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NAHB - week 2 survey shows impact of virus on the rise

Mon, 06 Apr 2020 22:16:41 GMT

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Residential refinance mortgages more than double in fourth quarter of 2019

Fri, 20 Mar 2020 17:28:03 GMT

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MBA - February new home purchase mortgage applications increased 25.9 percent

Thu, 19 Mar 2020 15:46:47 GMT

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.

ATTOM - U.S. counties with the greatest single family rental growth

Mon, 16 Mar 2020 18:46:10 GMT

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.

MBA - mortgage applications increase

Thu, 12 Mar 2020 15:25:50 GMT

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ATTOM - top metro areas seeing more home flips, millennials and baby boomers

Tue, 10 Mar 2020 12:54:13 GMT

Fresh off the heels of ATTOM Data Solutions’ Year-End 2019 U.S. Home Flipping Report released this week, ATTOM decided to take a deep dive into the demographics within the top metro areas seeing more home flips and here is what we found. According to ATTOM’s latest year-end home flipping report, U.S. single family homes and condos flipped in 2019 reached the highest point since 2006 – there were 245,864 home flips. That number represented 6.2 percent of all home sales in the nation during the year, an 8-year high. That rate was up from 5.8 percent in 2018 and from 5.7 percent in 2017. Drilling down to the metro area, home flips as a portion of all home sales increased from 2018 to 2019 in 122 of the 190 metro areas analyzed in the report (64.2 percent). The largest annual increases in the home flipping rate came in Laredo, TX (up 103.5 percent); Raleigh, NC (up 59.8 percent); Charlotte, NC (up 44.1 percent); Fort Smith, AR (up 43.2 percent) and Columbus, GA (up 40.5 percent). Metro areas qualified for the report if they had a population of at least 200,000 and at least 100 home flips in 2019.In terms of the demographic data we looked at from 2011-2016, here are the increases and decreases in millennials and baby boomers in these same areas, along with the complete list of the top 10 metro areas seeing the highest flipping rates with at least 200,000 people and 100 home flips in 2019: Laredo, TX – millennials down 1.6 percent, baby boomers down 9.4 percent; Raleigh, NC – millennials up 15.4 percent, baby boomers up 3.5 percent; Charlotte-Concord-Gastonia, NC-SC – millennials up 12.9 percent; baby boomers down 2.0 percent; Fort Smith, AR-OK – millennials down 0.5 percent, baby boomers down 6.6 percent; Columbus, GA-AL – millennials down 2.2 percent, baby boomers down 10.9 percent; Atlanta-Sandy Springs-Roswell, GA – millennials up 8.0 percent, baby boomers down 8.2 percent; San Antonio-New Braunfels, TX – millennials up 12.2 percent, baby boomers down 3.0 percent; Brownsville-Harlingen, TX – millennials down 12.4 percent, baby boomers down 4.7 percent; Tucson, AZ – millennials up 3.3 percent; baby boomers down 6.9 percent; and Springfield, MO – millennials up 7.1 percent, baby boomers down 5.2 percent.

Also according to the report, aside from Raleigh, NC, and Charlotte, NC, the biggest annual flipping-rate increases in MSAs with a population of 1 million or more were in Atlanta, GA (up 39.1 percent); San Antonio, TX (up 37.2 percent) and Tucson, AZ (up 34.2 percent). ATTOM’s report noted that biggest decrease in annual flipping rates among MSAs with a population of 1 million or more were in Seattle, WA (down 16.9 percent); Indianapolis, IN (down 9.1 percent); Grand Rapids, MI (down 8.0 percent); Rochester, NY (down 5.9 percent) and Baltimore, MD (down 4.8 percent). And, while flipping activity rose, profit margins continued dropping. Homes flipped in 2019 typically generated a gross profit of $62,900 nationwide (the difference between the median sales price and the median paid by investors), down 3.2 percent from $65,000 in 2018 year and 6 percent from the post-recession peak of $66,899 in 2017. Also in terms of profits, the typical gross flipping profit of $62,900 translated into a 40.6 percent return on investment compared to the original acquisition price. That was down from a 45.8 percent gross flipping ROI in 2018 and down from 51.4 percent ROI in 2017. The latest typical return on home flips stood at the lowest point since 2011.

Dow plunges as much as 2,000 points, oil crashes as price war erupts and coronavirus spreads

U.S. equity markets were sharply lower Monday morning after an oil price war broke out between Saudi Arabia and Russia and the new coronavirus showed signs of spreading. The Dow Jones Industrial Average was down by as many as 2,046 points, or 7.9 percent, in the opening minutes of trading while the S&P 500 and Nasdaq Composite were lower by 7.4 percent and 7.3 percent, respectively. Trading, which was already halted for 15 minutes, will see another stoppage if the S&P 500 trades down 13 percent. The steep slide has caused the New York Federal Reserve to increase its daily cash injections into the banking system to $150 billion from $100 billion. The stock-market selloff comes after a production dispute between OPEC members, led by Saudi Arabia, and Russia sent West Texas Intermediate crude oil, the U.S. benchmark, plunging by as much as 33.8 percent, the most since the outbreak of the 1991 Persian Gulf War, to a low of $27.34 a barrel in overnight trading. After a small rebound, WTI was trading down 21.4 percent at $32.42 a barrel. Oil majors, including Exxon Mobil, Chevron and BP, were sharply lower, as were service providers Haliburton and Schlumberger. Elsewhere, travel-related names remained under pressure after Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, warned Americans with underlying conditions not to take long plane trips or cruises due to the new coronavirus outbreak. Some drugmakers working on treatments for COVID-19, including Inovio Pharmaceuticals and BioCryst Pharmaceuticals were sharply higher. U.S. Treasurys were the beneficiary of the flight to safety with heavy buying pushing longer-dated yields lower by more than 30 basis points. Overnight, the benchmark 10-year yield fell to a record low of 0.38 percent before bouncing to 0.433 percent. Likewise, the 30-year yield plunged below 1 percent for the first time ever, and was down 36.8 basis points at 0.854 percent on Monday morning. The drop in Treasury yields accompanies expectations the Federal Reserve will cut rates by 100 basis points at its March 18 meeting, lowering its key interest rate to a range between 0 and 25 basis points. The expectation of the oversized rate cut is putting pressure on financials, which typically make 50 percent to 75 percent of their net revenue from the spread between the interest paid to depositors and the interest charged to borrowers. Lower rates mean the banks will make less per loan. J.P. Morgan Chase, Bank of America and Truist were all tumbling. Meanwhile, Wells Fargo was in focus after board chair Betsy Duke resigned.

Mortgage rates are lower than ever, but are lenders keeping them from going even lower?

Mortgage rates fell to an all-time low in the last week, and lenders across the country are now dealing with a deluge of mortgage applications as borrowers rush to both buy and refinance. But are some of those same lenders keeping borrowers from getting even lower interest rates than they already are? The answer: Possibly. The mortgage business is clearly in uncharted waters now, with interest rates falling below 3.3% for the first time ever. The yield on the benchmark 10-year U.S. Treasury note continues to fall every day to new record lows, and mortgage rates typically track with the 10-year Treasury. As of Friday afternoon, the yield on the 10-year Treasury was roughly 0.76%, but it had never fallen below 1.1% as recently as last week. Given the typical spread between the 10-year Treasury and mortgage rates, borrowers should be able to get an interest rate in the neighborhood of 2.75%, or perhaps even lower than that. But that’s not happening, at least not across the board. Why? Because it appears that some lenders are trying to protect themselves from being crushed by demand. Several lenders, mortgage brokers and other mortgage professionals shed light on an emerging trend wherein some lenders are keeping rates higher than they could be because they are not fully equipped to deal with the surge of demand they are seeing. The term that several used for this phenomenon is “throttling,” with lenders keeping rates above where they could be to ensure they can fulfill all the business they are getting.

The issue, as several mortgage professionals said this week, is capacity. Put simply, there is only so much volume that mortgage companies can handle. Some can handle more than others, depending on their size and technological capabilities. But others are already being stretched thin by the surging demand. Several lenders shared that they’ve heard of other lenders having to extend their lock windows to as much 180 days because they’re concerned they won’t be able to close these new loans for as much as six months. Now, it’s possible they’re telling tales out of school, but for comparison, the latest data from Ellie Mae shows that the average time-to-close (the period between loan application and loan closing) across the industry was 48 days in January. So instead of a month and a half, some lenders may now be quoting six-month closing windows. Subsequent reports from Ellie Mae and others will show if closing times begin to rise. LoanDepot CEO Anthony Hsieh directly addressed the capacity issue in a press release issued Thursday. “The current market conditions can create exceptional opportunities for consumers, but I think it’s going to be critical for consumers to be very knowledgeable and, importantly, very patient,” Hsieh said. “The analogy I would use is this: when you are using shared Wi-Fi at an airport, sometimes speed can be slowed because everyone around you is trying to use the same services. This market is unpredictable, but upcoming capacity demand for refinance may create a similar, slowed experience.” Hsieh suggested that many lenders may be “over capacity” in the next two to three months. At its core, the issue is how much mortgage business can the mortgage business handle? Several industry professionals said this week that they are seeing some sizable shifts in mortgage rates on a minute-by-minute basis. They said that interest rates are fluctuating so wildly right now that they’re struggling to keep up. One mortgage professional said another factor is that for many lenders, there is safety in the pack. Basically, if all other lenders aren’t dropping their rates below 3%, a lender will keep their interest rates around the same level to ensure they’re able to keep their heads above water. For many lenders, it seems to be about finding the sweet spot of pulling in as much mortgage business as they can handle and no more. So lenders are walking a tightrope right now, trying to determine what’s the appropriate mortgage rate that will attract exactly as many borrowers as they are able to handle. The bottom line is that the mortgage business is in a whole new world right now and trying to thread the needle as best as it can. Time will tell on whether all of these companies will be successful in that endeavor.

Oil plunges at much as 30% as another virus-fueled trading week begins

Oil prices are plunging amid concern a dispute among producers could lead a global economy weakened by coronavirus to be awash in an oversupply of crude. Overnight there was a point where oil was down 30 percent. Currently, Brent crude, the international standard, was down $9.41, or 20.7 percent, to $35.90 per barrel in electronic trading in London. Benchmark U.S. crude fell $9.00, or 21.8 percent, to $32.27. The dramatic losses follow a 10.1 percent drop for U.S. oil on Friday, which was its biggest loss in more than five years. Prices are falling as Saudi Arabia, Russia and other oil-producing countries argue how much to cut production in order to prop up prices. The turmoil in the oil markets caused share prices to plunge in the Middle East and in Asia. While lower oil prices can be a boon for economies that rely heavily on imports to fuel their industries, such as South Korea, Japan and China, extreme uncertainty can wreak havoc. Demand for energy is falling as people cut back on travel. The worry is that the new coronavirus will slow economies sharply, meaning even less demand. The oil market has seen arguments like this before. In 2014, OPEC held off production cuts in order to hold onto market share in the face of a resurgent U.S. oil industry. That led to oil to tumble from over $100 a barrel to below $40 by 2015. This most recent plummet for oil adds another punch to what's already been a brutal and dizzying couple weeks for financial markets worldwide. Treasury yields have plummeted to record lows as investors pile into anything that looks safe, almost regardless of how little it pays. The 10-year Treasury yield pierced below 1 percent for the first time on Tuesday, only to breach 0.70 percent Friday. The virus usually leaves people with only mild to moderate symptoms, but because it's new, experts can't say for sure how far it will ultimately spread and how much damage it will do, both to health and to the economy. The number of cases has reached 109,000 globally, and Italy on Sunday tried to quarantine a region holding more than a quarter of its population in hopes of corralling it. If the number of new infections slows in other parts of the world as it has in China, if the U.S. jobs market remains as solid as it's been and if all the unease in markets ends up creating just a short-term dip in confidence among shoppers, all this may recede quickly. But those are a lot of potential pain points.

CoreLogic - January home prices increased by 4% year over year

Wed, 04 Mar 2020 16:18:50 GMT

- The CoreLogic HPI Forecast projects the U.S. price index will rise 5.4% by January 2021

- Connecticut was the only state to post an annual decline in home prices while Idaho experienced the largest gain at 10.5%

- January 2020 marked the eighth consecutive year of annual home price growth in the Unites States

CoreLogic released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for January 2020, which shows home prices rose both year over year and month over month. Home prices increased nationally by 4% from January 2019. On a month-over-month basis, prices increased by 0.1% in January 2019. (December 2019 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.) Home prices continue to increase on an annual basis with the CoreLogic HPI Forecast indicating annual price growth will be 5.4% from January 2020 to January 2021. On a month-over-month basis, the forecast calls for U.S. home prices to increase by 0.2% from January 2020 to February 2020. 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. “January marked the third consecutive month that annual home price growth accelerated in our national index, as low mortgage rates and rising income supported home sales,” said Dr. Frank Nothaft, chief economist at CoreLogic. “In February, mortgage rates fell to the lowest level in more than three years, which likely will spur additional home shopping activity and price appreciation.”

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, 33% of metropolitan areas have an overvalued housing market as of January 2020. 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. As of January 2020, 29% of the top 100 metropolitan areas were undervalued, and 38% were at value. When looking at only the top 50 markets based on housing stock, 38% were overvalued, 24% were undervalued and 38% were at value in January 2020. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10% below the sustainable level. During the second quarter of 2019, CoreLogic, together with RTi Research of Norwalk, Connecticut, conducted an extensive survey measuring consumer-housing sentiment among millennials. While nearly half (44%) of millennials view homebuying as unaffordable, they are generally more optimistic than older generations about housing affordability. However, older generations are less concerned with home prices impacting personal finances and feel more comfortable handling monthly payments than millennials. “Despite a slowdown in home price growth last summer, annual appreciation is beginning to stabilize,” said Frank Martell, president and CEO of CoreLogic. “While just under half of millennials feel confident they can afford to purchase a home, housing starts have shot up, and mortgage rates have come down, which has helped improve affordability and spur overall housing demand.”

NAHB - Fed cuts rates by half a percentage point

Reacting to growing economic concerns stemming from the coronavirus, the Federal Reserve Federal Open Market Committee (FOMC) today reduced the target range for the federal funds rate by 50 basis points, lowering the target to 1% to 1.25%. This is the first time since 2008 the FOMC enacted a federal funds rate cut outside of the typical meeting schedule. It was adopted unanimously and just two weeks before their scheduled March meeting. The target rate is now the lowest since late 2017, completely unwinding the rate hikes of 2018. In a statement, the Fed said: “The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity.” The Fed’s action was expected, but perhaps not to this degree and timing. And the policy change was consistent with recent declines for interest rates in the bond market. These declines should push mortgage interest rates closer to a low 3% average for the 30-year fixed rate mortgage. However, the virus poses supply-side and potential growing demand-side challenges that are not precisely addressed by monetary policy. Fundamentally, this economic situation is one that must be addressed through public health and scientific institutions. The rate cut is supportive, both as a signal and as an insurance move for possible economic softening.

MBA - mortgage applications increase

Mortgage applications increased 15.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 28, 2020. The results for the week ending February 21, 2020, included an adjustment for the Presidents' Day holiday. The Market Composite Index, a measure of mortgage loan application volume, increased 15.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 29 percent compared with the previous week. The Refinance Index increased 26 percent from the previous week and was 224 percent higher than the same week one year ago. 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 10 percent higher than the same week one year ago. "The 30-year fixed rate mortgage dropped to its lowest level in more than seven years last week, amidst increasing concerns regarding the economic impact from the spread of the coronavirus, as well as the tremendous financial market volatility. Refinance demand jumped as a result, with conventional refinance applications increasing more than 30 percent," said Mike Fratantoni, MBA's Senior Vice President and Chief Economist. "Given the further drop in Treasury rates this week, we expect refinance activity will increase even more until fears subside and rates stabilize." Added Fratantoni, "We are now at the start of the spring homebuying season. While purchase applications were down a bit for the week, they are still up about 10 percent from a year ago. The next few weeks are key in whether these low mortgage rates bring in more buyers, or if economic uncertainty causes some home shoppers to temporarily delay their search."

The refinance share of mortgage activity increased to 66.2 percent of total applications from 60.8 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 decreased to 9.3 percent from 10.5 percent the week prior. The VA share of total applications decreased to 10.5 percent from 11.8 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.57 percent from 3.73 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) remained unchanged at 3.72 percent, with points decreasing to 0.20 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.74 percent from 3.84 percent, with points decreasing to 0.25 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.03 percent from 3.18 percent, with points increasing to 0.24 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 5/1 ARMs decreased to 3.12 percent from 3.21 percent, with points decreasing to 0.14 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

NAHB - a red-blue divide on home construction

Nearly two-thirds of multifamily construction in the fourth quarter of 2019 occurred in “blue counties” where Hillary Clinton garnered the most votes in the 2016 election, while nearly the same percentage of single-family home building took place in “red counties” where President Trump won. And momentum for continued single-family and multifamily construction continues in the red counties, according to the latest quarterly NAHB Home Building Geography Index (HBGI). The fourth quarter release of the HBGI examines all the counties in the United States based on the 2016 presidential candidate vote totals and sheds new light on red/blue county home building conditions. Using fourth quarter permit data, NAHB’s HBGI finds:

- 51% of the U.S. population live in blue counties and 49 percent live in red counties;

- 61% of single-family construction occurs in red counties;

- 64% of multifamily construction is found in blue counties;

Over the course of 2019, single-family construction expanded at a 1.7% average rate in red counties, while declining 1.2% in blue counties; and

Multifamily construction posted much faster growth rates in red counties vs. blue (21% vs. 8% gain). “The lack of housing supply and inventory is the primary challenge facing housing markets nationwide, and are key factors why the nation is struggling with a housing affordability crisis,” said NAHB Chairman Dean Mon. “This latest HBGI data reveals that red counties are outpacing their peers in blue counties, despite almost two-thirds of apartment construction occurring in blue areas. The analysis highlights the importance of land use rules and development costs in determining the amount of home construction that takes place in communities across the U.S.”

“While single-family permits ended the year just slightly positive and multifamily permits registered solid growth, ongoing challenges remain with respect to adding supply in high-growth, high-cost markets,” said NAHB Chief Economist Robert Dietz. “The lagging performance of single-family construction in blue counties, combined with the 2019 declines for home building in large metro suburban areas, highlight this affordability challenge, which is a source of frustration for younger households in high-cost markets.” The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural regions. Other findings in the fourth quarter HBGI:

- Single-family construction continues to lag in manufacturing areas, posting a 1.6% decline over the course of 2019, compared to a slight gain for the rest of the nation.

- Single-family construction is growing the fastest in small metro, outlying areas (small metro suburbs), while it continues to decline in traditional suburbs of large metro areas (1.4% decline) – the worst performing region for single-family.

- Multifamily construction posted gains in all regions by the end of the year.

Stocks soar as Bernie Sanders’ Super Tuesday dud boosts health care

U.S. equity markets surged at Wednesday’s opening bell after former Vice President Joe Biden’s strong showing on Super Tuesday lifted health care stocks. The early gains have the major averages on track to win back a majority of the losses they suffered a day earlier despite the Federal Reserve's emergency rate cut to insulate the U.S. economy from the new coronavirus. With votes still being counted, Biden had secured about 453 delegates on Super Tuesday, according to the Associated Press, capping a dramatic comeback after his campaign was left for dead following the Nevada caucus on Feb. 22. Meanwhile, Sen. Bernie Sanders, I-Vt., the self-declared democratic socialist and perceived frontrunner ahead of Tuesday night, had secured 382 delegates. Health care stocks, led by the insurers, soared in response to Biden’s big night. The names had been badly beaten down, underperforming the S&P 500, as Sanders, who is an advocate of Medicare-for-all, climbed in the polls. UnitedHealth Group, which was up close to 10 percent, adds 6.78 points with every gain of $1. Airlines, cruise operators and online travel platforms, which have been under pressure amid the COVID-19 outbreak, won some relief while drugmakers working on treatments for COVID-19 were lower. On the earnings front, Campbell Soup reported earnings and sales that topped Wall Street estimates and raised its 2020 profit outlook. Jack Daniels maker Brown-Forman lowered its guidance for sales growth due to an uncertain economic and geopolitical backdrop. Abercrombie & Fitch’s quarterly same-store sales exceeded forecasts amid strong holiday demand at its flagship stores in the U.S. U.S. Treasurys gained, pushing the yield on the 10-year note down 2.3 basis points to 0.994 percent. The benchmark yield touched a record low 0.90 percent on Tuesday. West Texas Intermediate crude oil rose 1.5 percent to $47.90 a barrel. OPEC and its allies will meet Thursday and Friday to discuss a production cut in the face of weaker demand due to the COVID-19 outbreak. Gold dipped 0.1 percent to $1,642 an ounce. In Europe, Britain’s FTSE spiked 2 percent while Germany’s DAX and France’s CAC both rose 1.7 percent. Overnight, Asian markets finished mixed with China’s Shanghai Composite adding 0.6 percent and Japan’s Nikkei edging up 0.1 percent. Hong Kong’s Hang Seng slid 0.2 percent.

CoreLogic - is the yield curve slope a leading indicator of the housing market?

One yield spread that is closely monitored by most economists is the difference between the yield on the 10-year Treasury bond and the yield on the 2-year Treasury bond. The typical shape of a yield curve has yields rising with bond term, that is, the 10-year-to-2-year spread is positive. A negative spread is often viewed as a harbinger of a recession. When the yield curve is negative, or “inverted,” the short-term rate is higher than the long-term rate and the chance of a recession becomes almost inevitable. As a matter of fact, a negative 10-year-to-2-year term spread has successfully signaled all recessions but one for the past 60 years. The housing market accounts for about 15% of gross domestic product (GDP), so it is a large part of the economy. If the economy is in recession, housing demand weakens and more neighborhoods experience home-price declines. Thus, it seems natural to expect that the yield curve is a leading indicator of the housing market as well. The yield curve became inverted in 2006 and what followed was a housing bubble burst in 2007 that preceded the 2008-2009 Great Recession. However, the yield curve inversions prior to 2006 only led to local housing market downturns instead of nationwide ones. One reason for the localized downturns is that housing demand and supply is local and there are many factors that drive local housing price dynamics. As Frank Nothaft, the Chief Economist at CoreLogic pointed out, there have always been areas with home price decline even when home prices are up nationally. The flip side is also true: there have always been areas with home price increases even when the home prices have declined nationally. The CoreLogic Market Risk Indicators (MRI) are a risk-management monitor. The MRI provide probability estimates of a one-year housing market decline and are updated monthly. As the yield curve flattened and the spread got close to zero, the percentage of markets that saw an early warning of a price decline increased significantly. As the yield curve steepened, the percentage of markets that had early warning signs based on the Indicators dropped too. It appears the yield curve is a good leading indicator for the housing market, but it is not the only factor. In a fast-changing environment, it is critical to leverage tools that can help assess the real estate risk in a timely manner.

Private-sector jobs up more than expected in February: ADP

U.S. private payrolls increased more than expected in February, pointing to labor market strength before a recent escalation of recession fears ignited by the coronavirus epidemic that prompted an emergency interest rate cut from the Federal Reserve. The ADP National Employment Report on Wednesday showed private payrolls rose by 183,000 jobs last month after rising 209,000 in January, which was revised down from 291,000. Economists polled by Reuters had forecast private payrolls rising by 170,000 jobs in February.

MBA - commercial and multifamily mortgage delinquencies stay low in the fourth quarter of 2019

Commercial and multifamily mortgage delinquencies remained low in the fourth quarter of 2019, according to the Mortgage Bankers Association's (MBA) latest Commercial/Multifamily Delinquency Report. "Commercial and multifamily mortgages ended the fourth quarter of 2019 much the way they started the year - at or near record low delinquency rates," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "The key drivers - solid property fundamentals, strong property values and low interest rates - continue to support the market. It is too early to tell if and how concerns tied to the coronavirus and the related global slowdown will affect commercial real estate loan performance, but the corresponding drop in financing costs are providing additional near-term support." MBA's quarterly analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together, these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding. Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the fourth quarter of 2019 were as follows:

- Banks and thrifts (90 or more days delinquent or in non-accrual): 0.42 percent, a decrease of 0.03 percentage points from the third quarter of 2019;

- Life company portfolios (60 or more days delinquent): 0.04 percent, an increase of 0.01 from the third quarter;

- Fannie Mae (60 or more days delinquent): 0.04 percent, a decrease of 0.02 percentage points from the third quarter;

- Freddie Mac (60 or more days delinquent): 0.08 percent, an increase of 0.04 from the third quarter; and

- CMBS (30 or more days delinquent or in REO): 2.07 percent, a decrease of 0.22 percentage points from the third quarter

Black Knight - January 2020 Mortgage Monitor

Mon, 02 Mar 2020 21:03:51 GMT

- After hitting an 18-year low in Q4 2018, refinance lending rose 250% year-over-year to hit a 6.5-year high in Q4 2019

- While rate/term refinance activity drove the bulk of the increase, cash-out lending rose to a more than 10-year high

- Despite the surge in refinance activity, mortgage servicers have struggled to recapture the business of refinancing borrowers, with just one in five borrowers remaining with their servicer post-refinance

- After spiking in Q2 2019 following the pullback in mortgage interest rates, retention rates among rate/term borrowers fell to 24% in Q4 2019

- Retention rates among cash-out refinance lending was even worse, with just 17% of cash-out borrower business being retained

- With 44.7 million homeowners holding a total of $6.2 trillion in tappable equity and approximately 600,000 withdrawing equity via cash-outs in Q4 2019, improving retention among this segment is crucial

The Data & Analytics division of Black Knight released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage performance, housing and public records datasets. This month, in light of a marked increase in refinance activity in Q4 2019, Black Knight looked into servicers’ retention of refinancing borrowers. As Black Knight Data & Analytics President Ben Graboske explained, despite refinance lending hitting a 6.5-year high, servicers are facing challenges in retaining the business of refinancing borrowers. “Despite a surge in refinance lending driven by low rates, servicers continue to struggle in their efforts to recapture refinancing borrowers, with only one in five being retained by servicers in Q4 2019,” said Graboske. “Retention rates rose along with refinance volumes early last year, hitting an 18-month high in Q2 2019, but retention rates have since fallen in each of the past two quarters. Fewer than one in four borrowers refinancing to lower their rate or term – business which has been historically easier to retain – stayed with their servicer post-refinance in Q4 2019. A large driver has been a recent failure to retain 2018 vintage mortgages, which goes to show just how quickly lender/borrower relationships can evaporate without the right data and tools for servicers to early on identify clients in their portfolios with sufficient tappable equity, and act to retain them. Borrowers who left for ‘greener pastures’ received an average 0.08% lower interest rate than those who stayed, strengthening the need for tools to ensure rate pricing is competitive. Retention challenges are even more pronounced among cash-out refinances, for which retention rates fell from 19% in Q3 2019 to just 17% in Q4 2019, the lowest in more than four years. At the same time, cash-out lending hit a more than 10-year high at the end of 2019, with some 600,000 borrowers pulling an estimated $41B in equity from their homes, the largest quarterly volume since 2007.

“Lenders and servicers should take note – there are currently 44.7 million homeowners with equity available to tap via cash-out refinance or HELOC, with the average homeowner having $119K in equity. At $6.2 trillion, total tappable equity – the amount available to homeowners with mortgages to borrow against while still retaining at least 20% equity in their homes – hit its highest year-end total on record. What’s more, the same falling interest rates that have reheated the housing market have also increased the rate of equity growth for the third consecutive quarter. Tappable equity grew 9.0% year-over-year in Q4 2019, the highest such growth rate since Q3 2018. Refinance lending is up 250% year-over-year, cash-out lending is at a 10-year high and 75% of homeowners with tappable equity have first lien interest rates at or above today’s prevailing rate. Taking all of this into account, improving the retention and recapture of this business is of critical importance. Data-driven portfolio retention strategies that help determine borrowers’ motivations for refinancing can go a long way in this regard.”

The month’s data also showed that, as interest rates fell throughout 2019, an increasing share of homeowners reduced their interest rate as part of the cash-out transaction, helping to offset some of the cost of borrowing against their equity. In fact, in Q4 2019, approximately 76% of homeowners were either able to keep their interest rate the same or, in many cases, significantly decrease their interest rate through cash-out refinancing, the largest such share since Q4 2016. This includes 50% who decreased their interest rate by at least 0.50% and 25% who decreased their interest rate by 1% or more. Much more detail can be found in Black Knight’s January 2020 Mortgage Monitor Report.

Stocks give up overnight gains after decimating week on Wall Street

U.S. equity futures are trading lower in a continuation of last week's biggest plunge in stocks since the financial crisis. The major futures indexes are indicating a delcine of 0.5 percent, having given up large overnight gains in which the Dow was up more than 400 points. Stocks have been swooning as investors fret the coronavirus outbreak will derail the global economy. But in those declines, some see opportunities to buy. Asian shares came charging back Monday from last week's retreat, with mainland Chinese benchmarks gaining 3 percent as data showed progress in restoring factory output after weeks of disruptions from the viral outbreak. Japan's Nikkei 225 recovered from early losses, gaining 1 percent, while the Shanghai Composite index rose 3.2 percent. The Hang Seng in Hong Kong jumped 0.6 percent. In Europe, London's FTSE is up 0.2 percent, Germany's DAX is lower by 0.8 percent and France's CAC fell 0.7 percent. Stocks sank Friday on Wall Street, extending a rout that left the market with its worst week since October 2008. Meanwhile, bond prices have soared as investors sought safety, pushing yields to record lows. The Dow fell 1.4 percent to 25,409.36. The S&P 500 slid 0.8 percent to 2,954.22, while the Nasdaq rose 0.1%, to 8,567.37. The damage from the week of relentless selling was eye-popping: The Dow Jones Industrial Average fell 3,583 points, or 12.4 percent. Microsoft and Apple, the two most valuable companies in the S&P 500, lost a combined $300 billion. In a sign of the severity of the concern about the possible economic blow, the price of oil sank 16 percent.

CoreLogic - "typical mortgage payment" U.S. homebuyers committed to in 2019 dropped from prior year

Falling mortgage rates and slower home-price growth meant that many buyers in 2019 committed to lower mortgage payments than they would have faced for the same home the year before. After rising at a double-digit annual pace in 2018, the principal-and-interest payment on the nation’s median-priced home – what we call the “typical mortgage payment” – fell year over year again in December 2019 for the 8th consecutive month. While the U.S. median sale price in December 2019 – $225,723 – was up 4.0% year over year, the typical mortgage payment fell 6.8% because of a 20% decline in fixed mortgage rates, from 4.64% in December 2018 to 3.72% in December 2019. By comparison, median sale price in December 2018 was up by 3.8%, and the typical mortgage payment spiked by 12.7% due to a 0.7 percentage point annual gain in mortgage rates. Looking ahead, the CoreLogic Home Price Index (HPI) and HPI Forecast suggest that annual gains in home prices each month from January 2020 through December 2020 will average 4.6%. However, that forecast, combined with the average among six mortgage rate forecasts, suggests that over that same 12-month period the annual change in the typical mortgage payment each month will average out to an increase of just 2.7%. The trend is driven by the expectation that, on average, the rate on a 30-year fixed-rate mortgage during the January 2020-through-December 2020 period will be about 0.2 percentage points lower than a year earlier. When adjusted for inflation the typical mortgage payment puts homebuyers’ current costs in the proper historical context. Figure 1 shows that while the real, meaning inflation-adjusted, typical mortgage payment has trended higher in recent years, in December 2019 it remained 35.8% below the all-time high of $1,298 in June 2006. That’s because the average mortgage rate back in June 2006 was about 6.7%, compared with an average rate of about 3.7% in December 2019 (Figure 2), and the real U.S. median sale price in June 2006 was $251,922 (or $197,000 in 2006 dollars), compared with a December 2019 median of $225,723.

Unthinkable a few weeks ago, Wall Street sees a chance of rates falling as low as zero this year

JP Morgan Chase economists see the Fed acting even more aggressively than the market is anticipating. Current market pricing is for a 50 basis point cut in March and 100 basis points in total this year. However, JPM says the Fed could got to zero by the end of the summer if conditions persist. With the Federal Reserve expected to act soon in response to the coronavirus scare, there’s a chance that the central bank could take policy back to where it was during the financial crisis. Goldman Sachs economists said Sunday they see the Fed cutting rates by 50 basis points by its March meeting or sooner, and probably 100 basis points this year, a forecast about in consensus with current market pricing. But as short-term rates keep going lower, there’s a chance they could go all the way to near-zero where they were during the financial crisis. Traders in the fed funds futures market are indicating about a 9% probability that the fed funds rate, which serves as benchmark for other very short-term rates, will fall to a range of zero to 25 basis points by December, according to the CME’s FedWatch tracker. JP Morgan Chase sees the chances even higher. “One of the recurring themes in optimal monetary policy near the zero lower bound is that when growth risks occur with policy rates within the neighborhood of zero, then the central bank should act early and aggressively,” JP Morgan chief U.S. economist Michael Feroli said in a note. “This suggests to us that there is a reasonable chance (we subjectively put the odds at one-in-three) that policy rates return to zero before the end of the summer.” While that chance is still small, it’s something that was unthinkable just a few weeks ago when policymakers had been in unison saying they were comfortable with the current policy level and not anticipating any moves through at least the rest of the year. However, research suggesting that it’s better to act aggressively when rates are already this low could drive even more dramatic action. New York Fed President John Williams caused a stir in July 2019 when he noted the same research that pointed to cutting rates dramatically rather than incrementally when they are already low. “When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress,” Williams said in a speech. He had to quickly walk back the remarks, however, when markets took his speech to mean that the Fed was contemplating action.

ATTOM - vacant “zombie” foreclosures increase to 3.1 percent nationwide

Fri, 28 Feb 2020 18:48:01 GMT

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CoreLogic - U.S. Case-Shiller Index has slowest annual rise since 2012

Wed, 26 Feb 2020 19:19:10 GMT

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ATTOM - U.S. foreclosure activity up 13 percent in january 2020, 2nd consecutive month-over-month increase

Thu, 20 Feb 2020 18:58:53 GMT

There were 60,085 U.S. properties with foreclosure filings in January 2020, up 13 percent from December 2019 and up 7 percent from a year ago. Nationally, one in every 2,270 U.S. properties received a foreclosure filing during the month of January. Counter to the national trend, 16 states posted month-over-month decreases in foreclosure activity in January 2020. Including Iowa (down 44 percent); Oregon (down 28 percent); Nevada (down 28 percent); Louisiana (down 24 percent); and Washington (down 20 percent). ATTOM’s Foreclosure Market Trend Reports offer a detailed look at foreclosure data. Lenders started the foreclosure process for the first time on 26,858 property owners in January 2020, down less than 1 percent from the previous month but down 9 percent from a year ago. Counter to the national trend, 19 states posted year-over-year increases in foreclosure starts, including California (up 27 percent); Tennessee (up 21 percent); Georgia (up 14 percent); Illinois (up 9 percent); and Ohio (up 3 percent). Also, counter to the national trend, 75 of 220 metro areas analyzed posted year-over-year increases in foreclosure starts, including San Antonio, Texas (up 66 percent); Los Angeles, California (up 63 percent); Riverside, California (up 22 percent); Nashville, Tennessee (up 19 percent); and Chicago, Illinois (up 14 percent). States with the worst foreclosure rates in January 2020 were New Jersey (one in every 1,046 housing units); Delaware (one in every 1,098 housing units); Illinois (one in every 1,139 housing units); Maryland (one in every 1,507 housing units); and Ohio (one in every 1,517 housing units).

Among 220 metropolitan statistical areas with at least 200,000 people, those with the worst foreclosure rates in August were Atlantic City, New Jersey (one in every 703 housing units); Rockford, Illinois (one in every 726 housing units); Peoria, Illinois (one in every 952 housing units); Fayetteville, North Carolina (one in every 957 housing units); and Trenton, New Jersey (one in every 984 housing units). Among 53 metro areas with at least 1 million people, those with the highest foreclosure rates in January were Chicago, Illinois (one in every 1,027 housing units); Cleveland, Ohio (one in every 1,029 housing units); Philadelphia, Pennsylvania (one in every 1,072 housing units); Jacksonville, Florida (one in every 1,144 housing units); and Riverside, California (one in every 1,189 housing units). Lenders repossessed 20,759 U.S. properties in January 2020 (REO), up 49 percent from the previous month and up 70 percent from a year ago, following the holiday season. Counter to the national trend, those metropolitan areas with a population greater than 200K that saw a month-over-month decrease included Cleveland, Ohio (down 40 percent); San Antonio, Texas (down 28 percent); Las Vegas, Nevada (down 27 percent); Dallas, Texas (down 26 percent); and Atlanta, Georgia (down 24 percent).

Tesla roars above $900 as solar sales light up prospects

Telsa shares zoomed back above $900 on Wednesday after a Wall Street analyst awarded the stock one of its highest price targets yet. The Palo Alto, California-based company's odds of success in the battery and solar-power industry prompted the investment bank Piper Sandler to set a 12-month price forecast of $928. “After logging 53,448 miles and surviving four Minnesota winters (with no noticeable range degradation), we are convinced that Tesla's automotive products offer a superior ownership experience,” analyst Alexander Potter wrote while raising his price target from $729. “If history is any indication, we'll eventually be saying something similar about generating and storing our own solar power.” While batteries and solar power amounted to just 6 percent of Tesla’s sales in 2019, management has said its revenue will eventually rival that of the automotive business. Potter says it’s “tough to ignore” the size of the addressable market for Tesla’s integrated solar roof, which is about $165 billion a year. The market’s size increases by another $70 billion per year when taking into account the cost of two Powerwalls, the company's home batteries, for each new solar roof. Wednesday’s gains have stretched Tesla’s year-to-date growth to more than 105 percent, putting extreme pressure on short-sellers, or traders betting that shares would fall.

MBA - mortgage applications decrease

Mortgage applications decreased 6.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 14, 2020. The Market Composite Index, a measure of mortgage loan application volume, decreased 6.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 165 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 10 percent higher than the same week one year ago. "Treasury yields moved slightly higher last week, despite uncertainty surrounding the economic impact from the spread of the coronavirus. The 30-year fixed mortgage increased five basis points to 3.77 percent as a result, causing refinance applications - driven by a 11 percent drop in applications for conventional refinances - to fall," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Even with an 8 percent decline, the refinance index was still at its third highest reading so far this year. Government refinance activity, which tends to lag movements in the conventional market, bucked the overall trend, as VA loan refinances jumped 23 percent." Added Kan, "Purchase applications fell 3 percent last week, as there continues to be some pullback after a strong January. Activity was still 10 percent higher than a year ago, but too few options - especially at the lower portion of the market - are slowing some would-be buyers."

The refinance share of mortgage activity decreased to 63.2 percent of total applications from 65.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.4 percent of total applications. The FHA share of total applications decreased to 9.5 percent from 9.7 percent the week prior. The VA share of total applications increased to 12.1 percent from 10.1 percent the week prior. The USDA share of total applications remained unchanged from 0.4 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 3.77 percent from 3.72 percent, with points remaining unchanged at 0.28 (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 3.79 percent from 3.75 percent, with points increasing to 0.19 from 0.17 (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 3.86 percent from 3.84 percent, with points decreasing to 0.24 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 15-year fixed-rate mortgages increased to 3.22 percent from 3.20 percent, with points decreasing to 0.26 from 0.27 (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 3.23 percent from 3.21 percent, with points increasing to 0.21 from 0.13 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

Judge tosses Huawei lawsuit against US government ban

U.S. District Judge Amos L. Mazzant dismissed a Huawei lawsuit that challenged a congressional defense bill banning federal agencies and contractors from buying products from the Chinese telecom giant. Huawei claimed that the ban was overbroad, that its due process rights were violated and that Congress was motivated by an intent to punish it and another Chinese telecom company, ZTE. At issue is the 2019 National Defense Authorization Act, which was signed into law by President Trump in 2018. Mazzant disagreed with Huawei's claims in a Tuesday order. "What Huawei pejoratively labels as Congress unconstitutionally adjudicating facts is better characterized as a thorough congressional investigation into a potential threat against the nation’s cybersecurity," the judge wrote. "Congress's investigation led to the passing of a defense-appropriations bill as a prophylactic response to that threat." Huawei may appeal the decision in the New Orleans federal appeals court.

NAHB - housing production shows solid start to 2020

Total housing starts decreased 3.6% in January from an upwardly revised December reading to a seasonally adjusted annual rate of 1.57 million units, according to a report from the U.S. Housing and Urban Development and Commerce Department. Meanwhile, overall permits surged to a 13-year high. The January reading of 1.57 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts decreased 5.9% to a 1.01 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 0.7% to a 557,000 pace. “The housing recovery continues, as single-family housing starts have surpassed one million for the second consecutive month and multifamily production has been running above 500,000 for the same period,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J. “Meanwhile, builder confidence remains solid as demand continues to pick up.” “While the solid pace for residential construction continues, favorable weather conditions may have accelerated production in the winter months,” said Nanayakkara-Skillington, NAHB’s Assistant Vice President of Forecasting and Analysis. “At the same time, the growth in permits is a harbinger that that market will continue to move forward in the coming months, even as builders grapple with supply-side issues like excessive regulations, labor shortages and rising material costs.” Regionally in January, combined single- and multifamily housing production increased 31.9% in the Northeast and 1.2% in the West. Starts fell 25.9% in the Midwest and 5.4% in the South. Overall permits, which are a harbinger of future housing production, increased 9.2% to a 1.55 million unit annualized rate in January. This is the highest level since March 2007. Single-family permits increased 6.4% to a 987,000 rate while multifamily permits increased 14.6% to a 564,000 pace. Looking at regional permit data, permits are 34.6% higher in the Northeast, 8.2% higher in the Midwest, 8.0% higher in the South and 3.1% higher in the West.

'Severe' blue-collar worker shortage to worsen as baby boomers retire

Blue-collar industries like manufacturing and construction are facing a "severe" worker shortage that will only get worse as young people fail to fill positions vacated by retiring baby boomers. That's according to an 85-page report by the nonprofit business research group Conference Board, which blamed a "perfect storm" of longterm trends. Young people, the authors say, are turning to college for white-collar job opportunities rather than trade school or apprenticeship opportunities in agriculture, mining, manufacturing, construction and transportation. At the same time, many baby boomers, who make up much of the blue-collar labor market, have reached retirement or are on their way to retirement. "While a lot has been written about the overall tightness of the labor market, much less has been written about severe labor shortages of blue-collar and manual services workers --- the exact opposite of the trends in recent decades," Gad Levanon, vice president of labor markets at The Conference Board, said. "This shortage is no coincidence but a result of several long-run demographic and educational trends that converge in a perfect storm like fashion, and that could make these shortages even more severe in the coming decades," Levanon said. "These shortages are a much more immediate and important problem than the risk of massive unemployment due to robots taking our jobs at some point in the future." The labor force participation rates for men ages 25 to 34 have seen a significant downturn since 1995, shows the study, which surveyed more than 200 human resources executives.

Demand for blue-collar workers continues to grow, in part because of a slowdown in labor productivity, according to the Conference Board. The number of U.S. citizens who qualify as disabled between the working ages of 25 and 64 has also reached a record high. The heaviest concentrations of disability appear along the Rust Belt and the industrial South, the study found. Additionally, young men are leaving the blue-collar workforce for white-collar opportunities after college. As a result, the number of blue-collar workers in the U.S. directly correlates with the number of people who hold a bachelor's degree. The participation of 16-24-year-old men who work blue-collar jobs that require little experience or education has dropped by about 10 percent since 1995, the study showed. This is seen as a positive trend by societal standards because it means more young people are getting a higher education, despite the fact that blue-collar jobs often hold the promise of high wages and steady work due to increasing demand. Nearly a quarter of young men without a college degree, however, still live at home with their parents, the study noted. "I think there is some stigma associated with manual labor," Levanon said. "The American dream and the entire education system is geared towards completing a four-year college. Also, the significant improvement in the labor market outlook for blue-collar workers is not common knowledge yet. I would argue that you still hear and read more about how robots will steal many of our jobs than you hear about labor shortages." As men leave blue-collar industries, more and more women aged 25 to 54 are joining the labor force --- but not enough to make a significant difference in these industries, the study found. Potentially increasing costs and quality of blue-collar services is now more of a concern than it was in the past because employers are more willing to hire candidates that are not qualified for the job or have been out of the labor market for years, according to the study. "Without a concerted effort by companies and governments, the nation’s overall standard of living will decline, along with profits in blue-collar-heavy industries such as transportation, warehousing and manufacturing," The Conference Board said in a press release Tuesday.

NAR - housing starts, February 19, 2020

The following is NAR Chief Economist Lawrence Yun’s reaction to the release from the U.S. Commerce Department on new home construction: “The latest month’s decline in housing starts is nothing to be concerned about. This housing data is quite jumpy. What is important is the trend line, which is clearly on an upward path. Higher housing permit issuances are also a positive indicator for even greater production in the months ahead. Housing starts of 1.57 million units (annualized rate) in January following 1.63 million in December marks the only two months in over a decade where activity has been above the historical average of 1.5 million a year. More construction will mean more housing inventory for consumers in the later months of this year. Spring months could still be quite tough for buyers, since it takes time to convert housing starts into actual housing completions. As trade-up buyers move into these new completed homes in the near future, their existing homes will be released onto the market.”

MBA - January new home purchase mortgage applications increased 35.3 percent

The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for January 2020 shows mortgage applications for new home purchases increased 35.3 percent compared from a year ago. Compared to December 2019, applications increased by 40 percent. This change does not include any adjustment for typical seasonal patterns. MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 865,000 units in January 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. "New home applications and sales activity surged in January. This was a continuation of the end of 2019, which saw strong residential construction and increased purchase applications activity," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Even with some global and domestic economic uncertainty, builders have ramped up production in recent months to meet increased homebuyer demand." Added Kan, "MBA estimates that January new home sales increased 25 percent over the month to a sales pace of 865,000 units, while the average loan size increased to $346,000 - both record highs since the survey began in 2012." The seasonally adjusted estimate for January is an increase of 25.5 percent from the December pace of 689,000 units. On an unadjusted basis, MBA estimates that there were 66,000 new home sales in January 2020, an increase of 37.5 percent from 48,000 new home sales in December. By product type, conventional loans composed 69.5 percent of loan applications, FHA loans composed 17.8 percent, RHS/USDA loans composed 0.8 percent and VA loans composed 12 percent. The average loan size of new homes increased from $338,625 in December to $346,140 in January.

NAHB - builder confidence remains solid in February

Builder confidence in the market for newly-built single-family homes edged one point lower to 74 in February, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. The last three monthly readings mark the highest sentiment levels since December 2017. “Steady job growth, rising wages and low interest rates are fueling demand but builders are still grappling with increasing construction and development costs,” said NAHB Chairman Dean Mon. “At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a dearth of lots are hindering the production of affordable housing in local communities across the nation,” said NAHB Chief Economist Robert Dietz. “And while lower mortgage rates have improved housing affordability in recent months, accelerating price growth due to limited inventory may offset some of that effect.” Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo HMI 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 index gauging current sales conditions fell one point to 80, the component measuring sales expectations in the next six months was one point lower at 79 and the gauge charting traffic of prospective buyers also decreased one point to 57. Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 63, the Midwest increased one point to 67 and the South moved two points higher to 78. The West fell one point to 83.

CoreLogic - Sometime after 2021, LIBOR, the London Inter-Bank Offered Rate

Mon, 17 Feb 2020 16:24:51 GMT

CoreLogic - Sometime after 2021, LIBOR, the London Inter-Bank Offered Rate – the index used to set many adjustable mortgage rates, is expected to be discontinued. Why is it being discontinued? Because the Financial Conduct Authority in the United Kingdom has announced that it will stop requiring banks to report the transactions that are used to calculate LIBOR. In the US, this change affects an estimated $1.2 trillion dollars in adjustable-rate mortgages. To help facilitate the likely transition away from LIBOR, the Federal Reserve convened a working group called the Alternative Reference Rates Committee. The ARRC has recommended an alternative to the LIBOR index called the Secured Overnight Financing Rate (SOFR) and has started promoting its use on a voluntary basis. What does this mean for Lenders and Borrowers? It means that lenders with loans or lines of credit based on the LIBOR index will need to identify and review the terms of all of their LIBOR loans. A portfolio of loans likely contains a wide variety of terms regarding LIBOR, and this will need to be assessed. Here are some questions to consider:

1. Are there loans with terms that didn’t contemplate the end of LIBOR? Or perhaps they contemplated only a temporary suspension of LIBOR?

2. For loans that do have LIBOR fallback provisions:

- What is the alternative to LIBOR? Is it the Prime rate, a fixed rate, or some other index?

- Do the loan documents allow the lender to change the margin and the lookback period? For example, some loan documents may describe an alternate index but fail to provide a mechanism for adjusting the margin in the event LIBOR is not available.

- And finally, does the new fallback rate mean the borrower will be facing a rate substantially higher or lower than LIBOR?

What should lenders do at this point? Between now and the end of LIBOR, there’s a good possibility that many loans will need to be modified because the fallback provisions are either nonexistent, unclear or impractical. For example, in some cases, the margin cannot be adjusted and it is either too high or too low when added to the new alternate index. For loans requiring modification, lenders should begin contacting borrowers well in advance of the potential change in the index. But there’s no need to panic just yet. The good news is there’s still time to successfully manage a smooth and efficient transition. Now is a good time for lenders to start auditing their loan data and documents and planning for fulfillment of amendments or borrower notifications.

US Navy awards $1B contract for manufacture of naval nuclear reactor components

A BWX Technologies subsidiary has secured a naval contract worth up to approximately $1 billion. The contract, which was awarded to BWXT Nuclear Operations Group, is for the manufacture of naval nuclear reactor components. “We are proud to provide nuclear propulsion systems that enable U.S. Navy sailors and aviators to protect freedom around the globe,” BWXT President and Chief Executive Officer Rex Geveden said. “We appreciate the U.S. Navy’s continued trust in our employees and our capability to perform this important work.” The Lynchburg, Virginia-based BWX Technologies said the initial contract award, which represents two-thirds of the anticipated value, booked in the fourth quarter of 2019. The remaining option, which is subject to congressional appropriations, is expected to be awarded later this year. The award announced Monday is in addition to the submarine reactor component and fuel manufacturing and long-lead materials contract announced last year. Together, the contracts are worth almost $4 billion, including future year options. BWX is set to report its fourth-quarter results ahead of the opening bell on Feb. 25. Wall Street analysts surveyed by Refinitiv are expecting adjusted earnings of 64 cents a share on revenue of $494.8 million. Shares have climbed 10.6 percent year-to-date through Friday, outperforming the S&P 500’s 4.6 percent gain.

NAHB - sluggish rebound in single-family permits in December

Over the year 2019, the total number of single-family permits issued year-to-date (YTD) nationwide reached 854,158. On a year-over-year (YoY) basis, this is a 0.2% increase over the December 2018 level of 852,856. Year-to-date ending in December, single-family permits reported declines in three regions and an increase in the South. The Northeast reported the steepest decline by 6.8%. The West and Midwest declined by 2.2% and 3.1% respectively, compared to the same time period in 2018. The Northeast region had the highest growth in multifamily (31.6%) while the West recorded the lowest growth in multifamily permits (4.1%) during the last 12 months as housing affordability concerns reduce production of both single-family and multifamily residences. Between December 2018 YTD and December 2019 YTD, 19 states and the District of Columbia saw growth in single-family permits issued while 31 states registered a decline. The District of Columbia recorded the highest growth rate during this time at 50.0% from 112 to 168, while single-family permits in Vermont declined by 22.0%, from 1,131 in 2018 to 882 in 2019. The 10 states issuing the highest number of single-family permits combined accounted for 61.1% of the total single-family permits issued. Year-to-date, ending in December 2019, the total number of multifamily permits issued nationwide reached 516,189. This is 11.0% ahead of its level over the year 2018, 465,039. Between December 2018 YTD and December 2019 YTD, 35 states and the District of Columbia recorded growth while 15 states recorded a decline in multifamily permits. Connecticut led the way with a sharp rise (120.9%) in multifamily permits from 1,796 to 3,968, while North Dakota had the largest decline of 46.0% from 1,336 to 722. The 10 states issuing the highest number of multifamily permits combined accounted for 63.7% of the multifamily permits issued.

General Motors is taking steps to exit unprofitable markets.

The automaker is pulling out of Australia, New Zealand and Thailand, markets that don't produce adequate returns on investments. The company said in a statement Sunday that it will wind down sales, engineering and design operations for its historic Holden brand in Australia and New Zealand in 2021. GM also announced that it plans to sell its Rayong factory in Thailand to China's Great Wall Motors. The Chevrolet brand will also withdraw from Thailand by the end of this year. GM has 828 employees in Australia and New Zealand and another 1,500 in Thailand, the company said. CEO Mary Barra says the company wants to focus on markets where it can drive strong returns. She says GM will support its employees and customers in the transition. “We are pursuing a niche presence by selling profitable high-end imported vehicles supported by a lean GM structure,” International Operations Senior Vice President Julian Blissett said in the statement. The Detroit automaker expects to take $1.1 billion worth of cash and noncash charges this year as it cuts operations in the three countries.

NAHB - learn how to comply with Final Joint Employer Rule

The Department of Labor (DOL) is offering a free webinar next week to provide compliance assistance with the final joint employer rule published on Jan. 12. The rule will give employers clarity and certainty about their responsibility to pay federal minimum wage and overtime for all hours worked in a workweek. The webinar takes place on Tuesday, Feb. 25, at 1:00 p.m. ET, and will cover:

- Provisions of the final rule so that employers comply with the changes and inform workers and their advocates of their rights.

- Specific changes that the final rule will make when it becomes effective on March 16.

- Detailed information about new materials and resources available on the joint employer final rule website.

Participants will have the opportunity to submit questions throughout the webinar. https://www.eventbrite.com/e/webinar-on-the-fair-labor-standards-acts-joint-employer-final-rule-tickets-91782751681

ATTOM - top ZIPS with highest shares of equity rich and seriously underwater properties in Q4 2019

Mon, 10 Feb 2020 16:59:04 GMT

ATTOM’s 2019 Year-End U.S. Home Equity and Underwater Report released this week stated that one in four or nearly 27 percent of the 54.5 million mortgaged homes in the U.S. were considered equity-rich in Q4 2019, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value. The report also noted that one in 16 or just over 6 percent of all U.S. properties with a mortgage in Q4 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value. Among the other key findings featured in ATTOM’s annual year-end home equity and underwater report were the top states, metro areas and counties with the highest shares of equity rich properties in the fourth quarter. The top states were all in the Northeast and West regions, led by California (42.8 percent equity-rich), Vermont (39.2 percent), Hawaii (38.8 percent), Washington (35.4 percent) and New York (35.1 percent). The top metro areas cited in ATTOM’s analysis with the highest shares of equity-rich properties in Q4 2019 were San Jose, CA (65.9 percent equity-rich); San Francisco, CA (57.5 percent); Los Angeles, CA (47.8 percent); Santa Rosa, CA (45.9 percent) and Honolulu, HI (39.3 percent). Drilling down to the zip code level, there were 451 zip codes where at least half of all properties with a mortgage were equity rich in the fourth quarter. The top 25 were all in California, with most in the San Francisco Bay area, led by zip codes 94116 in San Francisco (82.6 percent equity-rich), 94040 in Mountain View (81.7 percent), 94122 in San Francisco (80.6 percent), 94112 in San Francisco (80.1 percent) and 94087 in Sunnyvale (79.5 percent). Here are the other ZIPS that make up the top 10 with the highest shares of equity rich properties: 94030 in Millbrae, CA (78.9 percent); 94063 in Redwood City, CA (78.4 percent); 94134 in San Francisco, CA (77.9 percent); 94132 in San Francisco, CA (77.8 percent); and 94121 in San Francisco, CA (77.2 percent).

Also according to ATTOM’s year-end 2019 home equity and underwater report, the top 10 states with the highest shares of mortgages that were seriously underwater in the fourth quarter of 2019 were all in the South and Midwest, led by Louisiana (16.8 percent seriously underwater), Mississippi (16.0 percent), West Virginia (13.9 percent), Iowa (13.5 percent) and Arkansas (12.9 percent). At the metro area level, among those with the highest share of mortgages that were seriously underwater included Youngstown, OH (16.2 percent); Baton Rouge, LA (15.9 percent); Scranton, PA (15 percent); Cleveland, OH (13.7 percent) and Akron, OH (13.4 percent). Among 8,262 U.S. zip codes with at least 2,000 properties with mortgages in the fourth quarter, there were 149 zip codes where at least a quarter of all properties with a mortgage were seriously underwater. The largest number of those zip codes were in the Cleveland, OH; Philadelphia, PA; Milwaukee, WI; Rockford, IL, and St. Louis, MO, metropolitan statistical areas. The top five zip codes with the highest share of seriously underwater properties were 71446 in Leesville, LA (65.7 percent seriously underwater); 44110 in Cleveland, OH (59.6 percent); 08611 in Trenton, NJ (58.7 percent); 53206 in Milwaukee, WI (58.6 percent) and 44105 in Cleveland, OH (54.2 percent). Here are the other ZIPS rounding out the top 10 with the highest shares of seriously underwater properties: 08104 in Camden, NJ (50.9 percent); 44108 in Cleveland, OH (49.6 percent); 63137 in Saint Louis, MO (48.6 percent); 60426 in Harvey, IL (48.6 percent); and 45406 in Dayton, OH (48.0 percent).

Chinese military hackers charged in Equifax breach

Four Chinese military hackers have been charged with breaking into the computer networks of the Equifax credit reporting agency and stealing the personal information of tens of millions of Americans, the Justice Department announced Monday. The four are also accused of stealing the company's trade secrets, law enforcement officials said. The defendants are all members of the People's Liberation Army, an arm of the Chinese military. The case comes as the Trump administration has warned against what it sees as the growing political and economic influence of China, and efforts by Beijing to collect data on Americans and steal scientific research and innovation. “This was a deliberate and sweeping intrusion into the private information of the American people,” Attorney General William Barr said in a statement. “Today, we hold PLA hackers accountable for their criminal actions, and we remind the Chinese government that we have the capability to remove the Internet’s cloak of anonymity and find the hackers that nation repeatedly deploys against us," he added. The case is one of several the Justice Department has brought over the years against members of the PLA. The Obama administration in 2014 charged five Chinese military hackers with breaking into the networks of major American corporations to siphon trade secrets.

MBA - commercial/multifamily borrowing climbed to a new high to close out 2019

A 7 percent increase in commercial and multifamily mortgage originations in the fourth quarter of 2019 capped off what was a strong 2019 for the market, according to preliminary estimates from the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released here today at the 2020 Commercial Real Estate Finance/Multifamily Housing Convention & Expo. "Commercial and multifamily borrowing and lending hit a new high during the fourth quarter of 2019, surpassing the previous record from the second quarter of 2007," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "A pullback in lending by Fannie Mae and Freddie Mac suppressed multifamily borrowing during the quarter, but growth for most other property types made up the difference. Initial indications are that 2019 set new records, with double-digit growth in mortgage bankers originations, as well as new highs in originations for banks and life insurance companies." Added Woodwell, "Low interest rates and solid property fundamentals should help 2020 continue the trend of record borrowing and lending." A rise in originations for industrial, office and health care properties led the overall increase in commercial/multifamily lending volumes when compared to the fourth quarter of 2018. There was a 67 percent year-over-year increase in the dollar volume of loans for industrial properties, a 33 percent increase for health care properties, a 29 percent increase for office properties, and a 13 percent increase for retail properties. Multifamily property loan originations decreased 4 percent, and hotel property lending fell 25 percent.

Among investor types, the dollar volume of loans originated for Commercial Mortgage Backed Securities (CMBS) increased year-over-year by 81 percent, 13 percent for commercial bank portfolio loans, and 9 percent for life insurance companies. The dollar volume of Government Sponsored Enterprises (GSEs - Fannie Mae and Freddie Mac) loans decreased 30 percent compared to the fourth quarter of 2018. On a quarterly basis, fourth quarter originations for industrial properties increased 58 percent compared to the third quarter of 2019. There was a 46 percent increase in originations for hotel properties, a 29 percent increase for retail properties, a 22 percent increase for office properties, and a 7 percent increase for multifamily properties. Originations for health care properties were unchanged from the third quarter. Among investor types, between the third and fourth quarter of 2019, the dollar volume of loans for CMBS increased 56 percent, loans for life insurance companies increased 33 percent, originations for commercial bank portfolios increased 14 percent, while loans for the GSEs decreased by 17 percent. A preliminary measure of commercial and multifamily mortgage originations volumes shows activity in 2019 was 13 percent higher than in 2018. By property type, originations for health care properties increased 92 percent from 2018, 50 percent for industrial properties, 23 percent for office properties, and 8 percent for multifamily properties. Retail property originations decreased 6 percent, and hotel properties saw a decline of 19 percent. Among investor types, 2019 versus 2018, loans for CMBS increased 24 percent, originations for commercial bank portfolios increased 20 percent, and loans for life insurance companies increased five percent. GSE loans decreased 1 percent.

Coronavirus impact on US economy uncertain: Peter Navarro

It’s too early to know what kind of impact the coronavirus outbreak will have on the U.S. economy, White House trade adviser Peter Navarro said Monday. The outbreak, which has killed at least 910 and sickened 40,600 people globally, has U.S. companies to halt or drastically reduce operations in China and led to the grounding of flights between the two countries. “I think we are going to have to wait another couple of weeks or a month to see just what exactly is going on,” Navarro saide. “There’s also companies that are going back to work in China as we speak. We won’t know for a couple of weeks now whether the virus is going to peak or whether it’s going to spread.” While the White House is taking a wait-and-see approach on assessing the impact the coronavirus will have on the U.S. economy, it has already warned that the additional $200 billion of purchases that China agreed to as part of the phase one trade deal will be delayed. “The export boom from that trade deal will take longer because of the Chinese virus,” White House economic adviser Larry Kudlow said on Feb. 4, adding that any impact on the U.S. economy will be “minimal.” But since then, the Federal Reserve and a number of Wall Street banks have warned the outbreak will weigh on U.S. economic growth. The Federal Reserve said Friday it was on the lookout for "possible spillovers from the effects of the coronavirus." Additionally, economists at investment banks JPMorgan Chase and Goldman Sachs have reduced their first-quarter gross domestic product forecasts. JPMorgan cut its first-quarter U.S. growth estimate by 0.25 percentage points and Goldman Sachs lowered its forecast by 0.4 percentage points. Both firms expect the lost growth to be recouped once normal activities are resumed.

NAHB - top challenges for builders: cost/availability of labor in 2019 & 2020

Cost and availability of labor topped the list of problems builders faced in 2019, and is expected to return to the number one spot in 2020, according to special questions on the December survey for the NAHB/Wells Fargo Housing Market Index. The survey results showed that cost and availability of labor were a significant issue for 87% of builders last year. In 2020, however, a slightly smaller share – 85% of the builders – expect them to continue being a problem. The second most widespread problem in 2019 was building materials cited by 66% of builders. Unlike cost and availability of labor, the share of builders expecting building materials to be a problem this year is the same as share reporting it a problem last year. In 2011, cost and availability of labor was reported as a significant problem by only 13% of builders. The share increased to 30% in 2012, 53% in 2013, 61% in 2014, 71% in 2015, 78% in 2016, 82% in both 2017 and 2018, before peaking at 87% in 2019. Meanwhile building materials prices was reported as a significant problem by 33% of builders in 2011, followed by 46% in 2012, 68% in 2013, 58% in 2014, 42% in 2015, 48% in 2016 and 77% in 2017, 87% in 2018 and 66% in 2019. Another significant problem that builders faced in 2019, and is expected to face in 2020 is cost and availability of developed lots. In 2011, cost and availability of lots was reported as a significant problem by 21% of builders. The share increased to 34% in 2012, 46% in 2013, 55% in 2014, 58% in 2015, 60% in 2016, 58% in both 2017 and 2018, 63% in 2019 and 66% of builders expect it be a problem in 2020. Compared to the supply-side problems of materials, labor and lots, problems attracting buyers were not as widespread last year, but builders expect many of them to become more of a problem in 2020. Gridlock/uncertainty in Washington making buyers cautious was a significant problem for 45% of builders in 2019, compared to 56% who expected it to be an issue in 2020. Negative media reports making buyers caution was a significant problem for 39% of builders in 2019, but 44% expect it to be a problem in 2020. Concern about employment/economic situation was a problem for only 25% of builders in 2019, but 32% expect it to be a problem in 2020.

CoreLogic - December home prices increased by 4% year over year

Wed, 05 Feb 2020 22:14:29 GMT

- Price gains varied significantly across states last December, from Idaho’s 9.9% to Connecticut’s 0.2%

- Lower-priced homes had more price growth than higher-priced homes in 2019

CoreLogic released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for December 2019, which shows home prices rose both year over year and month over month. Home prices increased nationally by 4% from December 2018. On a month-over-month basis, prices increased by 0.3% in December 2019. (November 2019 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.) Home prices continue to increase on an annual basis with the CoreLogic HPI Forecast indicating annual price growth will be 5.2% from December 2019 to December 2020. On a month-over-month basis, the forecast calls for U.S. home prices to increase by 0.1% from December 2019 to January 2020, which would mark a new peak in prices since the last recorded peak in April 2006. 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. “Moderately priced homes are in high demand and short supply, pushing up values and eroding affordability for first-time buyers,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Homes that sold for 25% or more below the local median price experienced a 5.9% price gain in 2019, compared with a 3.7% gain for homes that sold for 25% or more above the median.”

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, 34% of metropolitan areas have an overvalued housing market as of December 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. As of December 2019, 26% of the top 100 metropolitan areas were undervalued, and 40% were at value. When looking at only the top 50 markets based on housing stock, 40% were overvalued, 20% were undervalued and 40% were at value in December 2019. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10% below the sustainable level. During the second quarter of 2019, CoreLogic, together with RTi Research of Norwalk, Connecticut, conducted an extensive survey measuring consumer-housing sentiment among millennials. The study revealed a significant contrast between younger millennials (ages 21-29) and older millennials (ages 30-38) regarding lifestyle preferences and aspirations for homeownership. Though 79% of younger millennial renters express a desire to purchase a home in the future, very few have previously owned a home, and many do not currently feel the need to own a home. However, due to homeownership rates nearly doubling for millennials once they reach their 30s, many enter a transitional period around 29-30 years old and reconsider their priorities. “On a national level, home prices are on an upswing,” said Frank Martell, president and CEO of CoreLogic. “Price growth is likely to accelerate in 2020. And while demand for homeownership has continued to increase for millennials, particularly those in their 30s, 74% admit they have had to make significant financial sacrifices to afford a home. This could become an even bigger factor as home prices reach new heights during 2020.”

Private sector job growth blows past Wall Street's expectations in January with 291,000 added

Private employers added 291,000 jobs in January, soaring past economists' expectations for the best monthly gain in more than five years, according to the latest ADP National Employment Report. The total far exceeded the 156,000 jobs that economists surveyed by Refinitiv were expecting. "Mild winter weather provided a significant boost to the January employment gain," Moody's chief economist Mark Zandi said in a statement. "The leisure and hospitality and construction industries in particular experienced an outsized increase in jobs." Growth was spread across a swath of sectors, boosted by the services-providing sector, which accounted for 237,000 new positions created last month, while the goods-producing sector added 54,000. In particular, construction posted a 47,000 bounce, the best monthly gain since April. The manufacturing sector expanded its payroll by 10,000. Education and health services also accounted for 70,000 jobs, while the leisure and hospitality sector added 96,000 to the total number. Leisure and hospitality and construction are among the most sensitive industries to weather, Zandi said during a conference call with reporters. "My guess is that extracting from the vagaries of this data, and it goes beyond weather, underlying job growth is probably somewhere around half the size of the January gain, probably around 150,000 jobs." That estimate, he said, is stable enough to maintain a record-low level of unemployment. Wednesday's report included a slight downward revision in December's numbers. The ADP Research Institute said the private sector added 199,000 two months ago, down from the 202,000 jobs initially reported. The data precedes the release of more closely watched update from the Labor Department on Friday, which is expected to show the U.S. economy added 160,000 jobs last month. Analysts anticipate unemployment will hold steady at 3.5 percent, a half-century low. In December, the U.S. added a slightly lower-than-expected strong 145,000 jobs.

MBA - mortgage applications increase in latest MBA weekly survey

Mortgage applications increased 5.0 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 31, 2020. The previous week's results included an adjustment for the Martin Luther King Jr. holiday. The Market Composite Index, a measure of mortgage loan application volume, increased 5.0 percent on a seasonally adjusted basis from one week earlier to its highest level since May 2013. On an unadjusted basis, the Index increased 20 percent compared with the previous week. The Refinance Index increased 15 percent from the previous week - its highest level since June 2013 - and was 183 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 10 percent from one week earlier. The unadjusted Purchase Index increased 8 percent compared with the previous week and was 11 percent higher than the same week one year ago. "The 10-year Treasury yield fell around 20 basis points over the course of last week, driven mainly by growing concerns over a likely slowdown in Chinese economic growth from the spread of the coronavirus. This drove mortgage rates lower, with the 30-year fixed rate decreasing for the fifth time in six weeks to 3.71 percent, its lowest level since October 2016," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Refinance activity jumped as a result, with an increase in the number of applications and a spike in the average loan amount, as homeowners with jumbo loans reacted more resoundingly to lower rates." Added Kan, "Prospective buyers weren't as responsive to the decline in mortgage rates - likely because of suppressed supply levels. Purchase applications took a step back, but still remained 11 percent higher than a year ago."

The refinance share of mortgage activity increased to 64.5 percent of total applications from 60.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9 percent of total applications. The FHA share of total applications decreased to 9.6 percent from 10.7 percent the week prior. The VA share of total applications decreased to 10.2 percent from 11.7 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.71 percent from 3.81 percent, with points remaining unchanged at 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.70 percent from 3.78 percent, with points decreasing to 0.19 from 0.20 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.80 percent from 3.82 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.19 percent from 3.24 percent, with points increasing to 0.23 from 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 5/1 ARMs increased to 3.23 percent from 3.15 percent, with points increasing to 0.15 from 0.12 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

US trade deficit drops for first time in 6 years as Trump hammers China with taxes

The U.S. trade deficit fell for the first time in six years in 2019 as President Donald Trump hammered China with import taxes. The Commerce Department said Wednesday that the gap between what the United States sells and what it buys abroad fell 1.7 percent last year to $616.8 billion. U.S. exports fell 0.1 percent to $2.5 trillion. But imports fell more, slipping 0.4 percent to $3.1 trillion. Imports of crude oil plunged 19.3% to $126.6 billion. The deficit in the trade of goods with China narrowed last year by 17.6 percent to $345.6 billion. Trump has imposed tariffs on $360 billion worth of Chinese imports in a battle over Beijing’s aggressive drive to challenge American technological dominance. The world’s two biggest economies reached an interim trade deal last month, and Trump dropped plans to extend the tariffs to another $160 billion in Chinese goods. But goods trade gap with Mexico rose 26.2 percent last year to a record $101.8 billion. The goods deficit with the European Union also hit a record, $177.9 billion -- up 5.5% from 2018. Overall, the United States posted a $866 billion deficit in the trade of goods such as cars and appliances, down from $887.3 billion in 2018. But it ran a $249.2 billion surplus in the trade of services such as tourism and banking, down from $260 billion in 2018. Trump campaigned on a promise to reduce America’s massive and persistent trade deficits, which he sees as a sign of economic weakness and the result of lopsided trade deals that put U.S. exporters at a disadvantage. He has negotiated a new trade agreement with Canada and Mexico that he says will bring more balance to trade in North America. Mainstream economists argue that trade deficits are largely the result of a big economic reality that doesn’t respond much to changes in trade policy: Americans spend more than they produce, and imports fill the gap. In December, the overall trade gap widened 11.9 percent to $48.9 billion as exports rose 0.8 percent to $209.6 billion and imports climbed 2.7 percent to $258.5 billion.

NAHB - building codes vote marred by ‘zombie proposals’ could impact housing affordability

For most of 2019, the International Code Council’s 2021 building codes cycle was moving along as expected. But a last-minute wave of newly-registered voters appears to have derailed the online vote in what appears to be a concerted effort to impact the code development process. NAHB was heavily involved at all stages in the current code development cycle, which includes changes to the International Energy Conservation Code (IECC) and the all-important International Residential Code (IRC) for the 2021 edition of the I-Codes. NAHB members and staff had a significant presence at both the ICC Committee Action Hearings in Albuquerque last May and the Public Comment Hearings in Las Vegas in October. Through the deliberative and transparent hearing process established by the ICC, NAHB — along with a host of other advocates and stakeholders along all ideological lines — publicly influenced many proposals with testimony backed by data and relevant research. When the vote results came in from the ICC’s Online Governmental Consensus Vote, held Nov. 19 through Dec. 6, 2019, it was as expected, with a success rate of around 84% on non-energy code proposals that NAHB either supported or opposed, in line with results from previous years. But when the preliminary results on the IECC were reported, there were some surprising discrepancies. Many aggressive energy efficiency proposals that had been defeated at both the committee hearings and the public comment hearings had been approved by the online vote (preliminary results). When proposals are defeated at hearings, they must get a two-thirds majority to overturn past results. It’s a bar so high, no previous proposal had ever met the threshold. But in this code cycle, 20 IECC “zombie” proposals cleared the hurdle and came back to life. And some will negatively impact housing affordability for home builders and buyers.

The more egregious changes include:

- Gas water heaters, stoves and dryers need to be “electric ready,” with appropriate receptacles installed nearby if a home owner decides to switch to all-electric appliances

- An electric vehicle charging receptacle (40A 220V) needs to be installed in all single-family homes with a parking space

- Wall insulation was increased to R-20+5 in climate zones 4 and 5

- Ceiling insulation was increased to R-60 in climate zones 4 through 8

- Ceiling insulation was increased to R-49 in climate zones 2 and 3

- A preliminary NAHB analysis of the changes pegs the cost impact to be a low-end estimate of $2,400-$7,200 in climate zone 1, to a high-end estimate of $5,000-$14,000 in climate zones 4 and 5, for each new single-family home of average size.

With such inconsistent results, NAHB suspected that something was amiss with the voting. After reviewing the approved governmental voters, it was discovered that hundreds of new government employees from towns all over the country were validated to vote — and they voted in droves. There was a concerted effort on the part of efficiency and environmental groups to engage like-minded governmental members who work in environmental, sustainability and resilience departments. These new voters appear to have worked off the same voting guide and simply voted their party line. NAHB will be very actively pushing back on these zombie proposals. First, staff is appealing at least two of the results that they believe are related to proposals that are out of scope for the energy code. Also, NAHB will be challenging the voting credentials of a number of new members. NAHB also intends to work with ICC to tighten up voting eligibility and modify the process to limit or eliminate proposals from getting approved that lose the first two hearings.

D.R. Horton improves 2020 home sales forecast

Mon, 27 Jan 2020 15:41:00 GMT

D.R. Horton Inc (DHI.N) raised the upper end of its full-year home sales forecast and topped Wall Street estimates for quarterly profit on Monday, as lower mortgage rates whet buyer appetite and boosted the No. 1 U.S. homebuilder’s sales. Shares of the company gained 2.3% in premarket trade as orders, an indicator of future revenue, rose 18.9% to 13,126 homes in the first quarter. “We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid,” Chairman Donald Horton said. Horton added that the company was well-positioned for the spring selling season as well as the remainder of 2020. U.S. home sales jumped to their highest level in nearly two years in December, the latest indication that lower mortgage rates have been helping the housing market regain its footing, after it hit a soft patch in 2018. The company said it sold 12,959 homes in the quarter, up from 11,500, a year ago. D.R. Horton now expects 2020 home sales to be between 60,000 and 61,500 units, compared with its previous range of 60,000 to 61,000 homes. Revenue rose 14.3% to $4.02 billion. Net income attributable to the company rose 50.2% to $431.3 million, or $1.16 per share, in the first quarter ended Dec. 31. The quarter included a tax benefit of $32.9 million. Excluding items, the company earned a profit of $1.07 per share according to IBES data form Refinitiv. Analysts on average had expected a profit of 92 cents per share.

Stocks slammed as coronavirus spooks markets

Stocks were under pressure Monday as the number of people affected by the coronavirus surged over the weekend. All three of the major averages were down at least 1.8 percent in the opening minutes of trading, continuing the selloff that began on Friday. By midnight Sunday, there were 2,744 confirmed cases of the virus and 80 deaths, according to China’s National Health Commission. There have been five confirmed cases in the U.S., health officials said. Travel-related names remained under pressure as the number of coronavirus cases continued to climb. Delta Air Lines, United Airlines, American Airlines and Southwest Airlines were all lower, as were cruise operators Royal Caribbean and Carnival Cruise Lines. President Trump tweeted that the U.S. is "in very close communication with China concerning the virus." "Very few cases reported in USA, but strongly on watch," Trump wrote. "We have offered China and President Xi any help that is necessary. Our experts are extraordinary!" Casino giants Wynn Resorts and Las Vegas Sands, which have exposure to Macau's Cotai Strip, were also weaker. An estimate from Deutsche Bank showed total visitation for Macau on Jan. 24 and Jan. 25 was down 50 percent from a year ago. Starbucks shares fell after the coffee giant said it all of its locations in China's Hubei province, where the outbreak occurred, will be closed through the week-long Lunar New Year. Last week, McDonald’s closed locations in the area and Disney announced its Shanghai and Hong Kong theme parks would be shuttered. Medical mask makers Lakeland Industries and Alpha Pro Technology continued to surge. Elsewhere, Boeing shares were under pressure after a Reuters report said a Boeing jet belonging to Ariana Afghan Airlines crashed in Afghanistan. Ariana CEO Mirwais Mizrakwal denied the report. Over the weekend, Boeing held the maiden flight for its 777X aircraft.

How the student loan burden affects millennial home-buying trends

We hear a lot of talk from presidential candidates and economists about the doom and gloom of student loan debt. Unfortunately, statistics show that student loan debt is pretty gloomy. Student loan debt has an enormous influence on how people make home-buying decisions. You simply can't begin to understand where the market is going until you understand the burden of student loans. The average outstanding balance of $37,172 is holding a lot of people back from the biggest milestones in their life. But despite the longer wait, millennials are increasingly entering the housing market. There is a light at the end of the tunnel, but the tunnel has some high interest rates and growing expectations. In the past decade, student loan debt has doubled. Americans are trying to pay off $1.5 trillion, and that number could reach $2 trillion in the next six years. Recent studies show that 61 percent of millennials have delayed or are currently putting off buying a new home due to student loan debt and other factors. Increasing numbers of millennials are also holding off on getting married, moving to a new city, or starting a family. Instead of saving up for a down payment, they’re sending away close to $400 each month to pay down their loans. Instead of buying, millennials are renting with roommates. Or they’re moving back home. Close to one in four millennials are living with Mom and Dad. While some have taken on the role of caregiver, others are just trying to save money. It makes sense—2018 graduates left school with an average debt of almost $30,000. And with an average income that’s less than $37,000, it looks like parents’ nests won’t be empty for at least a few years.

These statistics look pretty grim. Just hearing about the impact of the student debt crisis is enough for many millennials to click out of Zillow and give up hope. But student loans don’t necessarily bar millennials from buying a house. When mortgage lenders look at a potential buyer’s application, they aren’t just looking at how much they owe. They’re comparing the buyer’s recurring debt to their monthly income. Student loan debt is just one piece of the puzzle. Car loan payments and credit card debt are also considered when calculating the buyer's DTI. Lenders want to see a DTI below 36 percent. Home ownership dropped 20 percent between 2005 and 2014, partially due to the student debt crisis. But things have begun to pick up in the past few years. As millennials continue to save and manage their debt, they can and will (eventually) start to enter the housing market. Millennials haven’t completely shut down the idea of buying a home. Things are starting to pick up. The number of millennials buying home is beginning to increase year by year. In 2017, millennials made up 34 percent of the people buying homes. The rest of the generation is hopeful. After all, many millennials aspire to buy a house as a way of putting a cherry on top of the American Dream sundae. But many just can’t do it right now. The average baby boomer was 25 years old when they bought their first home. Millennials are waiting much longer—as in an additional five to 10 years. The combination of the long wait, student loan debt, and changing digital world have influenced the ways that millennials buy (and expect to buy) homes. Hop on these trends now to hand millennials exactly what they are looking for (with a side of avocado toast to celebrate).

Gas prices fall in past 2 weeks

After gas prices moved higher to start the new year, the price at the pump has receded. The average U.S. price of regular-grade gasoline has declined 4 cents a gallon to $2.60 over the past two weeks. That brings the price back to where it was as the new year began, giving back the same 4 cents a gallon lost in the first two weeks. Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that the pump price responded to a drop in crude oil costs. The highest average price in the nation for regular-grade gas is $3.58 per gallon in Honolulu. The lowest average is $2.16 in Houston. The average price of diesel is $3.05, down two cents.

NAHB - remodelers’ confidence increases in fourth quarter of 2019

Fri, 24 Jan 2020 18:26:38 GMT

The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 58 in the fourth quarter of 2019, up three points from the previous quarter. The RMI has been consistently above 50—indicating that more remodelers report market activity is higher compared to the prior quarter than report it is lower—since the second quarter of 2013. The overall RMI averages current remodeling activity and future indicators. Current market conditions increased two points to 56 in the fourth quarter of 2019. Among its three major components, major additions and alterations gained four points to 56, minor additions and alterations increased by one point to 54 and the home maintenance and repair component rose one point to 58. The future market indicators gained three points to 60 in the fourth quarter (Figure 3). Calls for bids increased by three to 58, amount of work committed for the next three months gained three points to 57, the backlog of remodeling jobs jumped five points 64 and appointments for proposals increased by two points to 62. The fourth quarter RMI reading reflects solid demand for remodeling, supported by a strong overall economy and low interest rates. Remodelers still face challenges in the market, including skilled labor shortages, making it harder to work off a backlog quickly.

Oil plunges as coronavirus outbreak threatens demand

Oil prices slid Friday morning as the widening Wuhan coronavirus outbreak threatened to curb global demand. Brent crude oil, the international benchmark, fell 1.8 percent to $60.90 a barrel while West Texas Intermediate crude oil, the U.S. benchmark, dipped 2 percent to $54.47. They have fallen by 5.9 percent and 6.9 percent this week, respectively. “Oil prices are at ground zero for the market-related fallout from the SARS-like coronavirus,” Phil Flynn, senior market analyst at the Price Futures Group, said in a note sent to clients on Friday. The outbreak has already caused “significant oil demand destruction,” according to Flynn, as more than 40 million people have been quarantined ahead of the Lunar New Year, a time when many Chinese would otherwise be traveling. The cancellation of many Lunar New Year festivities will “eventually add up to hundreds of thousands of unused barrels of jet fuel, diesel and gasoline,” Flynn said. The outbreak, which originated in Wuhan, China, has sickened 830 people and killed 26 in the country, China’s National Health Commission said Friday. Cases of the virus have also been discovered in the U.S., Japan, Korea, Singapore, Thailand and Nepal. On Thursday, the World Health Organization said that it's still “a bit too early to consider that this is a public health emergency of international crisis.” Even before the coronavirus outbreak, oil prices were under pressure due to a supply glut, which isn’t expected to end anytime soon despite OPEC cutting production at its December meeting. “We expect, even with the cuts coming from OPEC+, we think at least the first half of this year, we will see a surplus of 1 million barrels per day,” International Energy Agency Executive Director Fatih Birol told Reuters at the World Economic Forum in Davos, Switzerland. Brent crude oil has fallen 7.5 percent this year while West Texas Intermediate crude oil has tumbled 10.7 percent.

ATTOM - average U.S. home seller profits hit $65,500 in 2019, another new high

ATTOM Data Solutions released its Year-End 2019 U.S. Home Sales Report, which shows that home sellers nationwide in 2019 realized a home price gain of $65,500 on the typical sale, up from $58,100 last year and up from $50,027 two years ago. The latest profit figure, based on median purchase and resale prices, marked the highest level in the United States since 2006 – a 13-year high. That $65,500 typical home seller profit represented a 34 percent return on investment compared to the original purchase price, up from 31.4 percent last year and up from 27.4 percent in 2017, to the highest average home-seller ROI since 2006. Both raw profits and ROI have improved nationwide for eight straight years. However, last year’s gain in ROI – up less than three percentage points – was the smallest since 2011. “The nation’s housing boom kept roaring along in 2019 as prices hit a new record, returning ever-higher profits to home sellers and posing ever-greater challenges for buyers seeking bargains. In short, it was a great year to be a seller,” said Todd Teta, chief product officer at ATTOM Data Solutions. “But there were signs that the market was losing some steam last year, as profits and profit margins increased at the slowest pace since 2011. While low mortgage rates are propping up prices, the declining progress suggests some uncertainty going into the 2020 buying season.” Among 220 metropolitan statistical areas with a population greater than 200,000 and sufficient historical sales data, those in western states continued to reap the highest returns on investments, with concentrations on or near the west coast. Metro areas with the highest home seller ROIs were in San Jose, CA (82.8 percent); San Francisco, CA (72.8 percent); Seattle, WA (65.6 percent); Merced, CA (63.2 percent) and Salem, OR (62.1 percent). The top four in 2019 were the same areas that topped the list in 2018.

The U.S. median home price increased 6.2 percent in 2019, hitting an all-time high of $258,000. The annual home-price appreciation in 2019 topped the 4.5 percent rise in 2018 compared to 2017, but was down from the 7.1 percent increase in 2017 compared to 2016. Among 134 metropolitan statistical areas with a population of 200,000 or more and sufficient home price data, those with the biggest year-over-year increases in median home prices were South Bend, IN (up 18.4 percent); Boise City, ID (up 12.6 percent); Spokane, WA (up 10.9 percent); Atlantic City, NJ (up 10.6 percent) and Salt Lake City, UT (up 9.6 percent). Along with Salt Lake City, other major metro areas with a population of at least 1 million and at least an 8 percent annual increase in home prices in 2019 were Grand Rapids, MI (up 8.9 percent) and Columbus, OH (up 8.3 percent).Home prices in 2019 reached new peaks in 105 of the 134 metros (78 percent), including Los Angeles, Dallas-Fort Worth, Houston, Washington, D.C., and Philadelphia. Homeowners who sold in the fourth quarter of 2019 had owned their homes an average of 8.21 years, up from 8.08 years in the previous quarter and up from 7.95 years in the fourth quarter of 2018. The latest figure represented the longest average home seller tenure since the first quarter of 2000, the earliest period in which data is available. Among 108 metro areas with a population of at least 200,000 and sufficient data, the top five tenures for home sellers in the fourth quarter of 2019 were all in Connecticut: Norwich, CT (13.49 years); New Haven, CT (13.32 years) Bridgeport-Stamford, CT (13.23 years); Torrington, CT (12.33 years) and Hartford, CT (12.25 years). Counter to the national trend, 45 of the 108 metro areas (42 percent) posted a year-over-year decrease in average home-seller tenure, including Colorado Springs, CO (down 9 percent); Modesto, CA (down 7 percent); Visalia, CA (down 5 percent); Oklahoma City, OK (down 5 percent) and Olympia, WA (down 5 percent).

Nationwide, all-cash purchases accounted for 25.3 percent of single-family home and condo sales in 2019, the lowest level since 2007. The latest figure was down from 27.0 percent in 2018 and 27.7 percent in 2017, and well off the 38.4 percent peaks in 2011 and 2012. However, this is still well above the pre-recession average of 18.7 percent between 2000 and 2007. Among 166 metropolitan statistical areas with a population of at least 200,000 and sufficient cash-sales data, those where cash sales represented the largest share of all transactions in 2019 were Macon, GA (51.1 percent of sales); Naples, FL (50.4 percent); Chico, CA (47.9 percent); Montgomery, AL (44.7 percent) and Fort Smith, OK (43.8 percent). Distressed home sales — including bank-owned (REO) sales, third-party foreclosure auction sales, and short sales — accounted for 11.5 percent of all U.S. single family home and condo sales in 2019, down from 12.4 percent in 2018 and from a peak of 38.8 percent in 2011. The latest figure marked the lowest point since 2006. States where distressed sales comprised the largest portion of total sales in 2019 were all in the Northeast or Mid-Atlantic regions: New Jersey (20.1 percent of sales), Connecticut (19.5 percent), Delaware (19.4 percent), Maryland (18.1 percent) and Rhode Island (17.6 percent). Among 204 metropolitan statistical areas with a population of at least 200,000 and with sufficient data, those where distressed sales represented the largest portion of all sales in 2019 were Atlantic City, NJ (26.9 percent of sales); Columbus, GA (22.6 percent); Trenton, NJ (22.1 percent); Norwich, CT (21.6 percent) and Peoria, IL (20.0 percent). Those with the smallest shares were Portland, ME (3.3 percent of sales); Ogden, UT (3.8 percent); Provo, UT (4.1 percent); Salt Lake City, UT (4.6 percent) and San Francisco, CA (4.6 percent). Among 53 metropolitan statistical areas with a population of at least 1 million, those with the highest levels of distressed sales in 2019 were Baltimore, MD (19.3 percent of sales); Hartford, CT (18.9 percent); Philadelphia, PA (18.1 percent); Cleveland, OH (17.9 percent) and Providence, RI (17.7 percent).

Aside from San Francisco and Salt Lake City, metros with at least 1 million people that had the lowest shares, were San Jose, CA (5.2 percent of sales); Austin, TX (5.7 percent) and Grand Rapids, MI (6.2 percent). Institutional investors nationwide accounted for 2.9 percent of all single-family home and condo sales in 2019, down from 3.0 percent in 2018 to the lowest point since 2015. Among 120 metropolitan statistical areas with a population of at least 200,000 and sufficient institutional-investor sales data, those with the highest levels of institutional-investor transactions in 2019 were Atlanta, GA (9.5 percent of sales); Charlotte, NC (8.6 percent); Lafayette, LA (8.4 percent); Memphis, TN (8.3 percent) and Raleigh, NC (7.8 percent). Nationwide, buyers using Federal Housing Administration (FHA) loans accounted for 11.9 percent of all single-family home and condo purchases in 2019, up from 10.6 percent in 2018. The increase marked the first rise since 2015. Among 197 metropolitan statistical areas with a population of at least 200,000 and sufficient FHA- buyer data, the top four with the highest share of purchases made with FHA loans were in Texas. Those with the highest levels of FHA buyers in 2019 were McAllen, TX (30.4 percent of sales); El Paso, TX (26 percent); Amarillo, TX (24.4 percent); Beaumont-Port Arthur, TX (23.7 percent) and Visalia, CA (23.5 percent). The four Texas metros were the same that led the list in 2018.

Bank of America pours $35B into high-tech spending spree: Moynihan

Bank of America CEO Brian Moynihan says his company has been pouring billions of dollars into technology. The $35 billion the Charlotte, N.C.-based lender has invested over the past decade includes $1 billion in mobile banking to “make it better and better," he told FOX Business’ Maria Bartiromo at the World Economic Forum in Davos, Switzerland.. The focus is to make sure the digital services, which are less costly than both branch visits and ATM transactions, offer good feature functionality and are built "secure and to scale," he said. Mobile interactions, which include cash transfers and virtual check deposits, are growing at 15-20 percent a year and the number of mobile customers has risen 10 percent annually, Moynihan said. “Banks spend more on technology than any other industry, and we think this is going to be the decade of banks and technology,” Wells Fargo Securities analyst Mike Mayo told FOX Business’ Liz Claman earlier in January. He believes that digital banking, electronic payments and the governance of the process “makes or breaks the banks because that allows banks to grow revenues faster than expenses.” When financial institutions can control expenses, Mayo said, they encounter less pressure to boost revenue with risky loans. “Tech is getting married to banks, and it's permanent and it's finally going to work,” Mayo said.

NAHB - HUD secretary cites work to ease affordability woes

Ben CarsonU.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson said today he is committed to working with NAHB and other stakeholders to seek solutions to the nation’s housing affordability crisis' Speaking at the NAHB Leadership Council meeting in Las Vegas in conjunction with the International Builders’ Show, Carson said: “Addressing our country’s affordable housing challenges will take innovation not just in physical construction and development, but also innovation in developing housing choice. For example, municipalities may help alleviate barriers to renting apartments by providing renters with financing alternatives beyond a traditional lump-sum cash security deposit.” President Trump last year signed an executive order establishing the White House Council on Eliminating Regulatory Barriers to Affordable Housing. “This council, which I have the privilege to chair, is working with local leaders and citizens to identify and remove regulatory burdens that block affordable housing development,” Carson said. To assist the council’s work, HUD is soliciting input on perceived barriers that limit development. “We encourage NAHB members to take advantage of this open window to provide your insights and ideas,” Carson said. Carson also announced that HUD has initiated a pilot program to give procurement preferences to small businesses whose principal office is located in an opportunity zone. Opportunity zones were established as part of the Tax Cuts and Jobs Act of 2017 to provide tax incentives for investors with capital gains to invest in underserved communities. The pilot applies to procurements at or below the Simplified Acquisition Threshold, currently set at $250,000, and typically set aside for small businesses. The pilot began on Jan. 1 and will run through June 30, 2020.

The secretary also congratulated NAHB on the launch of its newest mobile app, the Pocket Guide to Fair Housing Act Accessibility. The app was partially funded by an educational grant from HUD and will enable builders and developers to determine if the Fair Housing Act’s accessibility requirements apply to their housing project and, if so, provide a quick reference guide to the seven basic accessibility requirements for compliance with the law. Last year, NAHB and HUD teamed up to host the inaugural Innovative Housing Showcase on the National Mall. The five-day event explored the latest housing technologies that are helping to improve housing affordability. Carson announced that HUD will continue the Innovative Housing Showcase as an annual tradition and that NAHB will once again co-host this year’s event, which will take place in September. Federal Housing Finance Agency (FHFA) Director Mark Calabria, whose agency oversees Fannie Mae, Freddie Mac and the Federal Home Loan Banks, also appeared before the NAHB Leadership Council to discuss the health of the housing finance system. “We are finally seeing income growth that can support housing markets,” said Calabria. “But there is still weakness in the mortgage market. We need to have a housing finance system that is competitive, liquid and resilient.” Calabria said he is working with the Treasury Department to raise the capital levels of Fannie Mae and Freddie Mac up to $45 billion. “We want to build up their capital so that in times of stress they can be there for you and the rest of the market,” he said.

Regulators drop the hammer on Wells Fargo execs at the center of fake account scandal

Wells Fargo indicated just over a week ago that the fallout from its fake account scandal was far from over, disclosing that it has at least $3.1 billion set aside for expected litigation payouts. But that is at the company level. Meanwhile, the fallout for the executives who failed to prevent the fake account scandal looks to be far from over as well. The Office of the Comptroller of the Currency announced Thursday that it is dropping the hammer on several of the bank’s former executives, on whose watch the fake account scandal took place. The trouble all began in 2016, when the Consumer Financial Protection Bureau, the OCC, and the City and County of Los Angeles fined the bank $185 million for more than 5,000 of the bank’s former employees opening as many as 2 million fake accounts in order to get sales bonuses. But that was hardly the end of the consequences that befell the bank. The bank’s CEO and chairman, John Stumpf, promptly resigned from his positions. From there, the bank took additional action to address the issues that led to the fines, including revoking 2016 bonuses for its top executives, firing four senior managers, outing another two executives, and splitting the role of chairman and CEO. Beyond that, the bank clawed back more than $100 million in bonuses from Stumpf and former head of community banking Carrie Tolstedt, both of whom could have put a stop to the fake account creation pipeline. The company even prepared a new pay plan where employee compensation was no longer tied to sales. The scandal also led to hundreds of millions of dollars in payouts to regulators, affected customers, and shareholders. But the bank, and the executives who failed to stop the creation of the fake accounts, are not done paying the piper yet. The OCC announced Thursday that it is fining Stumpf $17.5 million as part of a consent order that also prohibits Stumpf from working for a bank in any capacity without the OCC’s permission. According to the OCC, Stumpf did not do nearly enough to address the fake account issue either during his time as head of the community bank section of Wells Fargo or as the bank’s CEO. “[Stumpf] was or should have been aware of the problem and its root cause,” the OCC said in its consent order. “During Respondent’s tenure, there was a culture in the Community Bank that resulted in systemic violations of laws and regulations, breaches of fiduciary duties, and unsafe or unsound practices by large numbers of Community Bank employees.” According to the OCC, Stumpf’s failures were repeated and systemic.

CoreLogic - U.S. overall delinquency rate lowest for an October in at least 20 years

Wed, 15 Jan 2020 14:31:54 GMT

- No states posted an annual gain in overall delinquency rate in October

- Mississippi and North Carolina logged the largest annual declines in overall delinquency rate

- For the 12th consecutive month, the U.S. foreclosure rate was the lowest in at least 20 years

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 0.7% in October 2019, unchanged from October 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 at 2% in November 2008. “Home price growth builds homeowner equity and reduces the likelihood of a loan entering foreclosure,” said Dr. Frank Nothaft, chief economist at CoreLogic. “The national CoreLogic Home Price Index recorded a 3.3% annual rise in values through October 2019, and price growth was the primary driver of the $5,300 average gain in equity reported in the latest CoreLogic Home Equity Report.” No states posted a year-over-year increase in the overall delinquency rate in October 2019. The states that logged the largest annual decreases included North Carolina (down 0.9 percentage points) and Mississippi (down 0.8 percentage points). Eight other states followed with annual decreases of 0.6 percentage points. In October 2019, eight metropolitan areas in the Midwest and South recorded small annual increases in overall delinquency rates. The largest annual increases in October 2019 were in the following metros: Pine Bluff, Arkansas (1.0 percentage points); Dubuque, Iowa (0.2 percentage points) and Rockford, Illinois (0.2 percentage points). Five other metros were up 0.1 percentage points: Columbus, Indiana; Kokomo, Indiana; Manhattan, Kansas; Oshkosh-Neenah, Wisconsin and La Crosse-Onalaska, Wisconsin-Minnesota. While the nation’s serious delinquency rate remains at a 14-year low, 14 metropolitan areas recorded small annual increases in their serious delinquency rates. Metros with the largest increases were Panama City, Florida (0.4 percentage points) and Dubuque, Iowa (0.2 percentage points). The remaining 12 metro areas each logged an annual increase of 0.1 percentage point. “National foreclosure and serious delinquency rates have remained fixed at record lows for at least the last six months,” said Frank Martell, president and CEO of CoreLogic. “However, as markets can be much more volatile at the metro level, both late-stage delinquencies and foreclosures have continued to increase at this level in the Midwest and Southern regions of the country.”

US-China phase one trade deal: What Beijing has agreed to buy

Details are emerging of China's purchase commitments from the U.S under a historic phase one trade deal between the two economic superpowers to be signed later Wednesday in Washington. U.S. sources have told FOX Business the purchases will total $205 billion to $210 billion over two years while Chinese sources indicate the buys would be between $215 billion and $220 billion. “There’s a very detailed dispute-resolution process,” Treasury Secretary Steven Mnuchin said. “This is an enforceable agreement just as the president dictated it would be.” The pact, which follows a trade war of nearly two years, is slated to be signed by U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He at the White House. The purchase details are contained in a section of the agreement that officials have said won't be made public. Beijing will purchase up to $50 billion of crops, according to President Trump and Treasury Secretary Steven Mnuchin, $40 billion of which has been confirmed by Chinese sources. China has also agreed to buy $40 billion in services, $50 billion in energy and $75 billion to $80 billion worth of manufacturing, according to Chinese sources. "This is a great win for American business and American farmers," Mnuchin said. Aside from the more than $200 billion of Chinese purchases, Beijing has agreed to stop the theft of intellectual property and refrain from manipulation of its currency. The U.S., in return, will reduce tariffs on some products made in China while keeping duties on $375 billion worth of Chinese goods. The administration has held out the possibility of removing the duties under a later phase of the trade agreement, which Trump has said may require as many as three sections. Phase two negotiations will start "right away," Trump has said.

Olick - weekly mortgage applications soar 30% as homebuyer demand hits the highest level in 11 years

- Purchase application volume hit the highest level since October 2009, rising 16% for the week and 8% from a year ago, according to Mortgage Bankers Association data.

- Refinance applications jumped 43% for the week and were 109% higher than one year ago.

It was a seriously strong start to 2020 in the mortgage business for new home loans and refinances. Total mortgage application volume surged 30.2% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Refinancing led the surge, thanks to a drop in mortgage rates. Those applications jumped 43% for the week and were 109% higher than a year ago. The refinance share of mortgage activity increased to 62.9% of total applications from 58.9% the previous week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to the lowest level since September, 3.87%, from 3.91%, with points decreasing to 0.32 from 0.34 (including the origination fee) for loans with a 20% down payment. The rate was 87 basis points higher the same week one year ago. “Refinances increased for both conventional and government loans, as lower rates provided a larger incentive for borrowers to act,” said Joel Kan, an MBA economist. “It remains to be seen if this strong refinancing pace is sustainable, but even with the robust activity the last two weeks, the level is still below what occurred last fall.” Homebuyers also rushed in, sending purchase application volume up 16% for the week and up 8% from one year ago. Purchase mortgage activity hit the highest level since October 2009. Demand is so strong that real estate agents offered open houses on new properties the first weekend of the new year. Usually, they wait until February. “Homebuyers were active the first week of the year. Low rates and the solid job market continue to encourage prospective buyers to enter the market,” Kan said. Unfortunately, buyer demand is bumping up against near record-low supply. Price gains have reaccelerated, and if supply doesn’t improve markedly, some of the tightest markets will overheat quickly, leaving less affluent buyers out in the cold.

$1B California energy scam: 4th person pleads guilty

An executive of a San Francisco Bay Area solar energy company pleaded guilty Tuesday to participating in what federal prosecutors said was a massive Ponzi scheme that defrauded investors of $1 billion. Ryan Guidry, 43, of Pleasant Hill entered pleas involving the scam and money laundering. He could face up to 15 years in federal prison. Guidry was vice president of operations for DC Solar, based in Benicia, northeast of San Francisco. The now-defunct company made solar generators mounted on trailers and marketed them as able to provide emergency power for cellphone companies or to provide lighting at sporting and other events.

However, purportedly to improve tax benefits, the investors never actually took possession of the generators, authorities said. Instead, they would lease the generators back to DC Solar, which would then provide them to other companies for their use. Authorities said the investors were supposed to be paid with the profits, but the generators never provided much income. Instead, prosecutors say early investors were paid with funds from later investors — a classic Ponzi scheme. Prosecutors alleged that the company engaged in $2.5 billion in investment transactions between 2011 and 2018, costing investors $1 billion. Among the investors was Warren Buffett's Berkshire Hathaway Inc., which lost some $340 million. Guidry is the fourth person to plead guilty in connection with the scheme. Three other men, including a general contractor and an accountant, entered pleas last year. The company's owners, Jeffrey and Paulette Carpoff of Martinez, have not been charged criminally but they were named in civil lawsuits. Investigators said the couple spent lavishly, including $19 million on a private jet service; some 20 properties; some 150 expensive cars and even a $782,000 luxury box at the under-construction Las Vegas Raiders stadium. Many of their assets have been seized or liquidated. The couple authorized the government to sell more than $75 million of their real estate and other assets. Dozens of cars were auctioned off last year for millions of dollars, including a 1978 Pontiac Trans Am once owned by Burt Reynolds that is a replica of the car he drove in the movie "Smokey and the Bandit." The auction proceeds will go back to the owners if they are never convicted, but if they are and forfeit their belongings, the proceeds will go to the victims.

NAHB - how to build communities buyers will love to call home

A shift is taking place with home buyers. They want to invest in more than a home; they want to invest in the experience of living there. As a result, home builders need to focus more than ever on “placemaking” in community and neighborhood design. What is placemaking? It is a philosophy of planning public spaces that is about people — assembling, interacting and living. It capitalizes on a community’s unique assets to create inspiring spaces that promote health, happiness and well-being. People want to live in a home, a neighborhood and a community they feel is unique and grounded in a sense of identity and individuality, not just a little newer or a little better than the one down the street. Establish the image of community you want to achieve early on and use it as a guidepost for design and decision-making through the entire development process:

- Start with the existing physical, cultural or historic qualities of the site and the greater surrounding community. How can they be preserved, enhanced and integrated into the master plan? Let them drive the design.

- Place monuments, open spaces and amenities along the community entry drive and into each neighborhood that serve as landmarks that will remain in the mind of the buyer. Buyers respond well to communities that reflect the story of the land and its context.

- Preserve and enhance views, which are a paid-for amenity that comes with the site. Make them a compelling feature of your design.

- Simplify the landscape and amenity program. There is often a tendency to fill open spaces with all the things we think we need, such as walls, shelters, pools and play structures. The market is trending quickly away from “I want it all” to “What do I need to be happy?”

Neighborhood Design

Design neighborhood “villages” with a variety of home types, compact lot configurations, shared drives and motor courts to achieve higher net densities and create a safer, more pedestrian scale:

- Design from the back to the front, so design inefficiencies are moved to arrival zones and entries and consolidated into larger areas for greater visual impact.

- Make parks the visual focal point and center of activity to create a unique identity for each neighborhood. Create pocket parks within a short walk from homes.

- Preserve existing trees and vegetation whenever possible. They enhance aesthetics and the sense of establishment. When possible, make them a part of a pocket park.

Even if you’re just building one home, there are principles you can use to make it unique and memorable:

- Build a gracious porch, preferably covered, or front yard patio. Make the front yard a usable space where residents can engage their neighbors; use fencing or courtyard walls to enclose the front yard landscape. It will make the home stand out on the block and bring interest to the curb.

- Connect entry walks to the street, not just the driveway. It will make the front door more prominent, especially with smaller, narrower homes with front-loaded garages.

- Bring shrubs and perennial plantings out to the street, rather than just around the foundation.

- With compact front-loaded lots, extend a porch or living area of the home to the street beyond the garage door to make the porch or living area — and not the garage — the predominant element of the front elevation. Side load the garage, and install a more attractive garage door with windows, enhanced trim and higher quality materials and finishes.

- Use enhanced materials and finishes for driveways and walks.

- Plant street trees to frame the view to and soften the architecture of the home and the block, create a sense of establishment, cool the home and pavement, and sequester carbon.

Invest in placemaking, driven by an authentic and compelling community character that is carefully integrated into the master plan, each neighborhood and every home. When you do, you’ll turn the home-buying experience into a “lifestyle buying” experience your buyers will love.

ATTOM - buying a home is more affordable than renting in 53 percent of U.S. housing markets

Fri, 10 Jan 2020 20:07:20 GMT

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FHA, Fannie Mae, Freddie Mac are all now backing larger loans

Fri, 03 Jan 2020 15:45:03 GMT

With the calendar now officially flipped to 2020, Fannie Mae, Freddie Mac, and the Federal Housing Administration are now backing larger mortgages than they were just a few days ago. That’s because the 2020 loan limits for each of those agencies are now in effect. And each of the agencies’ loan limits are higher for 2020 than they were in 2019. The agencies’ loan limits (the highest dollar amount they will back on a mortgage) are dictated by the Federal Housing Finance Agency’s home price index. And that index rose in 2019, with home prices up nearly 5% over last year’s totals. With higher home prices come higher loan amounts, and the FHA, Fannie Mae, and Freddie Mac all recently adjusted their loan limit amounts to account for higher home prices. Those higher loan limits took effect on Jan. 1, 2020, meaning the FHA, Fannie Mae, and Freddie Mac are all now backing larger loans. Fannie Mae and Freddie Mac are now backing loans that exceed $510,000, while the FHA is backing loans of just above $331,000. At the end of November, the government-sponsored enterprises announced that the 2020 maximum conforming loan limit was increasing from 2019’s level to $484,350 to $510,400 for 2020. That marks the fourth straight year that the FHFA has increased the conforming loan limits after not increasing them for an entire decade from 2006 to 2016. In 2016, the FHFA increased the Fannie and Freddie conforming loan limit for the first time in 10 years, and since then, the loan limit has increased $93,400.In 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, the FHFA raised the loan limits from $424,100 to $453,100 for 2018. The FHFA then increased the loan limit from $453,100 to $484,350 for 2019. And now, loan limits officially top $510,000. The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot increase again until home prices return to pre-decline levels. Data from the FHFA showed that home prices increased by 5.38% on average between the third quarter of 2018 and the third quarter of 2019. Therefore, the baseline maximum conforming loan limit in 2020 increased by the same percentage. There are some markets where homes are more expensive, and those areas have even higher loan limits. For areas in which 115% of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit is $765,600 — or 150% of $510,400.

Meanwhile, the FHA loan limit also increased as of this week. The 2020 FHA loan limit for most of the country is now $331,760, an increase of nearly $17,000 over 2019’s loan limit of $314,827. FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008, to set single-family forward loan limits at 115% of median house prices, subject to a floor and a ceiling on the limits. FHA calculates forward mortgage limits by Metropolitan Statistical Area and county. FHA’s 2020 minimum national loan limit, or “floor,” of $331,760 is 65% of the Fannie, Freddie loan limit of $510,400. This floor applies to “low-cost areas,” which are counties where 115% of the median home price is less than the floor limit. There are a number of counties (approximately 70) where the median home price far exceeds the FHA loan limit floor. Those areas where the loan limit exceeds this floor are considered “high-cost areas”, and HERA requires the FHA to set its maximum loan limit “ceiling” for those high-cost areas at 150% of the national conforming limit. Therefore, for those approximately 70 “high-cost” counties, the FHA’s 2020 loan limit is $765,600, an increase of nearly $40,000 over 2019’s total of $726,525. According to the FHA, the loan limit increased in almost all of the 3,233 counties where it backs loans, but there are a handful of counties where the loan limit actually decreased. Per data from the FHA, there are 11 counties where the loan limit is smaller now than it was in 2019. In three of those counties (Dutchess County, New York; Orange County, New York; and Lincoln County, Idaho), the loan limit is decreasing by approximately 50%, due to the home price changes in those areas.

Gold surges after Iranian general killed by US

Pentagon has already approved responses to further Iranian aggression: Rep. Michael Waltz

Gold prices surged following the U.S. airstrikes against Gen. Qassem Soleimani, head of Iran’s elite Quds Force, late Thursday. The yellow metal jumped over 1 percent to $1,548 an ounce as investors dumped riskier assets, such as stocks, for the safe haven of precious metals. Even before the attacks, the investment picture for gold was bullish after it registered its best year since 2010, and strategists expect that to continue. The precious metal surged 20 percent last year to its biggest annual gain since 2010, according to Dow Jones Market Data, as a deceleration in global growth caused central banks around the world to slash interest rates. “Going into 2020, we remain constructive on gold as late-cycle concerns, heightened political uncertainty coupled with only a modest growth acceleration should, in our view, support investment demand for gold,” wrote Goldman Sachs’ Commodities Research team led by Jeffrey Currie. The firm expects gold to climb 5 percent this year to $1,600 an ounce. Central banks cut rates a total of 131 times in 2019, compared with just 21 rate hikes, according to cbrates.com. The rate cuts came as the global economy grew at a 3 percent pace in 2019, according to the International Monetary Fund, the weakest since the financial crisis. In an effort to combat the slowing global economy, the Federal Reserve, at its December meeting, said it expects to keep rates steady throughout 2020 before raising them once in 2021. The Fed’s preferred inflation measure, the core Personal Consumption Expenditures price index, rose 1.6 percent year-over-year in November, which was considerably below its 2 percent objective. A weaker U.S. dollar and macro uncertainties related to the upcoming presidential election and geopolitical risks make gold a “buy from a thematic angle, particularly on dips,” according to the Swiss lender UBS. The firm’s global wealth management team also thinks gold will hit $1,600 an ounce in 2020. But not everyone on Wall Street thinks gold will grind higher this year. Bank of America’s Global Commodity Research team says the Fed’s rate cuts and promise to remain on hold this year could lead to an “uplift in U.S. inflation” that could also be accompanied by “higher long-term interest rates.” The team has a 2020 price target of $1,494 an ounce, or 2.2 percent below current levels.

Where will the hottest housing markets be in 2020? Go south

The hottest housing markets in 2020 will be the ones where the weather is hotter too. New data from Zillow suggests that southern markets are expected to outperform other national markets this year. More specifically, Austin, Texas will stand out the most, according to a new survey from Zillow. In fact, 83% of respondents said they expect the Austin market to outperform nationally, and only 7% said they think it will underperform. “Having subjected buyers to a crucible of fierce competition for multiple years, many West Coast markets hit an affordability ceiling that set off declining home values in the most expensive of these,” said Skylar Olsen, Zillow’s director of economic research. “Indeed, this price correction – a clap back from having appreciated with too much exuberance in the recent past – pushes many previously hot markets to the bottom of our experts’ list.” In a panel comprised of economists and real estate experts conducted by Pulsenomics and Zillow, the average respondent expects U.S. home values to grow by 2.8% this year. Those who participated said they expect Austin, Texas, Charlotte, Atlanta and Nashville to be the most successful markets. In fact, of the 14 markets the experts expect to perform strongly in 2020, 11 come from Texas or elsewhere in the Southeast or Southwest. The exceptions are Denver, Minneapolis and Portland. On the other hand, San Francisco, San Jose and Los Angeles are expected to underperform. These expensive California markets already have a poor track record for affordable housing and cost of living expenses. Cincinnati and Sacramento are the other bottom two. Many of the panelists said they expect home values in San Jose and San Francisco to keep falling in 2020, as well as other California markets. In San Fransisco, only 8.4% of homes sold in Q3 2019 were affordable to families earning the area’s median income of $133,800. “At the top of the list are metros still providing relative affordability and thriving, amenity-rich communities that appeal to younger adults willing to make a move,” Olsen said. “These features, plus the ability to grow and add housing in the future, are attractive propositions for employers and employees alike.”

New York, New Jersey, have highest resident exodus in 2019

New Jersey, New York and other states in the northeast continued to see an uptick in outbound migrations in 2019. According to United Van Lines National Movers Study, which tracks annual migration patterns on a state-by-state basis, New Jersey had the highest percentage of outbound migrations of any state last year at a rate of 68.5 percent. The highest percentage of residents that left the state were wealthy, with nearly half of all outbound migrations occurring at income levels of $150,000 or more. The primary reasons people cited for leaving the Garden State were retirement and jobs. Illinois and New York came after New Jersey with 66.5 percent and 63.1 percent rates of outbound moves, respectively. They were closely trailed by Connecticut at 63 percent. Illinois and New York also saw the largest outflow of residents at the highest income brackets. California ranked seventh among the top outbound states. These high-tax states have been hurt by a $10,000 cap on state and local tax deductions, imposed as part of the 2017 Tax Cuts and Jobs Act. New York, New Jersey and Connecticut even filed a lawsuit to have the measure overturned, which was dismissed by a judge last year. New York Gov. Andrew Cuomo has credited the SALT cap and the flight of the wealthy for a $2.3 billion budget deficit in the state. As previously reported by FOX Business, recent U.S. Census Bureau data showed similar patterns as New York, New Jersey and Connecticut each lost tens of thousands of residents to Florida.

Baby boomers, who are of prime retirement age, drove much of the moving patterns last year. About 45 percent of all inbound moves involved people belonging to this demographic. That helps explain the outbound migrations in the northeast, Michael Stoll, economist and professor at the University of California in Los Angeles, said. “What is unique about the northeast is that the northeast age distribution is shifted towards more older Americans than the rest of the country as a whole,” Stoll said. “With that alone, you’re going to see a prompting of moves out of that region.” Stoll noted that many residents from the northeast moved to southern states like South Carolina and Florida, moves that were driven by climate and lifestyle preferences, as well as lower housing costs. Similar demographic and migration patterns were observed in the Midwest, among states like Kansas, Michigan and Iowa. Stoll said that while state taxes factor into Americans’ moving decisions, they tend to be secondary concerns when compared with the main drivers, like employment changes or retirement. On the other hand, Idaho had the highest percentage of inbound migration at 67.4 percent. It topped the list for the first time in more than 25 years. Idaho, which has a relatively strong and stable economy, is a place where people are locating for both retirement and lifestyle changes, Stoll said. Oregon has the second-highest percentage of inbound moves, at 65.7 percent. Arizona, South Carolina and Washington were next on the list. Florida also made

USMCA trade deal may ease housing shortage

Mon, 30 Dec 2019 17:15:35 GMT

The U.S.-Mexico-Canada Agreement passed by the House of Representatives will help to ease the nation’s housing shortage by stabilizing the prices of materials used in construction, according to the National Association of Home Builders. The new trade pact was approved on Dec. 19 with a 385 to 41 bipartisan vote. This was after the three nations agreed to revisions House Speaker Nancy Pelosi said would protect American workers and the environment. The trade pact is now pending in the Senate. The U.S. is Canada’s biggest export market for softwood lumber, primarily used for home construction. “The U.S. residential construction and remodeling industries rely on tens of billions of dollars in building materials sourced from Mexico and Canada annually because America cannot produce enough steel, aluminum and other materials and equipment to meet the needs of the domestic housing industry,” NAHB said in a statement. The U.S. housing market is struggling with an inventory shortage that has depressed sales. The so-called “months supply” number that measures how long it would take to sell off the existing stock of homes fell to 3.7 in November, according to the National Association of Realtors. Most economists consider a six-month supply to be a balanced market. U.S. existing-home sales fell 1.7% in November, according to NAR, even with mortgage rates near three-year lows. While some of the supply shortage can be blamed on factors like Baby Boomers aging in place, it’s also due to depressed levels of home building, said NAR Chief Economist Lawrence Yun said. Homebuilders still haven’t recovered from the housing bust a decade ago, Yun said in an interview. There probably will be 888,000 single-family housing starts in 2019, which isn’t enough to keep pace with population expansion, he said. The drop in home sales is “clearly due to inventory shortage at the lowest price point,” Yun said. “Some of the trade-up buyers, who often are buying new homes and releasing that entry-level existing home inventory to the market, aren’t making a move.”

Average U.S. salary reaches record high

The average annual U.S. salary for full-time workers rose to a record high of $69,181 in November, according to the Federal Reserve Bank of New York. That’s up 3.4% from the from $66,012 a year earlier, according to the bank’s Labor Market Survey. Income gains are picking up steam in a job market that’s the strongest in five decades, providing support for real estate demand by making it easier for buyers to qualify for mortgages. The jobless rate was 3.5% in November, matching the September measure that was the lowest since 1969. Employers are being forced to pay more as they competed to retain workers. The share of people who expected a job offer in the next four months rose to 37%. About 19% of those workers said they expected two or more job offers during that period. “We have seen a strong positive trend in real median annual household income over the past several years, which is encouraging,” said Gordon Green of Sentier Research. “But, the course of inflation over the coming months and years will be critical.” In other words, when prices for food and other necessities rise, it erodes the power of income gains. Inflation should remain muted in 2020, according to a forecast from the Securities Industry and Financial Markets Association. The SIFMA forecast projected a gain of 2.2% in the Federal Reserve’s preferred gauge known as “core PCE.” That’s the government’s measure of Personal Consumption Expenditures minus volatile food and energy prices. Average hourly earnings probably will rise 3.2% in 2020, compared with a gain of 3.1% in 2019, the SIFMA forecast said. The average U.S. unemployment rate probably will rise to 3.8% in 2020 from 3.7% in 2019, Fannie Mae said in a forecast earlier this month. That would make 2019 the lowest annual average since 1969, and 2020 would be the second-lowest.

ATTOM - neighborhood data improving vacation rental sites

As a vacation rental site owner, how can you ensure your attracting a steady influx of high-quality prospects every month? From including your platform on local directories to investing in your social media strategy, there are several ways to attract more visitors to your site and convert them once they arrive. In addition, including rich demographic and neighborhood data on your website is another great way to boost quality web traffic and improve your conversion rates – find out how, below. Offering property and demographic data on your vacation rental site is one of the most effective ways to boost web traffic. First and foremost, including neighborhood data on your rental site allows you to rank for a higher number of relevant keywords. For example, our Points of Interest (POI) data provides detailed information on local landmarks, business, and other key features, all of which can be leveraged to rank for a higher number of long-tail keywords. For instance, vacationing dog owners may be looking for rental properties close to pet services, such as trusted local dog walkers and dog day-care facilities – allowing them the freedom and flexibility to drop their dogs off with caretakers during their vacation. Long-tail keywords such as “dog-friendly holidays” or “pet care while on vacation,” can help the right leads find your vacation rental site. Alternatively, your younger holiday rental prospects may be looking for neighborhoods with a dynamic selection of nightclubs, eateries, and other entertainment venues. Including this information on your website enables you to rank for a wider range of keywords related to these interests – boosting your rankings in the search engines. The same is true of properties, for example, helping you to drive traffic from people searching online for vacation rental properties with a particular number of bedrooms or specific features, such as a swimming pool or patio.

From slow loading times (over just 4 seconds) to poor spelling and grammatical mistakes, there are several reasons that site visitors may click elsewhere after visiting your rental website. However, often low bounce rates directly correlate with how relevant your website data is to your visitors and whether or not they can find all the information they need on your website – or whether they have to venture elsewhere to find it. For example, many prospective vacation renters may be interested in finding out more about the available cultural attractions, entertainment options, transportation, and weather in a particular rental hotspot. Our Points of Interest Data provides data on more than 14 business categories and 120 lines of business – providing your site visitors with detailed insights into the surrounding neighborhood of each rental home. Ensuring you include this information on your platform will help boost your engagement and keep visitors on your page. As such, enriching your rental website with the right property and neighborhood data will help improve your bounce rates by ensuring you provide all the information your site users are looking for. Including all the neighborhood and community information your site visitors need will increase your dwell time and your conversions, as site visitors don’t need to go elsewhere to find the information they need on a vacation rental or neighborhood. There are over 207 million pages ranking for the search term “vacation rental property,” in Google. Cutting through the digital noise and ensuring your vacation rental website gets found is near impossible without the right data and a fool-proof SEO strategy. ATTOM property data helps ensure your site gets found by thousands of high-quality leads every month.

US-China phase one trade deal to be signed over weekend: Report

The partial trade deal between the U.S. and China will be signed this week, according to a report. Liu He, China’s chief trade negotiator, is leading a delegation to the U.S. on Saturday with the directive to sign the phase one trade agreement, the South China Morning Post reports, citing a source briefed on the matter. A White House spokesperson did not immediately respond to FOX Business’ request for comment. As part of the trade agreement, Beijing agreed to buy $200 billion of U.S. products over the next two years from the manufacturing, energy, agriculture and services sectors, in addition to protecting against intellectual property theft and technology transfer. In return, the U.S. will reduce tariffs on Chinese goods. About $380 billion of Chinese goods will still be taxed in an effort to force Beijing to negotiate a broad trade agreement. The skinny trade deal further deescalates the nearly two-year-long trade war that has hurt growth in the world’s two largest economies. China’s economy grew at a 6 percent rate in the third quarter, its weakest since recordkeeping began in 1993. Economic expansion in the U.S. slowed to 2.1 percent in the July-to-September period, down from 3.1 percent at the beginning of the year. President

MBA - mortgage applications down

Fri, 27 Dec 2019 16:28:37 GMT

Mortgage applications decreased 5.3 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending December 20, 2019. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 6 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week and was 128 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 5 percent higher than the same week one year ago. "The 10-Year Treasury yield increased last week amid signs of stronger homebuilding activity and solid consumer spending, leading to a rise in conventional conforming and jumbo 30-year mortgage rates to just under 4 percent. With this increase, conventional refinance application volume fell 11 percent," said Mike Fratantoni, MBA Senior Vice President and Chief Economist. "Refinance applications for government loans did increase, even though rates on FHA loans picked up. The change in the mix of business has kept the average refinance loan size smaller than we had seen earlier this year." Added Fratantoni, "We are in the slowest time of the year for the purchase market. Purchase application activity declined after the seasonal adjustment, but still remains about 5 percent ahead of last year's pace. The increase in construction activity will bolster housing inventories, which should be a positive for purchase volumes going into 2020."

The refinance share of mortgage activity increased to 62.6 percent of total applications from 62.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.1 percent of total applications. The FHA share of total applications increased to 14.5 percent from 13.7 percent the week prior. The VA share of total applications increased to 15.2 percent from 12.9 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.99 percent from 3.98 percent, with points remaining unchanged at 0.33 (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 $484,350) increased to 3.97 percent from 3.96 percent, with points decreasing to 0.25 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.87 percent from 3.79 percent, with points decreasing to 0.33 from 0.36 (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 decreased to 3.39 percent from 3.40 percent, with points remaining unchanged at 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week. The average contract interest rate for 5/1 ARMs increased to 3.38 percent from 3.28 percent, with points decreasing to 0.21 from 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

China-made Tesla deliveries start next week

Tesla Model 3s will start rolling off the assembly line at the company’s China Gigfactory next week, according to a report. The electric-car maker will deliver its first 15 China-made Model 3 sedans on Dec. 30 – all to company employees, a representative told Reuters. Tesla broke ground at its $2 billion Shanghai plant in January and began making vehicles there in October with the hope of producing 250,000 vehicles at the plant each year once production of the Model Y crossover utility vehicle gets fully up to speed. Deliveries of the vehicle are expected to start in summer 2020. Tesla has a lot riding on its business in China, which CEO Elon Musk believes will fuel the next leg of growth at the company. He hopes to take market share in the world’s largest electric-vehicle market from local rivals such as Nio and Xpeng Motors. The Model 3 starts at 355,800 Chinese yuan ($50,800). “The Tesla story and future growth will be heavily depending on China which is why the Giga 3 ramp (and financing) and gauging demand in the key region will be front and center for investors over the next 12 to 18 months,” wrote Dan Ives, analyst at Wedbush Securities, who on Thursday raised his price target to $370 from $270. “2020 represents a pivotal year for Musk & Co. as ultimately this will be the year the bulls have been waiting for with China coming on board and Musk’s grand EV vision starts to take hold......or hits another stumble and the bears will come quickly out of hibernation mode heading into next year with the stock at new highs.” On Thursday, Tesla secured a $1.29 billion loan from Chinese banks that can be used for construction and production at the Shanghai plant, as well as for repaying a loan due on March 4, Reuters said. Tesla has rallied 69.2 percent since reporting a surprise third-quarter profit on Oct. 23, sending short-sellers rushing for the exit. Shares have gained 29.5 percent this year, in line with the S&P 500.

DSNews - Freddie Mac: Finding solutions to ‘areas of concentrated poverty’

More than 19% of Americans—more than 61 million people—live in so-called “areas of concentrated poverty,” which are defined by “persistently high poverty levels, low economic opportunity and high housing costs relative to income,” according to Freddie Mac. This is significant because living in and growing up in poverty can have long-term impacts spanning from lower-quality education to lower quality health. Freddie Mac suggests one solution for bringing economic mobility to areas of concentrated poverty is mixed-income housing, and the GSE has helped finance such developments. In a recent white paper, Freddie Mac explored the idea of mixed-income housing, highlighting a few successes as well as pointing out a few obstacles that could prevent these developments from succeeding in all “areas of concentrated poverty.” “The development and transformation of an area of concentrated poverty can help revitalize the local economy by growing the tax base, leading to increased public investment and increased economic opportunity over time,” said Steve Guggenmos, VP of Multifamily Research and Modeling, Freddie Mac. “As these areas grow and develop, mixed-income and social impact housing are instrumental in encouraging residential economic diversity and preventing the displacement of long-time residents.”

Mixed-income housing properties offer units at market rate and other units below-market rate for lower-income tenants. Most often, the balance is 80/20, with 80% of units going at market rate and 20% reserved for low-income residents and available at a restricted rent level. Freddie Mac noted that, “Ultimately, the optimal percentages of restricted and unrestricted units are dependent upon market conditions.” However, tipping the scales too far will prevent a property from being “economically feasible,” forcing rents on unrestricted units above market rate or potentially requiring more public subsidy than is available. Public subsidies are often relied on in mixed-income housing. However, “socially conscious” private equity firms can also help with funding. One such firm, Turner Impact Capital, made the Regency Pointe mixed-income housing in the Washington D.C. metro area possible without a need for public subsidy, according to Freddie Mac. Mixed-income housing can help improve affordable housing conditions for low-income residents, provide amenities for those residents, and help bolster an area’s economy, they come with limitations. While speaking of the success of its mixed-income development investments, Freddie Mac also admitted, “fostering residential economic diversity and increasing access to opportunity for low-income residents through the development of mixed-income housing is ACPs is not an easy task.” For a mixed-income development to be viable, the high-poverty area must also be attractive to higher earners, which means it should be in close proximity to a booming job market or perhaps be an area in the midst of revitalization, which is the case with several of the developments Freddie Mac has backed.

Oil hits three-month highs on upbeat economic data

Oil prices rose on Friday, hitting three-month highs, as upbeat economic data from China and the United States indicated an end to the trade war between Washington and Beijing has restored confidence in the global growth. Brent crude was up 29 cents, or 0.4 percent, at $68.21 a barrel at 0903 GMT. The West Texas Intermediate was up 24 cents, or 0.4%, at $61.92 a barrel. Volume of oil trade remained thin in the Christmas holidays and New Year breaks. Data on Friday showed profits at China's industrial firms rose at the fastest pace in eight months in November. Among sectors, the chemical, petroleum processing and steel industries reported recovering profits last month due to rebounding market demand and rising prices amid easing trade hostilities with Washington. China and the United States cooled their 17-month long trade war earlier this month, announcing a Phase 1 agreement that would reduce some U.S. tariffs in exchange for more Chinese purchases of American farm products. The lingering ripple effect of the trade row, however, showed up in data from Japan, the world's third-biggest economy, on Friday as industrial output shrank for a second month in November. In the United States, a survey on Thursday showed that online holiday purchases by U.S. consumers reached a record, beating analysts' expectations and sending U.S. stocks to fresh. U.S. consumers are "showing few signs of tightening their purse strings, which is positive for oil also," said Stephen Innes chief Asia market strategist at AxiTrader. U.S. crude oil stockpiles likely declined last week, while inventories of gasoline were set to extend their build for the seventh straight week, an extended Reuters poll showed on Thursday. The latest poll was conducted ahead of the weekly status report from the Energy Information Administration (EIA), an agency of the U.S. Department of Energy. The EIA report is due at 11:00 a.m. on Friday.

Boston metro tops list of best 2020 multifamily markets

The Boston metro area will be the best multifamily market in 2020 as a softening economy cools apartment demand nationally, according to a CBRE forecast. “Boston is the star performer,” commercial real estate firm CBRE said in a report. The multifamily vacancy rate in 2020 probably will rise to 4.5% from 4.3% in 2019, remaining below the long-term average of 5.1%, the forecast said. Rent growth likely will average 2.4%, the Los Angeles-based firm said. The report said the metro areas surrounding cities would be the best location for apartment investments in 2020. “Buying or building in the suburbs will remain the best bet based on market performance and investment returns,” the report said. “Suburban multifamily will outperform urban, maintaining lower vacancy and achieving higher rent growth.” Other metro multifamily markets in CBRE’s top four for 2020 are: Phoenix, Atlanta and Austin, Texas. Those three cities “are very high-growth metros by population, households, employment and multifamily demand,” the report said. “In Atlanta and Phoenix, development has not ramped up to levels that should cause any concerns.” Seven smaller metros had 4% or higher rent growth as of Q3 2019, the report said: Albuquerque, New Mexico; Birmingham, Alabama; Colorado Springs, Colorado; Greensboro, North Carolina; Memphis, Tennessee; Dayton, Ohio; and Tucson, Arizona. “They are likely candidates for outperformance in 2020,” the report said.

Rent control, enacted in New York, California and Oregon in 2019, will impact the multifamily market in 2020, the report said. Other states might join the list, the report said, citing possible regulations in Illinois and Washington, as well as more restrictive legislation in California. “New rent regulations have been instituted in a few key markets and many more are being considered to alleviate rising rental housing costs,” CBRE said. “Housing economists concur that building more housing is a better response to the problem than rent control, but 2020 will bring more debate, possibly more regulation and more unease for the industry.” The U.S. economy in 2020 likely will grow at a 2.1% rate, slowing from a 2.3% pace in 2019, Fannie Mae said in a forecast Dec. 18. The unemployment rate, currently near 50-year lows, will stay under 4% through the end of 2020, the forecast said. That’s supporting the consumer

Here’s what will happen in multifamily real estate in 2020

Mon, 16 Dec 2019 18:30:19 GMT

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Freddie Mac: here’s what to expect from the housing market in 2020 and beyond

Mon, 02 Dec 2019 15:13:21 GMT

Freddie Mac: here’s what to expect from the housing market in 2020 and beyond

Just over a year ago, mortgage rates nearly hit 5%, levels that hadn’t been seen since the early part of this decade. But as we get ready to move into a new decade, mortgage rates are more than a full percentage point lower than that, comfortably back in the 3-4% range. And according to a new forecast from Freddie Mac, mortgage rates should stay that low for the rest of this year and well beyond that. In Freddie Mac’s newest housing market forecast, the company’s economic and housing research group states that they expect mortgage rates to remain around 3.8% for the rest of 2019 and stay at that level for all of 2020 and 2021. As other recent forecasts and mortgage market data has shown, this year’s unexpectedly low mortgage rates have driven a rise in refinances, as well as a surge in home purchases. A recent forecast from the Mortgage Bankers Association shows that 2019 is expected to be the best year for refis since 2016, and the best year for purchase mortgages since 2006. Freddie Mac agrees and expects the good times to keep rolling. In its latest forecast, the government-sponsored enterprise expects there to be $846 billion in refinance originations this year, and $834 billion more in refis next year. Both of those figures would be more than $300 billion more in refis than there were in 2018. On the purchase side, Freddie Mac expects there to be $1.255 trillion in purchase originations this year. And the GSE expects those figures to rise in both 2020 and 2021. According to Freddie Mac, it expects there to be $1.299 trillion in purchase originations in 2020 and $1.369 trillion in purchase originations in 2021.

Overall home sales are also expected to rise in each of the next two years. According to Freddie Mac, it expects to see 6 million home sales in 2019, 6.1 million home sales in 2020, and 6.2 million in 2021. Despite home sales and purchase originations projected to rise over the next few years, Freddie Mac currently expects 2021 to see a decline in total mortgage volume from 2020’s expected level due to a decline in refis. The GSE’s forecast expects to see just $429 billion in refis in 2021, perhaps a function of there simply not being that many people left who have not refinanced their mortgage by then, especially if mortgage rates stay as low as they are currently expected to. Overall, Freddie Mac expects there to be $2.101 trillion in total mortgage originations in 2019, $2.132 trillion in originations in 2020, and $1.798 trillion in 2021. The GSE also expects home price growth to slow over the next few years, with annual growth rates of 3.2%, 2.9% and 2.1% in 2019, 2020 and 2021, respectively. “The economy has seen increased volatility in November as hopes for a favorable resolution to the trade dispute have recently waned,” said Sam Khater, Freddie Mac’s chief economist. “However, given low interest rates, modest inflation and a solid labor market, the U.S. housing market continues to stand firm, and, our forecast is for the housing market to maintain momentum over the next two years.”

Many firms have no contingency plans should US-China trade war worsen: Survey

One-quarter of multinational companies have no contingency plans should the U.S.-China trade war drag on, according to a survey that gathered more than 260 anonymous responses from businesses. "When asked about how many months’ worth of contingency plans their organization has in place to cope with the effects of the trade war, the answers showed that companies were still falling short in terms of risk mitigation planning," wrote the authors of the study, which was conducted by German logistics company DHL. Twenty-five percent of respondents said they had no contingency plans, 20.4 percent said they had plans for up to six months and 34 percent said they had prepared for six to 18 months out. The companies represented industries including health care, technology, automotive, energy, retail, chemicals and more, according to DHL. The least prepared sectors were engineering and manufacturing (47.6 percent had no contingency plans) and automotive and mobility (40 percent had no plans). Even though a big chunk of firms surveyed said they had no contingency plans, more than two-thirds reported being impacted by U.S.-China trade tensions. China expects the U.S. to roll back some tariffs on its exports as part of a trade deal, an official newspaper said Monday, reiterating Beijing's insistence that President Trump’s administration can be "flexible" and "reasonable." The comments come amid negotiations on a preliminary "phase one" agreement aimed at resolving the tariff war between the world's two largest economies. New U.S. tariffs are set to kick in on many Chinese-made products as of Dec. 15. A preliminary deal could avert that.

DSNews - eye on recent delinquency rate increases

This week, Black Knight will be releasing its newest Mortgage Monitor report. In the First Look at October data, Black Knight improved delinquency rates both month-over-month and year-over-year, but rates have been increasing in recent weeks. According to Black Knight, the modest increase in 30-year rates in recent weeks, coupled with seasonal slowing in home sales, may dampen prepayment rates in the coming months. For now, Black Knight notes that mortgage prepayments continued to rise, climbing another 16% from September to hit the highest level since May 2013. That puts prepayments up 134% since this time last year as the refi surge continues. Despite the slight setback, the delinquency rate is now within 0.03% of the record low set back in May at 3.39%, down 3.8% from September and nearly 7% from last year. Meanwhile, serious delinquencies (all loans 90 or more days delinquent but not yet in foreclosure) continue to improve as well. Down 10K from last month and 66K from last year, there are now 433K serious delinquencies, a more than 14-year low. Black Knight also identified the top five and bottom five states by non-current percentage. The top states, with the highest percentage of non-current mortgages, were Mississippi (10.18%), Louisiana (7.72%), Alabama (6.68%), West Virginia (6.34%), and Arkansas (6.13%). Mississippi, Louisiana, Alabama, and Arkansas all also posted the highest percentages of loans 90 days or more delinquent, along with Tennessee. The bottom five states were Colorado (1.73%), Washington (1.81%), Oregon (1.86%), Idaho (1.96%), and California (2.01%). Washington and California also saw some of the biggest improvements in delinquency rates, with rates dropping by 10.89% and 10.58%, respectively. Alaska saw the biggest improvements in the nation, as delinquency rates in the state dropped by 15.67% in October.

Here's what else is happening in The Week Ahead

- Census Bureau Construction Spending Report (December 2)

- Banking, Housing, and Urban Affairs Hearing (December 5)

- Consumer sentiment index (December 6)

- BLS Employment Data (December 6)

Strong US consumer is proof recession won't happen: El-Erian

Don't throw in the towel on the U.S. economy just yet. Black Friday sales are the latest sign that the U.S. consumer, which makes up about 70 percent of the economy, is alive and well. "All this talk of recession, and you know I thought that was ridiculous talk, it's not going to happen," Mohamed El-Erian, chief economic adviser at Allianz Global Investors said on Monday. "The U.S. consumer is in a really good place and the U.S. consumer is the main driver of this economy." Spending figures from the Black Friday weekend showed online shoppers spent a record $7.4 billion, almost as much as the $7.9 billion they spent during last year's Cyber Monday. That’s in addition to the $4.2 billion they spent online on Thanksgiving Day, which was 14.5 percent higher than last year's spending. Brick-and-mortar sales were down 6.2 percent on Black Friday, but up 2.3 percent on Thanksgiving Day, according to ShopperTrack data. The National Retail Federation expects sales in November and December to hit up to $730.7 billion, a nearly 4.2 percent increase from 2018. The solid start to the holiday shopping season comes after retail sales rebounded in October, climbing 3.1 percent from last year and 0.3 percent from the prior month. They fell in September for the first time in seven months. The strength of the consumer has been a key driver in the economic expansion, which at 125 months, is the longest on record. “The United States has outperformed the rest of the world in an eye popping fashion. I don’t think we’ve seen numbers like that.” The only thing that would weaken the consumer, in El-Erian's view, is a "big policy mistake" like a government shutdown. As long as that doesn’t happen, he thinks the labor market will continue to "produce new jobs and wage growth." El-Erian recommends investors stick with the U.S., but go "up in quality." He also suggests keeping cash on hand to buy overseas names at cheaper prices.

Black Knight’s - strong decline in october mortgage delinquencies; refi wave pushes prepayments to highest level in more than six years

Mon, 25 Nov 2019 18:15:10 GMT

Black Knight, Inc. reports the following “first look” at October 2019 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.

- The national delinquency rate fell to 3.39% in October, a nearly 7% decline from last year, and within 0.03% of the record low set in May 2019

- Serious delinquencies fell by 10,000 from September, while the number of loans in active foreclosure edged up slightly (+3,000)

- Prepayment activity climbed another 16% in October to the highest level since May 2013

- Prepays are now up 134% year-over-year as refinancing homeowners continue to take advantage of low interest rates

- However, modest rises in 30-year rates in recent weeks – coupled with seasonal slowing in home sales – may dampen prepayment rates in coming months

Fed's Powell heads to Connecticut, Rhode Island as region's economy sags

Federal Reserve Chairman Jerome Powell is making his way through part of New England on Monday, meeting with local leaders in Rhode Island and Connecticut amid sluggish growth in the region’s economy. The head of the U.S. central bank, alongside Boston Federal Reserve President Eric Rosengren, will meet with leaders of East Hartford CONNects, a grant-funded initiative led by the Boston Fed that’s intended to combat poverty by connecting residents with education, job training and long-term, sustaining careers. Afterward, Powell will go to Rhode Island to deliver a speech at the Greater Providence Chamber of Commerce. In the second quarter of the year, Connecticut’s economy slowed, growing by just 1 percent -- half that of the overall U.S. GDP. It ranked 47th among the states, according to U.S. Commerce Department figures released at the beginning of November. Rhode Island’s economy fared slightly better at 1.5 percent but still ranked 35th. It’s a trend pervasive across New England, with only one state not falling in the bottom 15 of economic growth: Maine, at 0.6 percent, was 49th; Vermont, at 1.3 percent, was 37th; New Hampshire, at 1.4 percent, was 36th; and Massachusetts, at 1.5 percent, was 34rd. Connecticut’s anemic growth was tied to a slide of more than a quarter percentage point in the construction industry, which was among the weakest sectors. Across the state, the number of available construction jobs rose slightly to 57,700 in October, down from 62,100 at the start of the year, according to the state’s Department of Labor. Still, like most of the U.S., the state is steadily creating jobs -- in October, the state’s economy added 4,800 -- while unemployment fell to 3.6 percent, down 0.2 percent from the year-ago period. Economic growth has become a powerful political issue in Connecticut, with some businesses and Republicans criticizing the Democrats, who hold a majority, of raising taxes and imposing regulations that kill growth and slow job creation. Powell's presence in the states comes ahead of the upcoming Federal Open Market Committee meeting in mid-December, during which policymakers at the Federal Reserve are widely expected to leave interest rates unchanged on the basis that the economy is growing at a healthy pace, despite some potential roadblocks, such as the U.S.-China trade war. “Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely,” Powell said while testifying before Congress this month. “This favorable baseline partly reflects the policy adjustments that we have made to provide support for the economy.”

Millennials want a single-family house, even if it means a long commute

When it comes to affordability, Millennials are willing to go the extra mile, literally. Nearly 90% of Millennial homebuyers told Redfin that they would choose a single-family home over an equally priced unit in a triplex with a shorter commute. “Even as we’ve seen a revival in many urban neighborhoods, the American ideal of a detached home with a white picket fence and a private lawn doesn’t appear to be changing—at least for the time being,” said Redfin Chief Economist Daryl Fairweather. Redfin found that the price of single-family homes over condos is declining in expensive areas, and increasing in affordable inland areas, highlighting a dichotomy between the two. “This is another way America is dividing between coastal cities and the more affordable heartland,” Redfin CEO Glenn Kelman said. “All else being equal, almost everyone would prefer a house over a condo, and that preference is only getting stronger in most parts of America. But in the big city, that preference is actually getting weaker.” In some cities, like New York, living in condos or apartments is the norm, but that’s not the case in other markets. “As more folks move from San Francisco or New York in search of that house with a white picket fence, the ones left behind will be those most comfortable with life in a condo or townhouse,” Kelman said. “The question now becomes whether cities in the middle of a transition from affordable to affluent, like Minneapolis, Seattle, Portland, Austin, Nashville, and Charlotte can use local zoning laws to shift their citizens’ preference for single-family homes, so that it becomes less, not more, strong over time—or if people will shift away from them.” Meanwhile, it’s getting more attainable in some cities to choose a home over a condo. According to the Redfin report, in many expensive metro areas, the price premium for single-family homes over comparable condos—those with similar square footage, number of bedrooms and bathrooms and location, among a few other factors—has “dropped meaningfully” since 2013.

But buyers still prefer single-family housing. Of the Millennial homebuyer base, 93% said they would choose a single-family home. Overall, more than 85% of homebuyers and sellers said they preferred single-family homes over multifamily housing. “While some cities and states like Minneapolis and Oregon are aiming to create more affordable multi-family housing options by eliminating single-family zoning, as long as Americans are willing to pay a premium for detached homes, developers are likely to continue building them,” Fairweather said. And buyers, especially older buyers, are willing to tolerate a longer commute in order to get that house of their dreams. “Although the share of homebuyers limiting their searches to single-family homes has shrunk over the last seven years, that’s likely due to rising prices rather than homebuyer preferences,” the Redfin report stated. “Our research indicates that the vast majority of homebuyers and sellers would prefer a single-family home over a unit with shared walls, assuming the price is the same,” Redfin continued. “Just one out of every 10 prospective homebuyers and sellers would prefer a unit in a triplex with a short commute over a comparable single-family home farther away from their job. Nearly 90 percent of homebuyers would prefer a single-family home.” More than 85% of Millennials, Gen X, and Baby Boomers all said they’d deal with a longer commute for a single-family house. Meanwhile, just 58% of Gen Z said they want a single-family house instead of similarly priced condo. “Nearly half of the under-25 set would prefer a unit in a triplex over a single-family home with a private backyard,” Redfin stated. “While the youngest survey respondents’ sentiment could suggest that overall housing preferences will indeed shift away from single-family homes in the decades to come, it may be just as likely that their housing preferences will change as they start families.”

Charles Schwab buying TD Ameritrade for $26B in all-stock deal

Charles Schwab is acquiring TD Ameritrade in an all-stock transaction valued at $26 billion, the company announced Monday. TD Ameritrade shares were higher on the news. Schwab will pay approximately 1.0837 Schwab shares for each TD Ameritrade share. The deal represents a 17 percent premium to Ameritrade's 30-day volume weighted average price. TD Shareholders will own about 13 percent of the combined company once the deal is complete. The deal, which was first reported by FOX Business' Maria Bartiromo on Thursday, will create a financial-services behemoth with $5 trillion in assets under management, allowing Schwab to better compete with the likes of BlackRock. The firms generate a combined $17 billion of annual revenue and $8 billion of annual pre-tax profit. The deal is expected to be 10 percent to 15 percent accretive to earnings and 15 percent to 20 percent accretive to operating cash earnings per share in year three. "With this transaction, we will capitalize on the unique opportunity to build a firm with the soul of a challenger and the resources of a large financial services institution that will be uniquely positioned to serve the investment, trading and wealth management needs of investors across every phase of their financial journeys,” Charles Schwab President and CEO Walt Bettinger said in a statement. TD Ameritrade Chief Financial Officer Stephen Boyle will act as the interim president and CEO, helping the company with its fiscal year 2020 plan and integration with Schwab. Boyle will assume leadership effective immediately. Following the close of the deal, TD Bank will have the opportunity to name two board members and TD Ameritrade will name a director. The combined company's headquarters will be located in Westlake, Texas. Outgoing TD Ameritrade CEO Tim Hockey previously acknowledged his firm's decision to adopt zero commissions -- as Schwab and rivals E-Trade and Fidelity have done -- would prompt speculation about mergers. m"We will take a look at anything that makes financial and strategic sense," he said last month, outlining the company's plans to make up for lost revenue of as much as $240 million a quarter from the new commission structure. "Scale is important. We have scale. We're very comfortable with our earnings power now, even in this new environment." Schwab said in October that eliminating its $4.95-per-trade commission would trim quarterly revenue by $90 million to $100 million, or about 3 percent to 4 percent of the total.

CoreLogic - low rental inventory levels are pushing rent prices up

Wed, 20 Nov 2019 16:42:04 GMT

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ATTOM - top 10 major metros increasing in foreclosure starts

Mon, 18 Nov 2019 19:42:20 GMT

In October 2019, foreclosure filings climbed upward, increasing 13 percent from the previous month, according to ATTOM Data Solutions’ newly released October 2019 U.S. Foreclosure Activity Report. The report featured the rise of foreclosure completions (or REOs) in October, which reached the highest point in 2019. Lenders repossessed 13,484 U.S. properties through REOs in October, up 14 percent from the previous month. ATTOM’s October foreclosure report also noted that foreclosure starts increased monthly in 36 states. Lenders started the foreclosure process on 28,667 U.S. properties in October, up 17 percent from last month but down 1 percent from a year ago — the first double-digit month-over-month increase since February 2018. On the state level, states that saw double digit increases from last month included: Arizona (up 52 percent); Ohio (up 52 percent); Florida (up 48 percent); New Jersey (up 47 percent); and California (up 36 percent). On the other hand, 13 states including Washington, DC posted month-over-month decreases in foreclosure starts in October, including Maryland (down 42 percent); Idaho (down 36 percent); Delaware (down 32 percent); Nebraska (down 26 percent); and Utah (down 25 percent). Drilling down to the metro level, in looking at the major metros with a population greater than 1 million, the top 10 metros that saw month-over-month increases in foreclosure starts were: Minneapolis-St. Paul-Bloomington, MN-WI (up 189 percent); Cincinnati, OH-KY-IN (up 111 percent); Miami-Fort Lauderdale-West Palm Beach, FL (up 109 percent); Portland-Vancouver-Hillsboro, OR-WA (up 68 percent); Rochester, NY (up 64 percent); Orlando-Kissimmee-Sanford, FL (up 56 percent); Phoenix-Mesa-Scottsdale, AZ (up 51 percent); Detroit-Warren-Dearborn, MI (up 48 percent); Nashville-Davidson–Murfreesboro–Franklin, TN (up 45 percent); and Sacramento–Roseville–Arden-Arcade, CA (up 42 percent). And, the top 10 major metros with a population greater than 1 million that saw month-over-month decreases in foreclosure starts were: New Orleans-Metairie, LA (down 36 percent); Pittsburgh, PA (down 36 percent); Washington-Arlington-Alexandria, DC-VA-MD-WV (down 34 percent); Salt Lake City, UT (down 33 percent); Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (down 29 percent); Seattle-Tacoma-Bellevue, WA (down 23 percent); Milwaukee-Waukesha-West Allis, WI (down 11 percent); Kansas City, MO-KS (down 8 percent); Baltimore-Columbia-Towson, MD (down 7 percent); and Birmingham-Hoover, AL (down 7 percent). States with the highest foreclosure rates were New Jersey (one in every 1,316 housing units with a foreclosure filing); Illinois (one in every 1,336 housing units); Maryland (one in every 1,484 housing units); South Carolina (one in every 1,534 housing units); and Florida (one in every 1,571 housing units).

Huawei gets reprieve to do business with US companies: Exclusive

General temporary licences for Huawei extended for 90 days

Huawei, the world's largest telecommunications company, has received a 90-day extension for its temporary general licenses, Commerce Department sources said. "The Temporary General License extension will allow carriers to continue to service customers in some of the most remote areas of the United States who would otherwise be left in the dark,” Commerce Secretary Wilbur Ross said in a press release announcing the extension. “The Department will continue to rigorously monitor sensitive technology exports to ensure that our innovations are not harnessed by those who would threaten our national security.” The extension, which was set to expire Tuesday, allows American companies to sell to Huawei for the next 90 days. Commerce Secretary Wilbur Ross says 130 applications from companies are in the process of being reviewed to sell to Huawei without the Temporary General License. An official announcement from Commerce could come as early as today. In May, the Trump administration signed an executive order that banned all U.S. companies from using Huawei equipment. The Trump administration lifted the ban in July as part of President Trump’s trade-war ceasefire with Chinese President Xi Jinping. The exemption was extended in August for another 90 days. But, U.S. companies were blocked from doing business with Huawei. This move could also be interpreted as a goodwill gesture amid the ongoing U.S. and China trade talks. If the deadline was met no U.S company would be allowed to do business with Huawei without a special license.

MBA - CMBS market plays a significant role in commercial/multifamily real estate finance

The Mortgage Bankers Association (MBA) today released a new white paper, Role of CMBS in the Financing of Commercial and Multifamily Real Estate in America, which gives an overview of the commercial mortgage-backed securities market and highlights the vital role it plays as a capital source for the financing of commercial real estate. "MBA is a strong advocate for its commercial/multifamily membership, and this white paper is designed to educate members and industry stakeholders about the significant value and innovation that commercial mortgage-backed securities bring to the overall market," said Bill Killmer, MBA Interim Head of CREF and Senior Vice President of Legislative & Political Affairs. "CMBS lenders provide the necessary capital that finances infrastructure where individuals in large and small communities live, work and play." MBA's white paper highlights how the securitization technology utilized in CMBS provides a variety of investor benefits, including diversification with exposure to varied sponsors and collateral in different markets, as well as the ability for investors to purchase a mix of securities with differing risk profiles depending on their risk appetite. Seven key factors are explained as to why private label CMBS is important to the commercial real estate finance landscape.

CMBS lenders:

- Are natural providers of long term fixed-rate, and in some cases, floating rate capital to secondary and tertiary markets, where capital was not as plentiful prior to the development of CMBS;

- Diversify risk in the system by distributing investments with risk/return characteristics that are catered to investor needs;

- Can play a critical role when other capital sources become constrained due to economic or regulatory issues, as occurred in the 1990s or due to concentrations (i.e. banks can only have so much exposure to one borrower or market, etc.);

- Are consistently in the market for loan opportunities, albeit with the volatility of the capital markets being a feature of the product;

- Are providers of a wide variety of non-recourse, assumable loans of various sizes - characteristics which are attractive to sponsors;

- Will lend on a wide range of property types, borrowers and geographic locations; and

- Have provided standardization of underwriting, reporting and documentation that has benefited both CMBS borrowers and investors, as well as the broader commercial real estate finance industry through increased transparency.

"CMBS is a unique capital source with innovative securitization technology, and it remains a vital component of the over $3.5 trillion commercial real estate finance industry," said Chris LaBianca, 2020 Vice Chair of MBA's Commercial Real Estate/Multifamily Finance Board of Governors (COMBOG). "Borrowers, investors and communities across America are better off for having CMBS as an additional source of liquidity."

Biden email promotes phony watch party at Epstein estate organized by Sanders supporter

A man who says he supports Bernie Sanders punked Joe Biden's presidential campaign into sending out notices of a phony Palm Beach "November debate watch party" that was supposed to be held at the infamous estate of convicted sex offender Jeffrey Epstein. Gerald Doherty, 28, confirmed to FOX Business that he created the fake invite that linked to a Biden campaign web page for the alleged gathering during Wednesday's Democratic debate at 358 El Brillo Way in Palm Beach, the address of Epstein's nine-bedroom mansion where prosecutors say he performed illegal sex acts with underage girls. The event promised "street-side parking," according to an invite reviewed by FOX Business. "Looking forward to seeing you. Joe Biden for President," it added, with a link to Biden's official campaign website that said "pizza" would be served. The event notice was sent via email to numerous people in South Florida by the Biden campaign, one recipient told FOX Business, which reviewed the email. FOX Business then sought to confirm its legitimacy by contacting Doherty, whose telephone number was on the invite. In an interview Sunday, Doherty fessed up to the joke.

Epstein, a multi-millionaire Wall Street financier with ties to the rich and powerful like former President Bill Clinton, President Trump and Britain's Prince Andrew, reached a plea deal with prosecutors in 2008 for soliciting sex from a minor and served a brief jail sentence. His net worth approached a billion dollars, and he maintained mansions across the country, including his palatial estate in Palm Beach. In August, the New York City medical examiner said Epstein hung himself in his jail cell after facing new federal charges for abusing dozens of underage girls, which could have kept him in jail for the rest of his life, if convicted. Doherty described himself as a graduate of Ithaca College in New York who resides in Miami. He said he remains convinced the multi-millionaire sex offender died under mysterious circumstances, which was one of the motivating factors for creating the fake invite. Another reason Doherty said he created the fake invite is that he wanted to show just how little grassroots support Biden has in the area, particularly as compared to the Vermont senator, who is challenging Biden in the Democratic race to challenge Trump in the 2020 election. "I'm a Bernie Sanders supporter and I can tell you Joe Biden has zero grassroots support; it's a joke," said Doherty. "I'm also fixated with the Jeffrey Epstein story. The circumstances surrounding his death are weird. I'm not a Jeffrey Epstein expert, but based on what I've seen it's hard to digest he killed himself."

NAHB - builder confidence holds firm in November

Builder confidence in the market for newly-built single-family homes edged one point lower to 70 in November, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. The past two months mark the highest sentiment levels in 2019. “Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.” “We have seen substantial year-over-year improvement following the housing affordability crunch of late 2018, when the HMI stood at 60,” said NAHB Chief Economist Robert Dietz. “However, lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.” 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 index gauging current sales conditions fell two points to 76 and the measure charting traffic of prospective buyers dropped one point to 53. The component measuring sales expectations in the next six months rose one point to 77. Looking at the three-month moving averages for regional HMI scores, the Northeast posted a two-point gain to 62, the West was up three points to 81 and the South moved one point higher to 74. The Midwest remained unchanged at 58.

ATTOM - U.S. foreclosure activity in October 2019 climbs upward from previous month

Fri, 15 Nov 2019 20:02:07 GMT

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 October 2019 U.S. Foreclosure Market Report, which shows there were a total of 55,197 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — in October 2019, up 13 percent from the previous month but down 17 percent from a year ago. “While foreclosure activity across the United States rose in October, in looking at historical trends, October numbers tend to increase as lenders may be pushing filings through the pipeline before the holiday season,” said Todd Teta, chief product officer with ATTOM Data Solutions. “The latest number is still below where it was a year ago and less than 15 percent of what it was during the depths of the Great Recession.” Lenders repossessed 13,484 U.S. properties through completed foreclosures (REOs) in October 2019, up 14 percent from last month, hitting the highest point in total number of completed foreclosures in 2019. States that saw the greatest number in REOs in October 2019 included: Florida (1,493 REOs); Texas (912 REOs); Michigan (890 REOs); California (824 REOs); and Illinois (805 REOs). Those major metropolitan statistical areas (MSAs) with a population greater than 200,000 that saw the greatest number of REOs included: Detroit, MI (705 REOs); New York, NY (684 REOs); Chicago, IL (679 REOs); Philadelphia, PA (470 REOs); and Atlanta, GA (430 REOs). Nationwide one in every 2,453 housing units had a foreclosure filing in October 2019. States with the highest foreclosure rates were New Jersey (one in every 1,316 housing units with a foreclosure filing); Illinois (one in every 1,336 housing units); Maryland (one in every 1,484 housing units); South Carolina (one in every 1,534 housing units); and Florida (one in every 1,571 housing units). Among the 220 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in October were Peoria, IL (one in every 832 housing units); Rockford, IL (one in every 889 housing units); Atlantic City, NJ (one in every 933 housing units with a foreclosure filing); Fayetteville, NC (one in every 962 housing units); and Columbia, SC (one in every 1,028 housing units). Lenders started the foreclosure process on 28,667 U.S. properties in October 2019, up 17 percent from last month but down 1 percent from a year ago — the first double-digit month-over-month increase since February 2018. States that saw a double digit increases from last month included: Arizona (up 52 percent); Ohio (up 52 percent); Florida (up 48 percent); New Jersey (up 47 percent); and California (up 36 percent). Counter to the national trend, 13 states including Washington, DC posted month-over-month decreases in foreclosure starts in October 2019, including Maryland (down 42 percent); Idaho (down 36 percent); Delaware (down 32 percent); Nebraska (down 26 percent); and Utah (down 25 percent).

Trump administration to require hospitals to reveal discounted prices they give insurers

The Trump administration plans to release a sweeping proposal on Friday that would require hospitals to publicly disclose the discounted prices they secretly negotiate with insurance companies — a change intended to increase price transparency for patients shopping for care. According to The Wall Street Journal, which first reported the news, the final rule will force hospitals in 2021 to report the rates they strike with individual insurers for all services, including drugs, supplies, facility fees and care by doctors who work for the facility. The administration will also extend the rule to the $670 billion health-care industry, meaning that insurance companies, including Anthem and Cigna, and group health plans that cover employees will have to disclose negotiate rates and previously paid rates for out-of-network treatment in computer-searchable file formats, the Journal reported. The proposal will likely face a legal challenge from hospitals and insurers, which have previously warned that transparency could actually force prices to rise because they would know the price that competitors offer, and therefore be unwilling to settle. “Right now there is too much arbitrage in the system,” a senior administration official told the Journal. “There are a ton of vested interests who will oppose this. We expect to get sued." A similar health care transparency law in Ohio remains tangled in the legal web. Still, the Trump administration contends that requiring hospitals to release the negotiated price is intrinsic to lowering costs. For instance, hospitals would need to disclose payer-specific charges for at least 300 shoppable services, 70 of which -- including vaginal birth, colonoscopy and joint-replacement surgery, are mandated in the rule. Hospitals can select the other 230 services they post online. If the 6,000 hospitals that accept Medicare do not comply with the proposed requirement, they’ll be slapped with a $300 fine each day. Prices charged for health care vary dramatically depending on several factors, including whether a patient is in or out of the patient's insurance network and what price the hospital negotiated with the insurance company. For instance, the cost of a mammogram ranges from $50 at a hospital in New Orleans, to $86,000 at a hospital in Massachusetts, according to Clear Health Costs, which publishes information on health costs. By making those prices available to consumers, the Trump administration argues that hospitals will be under more pressure to compete, eventually causing prices to fall. According to a September study conducted by the Kaiser Family Foundation, employer health-plan deductibles are outpacing wage growth and have increased to an average of $1,655 for a single plan. On average, workers contribute $6,015 toward the cost of coverage.

NAR - NAR Forum asks if marijuana legalization presents a business opportunity or headache

Industry and legal experts weighed in on the expanding state-level legalization of marijuana and its impact on Realtors® and real estate markets this weekend in San Francisco, Calif. The forum, “Marijuana Legalization: Business Headache or Opportunity?” welcomed Megan Booth, director of federal housing and commercial policy for the National Association of Realtors®; Rick Payne, president & CEO of Cannabis Real Estate Consultants; and Neil Kalin, assistant general counsel for the California Association of Realtors. “As of today, 14 states have approved adult use cannabis, while a total of 33 states and territories have some form of comprehensive public legal medical marijuana,” Booth said at the event held as part of the 2019 REALTORS® Conference & Expo. “So why do we care? Because marijuana has to be grown, processed, distributed and used on real property. Every property type that’s out there, marijuana laws are impacting.” Booth opened the forum by noting that signals from the Trump administration indicate that the federal government will not prosecute state-legal marijuana entities. “I think that provides some comfort, I don’t think it provides all the comfort. There is still a federal law called civil asset forfeiture that allows the federal government to seize any property associated with an illegal activity. That’s something you should know if you get involved with cannabis businesses,” Booth said. “It is not very often used by the federal government for state-legal activities and I don’t think it is a tool the federal government will use randomly.” Booth noted that while NAR does not have official policy on marijuana legalization, it does have defined policy on cannabis banking. “Right now, businesses in a state that has legal marijuana – because they remain illegal under federal law – do not have access to FDIC-insured banks. This means they can’t accept credit cards and most of their businesses run in cash,” she continued.

Of particular importance to NAR members, Booth noted, is the added liability of operating with cash-only businesses that are exposed to added risks and security concerns not typically applicable to traditional entities. As a result, NAR has lobbied on behalf of H.R. 1595, the Secure and Fair Enforcement Banking Act, which overwhelmingly passed the House of Representatives on September 25 of this year. “It is apparent that the state-legal cannabis industry’s connection to other markets – including real estate – will continue to grow in the coming years,” then-NAR president John Smaby said following the House vote. “With current laws keeping the industry’s money out of America’s banking system, our nation is jeopardizing economic growth while forfeiting critical opportunities for oversight and transparency.” Payne, who founded Cannabis Real Estate Consultants after recognizing a void in the industry for knowledgeable commercial real estate professionals, said his company has refocused its attention on local regulatory policy. The firm recently opened a compliance division which evaluates potentially impactful regulations on the state and local levels. “The reality is that the federal government could at any point in time decide to enforce this issue,” said Payne, who has been in the cannabis industry since 2011. Today, his company offers guidance on the complexities associated with finding legally compliant locations and preparing them for the intended cannabis use. In addition, Kalin offered guidance to Realtors® working with clients involved in the cannabis industry. “On the federal side, there is no way to minimize risk. So you have to ask yourself, are you willing to live and work in a field where you are subject to federal prosecution?” Kalin asked the group of roughly 100 NAR members on Sunday afternoon. Kalin also stressed the importance of ensuring clients understand and have a plan surrounding their management of what essentially amounts to an all-cash business. “What are you going to do with the money that you’re making – are you going to keep it in a drawer in a back room? Are you going to purchase a safe? Are you going to try and find some sort of entity to hold the money? Because you’re not likely to find an FDIC bank that is willing to do so,” he concluded. “If the client is unsophisticated, you’re going to have to research this area and figure it out.”

Democrats delaying USMCA has 'cost the economy billions of dollars': Wilbur Ross

Wilbur Ross says it's time for House Speaker Nancy Pelosi to bring the United States-Mexico-Canada Agreement to a vote. “I think there’s no question that if she puts it on the floor it will be overwhelmingly voted – when or if she is willing to put it on the floor,” Commerce Secretary Wilbur Ross told FOX Business’ Maria Bartiromo on “Mornings with Maria.” He added that passing USMCA would be the “singular accomplishment of this Congress.” Ross said USMCA is “much better” on key issues than any trade deal in the history of the country, and that the delay has “cost the economy billions of dollars.” The USMCA, which overhauls the Clinton-era North American Free Trade Agreement, commonly known as NAFTA, requires 75 percent of automobile components be manufactured in the United States, Canada and Mexico in order to avoid tariffs, and that 40 to 45 percent of automobile parts be made by workers who earn at least $16 an hour by 2023. The commerce secretary’s comments come after Pelosi told reporters on Thursday that she’d “like to see” the trade deal get done this year so long as the issue of minimum wage enforcement is solved. Time is running out for Congress to pass the trade deal before the end of the year. Only 14 days are left in the Congressional session, and election-year politics might complicate its passage in 2020. “It’s time to get serious,” Ross concluded. “It’s time to pay attention to something that really helps everyday Americans instead of having these silly hearings,” he added, referring to a Congressional impeachment inquiry. House Democrats are investigating a whistleblower's claim that President Trump tried to coerce the Ukrainian government into digging up dirt on potential 2020 Democratic rival Joe Biden.

MBA - mortgage delinquencies fall to lowest level in nearly 25 years

The delinquency rate for mortgage loans on one-to-fourunit residential properties decreased to a seasonally adjusted rate of 3.97 percent of all loans outstanding at the end of the third quarter of 2019, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The delinquency rate was down 56 basis points from the second quarter of 2019 and down 50 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the third quarter fell by four basis points to 0.21 percent. "Mortgage delinquencies decreased in the third quarter across all loan types - conventional, VA, and in particular, FHA," said Marina Walsh, MBA's Vice President of Industry Analysis. "The FHA delinquency rate dropped 100 basis points, as weather-related disruptions from the spring waned. The labor market remains healthy and economic growth has been stronger than anticipated. These two factors have contributed to the lowest level of overall delinquencies in almost 25 years." Added Walsh, "Looking ahead, we do continue to monitor the credit profile of new FHA loans, as changes to this profile can have a noticeable impact on future delinquency rates." Key findings of MBA's Third Quarter of 2019 National Delinquency Survey:

Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding to the lowest level since the first quarter of 1995. By stage, the 30-day delinquency rate decreased 42 basis points to 2.20 percent, the 60-day delinquency rate decreased six basis points to 0.75 percent, and the 90-day delinquency bucket decreased 8 basis points to 1.02 percent.

- By loan type, the total delinquency rate for conventional loans decreased 61 basis points to 3.00 percent compared to the second quarter. The FHA delinquency rate decreased 100 basis points to 8.22 percent, and the VA delinquency rate decreased by 31 basis points to 3.93 percent.

- On a year-over-year basis, total mortgage delinquencies decreased for all loans outstanding. The delinquency rate decreased by 56 basis points for conventional loans, decreased 74 basis points for FHA loans, and decreased 23 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 third quarter was 0.84 percent, down six basis points from the second quarter of 2019 and 15 basis points lower than one year ago. This is the lowest foreclosure inventory rate since the fourth quarter of 1985.

- The seriously delinquent rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 1.81 percent - a decrease of 14 basis points from last quarter - and a decrease of 32 basis points from last year. This the lowest seriously delinquent rate since the third quarter of 2000. The seriously delinquent rate decreased 19 basis points for conventional loans, decreased four basis points for FHA loans, and increased six basis points for VA loans from the previous quarter. Compared to a year ago, the seriously delinquent rate decreased by 36 basis points for conventional loans, decreased 35 basis points for FHA loans and decreased eight basis points for VA loans.

- Only 14 percent of all seriously delinquent loans were originated in 2016 or later. However, 25 percent of FHA seriously delinquent loans were originated in 2016 or later.

- The three states with the largest decreases in their overall delinquency rate were states impacted by weather in the previous quarter: Alabama (81 basis points), West Virginia (78 basis points), and Mississippi (73 basis points).

CoreLogic - U.S. overall delinquency rate lowest for an August in at least 20 years but five states post annual gains

Wed, 13 Nov 2019 20:30:48 GMT

- Iowa, Minnesota, Nebraska, Wisconsin and Rhode Island posted small annual gains in their overall delinquency rates in August

- The nation's serious delinquency rate was the lowest for an August in 14 years

- For the 10th consecutive month, the U.S. foreclosure rate was the lowest in at least 20 years

CoreLogic released its monthly Loan Performance Insights Report. The report shows that nationally, 3.7% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in August 2019, representing a 0.2 percentage point decline in the overall delinquency rate compared with August 2018, when it was 3.9%. As of August 2019, the foreclosure inventory rate – which measures the share of mortgages in some stage of the foreclosure process – was 0.4%, down 0.1 percentage points from August 2018. The August 2019 foreclosure inventory rate tied the prior nine months 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 1.8% in August 2019, unchanged from August 2018. The share of mortgages 60 to 89 days past due in August 2019 was 0.6%, unchanged from August 2018. The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.3% in August 2019, down from 1.5% in August 2018. This August’s serious delinquency rate of 1.3% was the lowest for the month of August since 2005 when it was also 1.3%. The serious delinquency rate has remained consistent since April 2019. 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 0.8% in August 2019, unchanged from August 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 at 2% in November 2008. “Job loss can trigger a loan delinquency, especially for families with limited savings,” said Dr. Frank Nothaft, chief economist at CoreLogic. “The rise in overall delinquency in Iowa, Minnesota, Nebraska and Wisconsin coincided with a rise in state unemployment rates between August 2018 and August 2019.”

The nation's overall delinquency remains near the lowest level since at least 1999. However, five states posted small annual increases in overall delinquency rates in August: Iowa (0.2 percentage points), Minnesota (0.1 percentage points), Nebraska (0.1 percentage points), Wisconsin (0.1 percentage points) and Rhode Island (0.1 percentage points). In August 2019, 47 metropolitan areas recorded small annual increases in overall delinquency rates. Some of the highest gains were in the Midwest and Southeast. Metros with the largest increases were Dubuque, Iowa (2.2 percentage points), Pine Bluff, Arkansas (1.1 percentage points), Goldsboro, North Carolina (0.6 percentage points) and Panama City, Florida (0.5 percentage points). While the nation’s serious delinquency rate remains near a record low, 19 metropolitan areas recorded small annual increases in their serious delinquency rates. Metros with the largest increases were Panama City, Florida (0.9 percentage points), Jacksonville, North Carolina (0.2 percentage points), Wilmington, North Carolina (0.2 percentage points) and Goldsboro, North Carolina (0.2 percentage points). The remaining 15 metro areas logged annual increases of 0.1 percentage point. “Delinquency rates are at 14-year lows, reflecting a decade of tight underwriting standards, the benefits of prolonged low interest rates and the improved balance sheets of many households across the country,” said Frank Martell, president and CEO of CoreLogic. “Despite this month’s near record-low serious delinquency rate, several metros in hurricane-ravaged areas of the Southeast have experienced higher delinquency rates of late. We expect to see these metros to return to pre-disaster delinquency rates over the next several months.”

Powell to tell Congress Fed is unlikely to cut interest rates again

Federal Reserve Chairman Jerome Powell said policymakers at the U.S. central bank are unlikely to cut interest rates in December, so long as the economy remains on its current path of growth. In testimony he provided to the Joint Economic Committee of Congress, Powell reiterated what he said during the Fed's two-day meeting in October: The current level on its benchmark interest rate will likely remain "appropriate," despite persistent risks to the economic outlook. Those risks, he said, include slow global growth and the U.S.-China trade war. "We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective," he said in his Wednesday remarks. Powell is scheduled to appear before Congress twice this week and face a wide range of questions about the state of the U.S. economy. He sounded an upbeat note in his opening remarks, attributing some of the economy's strength to the three quarter-percentage interest rate cuts that officials made this year. “Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely,” he said. “This favorable baseline partly reflects the policy adjustments that we have made to provide support for the economy.” However, Powell warned that as a result of the so-called "mid-cycle adjustment," interest rates are historically low, giving the Fed few tools in its arsenal to respond to an economic downturn, should one happen. At the end of October, the Fed cut rates by a quarter-percentage point for the third time this year to cushion the economy against the U.S.-China trade dispute and a global growth slowdown, but signaled that it will take a wait-and-see approach before moving rates again. Rates are currently at a range between 1.75 percent and 2 percent. Because of that, he said that fiscal policy passed by Congress will be important in supporting the economy -- but noted the federal budget is on an "unsustainable path, with high and rising debt." "Over time," he said, "this outlook could restrain fiscal policymakers' willingness or ability to support economic activity during a downturn." Powell's testimony is likely to anger President Trump, who frequently berates the Fed for raising interest rates too high, too quickly. On Tuesday, Trump reignited his criticism of Fed officials saying the S&P 500, Dow Jones Industrial Average and Nasdaq Composite would be 25 percent higher if the "Federal Reserve worked with us." "We are competing against these other countries, nonetheless, and the Federal Reserve doesn't let us play the game," Trump said during a speech at the Economic Club of New York. "It puts us at an economic disadvantage."

MBA - mortgage applications up

Mortgage applications increased 9.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending November 8, 2019. The Market Composite Index, a measure of mortgage loan application volume, increased 9.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9 percent compared with the previous week. The Refinance Index increased 13 percent from the previous week and was 188 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 15 percent higher than the same week one year ago. "Mortgage applications increased to their highest level in over a month, as both purchase and refinance activity rose despite another climb in mortgage rates. Positive data on consumer sentiment, and growing optimism surrounding the U.S. and China trade dispute, were behind last week's rise in the 30-year fixed mortgage rate to 4.03 percent," said Joel Kan, Associate Vice President of Economic and Industry Forecasting. "Refinance applications jumped 13 percent to the highest level in five weeks, as conventional, FHA, and VA refinances all posted weekly gains. With rates still in the 4 percent range, we continue to expect to see moderate growth in refinance activity in the final weeks of 2020." Added Kan, "Last week was a solid week for homebuyers. Purchase applications increased 2 percent and were 15 percent higher than a year ago. Low supply and high home prices remain a key characteristic of this fall's housing market, which is why the largest growth in activity continues to be in loans with higher loan balances." The refinance share of mortgage activity increased to 61.9 percent of total applications from 59.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.9 percent of total applications.

The FHA share of total applications increased to 13.1 percent from 11.8 percent the week prior. The VA share of total applications increased to 12.7 percent from 12.0 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.03 percent from 3.98 percent, with points decreasing to 0.31 from 0.37 (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 $484,350) increased to 3.98 percent from 3.97 percent, with points decreasing to 0.22 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.85 percent from 3.79 percent, with points increasing to 0.28 from 0.21 (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 3.43 percent from 3.38 percent, with points decreasing to 0.28 from 0.31 (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 decreased to 3.40 percent from 3.43 percent, with points decreasing to 0.17 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

VW breaking ground on $800M Tennessee plant expansion for electric vehicles

Volkswagen is set to break ground on its $800 million Chattanooga, Tennessee, assembly plant expansion. Work on the expansion will start Wednesday, according to Tennessee Gov. Bill Lee's office. Volkswagen said it's investing in the plant in order to add electric vehicle production at the facility. It plans to produce the new ID Crozz SUV starting in 2022 in Chattanooga. It's one of just eight facilities across the world and the only in North America where VW said it would produce its upcoming ID electric cars. VW currently produces its Passat sedan and Atlas and Atlas Cross Sport SUVs at the Chattanooga plant. About 3,800 people work there. The expansion will increase the 3.4 million-square-foot plant's size by about a quarter and the company plans to add about 1,000 jobs at the site. Herbert Diess, CEO of Volkswagen AG, said earlier this year that Chattanooga "is a key part" of the company's growth strategy for North America. "Together with our ongoing investments and this increase in local production, we are strengthening the foundation for sustainable growth of the Volkswagen brand in the U.S.," Diess said. The Chattanooga project is part of what Volkswagen Group has said will be a $50 billion investment through 2023 for developing and producing electric vehicles and digital services. Volkswagen's push into electric is coming on the tails of its emissions scandal. VW's North American market share fell below 2 percent for the first time in nearly a decade after federal authorities said the company had cheated on emissions tests, but VW was able to recover thanks to its push into SUVs like the Chattanooga-built Atlas. Volkswagen's SUV sales growth has blossomed from about 15 percent in 2016 to more than 45 percent last year, according to its 2018 year-end sales report. Hinrich J. Woebcken, a former Volkswagen North America CEO who took over amid the scandal and led its recovery, told FOX Business in a statement that he is "glad to see that the turnaround- and comeback story for VW in the U.S. and North America, which was launched some years ago, is now transitioning into the electric future." The move into electric has been inspired by several factors. For one, Volkswagen has forecast that it will sell 150,000 electric vehicles by 2020 worldwide and 1 million by 2025. But the company is also required to invest $2 billion in zero-emissions vehicle charging infrastructure as part of its 2016 settlement with the Environmental Protection Agency. And as long as they're putting in charging stations, they may as well sell more cars to go with them, according to automotive expert Lauren Fix, "the car coach." "They're doing this because they're building the infrastructure," she said.

ATTOM - ATTOM CEO Rob Barber Bylines, “Brokerages Battle It Out With Tech,” for RISMedia

As featured on RISMedia’s HouseCall this month, ATTOM Data Solutions CEO Rob Barber suggests real estate brokerages aren’t letting tech take them down without a fight. In fact, many are using technology as a differentiator—critical leverage in the battle for great agents in an already-crowded industry. The proof is in the headlines. Just a quick glance at the past month’s news shows all kinds of tech developments on the brokerage front. Well-known brokerages are snapping up tech companies left and right, they’re launching their own proprietary tools and solutions, and they’re hiring known tech teams to keep the ball rolling in the future. They need to, too. According to the most recent Technology Survey from the National Association of REALTORS®, less than a third of agents are completely happy with the tech their broker provides. Brokerages that can up their game in the tech department have the opportunity to bring in more agents—potentially even steal them away from competitors—and, most importantly, keep them there for the long haul. How do they go about this, though? In general, brokerages are approaching their tech takeovers in one of two ways: with open platforms aimed at expanding their agents’ leads, branding and marketing opportunities; or, in some cases, with proprietary solutions, which offer agents a proprietary advantage once joining the team. Let’s take a look at both. A lot of the more time-tested brokerages are using open tech solutions—tools that offer a plug-and-play approach (often as a quick fix to keep up with competitors). These tools range from CRMs and texting campaign platforms to tech that helps agents launch their own websites, market their services and hone their individual brand. Property data and predictive analytics tools are also popular options. The approach here is one of empowerment. Brokerages are looking to differentiate themselves from their competitors by offering agents a large arsenal of tools that can both improve their prospects and help them boost their earnings.

The other approach is one of exclusivity. It’s brokerages offering proprietary, firm-only technology that agents can’t leverage anywhere else. It typically requires bigger spend, but the expectation is a bigger reward, too (however, time will tell). These “proprietary” tech solutions are a little more custom-fit and often more advanced. They’re mobile apps designed to help agents on the go, pre-populated with Google and Facebook campaigns to promote new listings, and automated CRMs that tap into property, neighborhood and market-level data instantly. There are even proprietary recruiting and scouting tools that help brokerages find and poach the best local agents. In a fairly new development, some brokerages are even offering internal cash-offer programs to help agents better compete with tech-heavy iBuyers. Given the rise of these new selling solutions in recent years, these programs can go a long way in helping a brokerage stand out among the crowd. Still, brokerages aren’t just differentiating themselves in tools or approach. They’re standing out in how they price these tech advantages, as well. NAR’s survey shows that almost 40 percent of agents pay a monthly technology fee to their brokers. But another 36 percent of brokers don’t charge for their technology at all. Others charge separate fees for each tech product, while others ask for a percentage of commissions for using the firm’s technology. It seems there’s a lot of room for brokerages to differentiate themselves simply by structuring their tech fees in a unique—or better yet, more affordable—manner. In the end, there’s no right or wrong path when it comes to brokerage technology, but one thing’s for sure: Investing in tech pays off. At ATTOM Data Solutions, we’re proud that our property datasets (and the platforms they power) can play even a small role in this growth.

MBA - mortgage credit availability increased in October

Mortgage credit availability increased in October 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 by 0.9 percent to 185.1 in October. 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 2.4 percent, while the Government MCAI decreased by 0.9 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 3.1 percent, and the Conforming MCAI rose by 1.3 percent. "Mortgage credit availability expanded in October, driven mainly by an increase in conventional loan programs, including more for borrowers with lower credit scores, as well as for investors and second home loans," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Credit supply for government mortgages continued to lag, declining for the sixth straight month. Meanwhile, the jumbo credit index increased 3 percent to another survey-high, as that segment of the market stays resilient despite signs of a slowing economy." The MCAI rose by 0.9 percent to 185.1 in October. The Conventional MCAI increased 2.4 percent, while the Government MCAI decreased by 0.9 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 3.1 percent, and the Conforming MCAI rose by 1.3 percent. The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI examines conventional loan programs that fall under conforming loan limits. The Conforming and Jumbo indices have the same "base levels" as the Total MCAI (March 2012=100), while the Conventional and Government indices have adjusted "base levels" in March 2012. MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the "base period") relative to the Total=100 benchmark.

CoreLogic - Amazon HQ2 and the Washington, DC Metro housing market

On November 13, 2018, Amazon stunned the news cycle by announcing that it was choosing not one, but two sites for the location of its second headquarters (HQ2): Arlington County, Virginia, at Crystal City, and Queens, New York at Long Island City. However, just three months after the announcement, Amazon said it would be withdrawing its intent to open the New York location, instead focusing on job growth in Crystal City and other locations. Now a year has passed from the announcement, and one burning question remains: Has the news had any noticeable effect on the Washington, D.C. housing market? In this post, we look at not only home price growth of the metro area, but also of individual zip codes within the region. In this CoreLogic special report, our findings are threefold. First, we see little evidence the metro area has experienced a large increase in housing prices since the November 2018 announcement. Second, and in contrast, we do find some individual zip codes – especially those near the HQ2 location – have had a strong uptick in price gains since the announcement. Lastly, we discovered that the relationship between proximity to the HQ2 site and home price gains have strengthened remarkably since March 2019. The impact of Amazon choosing the district housing market (which includes both the Washington-Arlington-Alexandria and Silver Spring-Frederick-Rockville metro divisions) for the location of their HQ2 is unclear at best. Looking at the year-over-year change in the monthly CoreLogic Home Price Index (HPI), the data shows that both metro divisions saw little change in the rate of appreciation after November 2018. In September 2018 (the most recent comparison month between 2018 and 2019), annual home price growth in the Washington-Arlington-Alexandria and Silver Spring-Frederick-Rockville metro divisions rested at 3.4% and 2.1%, respectively, but grew slightly to 3.5% and 2.3% by September 2019. This is hardly what one would call a “boom.” However, when compared to national trends over the same period, there is evidence that these two metro divisions outperformed the broader area. National home price growth descended by nearly two whole percentage points, from 5.3% to 3.5%, as high mortgage rates and uncertain macroeconomic conditions stymied the market towards the end of 2018 and into the first half 2019. While anecdotal, this does suggest that the HQ2 announcement possibly buoyed the market in what might have otherwise been a period of slowing home price growth for the Washington, D.C. metro area.

While evidence is somewhat weak that the HQ2 announcement boosted the regional market, our zip code-level analysis shows a different story. Namely, that there is a correlation between proximity to the HQ2 site and the increase of home price appreciation over the past year. Of the top 10 zip codes with the largest increase in year-over-year growth rates, half are within a 5- mile distance of the HQ2 site and eight are within 10 miles. The top three zip codes with the largest increase in their September 2018 and September 2019 year-over-year growth rates are not immediately adjacent to HQ2. These zip codes are 20815 (Chevy Chase, Maryland), 22180 (Vienna, Virginia) and 22306 (Mount Vernon, Virginia). Each of these areas is at least 7 miles away from HQ2, suggesting little correlation between the HQ2 announcement and the zip codes that have picked up the most gains in home price appreciation. However, there is a cluster of zip codes in the top-10 list that are all within 4 miles of HQ2 and adjacent to one another. These include 22302 (Alexandria, Virginia), 22206 (Arlington, Virginia), 22201 (Arlington), 22311 (Alexandria) and 22204 (Arlington). Each of these has swung from having negative or near-flat price growth just before the HQ2 announcement to near double-digit appreciation in September of this year. Analyzing just the top 10 zip codes isn’t a big enough sample to draw meaningful conclusions about the effects of HQ2 on the Washington, D.C. housing market. So, we took our research one step further and examined the correlation between zip code proximity to the HQ2 site and year-over-year change in the CoreLogic HPI on a month-by-month basis from September 2018 to September 2019. As you can see from the animation below, the correlation between a zip code’s home price appreciation rate and distance in miles from the HQ2 location was flat in September 2018 and remained so through February 2019, when average zip code appreciation was about 3%. From March 2019, you can see the price gradient rise more sharply the closer to HQ2 a zip code is. By September 2019, a clear negative gradient emerges whereby appreciation in zip codes near HQ2 was, on average, much higher than zip codes near the fringe. While not casual, the anecdotal evidence from this blog does suggest the announcement of HQ is starting to show signs that house prices in Northern Virginian submarkets – in particular, those close to Crystal City – are rising at rates much faster than last year and faster than submarkets further away.

Black Knight – August 2019 Mortgage Monitor

Wed, 16 Oct 2019 18:29:12 GMT

The Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage performance, housing and public records datasets. This month, Black Knight’s analysts examined the impact of recent interest rate declines on home affordability, finding yet another situation where rate shifts in either direction have profound impact. As Black Knight Data & Analytics President Ben Graboske explained, the current lower interest rate environment has provided a boost to potential homebuyers. “Back in November 2018, we were reporting on home affordability hitting a nine-year low,” said Graboske. “Interest rates were nearing 5%, pushing the share of national median income required to make the principal and interest (P&I) payments on the purchase of the average-priced home to 23.7%. While still below long-term averages, that made housing the least affordable it had been since 2009, spurring a noticeable and extended slowdown in home price growth. In the time since, rates have tumbled and the affordability outlook has improved significantly. That payment-to-income ratio is now 20.7%, which is the second lowest it has been in 20 months, behind only August of this year, and about 4.5% below the long-term, pre-crisis norm. To help quantify the boost this has given to homebuyers, consider that today’s prevailing 30-year rate has cut the monthly P&I payment to purchase the average-priced home by 10% – about $124 per month – from November. Put another way, the decline in rates since November has been enough to boost buying power by $46,000 while keeping monthly P&I payments the same.

“Despite falling interest rates and steadily improving affordability over the preceding eight months, annual home price growth held flat in August at 3.8% after rising for the first time in 17 months in July. It remains to be seen if this is merely a lull in what could be a reheating housing market, or a sign that low interest rates and stronger affordability may not be enough to muster another meaningful rise in home price growth across the U.S. That the strongest gains in – and strongest levels of – affordability were in August and early September could bode well for September/October housing numbers. As such, we’ll be keeping a close eye on the numbers coming out of the Black Knight Home Price Index over the coming months.” The month’s analysis also shows that while falling interest rates have improved affordability across the country, pockets of tight affordability remain, especially along the western coast of the U.S. In fact, California accounts for seven of the 10 least affordable markets. In Los Angeles for example, even with rates at 3.64%, purchasing the average-priced home requires nearly 43% of the median household income — more than twice the national average. While down from more than 48% near the end of 2018, that payment-to-income ratio still makes Los Angeles the country’s least affordable market. Tight affordability on the West Coast was likely a key driver in the strong deceleration in home price growth that began as interest rates rose in late 2018. Interest rate movements have become a key determining factor of housing affordability and significant shifts in either direction can change the landscape quickly.

– As of the end of September 2019 – with the average 30-year interest rate at 3.64% – it now requires 20.7% of the national median income to make monthly principal and interest (P&I) payments on the average-priced home

– That marks the second lowest national payment-to-income ratio in 20 months, behind only August 2019

– Home affordability briefly hit a 32-month high in early September, when interest rates dipped below 3.5% for a single week

– The $1,122 in monthly P&I required to purchase the average-priced home is down 10% from November – when interest rates peaked near 5% – despite home prices rising more than 4% from that point

– Home affordability had hit a nine-year low back in November when the national payment-to-income ratio rose to 23.7%, spurring a noticeable and extended slowdown in home price growth

– Despite strengthening home affordability as a result of recent interest rate declines, home price growth held flat in August after rising for the first time in 17 months in July

– While prospective homebuyers continue to benefit from strong rate-driven buying power, interest rate movements are a key determining factor of housing affordability; significant shifts in either direction can change the landscape quickly

US to tackle these trade issues with China in Washington Thursday

Trade talks between the U.S. and China are set to resume this week, as the two sides continue to work toward an agreement on a multitude of issues, the White House announced Monday. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will host a delegation led by China’s top trade negotiator Liu He in Washington on Thursday. The two parties will discuss outstanding issues that have kept the two sides from agreeing on a deal. These include forced technology transfer, intellectual property rights, services, non-tariff barriers, agriculture and enforcement, according to the White House. The Chinese delegation reportedly won’t be looking to include commitments on reforming Chinese industrial policy or the government subsidies, according to Bloomberg. That offer would take one of the Trump administration’s core demands off the table. People close to the Trump administration say the impeachment inquiry isn’t affecting trade talks with China. China’s markets will return to trading on Tuesday following a weeklong holiday.

FTC claims house flipping seminars featuring HGTV stars are total scams

Did you ever think those celebrity-endorsed “get rich quick by using other people’s money to flip houses” real estate seminars seemed too good to be true? Well, it turns out you may have been right. The Federal Trade Commission and the Utah Division of Consumer Protection announced this week that they are charging a Utah-based company with allegedly lying to consumers to convince them to attend the company’s supposedly free real estate seminars. The company promised to give away the secrets to making money flipping houses at the event, but actually charged thousands or tens of thousands of dollars for said “secrets.” According to the FTC, Zurixx entices people to attend its “free” real estate seminars by using HGTV stars and other TV personalities as celebrity endorsers and claims that attendees can learn how to flip houses to make money. But the agency claims that the entire operation is a scam, with the company allegedly using “deceptive promises of big profits to lure consumers into real estate seminars costing thousands of dollars.” The FTC claims that Zurixx uses celebrities in its advertisements to lend credibility to the seminars, including endorsements from Tarek and Christina El Moussa from HGTV’s “Flip or Flop,” Hilary Farr from HGTV’s “Love It or List It,” and Peter Souhleris and Dave Seymour from A&E’s “Flipping Boston.” According to the FTC, the ads convinced consumers to attend free events that would teach consumers how to make large profits by flipping “using other people’s money.” But the agency claims that the free events are actually a sales presentation for Zurixx’s three-day workshops that cost $1,997.

According to the FTC, during the free events, Zurixx repeatedly tells consumers who sign up for its three-day workshop that they are likely to earn thousands of dollars in profit, often with little risk, time or effort. “Zurixx also represents that consumers who purchase the workshop will receive 100% funding for their real estate investments regardless of their credit history,” the FTC said in its complaint. “It backs up these representations with a money-back guarantee – consumers who do not make ‘a minimum of three times’ the price of the three-day workshop within six months will receive their money back.” According to the FTC, Zurixx presenters have told attendees at these free events that the three-day workshop would “teach them everything they need to know to make substantial income from real estate.” If that pitch is successful in getting someone to fork over the nearly $2,000 for the three-day workshop, the selling allegedly doesn’t stop there. According to the FTC, presenters at the three-day workshop often claim that the workshop is “merely a beginner course,” then upselling consumers additional products and services that can cost as much as $41,297. But according to the FTC, many of Zurrix’s claims about its system are “false or unsubstantiated.” From the complaint: “Consumers are unlikely to earn thousands of dollars in profit from real estate investments by using Zurixx’s products. Consumers are unlikely to receive 100% funding for real estate deals through Zurixx or its partners and affiliates. Moreover, Zurixx’s six-month money-back guarantee contains substantial limitations that Zurixx fails to disclose adequately until after consumers have paid for the three-day workshop.”

The agency also states that Zurixx presenters “generously” include supposed success stories into their sales pitches. According to the FTC, presenters also allegedly “routinely” directed workshop attendees to obtain new credit cards or increase the credit limits on their existing cards, supposedly to help finance their house flips. Beyond that, the presenters allegedly told attendees to provide the credit card companies with income information that was “significantly higher” than their current income, basing that inflation on the supposed increase in the attendees’ income from investing in real estate. But, instead of using that increased credit flexibility obtained under questionable circumstances to invest in real estate, Zurixx presenters allegedly often suggested that attendees actually use the new credit to pay for “advanced training” from Zurixx itself. Zurixx’s business model has come under fire in recent years, with many customers accusing the company of using false advertising to entice them to attend the company’s events. According to a 2016 article from the Orange Country Register, Zurixx seemingly claimed in an ad that Tarek and Christina El Moussa would attend one of the company’s real estate seminars, and would teach their flipping strategy to the attendees. But when the seminar occured, the “Flip or Flop” stars were nowhere to be found. Others had similar experiences, leading to hundreds of complaints being filed with the FTC. Eventually, Christina El Moussa ended up going on ABC to defend the Zurixx seminars, claiming that she does attend the seminars, if they are held close to her house. From ABC: “Christina El Moussa said that she does attend seminars, when the events are close to her home. ‘If it’s going to be within 45 minutes from my house I’m definitely going to come,’ she said. ‘It gets harder to travel all around, especially [because] we have two kids.”

Christina recently attended seminars in St. Louis and Miami, but Zurixx said even those appearances are uncommon, adding that “nowhere on any other marketing does it state the El Moussas will be live and in-person at any event.” According to the FTC, some of Zurixx’s unsatisfied customers have tried to obtain a refund from the company, but the company allegedly required some consumers who received a refund to sign an agreement barring them from speaking with the FTC, state attorneys general and other regulators; submitting complaints to the Better Business Bureau; or posting negative reviews about Zurixx. The complaint alleges that Zurixx has violated the FTC Act’s prohibitions on misleading and deceptive conduct and the Consumer Review Fairness Act, as well as the Utah Consumer Sales Practices Act and the Utah Business Opportunity Disclosure Act. “From start to finish, these defendants used the promise of easy money and in-depth information to lure consumers down a path that could cost them thousands of dollars and put them in serious debt,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “When a company tells consumers they have the secret to get rich with little work, we encourage consumers to take a hard look at what’s really being offered.”

GE freezes pension plan for 20,000 employees

General Electric is making sweeping changes to its pension plan for approximately 20,000 employees, sending shares higher ahead of Monday’s opening bell. Seven hundred employees who became executives before 2011 will have their supplementary benefits frozen, and no changes will be made for retired employees. The changes will reduce GE’s pension deficit by about $5 billion – $8 billion and net debt by approximately $4 billion – $6 billion. “Returning GE to a position of strength has required us to make several difficult decisions, and today’s decision to freeze the pension is no exception,” Kevin Cox, chief human resources officer at GE, said in a press release. “We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees. We are committed to helping our employees through this transition.” The company said it will use some of the money it has received from the sale of its BioPharma, BHGE and Wabtec transactions to pre-fund up to $5 billion of its Employee Retirement Income Security Act payments for 2021 and 20212. Retired employees who have not started receiving monthly payments will have the option to receive a one-time lump-sum payout. General Electric, once an industrial icon, is in the midst of trying to engineer a turnaround after shares lost more than half their value amid a slew of problems last year. The battered company has undertaken a massive restructuring plan aimed at reducing debt by selling off non-core assets. In August, the company was accused by whistleblower Harry Markopolos, who alerted authorities about Bernie Madoff’s Ponzi scheme, of hiding its problems through fraudulent accounting.

CoreLogic – single-family rental market steadying as concerns for home-buying affordability linger

Wed, 16 Oct 2019 18:24:59 GMT

– U.S. single-family rent prices increased 3% year over year in August 2019—

– Phoenix had the highest year-over-year rent price increase at 6.6%

– Low-end rent prices were up 3.7%, compared to high-end price gains of 2.7%

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 August 2019 shows a national rent increase of 3%, compared to 3.1% in August 2018. 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%, and have stabilized over the last year with a monthly average of 3%. August marked the 64th consecutive month in which low-end rentals propped up national rent growth. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.7% year over year in August 2019, down from a gain of 4.1% in August 2018. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.7% in August 2019, up from a gain of 2.6% in August 2018.

Among the 20 metro areas shown in Table 1, and for the ninth consecutive month, Phoenix had the highest year-over-year increase in single-family rents in August 2019 at 6.6% (compared to August 2018). Las Vegas and Tucson, Arizona experienced the second- and third-highest rent gains in August at 5.8% and 5.3% respectively, while Miami saw the lowest rent increases of all analyzed metros at 1.5%. 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 high year-over-year rent growth in August, driven by the annual employment growth of 2.7%. This is compared with the national employment growth average of 1.4%, according to data from the United States Bureau of Labor Statistics. Orlando, Florida also experienced an elevated annual employment growth of 4%, which played a role in its above-average, year-over-year rent increase of 3.7% in August. “National rent increases have settled in around 3% over the past year, and the rate of increase for entry-level rentals has eased over the past six months,” said Molly Boesel, principal economist at CoreLogic. “However, home-buying affordability remains a top concern across generations and is keeping many consumers in the rental market. If this trend continues, we may see another uptick in rent price growth in the coming year, particularly in urban areas where we’re seeing increasing demand from millennials.”

US-China trade war: Beijing won’t buy $50B of crops overnight

China’s promise to buy $50 billion a year in U.S. crops isn’t one the world’s second-largest economy expects to keep overnight. “Many things” need to happen before the purchases — which President Trump has called a key part of a “phase one” trade deal between the two countries — can begin, China’s Ministry of Rural Affairs said. Speaking at a rally on Friday, Trump said farmers would need to buy more land and equipment to meet the surge in demand for American agriculture. “There will be more tractors sold, they’re going to be bigger and better and more powerful and they’re going to be made by John Deere and Case and Caterpillar,” Trump said, ticking off the names of American manufacturers. Reaching the $50 billion benchmark, however, may take up to two years and require the U.S. to lift tariffs on Chinese imports as a goodwill gesture. Even if a deal is signed, China could have trouble living up to its end of the bargain, according to a global markets research team at the Tokyo-based investment bank Nomura. Customs data show China imported $124.7 billion of agriculture products in 2017 and $136.7 billion last year, the analysts wrote. “So by shifting some purchases from other countries to the U.S., this target might be reachable,” they added. “However, meeting this target will surely be quite difficult for three reasons: 1) Chinese demand might be limited due to rising domestic output and falling demand on African Swine Fever (ASF); 2) China could face complaints from other countries, if it significantly ramps up its agriculture purchases from the U.S. in a non-market-based manner; 3) the production capacity of U.S. farmers may also be a constraint.”

The U.S. and China announced the framework last week for the first phase of a trade deal that would see Beijing raise its agricultural purchases to as much as $50 billion from about $8 billion to $16 billion in addition to reforming intellectual property practices. In return, the U.S. agreed to not raise tariffs on Chinese products from 25 percent to 30 percent on Oct. 15. A decision has not yet been made on the tariff increase scheduled for Dec. 15. While there’s hope that Trump and Chinese President Xi Jinping will sign an agreement next month at the Asia-Pacific Economic Cooperation conference in Chile, an op-ed in the state-run China Daily warned against celebrating until the two leaders put pen to paper. “While the negotiations do appear to have produced a fundamental understanding on the key issues and the broader benefits of friendly relations, the champagne should probably be kept on ice” for now, according to the column. The economies of both the U.S. and China have suffered as the trade war has dragged on. China’s gross domestic product growth slowed to 6.2 percent in the second quarter, its weakest in 27 years. Meanwhile, the U.S. grew at a 2 percent rate in the April-to-June period, down from 3.1 percent the prior quarter. A continuation of the trade war is expected to weigh on both economies, and slow growth around the world.

MBA – mortgage applications up

Mortgage applications increased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 11, 2019. The Market Composite Index, a measure of mortgage loan application volume, increased 0.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week and was 199 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 12 percent higher than the same week one year ago. “The ongoing interest rate volatility is impacting a borrowers’ ability to lock in the lowest rate possible. Despite a slight rise in mortgage rates last week, refinance applications increased 4 percent and were 199 percent higher than a year ago,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting. “Purchase applications slowed for the second week in a row. While near term economic uncertainty is still a factor, other fundamental issues, such as a lack of housing inventory in many markets, is preventing purchase activity from meaningfully rising. However, purchase applications were still much higher than a year ago. This is a reminder that the purchase environment in 2019 continues to be stronger than in 2018.” The refinance share of mortgage activity increased to 62.2 percent of total applications from 60.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.5 percent of total applications. The FHA share of total applications increased to 11.3 percent from 10.3 percent the week prior. The VA share of total applications increased to 12.9 percent from 12.3 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.92 percent from 3.90 percent, with points decreasing to 0.35 from 0.37 (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 $484,350) remained unchanged at 3.90 percent, with points decreasing to 0.23 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.77

percent from 3.75 percent, with points decreasing to 0.19 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.32 percent from 3.35 percent, with points increasing to 0.31 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 5/1 ARMs increased to 3.37 percent from 3.25 percent, with points decreasing to 0.23 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

Millennial millionaires are flocking to this zip code

The top zip code where millennial millionaires are living isn’t in California, New York or even Florida, according to a new report. Instead, the zip code with the most millennial millionaires is in northwestern Michigan. Coldwell Banker Global Luxury, along with WealthEngine, released a report on wealthy millennials on Wednesday, which analyzed their lifestyles, choices and spending habits. According to the report, millennial millionaires make up 2 percent of the millionaire population in the U.S. and about 0.2 percent of the general population in the country. About 93 percent of that group has a net worth between $1 million and $2.49 million and about 45 percent of that group is between the ages of 34 and 37. Compared to 76 percent of millionaires overall, 67 percent of wealthy millennials are married. Only 20 percent of millennial millionaires have a college education, but 42 percent of millionaires overall do. As far as homeownership goes, the two groups are similar. 94 percent of millionaires overall are homeowners and 92 percent of millennial millionaires also have their own homes. However, only about 63 percent of other millennials have purchased property. Overall, the average real estate portfolio of millionaires is $919,000, while millennial millionaires have an average of $1.4 million in their real estate portfolios, according to the report. “A Look at Wealth 2019 Millennial Millionaires” also found that 44 percent of millennial millionaires live in California — however, the zip code with the highest number of the group is actually in Traverse City, Mich.

“Millennials tend to prefer markets that are more affordable — often in suburbs or second-tier cities, where their dollar will carry them further,” the report said. “Even if they have the money, they may still choose a nontraditional luxury neighborhood over the prestige of a traditional luxury neighborhood, if it means they can walk to the corner café.” According to the report, Traverse City’s luxury homes start around $500,000 and the city itself has had a revitalization over the last 10 years. Coldwell Banker Global Luxury also found the favorite car models of millennials, compared to millennial millionaires. According to the report, wealthier young people prefer BMW 3 Series cars, while other millennials prefer Chevrolet Silverado cars.

According to the report, millennials aren’t actually buying cars as much as they used to, instead depending on public transportation and ride-hailing apps like Uber and Lyft. However, the top car models for millennial millionaires is the BMW 3 Series (BMW) For other millennials who are buying cars, the top model is the Chevrolet Silverado (pictured), according to the report. (Chevrolet) And even though there’s a stereotype that millennials love traveling, only about 38 percent of young millionaires are interested in travel. Many wealthy millennials are also generous, according to the report. About 56 percent of the group donates to charity — with political causes at the top of the list of charities. “Millennials are more likely to give than other generations,” the report said. “They are especially passionate about aligning with causes they care about, whether it’s for the environment or political parties.” “According to WealthEngine statistics, 35 percent of them say they have donated to charities,” the report added. “As wealth increases and they become more generous over the course of their lives, this number jumps to 56 percent among millennial millionaires.”

NAR – locations close to public transit boost residential, commercial real estate values

Neighborhoods located within a half-mile of public transit services outperformed those in areas farther from public transit based on a number of factors, according to a report released today by the American Public Transportation Association(link is external) and the National Association of Realtors®. “The Real Estate Mantra – Locate Near Public Transportation” highlighted the critical role public transportation plays in determining real estate values, revealing that commercial and residential real estate market sales thrive when residents have mobility options close by. The report explored seven metropolitan regions – Boston; Hartford; Los Angeles; Minneapolis-St. Paul; Phoenix; Seattle; and Eugene, OR – that provide access to heavy rail, light rail, commuter rail and bus rapid transit. Residential properties within these areas had 4-24% higher median sale prices between 2012 and 2016, the report found. Commercial property near public transit also witnessed value gains in the studied cities, where four of the regions saw median sales prices per square foot increase between 5-42%. Transportation costs in transit-oriented areas are significantly lower than in other regions, with an average annual savings of $2,500 to $4,400 for the typical household. One in four households in close proximity to transit does not own a vehicle, according to the study. The seven sample areas were examined by residential and commercial sales performance, rent, neighborhood characteristics, local government interventions and housing affordability.

“Public transit’s benefits go beyond moving people from point A to point B,” said APTA President and CEO Paul P. Skoutelas. “Public transportation is a valuable investment in our communities, our businesses, and our country. Public transportation gets people to jobs and educational opportunities and helps businesses attract employees and customers.” “Access to public transportation is an extremely valuable community amenity that increases the functionality and attractiveness of neighborhoods, making nearby communities more desirable places to live, work and raise a family,” said NAR 2019 First Vice President Charlie Oppler, who spoke at Monday’s press conference along with 2019 New York State Association of Realtors® President Moses Seuram. “The results of our report, conducted over multiple years alongside the American Public Transportation Association, should reiterate to policymakers at all levels of government the importance of investing in modern, efficient infrastructure that facilitates growth and helps our nation keep pace in a rapidly evolving world.” Neighborhoods with high-frequency public transportation are in high demand. While property values and rents have risen, contributing to healthy local economies, the rapidly increasing demand for housing near public transit has resulted in constrained housing supplies. “As the conversation surrounding housing affordability continues, public transportation agencies are critical allies in working with elected officials and community leaders in the effort to increase housing opportunities and maximize value around stations,” said Skoutelas.

CoreLogic – housing’s contribution to longevity of economic growth

Economists have measured business cycles dating back 165 years in America, and none have lasted more than a decade. That is, until the current expansion. The economic recovery that began mid-2009 set a longevity record as it entered July 2019, and the recovery is expected to continue at least into next year. During this period the economy set other milestones as well: Nonfarm private-sector payroll employment through September has grown for 115 consecutive months, also the longest string of employment growth recorded for the U.S. During the last nine years the expansion has created more than 20 million jobs, raised family incomes and rebuilt consumer confidence. As we found in CoreLogic’s Special Report: The Role of Housing in the Longest Economic Expansion, these economic forces have driven a recovery in home construction, prices and equity. Residential building and contractor jobs are up by nearly one million from the trough in January 2011, accounting for about 5% of private nonfarm employment gains. The increase would have been even greater if builders could fill all the job openings that they have. Job openings in construction are the highest since records began to be kept in 2000 and would have added further to employment totals if companies could find workers to hire. Home prices have rebounded from their trough in all metros. The CoreLogic Home Price Index for the U.S. has recorded a 59% increase in prices since January 2011. The rise in prices has been the key ingredient in the recovery in home-equity wealth. In turn, higher levels of wealth add to consumer purchases. CoreLogic’s Home Equity Report has documented the rise in wealth per homeowner: Between the first quarter of 2011 and the second quarter of 2019, the average equity per borrower increased from $75,000 to $176,000 and rose $5,000 in the past year alone. (Exhibit 3) Aggregated across all homeowners, home-equity wealth has increased by $10 trillion since 2011 and stands at a record $18.7 trillion as of mid-2019. This gain in home-equity wealth has supported an additional $200 billion in consumer expenditures over this period, helping to sustain the economic expansion’s longevity.

NAHB – builder confidence hits 20-month high

Builder confidence in the market for newly-built single-family homes rose three points to 71 in October, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Sentiment levels are at their highest point since February 2018. “The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth and a reduction in new home inventory,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months,” said NAHB Chief Economist Robert Dietz. “However, builders continue to remain cautious due to ongoing supply side constraints and concerns about a slowing economy.” 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. All the HMI indices posted gains in October. The HMI index gauging current sales conditions increased three points to 78, the component measuring sales expectations in the next six months jumped six points to 76 and the measure charting traffic of prospective buyers rose four points to 54. Looking at the three-month moving averages for regional HMI scores, the Northeast posted a one-point gain to 60, the Midwest was up a single point to 58, the South registered a three-point increase to 73 and the West was also up three points to 78.

CoreLogic releases most recent HPI forecast validation report

– Analysis shows 16 metros had forecasts with less than a 1% difference from actual values

CoreLogic released its latest CoreLogic HPI Forecast Validation Report that compares its 12-month CoreLogic Home Price Index (HPI) Forecast to the actual CoreLogic Home Price Index. The report compares the changes in national and key metro-level forecasts made in June 2018 to the actual HPI index, which includes data through June 2019. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. National values are derived from state-level forecasts by weighing indices according to the number of housing units for each state. Published every six months, the Forecast Validation Report is designed to provide transparency into CoreLogic forecasting abilities. The report showed:

– Sixteen large metros had forecasts with less than a 1% difference from actual values, including the Phoenix, Houston and Milwaukee metros all coming in within 0.3%. The top 10 major metros all had forecasts within 0.5% of actual values.

– The national forecast prediction of a 5.7% increase was within 2.4% of the 3.3% increase of the HPI for the 12-month period ending in June 2019. Long-term affordability concerns, coupled with consumer sentiment about the general economic climate along with other economic factors caused actual home prices to increase at a slower rate.

– The most accurate metro-level forecast was for the Phoenix-Mesa-Scottsdale, AZ area, which at 5.9% came on target of the actual HPI increase of 5.9%.

– The widest metro gap was in the San Jose, California metro areas, with a 13% over-estimation of actual increase. CoreLogic noted that the variance in this under-valued metro was mainly due to a concern over long-term affordability.

– Severe inventory shortages and rising interest rates impacted the forecasts of several metros – including the Chicago and San Francisco areas – reflecting the overall market volatility of the past 12 months.

– Slowing home price appreciation across many markets over the last 12 months caused much more volatility in housing markets than has been observed over the last three years.

“The latest HPI Forecast Validation report continues to demonstrate why CoreLogic is the gold standard when it comes to home price forecasting,” said Ann Regan, executive, product management for CoreLogic. “While our national forecast results reflect the difficulties of forecasting in an extremely volatile market, our forecasts were still able to provide accurate, region-specific forecasts for major metro areas, providing HPI clients with the reliability they need in the current market.”

DSNews – the week ahead: economic activity’s growth measured

Mon, 14 Oct 2019 07:00:00 GMT

On Wednesday, the Federal Reserve will release its latest Beige Book , a publication about current economic conditions across the 12 Federal Reserve Districts. The Book is published eight times per year, and summarizes key economic conditions by each of the Fed districts. The last Book revealed increased economic activity across the U.S. Eight of the 12 Federal Reserve Districts reported modest to moderate growth. The majority of Districts indicated that manufacturing expanded, but that growth had slowed, particularly in the auto and energy sectors. New home construction and existing home sales were little changed, with several Districts reporting that sales were limited by rising prices and low inventory. Commercial real estate activity was also little changed on balance. Most Districts reported modest to moderate growth in activity in the nonfinancial services sector, though a few Districts noted that growth there had slowed. According to the Book, residential real estate markets saw ongoing price increases and mixed sales results; contacts in a couple of markets cited greater “balance” as local shortages of housing inventory eased somewhat. While retailers (including an auto dealer) and manufacturers said sizable tariff increases would pose significant problems if they occurred and many respondents cited uncertainty, outlooks remained mostly positive. Closed single-family sales were up year-over-year from November 2017 to November 2018 in Rhode Island, Boston, and Maine, and down in Massachusetts and New Hampshire. Residential markets in Rhode Island and Boston became more balanced in recent months, with growing supplies of homes for sale and moderation in the pace of home price appreciation. Despite a seller’s market environment, contacts said real estate was a preferred investment choice, given the volatile U.S. stock market. Here’s what else is happening in The Week Ahead:

– Eighth Annual AEI-CRN Housing Conference (October 16-17)

– Affinity Consulting 2019 Management Symposium (October 16-17)

– Census Bureau Housing Starts (October 17)

– Census Bureau Building Permits Survey (October 17)

– The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress (October 17)

China warns to keep ‘champagne’ on ice after ‘phase one’ trade deal

The United States and China still have some work to do before finalizing their “phase one” trade deal. Beijing wants to send Vice Premier Liu He, China’s top trade negotiator, to Washington as soon as the end of October to finalize a deal that can be signed next month at the Asia-Pacific Economic Cooperation conference next month in Chile. “While the negotiations do appear to have produced a fundamental understanding on the key issues and the broader benefits of friendly relations, the Champagne should probably be kept on ice, at least until the two presidents put pen to paper,” wrote the state-owned China Daily. Stocks futures are pointing to a modestly lower open following the report. Last week, the major averages rallied sharply in anticipation of a deal. “The outline of the agreement is quite similar to what was reached in late 2018 after the first trade summit between Presidents Trump and Xi,” wrote a global markets research team at the Tokyo-based investment bank Nomura, adding that the deal does little to materially reduce “fundamental uncertainties regarding the US-China economic relationship.” The “phase one” agreement came days before customs data released Monday by Beijing showed Chinese exports to the U.S. fell 17.8 percent to $36.5 billion in September, evidence the trade war is taking a toll on the world’s second-largest economy. The U.S. is the biggest buyer of Chinese goods. Trade negotiators from the U.S. and China on Friday agreed to a deal in principle that is expected to take three to five weeks to complete. As part of the deal, China agreed to increase its purchases of U.S. agricultural products and Boeing aircraft, in addition to making reforms on intellectual property and financial services. The U.S. has agreed to not raise tariffs from 25 percent to 30 percent on Oct. 15. A decision has not yet been made on the tariff increase scheduled for Dec. 15. Trump touted the agreement as a big win for U.S. industrial companies and farmers. “There will be more tractors sold, they’re going to be bigger and better and more powerful and they’re going to be made by John Deere and Case [IH] and Caterpillar,” Trump said Friday during a rally in Lake Charles, Louisiana. On Sunday, he tweeted, “My deal with China is that they will IMMEDIATELY start buying very large quantities of our Agricultural Product, not wait until the deal is signed over the next 3 or 4 weeks.”

Citibank fined $30 million for holding onto foreclosures for too long

Citibank was fined $30 million by federal banking regulators after an investigation found that the bank was not selling foreclosed homes back into the market fast enough. The Office of the Comptroller of the Currency announced Friday that it fined Citibank $30 million for “violations related to the holding period of other real estate owned.” Under federal banking regulations, there is a two-year limit on banks maintaining possession of a foreclosed property. The rules stipulate that banks can apply for an annual exemption that can push their ownership of a property to as much as five years. But after that, the bank is supposed to sell the property back into the market to prevent available housing inventory from being kept away from would-be homebuyers. And according to the OCC, Citibank violated that rule by holding onto hundreds of foreclosures for longer than the five-year limit. “The OCC found the bank engaged in repeated violations of the statutory holding period for OREO,” the OCC said in a statement. “These violations resulted from the bank’s deficient processes and controls in the identification and monitoring of the OREO holding period. In assessing this civil money penalty, the OCC found the bank failed to meet its commitment to implement corrective actions, resulting in additional violations.” A quick note of explanation on the use of the term “OREO” by the OCC: Most in the housing industry refer to foreclosures as REOs, for real-estate owned, but federal regulators like the OCC and the Federal Reserve refer to them as OREO, for other real estate owned. According to the OCC order, an investigation found more than 200 violations of the foreclosure sale time limit rule between April 4, 2017 and Aug. 14, 2019. But, Citibank states that the problem was limited to those 200 properties. “The maximum holding period for foreclosed properties by a national bank may not exceed five years. In some instances, we did not meet the requirement,” the bank said in a statement. “The issue, involving approximately 200 properties, was identified in 2015 and there was no impact on our customers,” the bank continued. “Since identifying the issue, we have strengthened controls, processes and procedures to ensure the timely disposition of these assets,” the bank added. “Most importantly, we consistently worked to ensure the responsible disposition of the properties to avoid negatively affecting the real estate market in those communities.” As Citibank noted, the problem began in 2015.

According to the OCC, in 2015, the bank found its own processes to be “deficient.” More specifically, the bank “lacked adequate policies, procedures, and processes to effectively identify and monitor the holding period for OREO assets,” the OCC said. The OCC stated that at that time, Citibank “committed to developing and implementing corrective actions to address these deficiencies.” But, the bank later submitted multiple requests to extend the holding period for REO properties that were “not made timely and resulted in numerous additional violations,” the OCC said. Then, in April 2017, the OCC told Citibank that its internal controls on REOs remained “decentralized, ineffective, and inadequate.” After that, Citibank continued to submit “untimely requests” to extend the REO holding period, the OCC said. And things didn’t get much better from there. “Following additional efforts to correct the root cause of the continued OREO holding period violations, the Bank recommitted to implementing corrective actions by August 31, 2018,” the OCC said. “The Bank failed to meet its commitment, resulting in additional violations.” According to the OCC, the bank has made progress in dealing the REOs in question. In fact, the regulator states that Citibank has “significantly reduced” its REO holdings in the last year. “The OCC continues to monitor the Bank’s progress to implement the required corrective actions to attain effective policies, procedures, and processes to identify and monitor the holding period for OREO assets in compliance with the law and regulation,” the OCC stated. “As part of these efforts the Bank has, over the last twelve months, significantly reduced its inventory of OREO assets.” According to the OCC, Citibank has already paid the penalty to the Department of the Treasury.

Ross Stores expanding, announces dozens of new stores

Ross Stores is growing, the California-based retailer expanding its national footprint. And the discount clothing store’s brand shows no sign of slowing growth. The new stores – 30 Ross Dress for Less locations (“Ross”) and 12 dd’s DISCOUNTS stores – will be added to 19 states. This is part of a national burst in openings for the brand, the new additions giving a total of 98 openings for Ross this year. These additions add to the 1,811 Ross Dress for Less and dd’s DISCOUNTS locations as well. Noticeable among the announced locations are nine stores in the Midwest where Ross has been actively seeking to expand its presence. This summer, Ross went into Ohio for the first time with two new stores. “This fall, we continued to expand our Ross and dd’s footprints across our existing markets as well as expansion in our newer market — the Midwest. The 42 locations we added this fall included nine stores in our newer Midwest markets of Illinois, Indiana, Kentucky, Nebraska, and Ohio. In addition, dd’s DISCOUNTS entered the state of Virginia with the opening of one new store and now operates in 19 states,” said Jim Fassio, president and chief development officer. “Looking ahead, we remain confident in our ability to grow to 2,400 Ross Dress for Less and 600 dd’s DISCOUNTS locations over time.” According to their website, Ross offers “name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day.”

CoreLogic – California home sales dip to a four-year low for an August

Fri, 11 Oct 2019 07:00:00 GMT

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.

CoreLogic – August home prices increased by 3.6% year over year

Wed, 02 Oct 2019 07:00:00 GMT

– The CoreLogic HPI Forecast indicates annual price growth will increase 5.8% by August 2020

– About three-fourths of millennial renters indicate they are likely to purchase a home in the future

– Connecticut was the only state to post an annual decline in home prices this August

CoreLogic released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for August 2019, which shows home prices rose both year over year and month over month. Home prices increased nationally by 3.6% from August 2018. On a month-over-month basis, prices increased by 0.4% in August 2019. (July 2019 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.) Home prices continue to increase on an annual basis with the CoreLogic HPI Forecast indicating annual price growth will increase 5.8% by August 2020. On a month-over-month basis, the forecast calls for home prices to increase by 0.3% from August 2019 to September 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 3.6% increase in annual home price growth this August marked a big slowdown from a year earlier when the U.S. index was up 5.5%,” said Dr. Frank Nothaft, chief economist at CoreLogic. “While the slowdown in appreciation occurred across the country at all price points, it was most pronounced at the lower end of the market. Prices for the lowest-priced homes increased by 5.5%, compared with August 2018, when prices increased by 8.4%. This moderation in home-price growth should be welcome news to entry-level buyers.”

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, 37% of metropolitan areas have an overvalued housing market as of August 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. As of August 2019, 23% of the top 100 metropolitan areas were undervalued, and 40% were at value. When looking at only the top 50 markets based on housing stock, 40% were overvalued, 16% were undervalued and 44% were at value. The MCI analysis defines an overvalued housing market as one in which home prices are at least 10% above the long-term, sustainable level. An undervalued housing market is one in which home prices are at least 10% below the sustainable level. During the second quarter of 2019, CoreLogic, together with RTi Research of Norwalk, Connecticut, conducted an extensive survey measuring consumer-housing sentiment among millennials. The survey found that approximately 75% of millennial renters indicate they will likely purchase a home in the future. However, despite a desire from the entire millennial cohort to purchase a home, there is a clear difference between older and younger millennials’ living situation preferences. Generally, older millennials (30-38) aspire to own a single, stand-alone home in the suburbs that is somewhat secluded. Meanwhile, younger millennials (21-29) lean towards modern apartment rentals in urban settings, with 55% of younger millennials saying they prefer to also live in lively neighborhoods. Still, 79% of younger millennials are confident that they will be homeowners in the future. “The millennial cohort has now entered the housing market in force and is already driving major changes in buying and selling patterns. Almost half of the millennials over 30 years old have bought a house in the last three years. These folks are increasingly looking to move out of urban centers in favor of the suburbs, which offers more privacy and a greener environment,” said Frank Martell, president and CEO, CoreLogic. “Perhaps most significantly, almost 80% of all millennials are confident they will become homeowners in the future.”

Dow tumbles over 500 points on global economic slowdown fears

Stocks tumbled on Wednesday on concerns the U.S. economy is slowing mirroring the pattern in Europe and other global nations. The Dow Jones Industrial Average fell over 500 points or more than 2 percent. The S&P 500 and the Nasdaq also dropped over 1 percent mid-morning. Selling accelerated after the Energy Department reported an inventory build of 3.1 million barrels, almost double the estimate, stoking fears of a slowdown and driving energy stocks lower. The latest read on America’s job market also signaled a pullback. Private-sector employers added 135,000 jobs in August, according to the latest ADP National Employment Report, missing the 140,000 that economists surveyed by Refinitiv were expecting. On Tuesday, the ISM September Manufacturing Index fell to 47.8, its weakest reading since June 2009. Construction spending also was little changed in August. Financials also took a beating for a second day. Brokerage firms remained under pressure after TD Ameritrade on Tuesday evening said it would match Charles Schwab’s commission-free trading. Schwab earlier on Tuesday said it would eliminate its $4.95 per trade fee on stock, exchange-traded funds and options trades. Sanofi shares were lower after Walmart suspended sales of its drug Zantac and all forms of heartburn medication containing ranitidine after the Food and Drug Administration warned of potential cancer risks. On the earnings front, Lennar gained after reporting better than expected third-quarter profits and sales while United Foods was sharply lower after reporting its first annual loss in more than a decade. European markets were sharply lower. London’s FTSE fell 2 percent, Germany’s DAX is down 1.3 percent and France’s CAC is down 1.6 percent. In Asia, Japan’s Nikkei closed down 0.5 percent and Hong Kong’s Hang Seng slid 0.3 percent. Markets in mainland China were closed for National Day holidays. They reopen on Oct. 8.

MBA – mortgage applications increase

Mortgage applications increased 8.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 27, 2019. The Market Composite Index, a measure of mortgage loan application volume, increased 8.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 8 percent compared with the previous week. The Refinance Index increased 14 percent from the previous week and was 133 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 10 percent higher than the same week one year ago. “Mortgage rates mostly decreased last week, with the 30-year fixed rate dropping below 4 percent for the sixth time in the past nine weeks. Borrowers responded to these lower rates, leading to a 14 percent increase in refinance applications,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Although refinance activity slowed in September compared to August, the months together were the strongest since October 2016. The slight changes in rates are still causing large swings in refinance volume, and we expect this sensitivity to persist.” Added Kan, “Purchase applications also increased and remained more than 9 percent higher than a year ago. Low rates and healthy housing market fundamentals continue to support solid levels of purchase activity.”

The refinance share of mortgage activity increased to 58.0 percent of total applications from 54.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.5 percent of total applications. The FHA share of total applications decreased to 10.4 percent from 11.4 percent the week prior. The VA share of total applications decreased to 12.4 percent from 13.1 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 3.99 percent from 4.02 percent, with points remaining unchanged at 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) decreased to 3.98 percent from 4.00 percent, with points increasing to 0.28 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.79 percent from 3.90 percent, with points remaining unchanged at 0.23 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.43 percent from 3.46 percent, with points increasing to 0.37 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 5/1 ARMs increased to 3.42 percent from 3.39 percent, with points increasing to 0.37 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

NYC housing prices in near ‘free fall,’ conditions mirror recession era following tax hikes

The Manhattan real estate market stumbled in the third quarter of 2019, new reports show, as prices plunged and fewer buyers were willing to purchase higher-priced properties in the wake of two recent tax increases. The median sales price for properties fell 17 percent from the same quarter last year, to $999,950, according to new data from CORE. The average sales price dropped 12 percent, to $1.64 million. Condo sales fell 8 percent, logging 946 transactions. Co-op sales, on the other hand, were up a modest 2 percent year over year. “The third quarter of 2019 was undoubtedly the most challenging quarter in recent memory, especially for condo sales,” Garrett Derderian, managing director of market analysis at CORE, said in a statement. “Market prices have gone from what was once described as the kindest, gentlest correction to a near free fall. The last time conditions were described in such a way was in the height of the recession.” Only 9.7 percent of sales were above $3 million, down 14.8 percent from last year. The last time sales above $3 million were that low was in 2012. Consequently, nearly 30 percent of inventory on the market was priced above $3 million. It’s worth noting that many buyers rushed to purchase properties before an increase in the city’s mansion tax and transfer tax took effect in July. “Third quarter data reflects a more accurate snapshot of the current market – continued price correction,” Diane M. Ramirez, Chairman & CEO of Halstead, said in a statement.

Halstead’s own report released on Wednesday showed Manhattan apartment sales fell 16 percent in the third quarter – with sales above $5 million dropping nearly 50 percent. Properties, meanwhile, spent an average of 192 days on the market – the highest quarterly total since the final quarter of 2012. In July, New York City increased its mansion tax – a progressive tax that applies to home sales of more than $1 million – to a maximum of 3.9 percent, up from a flat-rate of 1 percent. The tax rates vary from 1.25 percent for $2 million sales, to 3.9 percent for sales of $25 million and higher. The city also increased a one-time charge on properties worth more than $2 million – known as the transfer tax. That fee, typically paid by a seller, varies from 0.4 percent for transactions under $3 million, to 0.65 percent for anything above $3 million. As previously reported by FOX Business, more than 25 percent of new condos that have been built in New York City since 2013 remain unsold. In terms of units – of the 16,242 condos built since 2013, about 12,133 have sold. That means more than 4,100 have not. Experts have said the trend could be indicative of a potential future recession. Falling real estate prices come as concerns mount over the new tax law’s impact on high-tax states – particularly a $10,000 cap on state and local tax (SALT) deductions. Some people have begun fleeing states like New York and New Jersey, headed for lower-tax areas like Florida and Texas. New York was one of a handful of states dealt a blow in its bid to challenge the SALT cap this week, after a judge dismissed its lawsuit.

NAR – NAR commends Administration for pushing GSE reform conversations forward

National Association of Realtors® President John Smaby commended the administration for taking steps to further Fannie Mae and Freddie Mac reform this week. The U.S. Department of the Treasury and the Federal Housing Finance Agency on Monday announced that they will permit the Government Sponsored Enterprises to retain additional earnings in excess of the $3 billion capital reserves currently permitted, a proposal outlined in the Treasury Housing Reform Plan released in early September. “NAR appreciates the Treasury Department and FHFA’s work to advance housing finance reform and protect taxpayers by increasing available capital within the system,” said Smaby, a second-generation Realtor® from Edina, Minnesota. “While Realtors® eye GSE reforms that ensure responsible, creditworthy Americans can secure a mortgage in all types of markets, we urge Congress and the administration to work together toward a consensus that will create a housing finance system that protects taxpayers, supports homeownership and maximizes competition. The private utility model Realtors® proposed earlier this year(link is external) outlines the best possible path forward for the GSEs, and we will continue to work closely with policymakers to shape positive, pragmatic system reforms.”

CoreLogic – most EPIQ attendees expect little change in rates and slower price growth

EPIQ 2019 attendees represented a broad cross-section of industry professionals, think tank researchers, and government policy makers who have a view on the interest rate, home-price and loan performance outlook. These are three of the economic variables that affect housing activity and portfolio risk management. During my outlook session, I polled the attendees to learn their expectations for one year from now.

– What will fixed-rate mortgage rates be at EPIQ 2020?

Mortgage rates had moved more than a percentage point lower from November 2018 to late July when EPIQ 2019, CoreLogic’s annual client conference, was held. Attendees were asked what they expect the level of mortgage rates would be in one year, at the time of EPIQ 2020.

– Most EPIQ Attendees Expect Little Change in Mortgage Rates

The majority, 51%, expect mortgage rates to be very close to where they were during our conference. (Figure 1) The remaining respondents were nearly equally split between mortgage rates dropping or rising by 0.5 percentage points.

– How much will the CoreLogic HPI change by EPIQ 2020?

Nationally, home-price appreciation has decelerated over the last year. Comparing the 12-month change in the national index, growth measured by the CoreLogic Home Price Index (HPI) had slowed by nearly 3 percentage points between May 2018 and May 2019. The attendees were polled on what they expected the one-year price change would be with the release of the May 2020 HPI, the latest that would be available as of EPIQ 2020.

– Most EPIQ Attendees Expect Slower Home-Price Growth

A majority, 55%, expect home-price growth to continue to slow in the coming year. (Figure 2) Even so, 11% of attendees expect an acceleration in single-family price growth next year to more than 5% appreciation.

– What Will the Delinquency Rate Be by EPIQ 2020?

The total past due rate for home mortgages peaked at 12.0% in January 2010 and has steadily moved lower on a year-over-year basis. As of May 2019 the 30-day-plus delinquency rate had dipped to 3.6%, the lowest in more than 20 years. EPIQ attendees were divided on how the delinquency rate would evolve over the next year: 32% expected further declines while 43% foresaw a rise. The median response was for little change in the overall delinquency rate in the coming year.

– EPIQ Attendees Were Split on Delinquency Rate Direction

Attendees’ projections were affected by a variety of assumptions each had for how the economy and the housing market may evolve, reflected in the forecast distribution. Nonetheless, a majority of attendees expect interest rates on 30-year fixed-rate loans to remain close to where they were during EPIQ and expect further slowing in home-price growth during the next year.

MBA – commercial/multifamily mortgage debt increased $51.9 billion in the second quarter of 2019

The level of commercial/multifamily mortgage debt outstanding rose by $51.9 billion (1.5 percent) in the second quarter of 2019, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report. At the end of the first half of 2019, total commercial/multifamily debt outstanding was at$3.50 trillion. Multifamily mortgage debt alone increased $24.4 billion (1.7 percent) to $1.5 trillion from the first quarter. “Strong borrowing and lending, coupled with relatively low levels of loan maturities, are helping to boost the amount of commercial and multifamily mortgage debt outstanding,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “All four major capital sources increased their holdings during the quarter. With strong demand expected to continue, debt levels are likely to climb even more and end the year at a new high.” The four major investor groups in MBA’s report are: banks and thrifts; federal agency and government sponsored enterprise (GSE) portfolios and mortgage backed securities (MBS); life insurance companies; and commercial mortgage backed securities (CMBS), collateralized debt obligation (CDO) and other asset backed securities (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 (20 percent) at $703 billion. Life insurance companies hold $539 billion (15 percent), and CMBS, CDO and other ABS issues hold $471 billion (13 percent). Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the”CMBS, CDO and other ABS” category of the the report.

Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $703 billion (48 percent), followed by banks and thrifts with $445 billion (31 percent), life insurance companies with $143 billion (10 percent), state and local government with $82 billion (6 percent), and CMBS, CDO and other ABS issues holding $42 billion (3 percent). Nonfarm non-corporate businesses hold $16 billion (1 percent). In the second quarter, commercial banks saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $22.4 billion (1.7 percent). Agency and GSE portfolios and MBS increased their holdings by $15.9 billion (2.3 percent), life insurance companies increased their holdings by $7.4 billion (1.4 percent), and CMBS, CDO and other ABS issues increased their holdings by $4.8 billion (1.0 percent). In percentage terms, state and local government retirement funds saw the largest gain – 8.8 percent – in their holdings of commercial/multifamily mortgages. Conversely, the federal government saw their holdings decrease 3.4 percent. The $24.4 billion increase in multifamily mortgage debt outstanding from the first quarter represents a 1.7 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest gain – $15.9 billion (2.3 percent) – in their holdings of multifamily mortgage debt. Commercial banks increased their holdings by $9.0 billion (2.1 percent), and life insurance companies increased by $3.3 billion (2.3 percent). Federal government saw the largest decline in their holdings of multifamily mortgage debt at $3.6 billion (28.4 percent). In percentage terms, real estate investment trusts (REITs) recorded the largest increase in holdings of multifamily mortgages, at 13 percent, and federal government saw the biggest decrease at 28.4 percent.