CoreLogic – California home sales dip to a four-year low for an August
October 11, 2019
California home sales edged moderately lower in August, marking the twelfth month out of the last 13 in which sales were lower than a year earlier as some would-be buyers remained priced out and others stayed on the sideline, hesitant to buy near a potential price peak. The statewide median sale price remained 1% higher than August 2018 but in Southern California the median was flat year over year and in the San Francisco Bay Area it fell slightly for the fourth consecutive month. An estimated 42,440 new and existing houses and condos sold statewide in August 2019, down 0.2% from July 2019 and down 2.8% from August 2018, CoreLogic public records data show. Activity normally edges higher between July and August, and since 2000 the average change in sales between those two months is a gain of 2.8%. Statewide sales have fallen on a year-over-year basis since August 2018, with the only annual gain – 2.1% – in July this year. Last month’s 2.8% annual sales decline was likely tempered by this summer’s downward trend in mortgage rates. During the first half of this year sales fell nearly 9% from the same period last year, and the annual declines during the first three months of this year were double-digit. The significant drop in mortgage rates in recent months has helped stoke sales by enabling many buyers to purchase homes with at least modestly lower payments than they would have faced last year. While California’s median sale price was up 1% year over year this August, the state’s “typical mortgage payment” – the monthly principal and interest payment on the median priced home – fell almost 11% because of a roughly 1 percentage point decline in mortgage rates over that 12-month period. Compared with a year earlier, August 2019 sales declined across the price spectrum. Deals below $300,000 fell 13.1% year over year, while sales under $500,000 fell 7.9% and sales of $500,000 or more fell 4.9%. Sales of $1 million-plus fell 6% year over year and $2 million-plus deals fell 2.6%. Through the first seven months of this year sales of $1 million or more have fallen 8.1% compared with the same period last year, while $2 million-plus sales are down 7.3%. Stock market volatility has likely played a role in this year’s decline in high-end sales.
The median price paid for all new and existing houses and condos sold statewide in August 2019 was $499,000, down 0.2% from $500,000 in July 2019 and up 1% from $494,000 in August 2018. On average since 2000 the median hasn’t changed at all between July and August. This August’s 1% year-over-year gain in the median was down from an annual increase of 6.2% in August last year and an 8.1% gain in August 2017. Other August 2019 highlights:
– Adjusted for inflation, California’s August 2019 median sale price remained 14.6% below its March 2007 peak.
– In the six-county Southern California region, 22,025 new and existing houses and condos sold in August 2019, down 1.2% year over year. August’s median sale price was $535,000, unchanged year over year. Four of the counties posted annual gains in their medians of between 0.7% and 5.3%, while Orange and San Diego counties logged annual declines of 1.0% and 0.1%, respectively.
– Counties in the relatively affordable Central Valley and Inland Empire (Riverside-San Bernardino counties) recorded some of the state’s largest annual increases in home sales this August, including the following: Butte (+13.9%); Sutter (+12.7%); Solano (+8.6%); Riverside (6.7%); and Kern (+6.2%).
Dow jumps over 400 points on US-China trade progress
U.S. stocks kicked off the final day of the week on a high note as the U.S. and China begin day two of trade talks. This after President Trump signaled that thus far the talks are going well. He tweeted as much on Friday after the opening bell. Trump is set to meet with Chinese Vice Premier Liu He at the White House later today. The Dow rose by more than 400 points in early trading. Also providing a boost was a rebound in consumer sentiment, which in October climbed to a three-month high of 96, up from 93.2 the prior month, according to preliminary data released by the University of Michigan. In stock news, General Motors shares were higher after the automaker provided fresh details on negotiations with the United Auto Workers union. GM, in a letter, outlined some revised points on its offer to the union. Investors are also eyeing Apple which hit an all-time high after a Wall Street analyst raised his price target. Wendy’s also saw a nice pop after disclosing that sales in the third-quarter were stronger than expected. In commodities, oil prices spiked around 1 percent after a rocket attack on an Iranian tanker. Global investors are also expecting to hear from Saudi oil giant Aramco as it prepares for its initial public offering. Early reports indicate the company’s valuation may around $1.5 trillion, slightly below the $2 trillion Crown Prince Mohammed bin Salman was aiming for. In Europe, London’s FTSE gained 0.3 percent, Germany’s DAX added 1.9 percent and France CAC was higher by 1.2 percent. In Asia, China’s Shanghai Composite finished higher by 0.9 percent on Friday and 2.4 percent for the week. Tokyo’s Nikkei closed up 1.2 percent and 1.8 percent for the week. Hong Kong’s Hang Seng ended the session higher 2.3 percent and 1.9 percent for the week.
NAR – rising financial wealth boosts demand for vacation homes
Increased financial wealth and low mortgage rates boosted the demand for and price of vacation homes, according to the National Association of Realtors® 2019 U.S. Vacation Home Counties Report. Between 2013 to 2018, the median sales price in vacation home counties increased at a slightly higher pace of 36% compared to the pace of increase of all existing and new homes sold, at 31%. Median price increases occurred across both expensive and inexpensive areas. The counties with the highest price increases during this five-year span were in three states: Pennsylvania, which includes Pike and Monroe counties; Wisconsin, which contains Price and Washburn counties; and Massachusetts, which includes Nantucket. Lawrence Yun, NAR’s chief economist, says the present figures are telling, especially when compared to data from 10 years prior. “As of 2018, household net worth reached an all-time high of $100.3 trillion – that’s nearly double from a decade ago when wealth declined during the recession. Some of this tremendous growth in wealth, although concentrated, increased demand for vacation homes.” Although most homebuyers purchase their residence with an intent to use the property as a primary home, that is not the case for all buyers. In fact, a portion of homeowners purchase a second home expecting to use it as a general family vacation spot, as a tenant rental, a means to gain equity, or – upon retirement – a future primary residence. The NAR report uses the U.S. Census Bureau’s American Community Survey data to examine “vacation home counties.” These areas are counties where the vacant housing for seasonal, recreational or occasional use, made up 20% or more of the county’s total housing stock. Of 3,141 counties, 206 counties (6.6%) were identified as vacation home counties. Additionally, NAR identified the most and least expensive and affordable vacation home counties, and exactly who is able to afford to purchase a second home.
According to the NAR report, the top 26 vacation home counties – the counties with the largest percentages of vacant seasonal, recreational, or occasional use housing units – include those with nationally-known sites, as well as local destinations. Though less populated, this group includes a large number of counties along northern Michigan, Wisconsin, and Minnesota. Leading the list are counties in Massachusetts (Nantucket and Dukes, 56%; Barnstable, 41%), New Jersey (Cape May, 51%), Colorado (Grand, Summit Eagle, Jackson and Pitkin, 51%), Wisconsin (Vilas, Lincoln, Langlade, Forest and Oneida, 43%), and Michigan (Roscommon, Ogemaw, Gladwin, Iosco and Arenac, 42%). “Some people may visualize the common popular vacation destinations in the U.S. when considering a vacation home, such as counties in Florida or California,” says Yun. “And although those locations have their share of vacation properties, we see that some homeowners prefer some of the other counties, including those in Massachusetts and New Jersey. These areas are often known for harsh weather conditions, but are popular nonetheless.” Some other notable vacation home counties are found in Maine, Pennsylvania, New York, New Hampshire, Maryland, Delaware, North Carolina, Vermont, Florida, California, Georgia, South Carolina, Arizona, Idaho and Oregon. The areas identified as the top 25 most expensive vacation home counties included many well-known summer and winter getaways. Using Black Knight property records data, Nantucket, Mass. emerged as the most expensive vacation home county in 2018, with the median sales price at $1 million. Following were other counties in Massachusetts, including Dukes, a portion of which includes Martha’s Vineyard. Other places of note were Colorado, which contains counties like Pitkin, Eagle, Summit and Grand that are popular Rocky Mountain summer and winter destinations; Florida, which includes Monroe and Collier, known respectively for the Florida Keys and Naples; California, which contains the counties of Mono, Alpine and Inyo, among others, all of which are near Yosemite National Park; and Arizona, which includes Coconino county, home of part of the Grand Canyon. Taking into account the 2018 median sales price and the income of a typical family in the top 25 most expensive areas, the typical family – that is, a family earning the median income only – would be unable to afford to purchase a home in these counties.
Data from Black Knight property records showed that the median price for a vacation home was usually less than $100,000. The most inexpensive vacation home counties were found in Maine (Aroostook, Piscataquis, Somerset, Franklin, Oxford, Washington and Waldo), New York (Chenango and Franklin), Pennsylvania (McKean, Venango, Clarion, Elk, Potter, Clearfield and Jefferson), Missouri (Miller), and Michigan (Gogebic, Lake, Arenac, Iosco and Cheboygan). The expected annual mortgage on a 30-year mortgage with a 20% down payment for a home purchased at the median sales price is less than $5,000. Under such a scenario, the mortgage payment would account for less than 10% of the income of a typical family that purchased a vacation home in one of the top least expensive vacation destination locations. Owning a second home is more affordable for families living in these particular areas. Buyers purchasing a vacation home usually pay all-cash or opt to obtain a mortgage, and typically make a 20% down payment. Recent low mortgage rates made it more affordable to borrow to purchase a second home. Cape May, New Jersey, topped the list of vacation home counties where second home mortgages accounted for the largest share of home purchase loans. Also on that list, among other areas, was California, which has Alpine and Mono counties; New York, which has Hamilton and Delaware counties; and, among others, Colorado, which is the location of Grand and Summit counties. Most of the borrowers who obtained mortgages for second homes earned around $100,000 or more. Among borrowers for second homes, the estimated mortgage payment to income ratio ranged from 4% to 12% in the vacation home counties.
Amazon takes a stand: Company releases “Our Positions” paper
Amazon took the extraordinary step of laying out its positions on nearly every hot-button topic in the world in a web page that unveiled Thursday, bringing new clarity to the tech company’s public policy agenda. The page, which is simply titled “Our Positions,” states where the Seattle tech giant stands on eleven issues — several of which have a direct impact on business in America. “We created this page to provide customers, investors, policymakers, employees, and others our views on certain issues,” the company states on the new page. “While our positions are carefully considered and deeply held, there is much room for healthy debate and differing opinions. We hope being clear about our positions is helpful.” Amazon starts off the “Our Positions” missive by saying “the federal minimum wage in the U.S. is too low and should be raised.” An issue that will become a topic during the 2020 election. This section states that federal minimum wage is $7.25 and has not gone up since 2009, and declares that “raising the minimum wage would have a profound impact on the lives of tens of millions of individuals and families across the nation and help address growing income inequality.” The company then states that it pays a minimum wage of $15 an hour to all full-time, part-time, temporary, and seasonal employees across the United States, and then says they offer the best benefits that are “egalitarian, regardless of level or seniority.” Amazon supports and lobbies for reforms to the immigration system, which includes a legal pathway to citizenship for Dreamers, reforms to the green card and high-skilled visa programs, and their active participation in legal challenges to the Trump administation’s travel ban.
The tech giant feels that counterfeiters should be given stronger penalties under federal law. It claims that counterfeiters are “undeterred and continue to push their products through online and physical stores, harming both consumers and the retail companies who serve them.” In 2018, Amazon invested more than $400 million in personnel and preventative tools built on machine learning and data science, and employed more than 4,000 employees to fight fraud and counterfeiting in our stores. Last year alone, our proactive efforts prevented more than 1 million suspected bad actors from opening Amazon seller accounts and blocked more than 3 billion suspected bad listings. “While our positions are carefully considered and deeply held, there is much room for healthy debate and differing opinions. We hope being clear about our positions is helpful” Amazon supports U.S. federal policies that make intellectual property violations crimes with meaningful penalties, which includes a requirement that every package imported into the U.S. clearly identify who is responsible for shipping the product. “Consumer data privacy should be protected under federal law,” the policy paper states. Amazon claims it has built privacy into our services from the ground up, and it never sells data of its individual customers. Amazon discloses in their privacy notice the types of data collected and the limited circumstances in which we share customer data with third parties. Amazon also feels that “corporate tax codes in any country should incentivize investment in the economy and job creation.” It also goes into how they feel tax codes – particularly those between countries – should be coordinated to have neither loopholes to create lower taxes or overlaps that lead to higher tax rates “because these distort company behavior in ways that don’t benefit consumers or the economy. It also declared support for the Organisation for Economic Co-operation and Development (OECD) and its efforts with governments around the world to review the international tax system.
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The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for February 2020 shows mortgage applications for new home purchases increased 25.9 percent compared from a year ago. Compared to January 2020, applications decreased by 1 percent. This change does not include any adjustment for typical seasonal patterns. "Despite a monthly decrease in February new applications and estimated new home sales, the year-over-year trends were strong, with new applications increasing 26 percent, and our estimate of new home sales increasing 8 percent," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Looking ahead, there is significant uncertainty regarding how the coronavirus epidemic will impact the housing market, and some of January's record-level activity could have been attributed to the warmer winter weather, lower mortgage rates, and the tight inventory of existing homes on the market - especially in lower price tiers." MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 746,000 units in February 2020, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. The seasonally adjusted estimate for February is a decrease of 13.8 percent from the January pace of 865,000 units. On an unadjusted basis, MBA estimates that there were 64,000 new home sales in February 2020, a decrease of 3 percent from 66,000 new home sales in January. By product type, conventional loans composed 69.3 percent of loan applications, FHA loans composed 18.5 percent, RHS/USDA loans composed 0.8 percent and VA loans composed 11.4 percent. The average loan size of new homes decreased from $346,140 in January to $340,169 in February. NAHB - HUD, Fannie Mae and Freddie Mac suspend foreclosures and evictions President Trump announced today that he has directed the Department of Housing and Urban Development to suspend foreclosures and evictions for mortgages insured by the Federal Housing Administration through the end of April. The Federal Housing Finance Agency also announced that Fannie Mae and Freddie Mac will follow suit and suspend all foreclosures and evictions for at least 60 days for home owners with mortgages backed by the two government-sponsored enterprises. “This foreclosure and eviction suspension allows home owners with an Enterprise-backed mortgage to stay in their homes during this national emergency,” said FHFA Director Mark Calabria. “As a reminder, borrowers affected by the coronavirus who are having difficulty paying their mortgage, should reach out to their mortgage servicers as soon as possible. The Enterprises are working with mortgage servicers to ensure that borrowers facing hardship because of the coronavirus can get assistance.” Earlier this month, FHFA announced that Fannie Mae and Freddie Mac would allow borrowers impacted by the coronavirus to suspend mortgage payments for up to 12 months. New home construction dips again in February Construction of new homes fell again in February, but not as much as the previous month. Those declines follow a December surge which had pushed home construction to the highest level in 13 years. Builders started construction on 1.60 million homes at a seasonally adjusted annual rate, a decline of 1.5% from 1.62 million units in January, the Commerce Department reported Wednesday. Analysts had expected a more significant drop. The economic impact of the coronavirus outbreak was not apparent in the February numbers. Application for building permits, considered a good sign of future activity, fell 5.5% in February to an annual rate of 1.46 million units. However, permits for single-family home construction rose 1.7%. Single-family housing starts were up 6.7% to 1,072,000 in February over the revised January figure of 1,005,000. The report on housing starts showed that home building declined the most in the Northeast, falling 25.1%, followed by a 8.2% drop in the West. Home building fell modestly in the West and South regions. The National Association of Home Builders reported Tuesday that its survey of builders' sentiment declined slightly in February, but remains high. The group said that builder confidence reflected a decline in mortgage rates, a low supply of existing homes and a strong labor market with rising wages and the lowest unemployment rate in a half century. But that could change drastically in the coming months as American industry braces for the impact of COVID-19, which is grinding the economy to a near halt as people stay home, airlines cancel flights and public events are called off. "Due to the slowdown in economic growth and the volatility in markets from the coronavirus, mortgage rates will remain lower for longer, which will help homebuyers in the longer run," said Adam DeSanctis of the Mortgage Bankers Association. "However, we may start to see these homebuilding trends take a turn for the worse, depending on the industry's ability to continue day-to-day operations during these difficult times." The average rate on a 30-year-fixed mortgage ticked up slightly to 3.36% last week from 3.29% the previous week, which was the lowest level since mortgage buyer Freddie Mac started tracking the average in 1971. It could fall further this week after the Fed on Sunday slashed its benchmark rate to nearly zero. CoreLogic - single-family rent price increases double the rate of inflation, spurring affordability concerns in the midst of economic volatility - For the 14th consecutive month, Phoenix had the highest year-over-year rent price increase at 6.4% - Lower-priced rentals experienced increases of 3.5%, compared to gains of 2.6% among higher-priced rentals CoreLogic released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas. Data collected for January 2020 shows a national rent increase of 2.9% year over year, down slightly from a 3.2% year-over-year increase in January 2019. Rent prices are now increasing at double the rate of inflation, presenting affordability challenges among current and prospective renters. Low rental home inventory, relative to demand, fuels the growth of single-family rent prices. The SFRI shows single-family rent prices have climbed between 2010 and 2019. However, overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%, and have stabilized at around 3% over the past year. Low-end rentals propped up national rent growth in January, which has been an ongoing trend since May 2014. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.5% year over year in January 2020, down from a gain of 3.9% in January 2019. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.6% in January 2020, down from a gain of 2.9% in January 2019. Among the 20 metro areas shown in Table 1, and for the 14th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in January 2020 at 6.4% (compared to January 2019). Tucson, Arizona experienced the second-highest rent price growth in January 2020 with gains of 5.2%, followed closely by Las Vegas at 4.9%. Honolulu experienced the lowest rent increases out of all analyzed metros at 0.6%. Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix experienced the highest year-over-year rent growth in January 2020, driven by annual employment growth of 3.2%. Austin, Texas experienced a 3.6% employment growth, which played a role in its above-average rent growth of 3.4% in January. This is compared with the national employment growth average of 1.5%, according to data from the United States Bureau of Labor Statistics. “The single-family rental market benefited from low unemployment rates over the past year, resulting in an increase in rental demand,” said Molly Boesel, principal economist at CoreLogic. “However, rents are increasing at about double the rate of inflation, which has negatively impacted affordability.” Home sales 'robust' despite coronavirus outbreak, real estate CEO says With many companies struggling amid the coronavirus pandemic, one industry may not be feeling the hurt yet, according to real-estate company Hovnanian Enterprises Inc.'s CEO. "The last two weeks, in one word, have been robust," Hovnanian Enterprises Inc. chairman and CEO Ara Hovnanian shared with FOX Business' Liz Claman on Tuesday. "We have been selling a lot of homes. Frankly, it's been surprising." Hovnanian admitted that going into the outbreak, his company was already seeing strong sales, so they are remaining cautiously optimistic. "New sales closings have been progressing regularly," Hovnanian said on "The Claman Countdown." "Customers want their home. They want to nest. If they're going to be inside for a while, they want to do it in their own home." He recognized the situation is changing quickly, but as of now, he's encouraged. Coronavirus spurs Trump to invoke Defense Production Act 'just in case we need it' President Trump will invoke the Defense Production Act because of the coronavirus pandemic, he said at a press conference Wednesday. "We'll be invoking the Defense Production Act just in case we need it. I think you all know what it is, and it can do a lot of good things if we need it," Trump said, adding that he'd sign it after the presser. The decision means the private sector can ramp up manufacturing of emergency supplies, including medical equipment. In addition, the administration is pushing for direct payments to relieve people suffering financially because of the virus. Trump said the size of those checks is "to be determined." Trump had said he hoped he didn't need the Defense Production Act because "it's a big step" in a Tuesday's press conference. President Trump declared a national emergency and enacted emergency powers outlined in the Stafford Act on Friday. MBA - mortgage applications decrease in latest MBA weekly survey Mortgage applications decreased 8.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 13, 2020. The Market Composite Index, a measure of mortgage loan application volume, decreased 8.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 8 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week and was 402 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index remained unchanged compared with the previous week and was 11 percent higher than the same week one year ago. "The ongoing situation around the coronavirus led to further stress in the financial markets late last week, with unprecedented volatility and widening spreads. This drove mortgage rates back up to their highest levels since mid-February and led to a 10 percent decrease in refinance applications. However, refinance activity remains very high. Excluding the spike two weeks ago, the index remained at its highest level since October 2012, and refinancing accounted for almost 75 percent of all applications," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The Federal Reserve's rate cut and other monetary policy measures to help the economy should help to bring down mortgage rates in the coming weeks, spurring more refinancing. Amidst these challenging times, the savings that households can gain from refinancing will help bolster their own financial circumstances and support the broader economy." Added Kan, "Purchase activity was flat but remained over 10 percent higher than a year ago. The purchase market was on firm footing to start the year and has so far held steady through the current uncertainty. Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search, even with these lower mortgage rates." The refinance share of mortgage activity decreased to 74.5 percent of total applications from 76.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications. The FHA share of total applications increased to 7.3 percent from 6.9 percent the week prior. The VA share of total applications increased to 14.5 percent from 13.1 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.74 percent from 3.47 percent, with points increasing to 0.37 from 0.27 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.77 percent from 3.58 percent, with points increasing to 0.32 from 0.20 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.71 percent from 3.57 percent, with points increasing to 0.28 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.10 percent from 2.90 percent, with points increasing to 0.37 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 5/1 ARMs increased to 3.19 percent from 3.02 percent, with points decreasing to 0.19 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The high-level takeaways from ATTOM Data Solutions’ newly released 2020 U.S. Single Family Rental Market Report are potential rental returns decrease from a year ago in 59 percent of the U.S. counties analyzed, while the highest potential SFR returns are in the Baltimore, Vineland, Macon, Mobile and Atlanta Metros. ATTOM’s annual single family rental report this year analyzed single-family rental returns in 389 U.S. counties with a population of at least 100,000 and sufficient rental and home price data. Rental data comes from the U.S. Department of Housing and Urban Development, and home price data comes from publicly recorded sales deed data collected and licensed by ATTOM Data Solutions. According to the report, the average annual gross rental yield (annualized gross rent income divided by median purchase price of single-family homes) among the 389 counties analyzed is 8.4 percent for 2020, down slightly from an average of 8.6 percent in 2019. The report revealed the counties with the highest potential annual gross rental yields for 2020: Baltimore City/County, MD (28.9 percent); Cumberland County, NJ, in the Vineland-Bridgeton metro area (20.1 percent); Bibb County, GA, in the Macon metro area (18.2 percent); Mobile County, AL (15.7 percent); and Clayton County, GA, in the Atlanta metro area (15.1 percent). Baltimore City, Cumberland and Bibb counties also had the top three yields in 2019. ATTOM’s report also pointed out that among counties with a population of at least 1 million, the highest potential gross rental yields in 2020 are in Wayne County (Detroit), MI (14.5 percent); Cuyahoga County (Cleveland), OH (11.8 percent); Cook County, IL (9.3 percent); Dallas County, TX (9.1 percent); and Harris County, TX (8.7 percent). Here are the Top 10: Saint Clair, IL (21.0 percent); Jefferson, AL (20.7 percent); Mobile, AL (19.6 percent); Baltimore City, MD (18.5 percent); Caddo, LA (17.3 percent); Beaver, PA (15.7 percent); Lorain, OH (15.4 percent); Madison, IL (10.0 percent); Summit, OH (9.9 percent); and Spartanburg, SC (8.1 percent). ATTOM’s 2020 SFR market report also noted the counties with the lowest potential annual gross rental yields: San Francisco County, CA (3.8 percent); San Mateo County, CA (3.8 percent); Williamson County, TN, in the Nashville metro area (3.9 percent); Kings County (Brooklyn), NY (4.3 percent); and Santa Clara County, CA (4.3 percent). Moreover, along with Kings County and Santa Clara County, the lowest potential annual gross rental yields in 2020 among counties with a population of at least 1 million are in Orange County, CA (5.0 percent); Queens County, NY (5.1 percent); and Los Angeles County, CA (5.2 percent). Impossible Foods raises $500M in new funding, says it can 'thrive' in coronavirus pandemic Plant-based meat producer Impossible Foods has raised around $500 million in its latest funding round. The Redwood City, California-based food-tech startup that makes alternative meat products using a molecule called heme that makes food look, taste and bleed like real beef or pork, announced Monday its latest series F funding round led by new investor South Korea's Mirae Asset Global Investments. Impossible said the new investment will go toward accelerating its manufacturing and scale helping it to expand its retail presence in more international markets and increase supply of newer products like its plant-based Impossible Sausage and Impossible Pork. The funding news comes with the widening coronavirus pandemic resulting in school closures and businesses like restaurants, bars and gyms to shutter in an attempt to contain virus from spreading. What's more, grocery store shelves have become increasingly empty as Americans stock up. "With this latest round of fundraising, Impossible Foods has the resources to accelerate growth -- and continue to thrive in a volatile macroeconomic environment, including the current COVID-19 pandemic." With this latest round of fundraising, Impossible Foods has the resources to accelerate growth -- and continue to thrive in a volatile macroeconomic environment, including the current COVID-19 pandemic," Impossible Foods' Chief Financial Officer David Lee said in a statement. Impossible Foods has raised $1.3 billion in funding, including its latest round. Other investors include Horizons Ventures, Khosla Ventures and Temasek. And the $5 billion market for plant-based foods has grown increasingly competitive as larger food companies like Kellogg's, Nestle and Tyson roll out their own versions of plant-based meat at lower price points. As a result, Impossible Foods lowered its wholesale prices by 15 percent. And its competitor Beyond Meat told analysts earlier this month it wants to have at least one of its products comparably priced to real meat by 2024. MBA - commercial/multifamily mortgage debt grows in the fourth quarter of 2019 The level of commercial/multifamily mortgage debt outstanding at the end of 2019 was $248 billion (7.3 percent) higher than at the end of 2018, according to the Mortgage Bankers Association's (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report. MBA's report found that total mortgage debt outstanding in the final three months of 2019 rose by 2.1 percent ($75.0 billion) compared to last year's third quarter, with all four major investor groups increasing their holdings. Multifamily mortgage debt grew by $30.4 billion (2.0 percent) to $1.53 trillion during the fourth quarter, and by $116.7 billion (8.2 percent) for the entire year. "In 2019, the amount of mortgage debt backed by commercial and multifamily properties grew by the largest annual amount since before the Global Financial Crisis," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Every major capital source increased their holdings, and some by double digits. Continuing the recent trend, the growth in multifamily mortgage debt outpaced that of other property types." Added Woodwell, "Looking ahead, a key question will be how the coronavirus and related economic shocks will affect the market's momentum in 2020. At this point it is still too early to tell." The four major investor groups are: bank and thrift; commercial mortgage backed securities (CMBS); collateralized debt obligation (CDO) and other asset backed securities (ABS) issues; federal agency and government sponsored enterprise (GSE) portfolios and mortgage backed securities (MBS); and life insurance companies. MBA's analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under "Life Insurance Companies"), and in CMBS, CDOs and other ABS for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues). Commercial banks continue to hold the largest share (39 percent) of commercial/multifamily mortgages at $1.4 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages, at $744 billion (20 percent of the total). Life insurance companies hold $561 billion (15 percent), and CMBS, CDO and other ABS issues hold $504 billion (14 percent). Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total debt outstanding at $744 billion (49 percent of the total), followed by commercial banks with $459 billion (30 percent), life insurance companies with $149 billion (10 percent), state and local governments with $88 billion (6 percent), and CMBS, CDO and other ABS issues with $48 billion (3 percent). In the fourth quarter of 2019, CMBS, CDO and other ABS issues saw the largest rise in dollar terms in their holdings of commercial/multifamily mortgage debt, with an increase of $23.1 billion (4.8 percent). Commercial banks increased their holdings by $21.5 billion (1.5 percent), agency and GSE portfolios and MBS increased their holdings by $16.1 billion (2.2 percent), and finance companies saw the largest decrease at $117 million (0.4 percent). In percentage terms, CMBS, CDO and other ABS issues saw the largest increase - 4.8 percent - in their holdings of commercial/multifamily mortgages, and state and local government retirement funds saw their holdings decrease the most, at 1.0 percent. The $30.5 billion rise in multifamily mortgage debt outstanding between the third and fourth quarters of 2019 represented a 2.0 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase, at $16.1 billion (2.2 percent), in their holdings of multifamily mortgage debt. Commercial banks increased their holdings of multifamily mortgage debt by $6.7 billion (1.5 percent). CMBS, CDO and other ABS issues increased holdings by 9.5 percent to $4.1 billion. Private pension funds saw the largest decline (7.2 percent) in their holdings, by $65 million. In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages (23.9 percent), and private pension funds saw the biggest decrease (7.2 percent). Between December 2018 and December 2019, commercial banks saw the largest gain (6.1 percent) in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $82 billion. State and local government decreased their holdings of commercial/multifamily mortgages by $1.5 billion (1.4 percent). In percentage terms, finance companies saw the largest increase (14.9 percent) in their holdings of commercial/multifamily mortgages, and state and local government retirement funds saw the largest decrease (3.3 percent). The $116.7 billion rise in multifamily mortgage debt outstanding during 2019 represents an 8.2 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt at 10 percent ($69.2 billion). State and local government saw the largest decrease in their holdings down $1.3 billion (1.4 percent). In percentage terms, REITs recorded the largest increase in their holdings of multifamily mortgages, 52 percent, while private pension funds saw the largest decrease, 24 percent. China's economy skids as virus paralyzes factories, households China factory production plunged at the sharpest pace in 30 years in the first two months of the year as the fast-spreading coronavirus and strict containment measures severely disrupted the world's second-largest economy. Urban investment and retail sales also fell sharply and for the first time on record, reinforcing views that the epidemic may have cut China's growth by half in the first quarter and that authorities will need to do more to restore growth. Industrial output fell by a much larger-than-expected 13.5% in January-February from the same period a year earlier, data from the National Bureau of Statistics (NBS) showed on Monday. That was the weakest reading since January 1990 when Reuters records started, and a sharp reversal of the 6.9% growth in December. The median forecast of analysts polled by Reuters was for a rise of 1.5%, though estimates varied widely. "Judging by the data, the shock to China's economic activity from the coronavirus epidemic is greater than the global financial crisis," said Zhang Yi, chief economist at Zhonghai Shengrong Capital Management. "These data suggest a small contraction in the first-quarter economy is a high probability event. Government policies would need to be focused on preventing large-scale bankruptcies and unemployment." The dire batch of official economic data on Monday also showed a shocking declines in the retail and property sectors. Fixed asset investment fell 24.5% year-on-year, dashing forecasts for a 2.8% rise and skidding from the 5.4% growth in the prior period. Private sector investment dived 26.4% from a year earlier. Retail sales shrank 20.5% on-year, compared with a rise of 0.8% tipped by analysts and 8% growth in December as consumers shunned crowded places like shopping malls, restaurants and movie theaters. China's jobless rate rose to 6.2% in February, compared with 5.2% in December and the highest since the official records were published. While officials say the epidemic's peak in China had passed, analysts warn it could take months before the economy returns to normal. The fast spread of the virus around the world is also sparking fears of a global recession that would dampen demand for Chinese goods. The NBS in a statement on Monday said the impact from the coronavirus epidemic is controllable and short-term and authorities would strengthen policy to restore economic and social order. Mainland China has seen an overall drop in new coronavirus infections, but major cities such as Beijing and Shanghai continued to wrestle with cases involving infected travelers arriving from abroad, which could undermine China's virus fighting efforts. "While domestic conditions should improve slowly in the coming months, the mounting global disruption from the coronavirus will hold back the pace of recovery," said Julian Evans-Pritchard, Senior China Economist at Capital Economics. Prior to a significant deterioration in the virus, analysts had predicted a rapid V-shaped recovery for China's economy, similar to that seen after the SARS epidemic in 2003-2004. However, the outbreak escalated just as many businesses were closing for the long Lunar New Year holidays in late January, and widespread restrictions on transportation and personal travel, as well as mass quarantine, delayed their reopening for weeks. Both exports and imports fell in the first two months from a year earlier, while slumping demand pushed factory prices back into deflation. Factories may not be back to full output until April, some analysts estimate, and consumer confidence may take even longer to recover. The pain in the industrial sector was also seen in China's real estate market. Property investment fell at its fastest pace on record while home prices stalled for the first time in nearly five years. Despite those numbers, NBS spokesman Mao Shengyong said short-term policies to support the property market were not among the government's broad swathe of stimulus options. Authorities have been ramping up support since the virus outbreak escalated, with most aimed at helping cash-starved companies stay afloat until conditions improve. Other major global economies have more recently unleashed a wave of stimulus to prop up growth and ensure financial stability. China's central bank said on Friday it was cutting the amount of cash that banks must hold as reserves (RRR) for the second time this year, releasing another 550 billion yuan ($78.82 billion) to push down borrowing costs. Mao from the NBS told reporters after the data release there is room for China to appropriately raise budget deficit ratio this year, and Beijing would expand effective investment to cope with the economic downward pressure. China has cut several key interest rates since late January, and some analysts are expecting another reduction in its benchmark lending rate this week. It has also urged lenders to extend cheap loans to the worst-hit firms and tolerate late payments, though analysts note that will likely saddle banks with more bad loans. The government has also announced fiscal support measures, including more funding for the virus fight, tax waivers, cuts in social insurance fees and subsidies for firms. "I'm worried about the small firms. The pressure of rent remains a problem and tax waivers don't mean much, as there's no revenues," said Hua Changchun, chief economist at Guotai Junan Securities. "If Q1 GDP growth turns negative, there would be huge pressure to achieve the full year target, unless we can have a 8%-10% of GDP growth in the second quarter." NAHB - Fed cuts interest rates to zero The Federal Reserve on Sunday evening slashed interest rates to zero in a dramatic move to boost the economy and keep borrowing costs as low as possible for consumers and businesses in the wake of the coronavirus crisis. The Fed reduced the federal funds target rate by a full percentage point, from 1% to 1.25% down to 0% to 0.25%. NAHB Chief Economist Robert Dietz provides analysis on how the Fed action will provide a stimulus to the economy and housing in this Eye on Housing blog post. In an official statement, the Fed said: “The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4%. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” The moves comes less than two weeks after the Fed made an emergency 50-point basis rate cut and pledged to purchase $1.5 trillion in bonds to keep the financial markets from seizing up. In today’s announcement, the Fed also announced that in order to support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, the central bank will purchase at least $500 billion of Treasury bonds and $200 billion of mortgage-backed securities over the coming months.
