “We want the Iranian people to know that we are listening to them and standing with them,” he said. Crude oil prices promptly jumped more than 2% to more than $65 per barrel for the first time since November on concerns about how the US termination of Iranian oil waivers will affect global supply. In early trading Monday, West Texas Intermediate, the benchmark American crude, climbed to $65.45, a 2.27% jump, its highest level since Oct. 31, 2018. “The United States, Saudi Arabia, and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied,” the White House said Monday in a statement. “The Trump Administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime’s destabilizing activity threatening the United States, our partners and allies, and security in the Middle East.” President Trump tweeted that the US and other big oil producers will more than make up for any loss of Iranian oil. It was not immediately clear if any of the five nations would be given additional time to wind down their purchases or if they would be subject to US sanctions on May 3 if they do not immediately halt imports of Iranian oil, according to The Associated Press. The other two countries are China and India.

The US had previously granted eight nations a 180-day waiver to keep buying Iranian crude oil provided that they take steps to cut purchases and eventual end them altogether. Price increases are expected to continue. “I think it’s pretty clear that tightening supplies and receding fears of demand growth is a boost to the market to these 5-month highs,” Gene McGillian, Tradition Energy vice-president of market research in Stamford, Conn., told Reuters. Concerns about global oil supplies also stemmed from the effect of American sanctions against Venezuela and civil unrest in Libya. Rising crude oil prices are boosting the prices of petroleum products, which are refined from crude oil. The average US price of regular gasoline jumped 13 cents a gallon over the last two weeks to $2.91. California is being hit the hardest by the tightening supply: As of late last week, the average gasoline price in the state was about $4.02, according to AAA, compared with the national average of $2.83. Those are the highest prices California has seen since 2014. Prices have risen around 68 cents per gallon over the course of a month. According to Dan McTeague, a senior petroleum analyst at GasBuddy, it’s a supply crunch resulting from refinery upsets in Los Angeles and San Francisco.

NAR – existing-home sales slide 4.9% in March

Existing-home sales retreated in March, following February’s surge of sales, according to the National Association of Realtors. Each of the four major US regions saw a drop-off in sales, with the Midwest enduring the largest decline last month. Total existing-home sales,, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 4.9% from February to a seasonally adjusted annual rate of 5.21 million in March. Sales as a whole are down 5.4% from a year ago (5.51 million in March 2018). Lawrence Yun, NAR’s chief economist, anticipated waning in the numbers for March. “It is not surprising to see a retreat after a powerful surge in sales in the prior month. Still, current sales activity is underperforming in relation to the strength in the jobs markets. The impact of lower mortgage rates has not yet been fully realized.” The median existing-home price for all housing types in March was $259,400, up 3.8% from March 2018 ($249,800). March’s price increase marks the 85th straight month of year-over-year gains. Total housing inventory at the end of March increased to 1.68 million, up from 1.63 million existing homes available for sale in February and a 2.4% increase from 1.64 million a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace, up from 3.6 months in February and up from 3.6 months in March 2018. “Further increases in inventory are highly desirable to keep home prices in check,” says Yun. “The sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”

Properties remained on the market for an average of 36 days in March, down from 44 days in February but up from 30 days a year ago. Forty-seven% of homes sold in March were on the market for less than a month. Yun says tax policy changes will likely add further complications to the housing sector. “The lower-end market is hot while the upper-end market is not. The expensive home market will experience challenges due to the curtailment of tax deductions of mortgage interest payments and property taxes.”’s Market Hotness Index, measuring time-on-the-market data and listing views per property, revealed that the hottest metro areas in March were Columbus, Ohio; Boston-Cambridge-Newton, Mass.; Midland, Texas; Sacramento–Roseville–Arden-Arcade, Calif.; and Stockton-Lodi, Calif. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 4.27% in March from 4.37% in February. The average commitment rate across all of 2018 was 4.54%. “We had been calling for additional inventory, so I am pleased to see that there has been a modest increase on that front,” said NAR President John Smaby, a second-generation Realtor® from Edina, Minnesota and broker at Edina Realty. “We’re also seeing very favorable mortgage rates, so now would be a great time for those buyers who may have been waiting to make a purchase.” First-time buyers were responsible for 33% of sales in March, up from last month and a year ago (32% and 30%). NAR’s 2018 Profile of Home Buyers and Sellers – released in late 2018 – revealed that the annual share of first-time buyers was 33%. All-cash sales accounted for 21% of transactions in March, down from February’s 23%, but up from a year ago (20%).

Individual investors, who account for many cash sales, purchased 18% of homes in March, up from February’s 16%, and up from a year ago (16%). Distressed sales – foreclosures and short sales – represented 3% of sales in March, down from 4% last month and down from 4% in March 2018. One% of March 2019 sales were short sales. Single-family home sales sit at a seasonally adjusted annual rate of 4.67 million in March, down from 4.91 million in February and down 4.7% from 4.90 million a year ago. The median existing single-family home price was $261,100 in March, up 3.8% from March 2018. Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 540,000 units in March, down 5.3% from last month and down 11.5% from a year ago. The median existing condo price was $244,400 in March, which is up 3.6% from a year ago. March existing-home sales numbers in the Northeast decreased 2.9% to an annual rate of 670,000, 1.5% below a year ago. The median price in the Northeast was $277,500, which is up 2.5% from March 2018. In the Midwest, existing-home sales declined 7.9% from last month to an annual rate of 1.17 million, 8.6% below March 2018 levels. The median price in the Midwest was $200,500, which is up 4.6% from last year. Existing-home sales in the South dropped 3.4% to an annual rate of 2.28 million in March, down 2.1% from last year. The median price in the South was $227,400, up 2.4% from a year ago. Existing-home sales in the West fell 6.0% to an annual rate of 1.09 million in March, 10.7% below a year ago. The median price in the West was $389,300, up 3.1% from March 2018.

Elizabeth Warren wants to ‘cancel’ student debt for millions

Democratic Massachusetts Sen. Elizabeth Warren announced a proposal on Monday aimed at alleviating the student loan debt crisis by largely eliminating the obligations altogether. The 2020 Democratic presidential candidate Opens a New Window.  wrote in a blog post on Medium that she would like to cancel $50,000 in student debt for individuals with household incomes below $100,000 – or about 42 million people. American households with higher incomes, up to $250,000, would also see some of their debt written off as well. The $50,000 cancellation amount would phase out by $1 for every $3 in income above $100,000. Individuals with incomes of more than $250,000 would not have their debts reduced. Warren says the cancellation would take place automatically using data the government already has available to it. Outstanding student loan debt has doubled over the past decade to more than $1.5 trillion in 2018 and is now  second only to the amount of mortgage debt held by Americans. It has been named as a contributor to declining home ownership rates among young adults. The Massachusetts lawmaker also wants to make college tuition free for all Americans, with the opportunity to attend either a two- or four-year course at a public institution at no cost. Warren’s office estimates her student debt cancellation proposal would cost $640 billion, while the Universal Free College program would bring the total up to $1.25 trillion over the course of the decade. Warren said that would be entirely covered through a tax proposal she announced earlier this year, which she calls the “ultra-millionaire tax.” The tax would be equal to 2% for those with more than $50 million in assets, but would rise to 3% for those who have assets valued at more than $1 billion. According to economists  from the University of California, Berkeley, who helped write the proposal, the tax would raise $2.75 trillion over the course of a decade. It would only apply to less than 0.1% of the population or about 75,000 families.

ATTOM – top 10 states with the worst foreclosure rate

This week ATTOM Data Solutions released its February 2019 foreclosure activity datasets, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 54,783 US properties in February 2019, down 3% from the previous month and down 11% from a year ago – 8th consecutive annual decrease in foreclosure activity. In keeping with ATTOM Data’s figures Friday posts and doing a bit of a deeper dive with the data, we wanted to uncover those top 10 states whose foreclosure activity is among the highest in the nation. Topping the list is New Jersey with a foreclosure rate of 1 in every 1,006 housing units receiving a foreclosure filing in February 2019. Followed by Delaware (1 in every 1,008 housing units); Maryland (1 in every 1,193 housing units); Florida (1 in every 1,365 housing units); Illinois (1 in every 1,465 housing units); South Carolina (1 in every 1,615 housing units); Connecticut (1 in every 1,801 housing units); Ohio (1 in every 1,918 housing units); Nevada (1 in every 2,041 housing units); and rounding out the top 10 is Pennsylvania with 1 in every 2,205 housing units receiving a foreclosure filing in February 2019. A total of 29,735 US properties started the foreclosure process in February 2019, up 1% from the previous month but still down 9% from a year ago.  Counter to the national trend, 13 states posted year-over-year increases in foreclosure starts in February 2019, including Florida (up 68%); Oregon (up 46%); Louisiana (up 34%); Illinois (up 9%); Texas (up 9%); and Colorado (up 3%). Those metro areas with a population greater than 1 million that saw an annual increase in Foreclosure starts included Los Angeles, California (up 7%); Chicago, Illinois (up 15%); Houston, Texas (up 73%); Washington, D.C. (up 11%); and Miami, Florida (up 74%). Banks repossessed 11,392 US properties in February 2019, down 7% from the previous month and down 12% from a year ago.

Southwest Airlines reaches tentative deal with mechanics to end dispute

Southwest Airlines and its mechanics reached a tentative labor agreement that could end a standoff between the two sides that led to hundreds of canceled flights and cost the carrier millions of dollars. In a joint statement on Saturday, the Dallas-based airline and the Aircraft Mechanics Fraternal Association said the deal would bump pay by 20% for the nearly 2,400 mechanics and includes a $160 million one-time bonus. It must still be approved by the union. “We are very pleased with the efforts of both teams to find common ground on a new contract,” the two sides said. Southwest was forced to declare an “operational emergency” in February after maintenance issues with some of its jets forced a higher-than-normal amount of out-of-service aircraft. In a lawsuit, the airline accused union members of flagging non-safety related items to manufacture a crisis and force the company to make more concessions in the tentative labor agreement. Southwest and the mechanics union have been in negotiations for more than six years, most recently in federally mediated sessions. The AMFA previously rejected an agreement that included a 16.3% pay raise. The airline is under investigation by the Federal Aviation Administration over how it calculates baggage weight.

CoreLogic – Characteristics of Today’s Non-Qualified Mortgages

Five years have passed since the Consumer Financial Protection Bureau (CFPB) issued regulations to provide safer and more sustainable home loans for consumers, known as Qualified Mortgages (QMs).  The Dodd-Frank Wall Street Reform and Consumer Protection Act imposed an obligation on lenders to make a good-faith effort to determine that the applicants have the ability to repay the mortgage. This is known as the ability-to-repay (ATR) rule. The Act also mandates that QM loans cannot have risky loan features like negative amortization, interest-only, balloon payments, terms beyond 30 years or excessive points and fees. QM loans must also satisfy at least one of the following three criteria:

–  Borrower’s debt-to-income (DTI) ratio is 43% or less

–  Loan is eligible for purchase, guarantee or insurance through the Federal Housing Administration, Veterans Affairs, United States Department of Agriculture or a government-sponsored enterprise (GSE), regardless of the DTI ratio

–  Loan was originated by insured depositories with total assets less than $10 billion and must be held in portfolio for at least three years.

Any home loan that doesn’t comply with the QM rules is called non-QM. A non-QM loan is not necessarily a high-risk loan, it’s merely a loan that doesn’t meet the QM standards. Examples of a non-QM loan include interest-only or limited/alternative documentation loans. A non-QM loan still needs to satisfy the ATR requirements. The non-QM market is expanding (up by 1 percentage point from 2017 to 2018) and represented about 4% of 2018 originations. Although the non-QM market is just a small piece of today’s mortgage market, it plays a key role in meeting the credit needs for homebuyers who are not able to obtain financing through a GSE or government channels. Creditworthy borrowers not applying for GSE or government-insured loans may benefit from non-QM options. These may include self-employed borrowers, first-time homebuyers, borrowers with substantial assets but limited income, jumbo loan borrowers and investors. All conventional home-purchase loans not meeting at least one of these six QM-mandated criteria were included. The three main reasons why non-QM loans that originated in 2018 failed to fit in the QM box were use of limited or alternative documentation, DTI above 43% and interest-only loans. Almost 46% of the non-QM borrowers exceeded 43% DTI threshold, 44% used limited or alternative documentation and 13% of the non-QMs were interest-only loans.

The share of non-QM loans exceeding 43% DTI threshold has increased by more than three times in 2018 compared with 2014. However, some of the riskier factors such as negative amortization and balloon payments have completely vanished. Today’s non-QMs are high quality. They are vastly different and safer than their pre-crisis counterparts. In 2018, the average credit score of homebuyers with non-QMs was 760, compared to a score of 754 for homebuyers with QMs. Similarly, the average first-lien LTV for borrowers with non-QMs was 79% compared to 81% for borrowers with QMs. However, average DTI for homebuyers with non-QMs was higher compared with the DTI for borrowers with QMs. Despite having DTI ratios that are higher than conventional QM loans today, non-QMs are performing very well. Both the non-QM and QM conventional loans had low delinquency rates in 2018. In fact, the serious delinquency rate for non-QM loans is slightly lower than the rate for conventional QM loans and government-insured loans in 2018. Lenders are using high credit score and low LTV to help offset the added risk from high DTI, limited documentation and interest-only non-QM loans.

Marriott plans to open more than 1,700 hotels by 2021

Marriott International is very bullish on its future. The hotel chain on Monday ahead of its investor day announced an aggressive three-year plan to open more than 1,700 hotels worldwide and return up to $11 billion to shareholders. Shares for the Bethesda, Maryland-based company popped on the news. However, the news comes after Marriott last month missed Wall Street estimates for the fourth-quarter. It also forecasted lower-than-expected full-year profit citing weak demand in North America—its largest market—as the reason. Last year, Marriott disclosed it suffered a massive data breach that exposed the personal information of roughly 500 million of its guests. The hack was later linked to Chinese hackers, according to several reports. Marriott CEO Arne Sorenson later apologized for the breach before a US Senate panel and vowed to protect against attacks in the future. Last week, The Wall Street Journal reported that activist investor Land & Building Investment Management LLC was seeking to get a seat on Marriott’s board as it has become “displeased” with the company’s purchase of Starwood Hotels & Resorts Worldwide in 2016. Additionally, sources told the outlet that the activist investor believes the hotel chain has too many brands under its portfolio. Marriott’s investor day is slated to start Monday in New York.

NAHB – builder confidence holds steady in March

Builder confidence in the market for newly-built single-family homes held steady at 62 in March, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. “Builders report the market is stabilizing following the slowdown at the end of 2018 and they anticipate a solid spring home buying season,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “In a healthy sign for the housing market, more builders are saying that lower price points are selling well, and this was reflected in the government’s new home sales report released last week,” said NAHB Chief Economist Robert Dietz. “Increased inventory of affordably priced homes – in markets where government policies support such construction – will enable more entry-level buyers to enter the market.” However, affordability still remains a key concern for builders. The skilled worker shortage, lack of buildable lots and stiff zoning restrictions in many major metro markets are among the challenges builders face as they strive to construct homes that can sell at affordable price points. Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. The HMI component charting sales expectations in the next six months rose three points to 71, the index gauging current sales conditions increased two points to 68, and the component measuring traffic of prospective buyers fell four points to 44. Looking at the three-month moving averages for regional HMI scores, the Northeast posted a five-point gain to 48, the South was up three points to 66 and West increased two points to 69. The Midwest posted a one-point decline to 51.

Airbnb suffers major loss in fight for Santa Monica rentals

Cities continue to tighten their grip around Airbnb and other short-term rental sights, and Santa Monica, California, is no different. In the latest loss, Airbnb and Expedia Group’s HomeAway lost their case in the Ninth Circuit Court of Appeals to the city of Santa Monica. This means the previous ruling still stands that the short-term rental companies are liable for illicit rentals on their sites. In Santa Monica, short-term rentals must be licensed by the city. If they aren’t, the companies will now be responsible for taking them off the site. “This critical local law prevents residences in our community from being converted into de facto hotels – it protects affordable housing and it helps residents stay in their homes,” Santa Monica City Attorney Lane Dilg said in a statement. And while the short-term rental sites tried to argue this regulation would make it impossible for the sites to operate, the three panel judges disagreed. “Even assuming that the ordinance would lead the platforms to voluntarily remove some advertisements for lawful rentals, there would not be a severe limitation on the public’s access to lawful advertisements, especially considering the existence of alternative channels like Craigslist,” the judges said in the ruling.

Santa Monica’s regulations are among the strictest in the nation. They prohibit rentals of whole homes to travelers for less than 30 days. Vacation-rental hosts in the city can only rent rooms to tourists and must be present throughout the stay. As for the city, it is pleased with the ruling and called it a win for housing and affordability. “We are thrilled to have confirmation from the Ninth Circuit that our balanced approach to home sharing is working at a time when housing and affordability continue to challenge the region,” Mayor Gleam Davis said. “This is a big win for Santa Monica residents and our residential neighborhoods.” But Santa Monica isn’t the only city Airbnb is fighting. New York City is upping the ante in its fight against Airbnb, as the two sides battle it out in court and in the court of public opinion. New York City Mayor Bill de Blasio recently announced that the city is issuing a subpoena to Airbnb, demanding that the short-term rental site turn over the listing data that’s at the center of a legal battle between the two sides. Last year, New York passed legislation designed to combat the rise of short-term rentals in the city. The law prevents landlords and tenants from illegally renting out apartments for a few days at a time to tourists. And Massachusetts recently passed a law that extended the state’s current 5.7% hotel tax to most short-term rentals, along with giving municipalities the option of tacking an additional 6% onto the tax; 9% if an owner rents out two or more units in the same community. But despite all of these battles, the company seems to be remaining optimistic. “Airbnb has made great strides around the world, working with dozens of cities to develop more than 500 partnerships including fair, reasonable regulations, tax collection agreements, and data sharing that balance the needs of communities, allow hosts to share their homes in order to pay the bills and provides guests the opportunity to affordably visit places like the California coast,” the company said in a statement.

CoreLogic – January home prices increased by 4.4 percent year over year

–  Twelve-month home-price growth rate was slowest since August 2012

–  HPI Forecast indicates annual average home price to increase 3.4 percent from 2018 to 2019

–  Since peaking at 6.6 percent last April, annual home price gains have declined or held steady each month

CoreLogic released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for January 2019, which shows home prices rose both year over year and month over month. Home prices increased nationally by 4.4 percent year over year from January 2018. On a month-over-month basis, prices increased by 0.1 percent in January 2019. (December 2018 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results each month.) Looking ahead, the CoreLogic HPI Forecast indicates that the 2019 annual average home price will increase 3.4 percent above the 2018 annual average. On a month-over-month basis, home prices are expected to decrease by 0.9 percent from January 2019 to February 2019. The CoreLogic HPI Forecast is a projection of home prices calculated 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. “The spike in mortgage interest rates last fall chilled buyer activity and led to a slowdown in home sales and price growth,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Fixed-rate mortgage rates have dropped 0.6 percentage points since November 2018 and today are lower than they were a year ago. With interest rates at this level, we expect a solid home-buying season this spring.”

According to the CoreLogic Market Condition Indicators (MCI), an analysis of housing values in the country’s 100 largest metropolitan areas based on housing stock, 35 percent of metropolitan areas have an overvalued housing market as of January 2019. 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). Additionally, as of January 2019, 27 percent of the top 100 metropolitan areas were undervalued, and 38 percent were at value. When looking at only the top 50 markets based on housing stock, 40 percent were overvalued, 18 percent were undervalued and 42 percent were at value in January 2019. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10 percent above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10 percent below the sustainable level. “The slowing growth in home prices was inevitable in many respects as buyers pull back in the face of higher borrowing and ownership costs,” said Frank Martell, president and CEO of CoreLogic. “As we head into 2019, we can expect continued strong employment growth and rising incomes which could support a reacceleration in home-price appreciation later this year.”

Private sector hiring slowed in February: ADP

Hiring in the U.S. private sector decelerated in February, according to research released on Wednesday from payroll services firm ADP, results that come ahead of federal employment numbers on Friday that will provide greater insight Opens a New Window.  into whether the nation’s economy is slowing. Non-farm payrolls increased 183,000 last month, slightly less than the expected 189,000. It was also a decline from January, which ADP revised up to 300,000 from an initial estimate of 213,000 – indicating that February’s numbers could also increase. The Bureau of Labor Statistics will report February employment numbers on Friday. Experts predict unemployment will sit at 3.9 percent and that the U.S. economy added 190,000 new jobs last month.

MBA – mortgage applications down

Mortgage applications decreased 2.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 1, 2019. The results for the week ending February 22, 2019, included an adjustment for the Washington’s Birthday (Presidents’ Day) holiday. The Market Composite Index, a measure of mortgage loan application volume, decreased 2.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 11 percent compared with the previous week and was 1 percent higher than the same week one year ago. “Slightly higher mortgages rates last week led to a decrease in application volume. Furthermore, the average loan size for purchase applications increased to a record high, led by a rise in the average size of conventional loans. This suggests that move-up and higher-end buyers have so far become a greater share of the spring market,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Overall, conventional purchase loans are up 2.1 percent relative to last year, indicating that homebuyers continue to be inspired by the stable rate environment and the modest increase in housing supply.” The refinance share of mortgage activity decreased to 40.0 percent of total applications from 40.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.4 percent of total applications. The FHA share of total applications increased to 10.3 percent from 10.2 percent the week prior. The VA share of total applications decreased to 10.4 percent from 10.7 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

US trade deficit jumps to 10-year high in 2018

The U.S. trade deficit surged to a 10-year high in 2018, with the politically sensitive shortfall with China hitting a record peak, despite the Trump administration slapping tariffs on a range of imported goods in an effort to shrink the gap. The Commerce Department said on Wednesday that an 18.8 percent jump in the trade deficit in December had contributed to the $621.0 billion shortfall last year. The 2018 deficit was the largest since 2008 and followed a $552.3 billion gap in 2017. The trade deficit has deteriorated despite the White House’s protectionist trade policy, which President Donald Trump said is needed to shield U.S. manufacturers from what he says is unfair foreign competition. The United States last year imposed tariffs on $250 billion worth of goods imported from China, with Beijing hitting back with tariffs on $110 billion worth of American products, including soybeans and other commodities. Trump has delayed tariffs on $200 billion worth of Chinese imports as negotiations to resolve the eight-month trade war continue. The United States has also slapped duties on imported steel, aluminum, solar panels and washing machines. The goods trade deficit with China increased 11.6 percent to an all-time high of $419.2 billion in 2018. The December trade deficit of $59.8 billion was the largest since October 2008 and overshot economists’ expectations for a $57.9 billion shortfall, as exports fell for a third straight month and imports rebounded. The release of the December report was delayed by a 35-day partial shutdown of the government that ended on Jan. 25. When adjusted for inflation, the goods trade deficit surged $10.0 billion to a record $91.6 billion in December. The jump in the so-called real goods trade deficit suggests that trade was probably a bigger drag on fourth-quarter gross domestic product than initially estimated by the government.

The government reported last week that trade subtracted 0.22 percentage point from GDP growth in the fourth quarter. The economy grew at a 2.6 percent annualized rate in the October-December quarter, slowing from the third quarter’s brisk 3.4 percent pace. The downbeat trade data joined weak December retail sales, construction spending, housing starts and business spending on equipment reports in setting the economy on a low growth trajectory in the first quarter. The trade deficit in December was driven by 1.9 percent drop in exports of goods and services to a 10-month low of $205.1 billion. Exports are weakening because of slowing global demand and a strong dollar, which is making U.S.-made goods less competitive on the international market. Exports of industrial supplies and materials fell by $2.1 billion, with shipments of petroleum products dropping $0.9 billion and crude oil decreasing $0.5 billion. Exports of capital goods dropped $1.7 billion, led by a $1.0 billion decline in civilian aircraft shipments. In December, imports of goods and services increased 2.1 percent to $264.9 billion, likely as businesses stocked up in anticipation of further duties on Chinese imports. Consumer goods imports jumped $2.4 billion, boosted by a $0.7 billion increase in imports of household and kitchen appliances. Cellphone imports increased $0.6 billion. Capital goods imports increased $2.7 billion, with imports of computer accessories rising $0.7 billion. Computer imports also increased $0.7 billion.

NAHB – new home sales end the year up 1.5 percent

Sales of newly built, single-family homes posted a yearly gain of 1.5 percent in 2018, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The December sales numbers rose 3.7 percent to a seasonally adjusted annual rate of 621,000 units after a downwardly revised November report. The sales report was delayed due to the partial government shutdown. “The slight gain for 2018 new home sales reflects solid underlying demand for homeownership,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “Housing affordability remains a challenge across the country, but conditions have improved in early 2019, as illustrated by the recent uptick in builder confidence.” “Despite a period of weakness in the fall, new home sales ended the year with a small gain,” said NAHB Chief Economist Robert Dietz. “While the December sales pace improved on a monthly basis, the current rate of sales remains off the post-Great Recession trend due to housing affordability concerns made worse by the rise in mortgage interest rates at the end of the year. We expect lower mortgage rates in the early months of 2019 will lead to additional new home demand.” A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the December reading of 621,000 units is the number of homes that would sell if this pace continued for the next 12 months. The inventory of new homes for sale continued to rise in December to 344,000 homes available for sale. A year prior, new single-family home inventory stood at 294,000. The median sales price increased in December to $318,600, although it is lower than a year ago when the median sales price was $343,300. This is primarily due to the rising use of price incentives and a slow change toward additional entry-level inventory. Regionally, on a total year basis for 2018, new home sales declined 16 percent in the Northeast and one percent in the West. Sales rose four percent in the South and six percent in the Midwest.

CoreLogic – January marks seven years of annual home price appreciation

–  National prices increased 4.4 percent year over year in January.

–  Home prices forecast to rise 4.6 percent from January 2019 to January 2020.

–  Idaho posted the fastest annual home price appreciation.

National home prices increased 4.4 percent year over year in January 2019 and are forecast to increase 4.6 percent from January 2019 to January 2020, according to the latest CoreLogic Home Price Index (HPI®) Report. The January 2019 HPI gain was a slowdown from the January 2018 gain of 6.1 percent.  CoreLogic analyzes four individual home-price tiers that are calculated relative to the median national home sale price. The lowest price tier increased 6.4 percent year over year, compared with 5.3 percent for the low- to middle-price tier, 4.7 percent for the middle- to moderate-price tier, and 3.5 percent for the high-price tier. As with the overall HPI (all price tiers combined), the price tiers have seen a slowing in price appreciation ranging between 1.4 to 2.3 percentage points compared with a year ago. The overall HPI has increased on a year-over-year basis every month for seven years (since February 2012) and has gained 57.3 percent since hitting bottom in March 2011. As of January 2019, the overall HPI was 5.6 percent higher than its pre-crisis peak in April 2006. Adjusted for inflation, U.S. home prices increased 3.7 percent year over year in January 2019 and were 13.1 percent below their peak. Two states showed double-digit year-over-year increases: Idaho, up 11.2 percent, and Nevada, up 10.2 percent. Prices in 39 states (including the District of Columbia) have risen above their pre-crisis peaks. Of the seven states that had larger peak-to-trough declines than the national average, California, Idaho, and Michigan have surpassed their pre-crisis peaks as of January 2019. Connecticut home prices in January 2019 were the farthest below their all-time HPI high, still 16.3 percent below the July 2006 peak.

NAR – majority of real estate firms remain optimistic, evolving technology remains a challenge

The evolving technological landscape, competition from nontraditional market participants and housing affordability continue to be among the biggest challenges facing real estate firms in the next two years, according to a report by the National Association of Realtors. NAR’s 2019 Profile of Real Estate Firms found that commercial real estate firms were more likely than residential firms to cite local or regional economic conditions as the biggest challenges, while residential firms were more likely to mention competition from non-traditional market participants and virtual firms. The survey found that the vast majority of firms have an optimistic outlook for the industry’s future growth. Although expectations have slightly decreased from last year’s survey, firms remain confident and expect profits from real estate activities to increase or stay the same over the next year. “Real estate firms continue to look optimistically toward the future, with a majority expecting profits to increase in the next two years. These trends are positive signs, particularly in our constantly evolving industry,” said NAR President John Smaby, a second-generation REALTOR® from Edina, Minnesota and broker at Edina Realty. The report is based on a survey of firm executives who are members of NAR and provides insight into firm activity, the scope of benefits and education provided to agents and future market outlooks. The report shows that almost 60 percent of firms expected profitability (net income) from all real estate activities to increase in the next year. Forty-four percent of firms expected competition from virtual firms to increase in the next year and 43 percent expected the same from non-traditional market participants. “It is clear that the real estate industry is rapidly changing, and with that comes growing competition in the market,” said NAR CEO Bob Goldberg. “NAR continues to stay ahead of the evolving trends in technology as we work with market disruptors to best serve our members and ensure they have the resources needed to be successful.”

Firms also predicted the effects different generations of homebuyers would have on the industry. Fifty-eight percent of firms were concerned with Millennials’ ability to buy a home while 46 percent experienced similar heartburn with Millennials’ view of homeownership. Firms typically had 30 percent of their sales volume from past client referrals and 30 percent from repeat business from past clients. Fifty percent of current competition came from traditional brick and mortar large franchise firms. The most common benefit that firms offered to independent contractors, licensees, and agents was errors and omissions/liability insurance at 40 percent. Thirty-five percent of senior management received errors and omissions/liability insurance, 15 percent vacation/sick days, and 10 percent received health insurance. That survey states that over 80 percent of real estate firms had a single office, typically with two full-time real estate licensees, down from three licensees in the 2017 report. Eighty-six percent of firms were independent non-franchised firms, 11 percent were independent franchised firms and 82 percent of firms specialized in residential brokerage. Thirty-two percent of brokers of record were CEOs, presidents or owners, and 64 percent were regional managers or regional vice presidents.Firms with only one office had a median brokerage sales volume of $4.2 million in 2018 (down from $4.3 million in 2016), while firms with four or more offices had a median brokerage sales volume of $100 million in 2018 (down from $235.0 million in 2016). Thirteen percent of all firms had real estate teams, with a median of three people per team. Real estate firms with one office had 18 real estate transaction sides in 2018 (down from 20 in 2016), while firms with four or more offices typically had 478 transaction sides (down from 550 in 2016). Firms usually received 30 percent of their sales volume from past client referrals and 30 percent from repeat business, while 50 percent of current competition came from traditional brick and mortar large franchise firms.

The 10 Most Homebuyer Friendly Markets

Prospective homebuyers are gearing up for the home shopping season, but where should they go to find the most favorable conditions among the hottest metros? A new analysis from Zillow determined how hot a region’s housing market is compared to others by analyzing sale-to-list-price ratios, the percentage of listings with a price cut, and how long homes stay on the market.Among the nation’s 35 largest metro areas, Miami, Tampa, and Orlando combine to show that buyers in Florida will have an easier time shopping for a home than buyers in most other markets. All three have seen year-over-year home-value growth the same or higher than the nation as a whole. Here are the top ten in order: New York, New York; Miami, Florida; Baltimore, Maryland; Chicago, Ilinois; Philadelphia, Pennsylvania; Pittsburgh, Pennsylvania; Tampa, Florida; Orlando, Florida; Houston, Texas and Riverside, CA. On the opposite end of the scale, San Francisco, San Jose, Seattle, and Denver have seen home values grow slower than the nation over the past year, but remain the four hottest markets. Despite having some of the highest prices in the country, buyers face more competition for an even more limited inventory. Surprisingly,  the New York metro area is the most buyer-friendly market right now. People who can afford to buy in the New York metro have relatively little competition, and properties tend to sit longer on the market. Aaron Terrazas, Senior Economist at Zillow said  “Blanket seller’s markets are history, while inventory remains tight, it is starting to climb. The housing market has cooled and in a growing number of markets, buyers are gaining more and more leverage – especially those well-heeled buyers willing to pay top dollar in pricey communities. However, the crunch is still on in more affordable areas so the bulk of buyers continue to see some competition, though somewhat less than a few months ago.” Overall, the housing market still favors sellers but is slowing—trending toward historical norms. According to another Zillow analysis, inventory is the highest it has been in a year, and the number of homes that sold for over list price decreased from 21% in November to 19% in December–the largest month-over-month drop in seasonally adjusted data since at least 2012. The share has been declining steadily since its peak of 24% of homes sold above list price in May 2018.

Average tax refunds up 19%, now in line with 2018 levels, IRS says

The average tax refund, which had been lagging so far this tax season, is now in line with last year’s levels, according to data released Thursday by the Internal Revenue Service. Data from the week ending Feb. 22 showed the average refund was $3,143 – a 1.3% increase when compared with the same period last year ($3,103). It encompasses four weeks of tax season. That represents a meaningful jump when compared with last week’s data, which had the average refund pegged at $2,640, down by double digits when compared with the year prior. The Treasury Department attributed the sizable increase in average refund size to the remainder of the Earned Income Tax Credits and Child Tax Credits being paid out last week. It also cautioned that data is likely to fluctuate week to week, and it is therefore difficult to draw conclusions this early on in the filing season. The overall amount the IRS has paid in refunds is now only down about 3.6%. The total number of refund checks doled out is down 4.8%. So far this year more than 47 million returns have been processed, a decline of more than 4% when compared with the same period last year. More than 3% fewer returns have been received by the agency. Throughout the early weeks of this year’s tax season, many payers voiced frustrations over smaller or non-existent refunds – with some even owing the agency for the first time. On this note, the Treasury continued to emphasize that there is a difference between your tax liability and your tax refund. “The size of someone’s refund is a separate issue from whether their taxes have increased or decreased,” the department noted in a statement on Thursday. “Most people are benefiting from the Tax Cuts and Jobs Act by receiving larger paychecks throughout the year, instead of tax refunds that simply result from people overpaying the government throughout the year.” Overall, Treasury officials said they expect fewer Americans to get refunds this year when compared with last year. However, they said most Americans are still expected to see a net tax benefit as a result of the passage of the Tax Cuts and Jobs Act. A spokesperson for the Treasury Department previously told FOX Business that individual taxes will be lower for “approximately 80% of filers” thanks to the Tax Cuts and Jobs Act. Meanwhile, another 15% of people will see no change. That leaves about 5% who will owe more.

First American – Mortgage fraud risk climbs 4.6% in January

In January, declining mortgage rates mixed with higher loan applications led to more risk of fraud and other errors in the home loan applications, according to the latest First American Loan Application Defect Index. According to the report, the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications rose 4.6% from the previous month, increasing 9.6% from January 2018. Nationally, the Defect Index for refinance transactions moved forward 5.1% from December and is up a whopping 20.3% from the same time a year ago. Notably, the Defect Index for purchase transactions climbed 5.6% from December and is up 3.3% from 2018. First American Chief Economist Mark Fleming said: “Overall, the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications increased by 4.6% compared with the previous month. While overall fraud risk has been on the rise since July 2018 due partially to the impact of natural disasters, the last two months have experienced an acceleration in fraud risk – what could be driving this change?” According to Fleming, the rise is attributed to a plunge in rates and spike in mortgage applications. “Surprisingly, mortgage rates declined in December and continued falling into January, reaching their lowest levels since April 2018,” Fleming continued. “Prospective home buyers and existing homeowners reacted to the lower rates, resulting in a mini-boom in mortgage applications, both purchase and refinance.” Overall, Fleming said a rise in purchase and refinance applications, coupled with strong first-time home buyer demand and tight inventory, bodes well for an early spring home-buying season. However, Fleming notes that this could contribute to further increases in defect risk. “Historically, purchase transactions tend to be more at risk of defects, fraud and misrepresentation, and the pressures resulting from rising demand and a strong sellers’ market compounds that risk,” Fleming continued. “When home values are rising, and the housing market is competitive, more buyers want to enter in the market. As a result, misrepresentation and fraud are more likely on a loan application.”

Cuomo, New Yorkers’ Amazon HQ2 pleas too little, too late?  Ocasio-Cortez blamed

Some New York lawmakers are not ready to give up on the prospect of hosting Amazon’s HQ2 just yet. The state’s Democratic governor, Andrew Cuomo, has been trying to convince Amazon executives to recommit to plans in New York, the New York Times reported, citing two people with knowledge of the efforts. He has even reportedly connected personally with CEO Jeff Bezos while working “intensely behind the scenes to lure the company back.” According to the report, a recent conversation between Cuomo and Bezos marked the first time the pair had spoken since the lucrative deal fell through. Cuomo did not offer Amazon a new location for its facility, but is said to have promised support for the project. Amazon, however, did not indicate it was willing to reconsider. New York had offered $3 billion worth of incentives for Amazon to choose the location. It’s not just Cuomo who is hoping Amazon will change its mind. In an open letter published in The New York Times on Friday, local unions, businesses and other groups communicated support for the project. “A clear majority of New Yorkers support this project and were disappointed by your decision not to proceed,” the letter read. “Governor Cuomo will take personal responsibility for the project’s state approval.” Last month, Amazon announced its decision to abandon plans for its Long Island City, New York HQ2 location – taking along with it 25,000 high-paying jobs and a $2.5 billion investment. The company had been expected to generate billions of dollars’ worth of tax revenue for New York. Amazon’s November HQ2 announcement sparked fierce local opposition, including among some lawmakers – like Democratic Rep. Alexandria Ocasio-Cortez, who cheered the e-commerce giant’s eventual about-face. Cuomo recently hinted he believed Ocasio-Cortez’s surprise victory over Rep. Joe Crowley in the 2018 Democratic primary was at least partially to blame for Amazon’s decision.

DSNews – homebuyers stretching budgets for the American dream?

Buying a home can be a test of willpower, especially if a bidding war breaks out. Typically, it comes down to two options-spend more than the determined budget on that dream home, or make concessions and stick to inventory that is affordable. Some homebuyers choose to go for broke, others are willing to sacrifice amenities to avoid getting stretched too thin, and reaching either conclusion can be a harrowing ride. Speaking about the last year when mortgage rates were low and the market was competitive, NerdWallet’s home expert Holden Lewis described it as, “Homebuyers have been on a dizzying, twisty journey.” The company’s 2019 Home Buyer Report took data that showed how much American homebuyers compromised to make their homeownership dreams come true, and where they could have saved some money. It showed that nearly half (45%) of Americans who’ve purchased a home in the past five years ended up offering more than asking the price before having their offer accepted. That explains the 25% of American homeowners that said they no longer felt financially secure after purchasing their current home, and more than one-third of first-time home buyers could identify with them. By comparing mortgage rates among lenders, home buyers could save $776 million in a single year, that’s over $400 per borrower in the first year of a 30-year mortgage. Thirty-six% of Americans plan to buy a home in the next five years, of which  24% will be in the next year. The study also looked at how those getting back on track from foreclosure feel about the possibility of future ownership. Thirteen% of Americans have lost a home to foreclosure in the past 10 years—61% of those have not bought a home since, and 20% of those who haven’t repurchased say they never plan to again. Quoting CoreLogic, the report pointed out that foreclosures peaked in 2011 during the crisis. More than 1 in 10 Americans (13%) say they’ve lost a home in the past 10 years due to a financial event such as foreclosure, short sale or bankruptcy. More than 6 in 10 (61percent) of them have not purchased a home since their financial event. Twenty% of those who haven’t repurchased say they plan on never buying a home again. On the other hand, 58% say they plan to buy again in the next five years.

Former SoFi CEO Mike Cagney’s blockchain lending startup Figure raises $65 million

Figure Technologies, the blockchain lending startup co-founded by former SoFi CEO Mike Cagney, grew throughout its first year of business last year. The company entered the home equity lending market first, when it rolled out its signature product, Figure Home Equity, which is a hybrid between a traditional home equity loan and a HELOC that allows homeowners to borrow from their home equity. Then the company went after the reverse mortgage market and unveiled a new program that it called an alternative to reverse mortgages. The program, called Figure Home Advantage, sees the company buy a property outright from a homeowner, who then rents the house back from Figure for as long as they want to. And now, the company will have some new funding to continue its expansion. Figure announced this week that it raised $65 million in its Series B equity funding. According to the company, the latest funding round brings the company’s total equity funding to more than $120 million in just its second year of operating. The funding round was led by RPM Ventures and partners at DST Global, with participation from investors Ribbit Capital, DCM, DCG, Nimble Ventures, Morgan Creek, and others. Cagney, who left SoFi in 2017 after reports emerged about the alleged toxic culture at the online lender, said that Figure is “encouraged” by the company’s first-year results and is looking forward to growing thanks to the new funding. “We are encouraged by what we’ve accomplished in our first year, and this investment validates Figure’s market potential,” Cagney, who serves as Figure’s CEO, said. “We launched the fastest HELOC in the market, and we originate, finance and sell every one of our loans on the Provenance blockchain, an industry first,” Cagney continued. “From the diversity of our founding team to our alignment with our members’ financial success, we believe we’re building a different — and better — kind of technology company.” As Cagney noted, the company built and deployed its own blockchain system, which it calls Provenance. The company uses the blockchain for all of its lending activities, which has its advantages, according to the company. This is how Figure describes it: “The company leverages the security, efficiencies and cost advantage of blockchain for loan origination, financing and sales and has a diverse set of funds, banks and dealers active on Provenance today.” According to the company, Figure was the first loan originator on Provenance, but the company says that several other originators plan to use the platform by the middle of this year. The company also said that additional use cases, such as investment funds on blockchain, are also planned for this year. Beyond that, the company plans to expand its Figure Home Advantage reverse mortgage alternative, which is currently being rolled out in Texas, Illinois, and Nevada, and take the program nationwide this year.