Thru the Roof: #Home Sales at Decade High
Existing Home Sales are on fire, hitting a ten-year high in March.
Used home sales ran at a seasonally adjusted annual rate of 5.71 million, a 4.4% monthly increase, according to the National Association of Realtors. It’s the strongest selling pace since February 2007 and was 5.9% higher than a year ago.
Giserman Group client, The Collingwood Group Chairman Tim Rood appearing on Fox Business Network’s Cavuto (Friday) said, "Unfortunately, this sales pace is not sustainable because inventories are actually going down. Existing homes sales will likely hit a wall over the summer unless something changes to increase inventory. Moreover, there remains too much uncertainty for current owners to know whether this is the right time to sell and whether they’ll find anything that makes economic sense and is suitable."
Tight inventory is still the biggest factor in the marketplace: supply was 6.6% lower compared to a year ago. There were 1.83 million homes for sale on the last day of the month, which represented 3.8 months of supply at March’s sales pace. Properties stayed on the market for only 34 days.
That nudged the national median sales price to $236,400 - a 6.8% gain compared to a year ago.
Regionally, sales surged 10.1% in the Northeast and 9.2% in the Midwest, and ticked up 3.4% in the South. In the West, sales fell by 1.6%.
Investors made up 15% of all purchases, little changed from a year ago. First-time home buyers also made little progress, accounting for 32% of the market.
U.S. Office Market Takes a Breather
Office Markets are weakening in many big cities as a seven-year expansion seems to be taking a breather.
The Wall Street Journal reports rents in Midtown Manhattan averaged $80.45 a square foot annually in the first quarter, compared with $81.16 at the end of the first quarter in 2016, while the vacancy rate crept up to 11.9 percent from 11.6 percent.
In San Francisco, vacancy rose for the fourth consecutive quarter amid a surge of new supply, according to real-estate services firm Cushman & Wakefield.
"Although each market has its own dynamics, the delicate balance between over- and under-supply has been managed rather well over the past few years," says Giserman Group client, Situs Executive Managing Director Steven Bean. "I give a lot of the credit to banks and other lenders on this front. If provided the funds to build, developers have a tendency to overbuild, but the judiciousness of the lenders has kept overbuilding at bay."
In prior cycles there was a high correlation between the office market and growth in the job market. But the Journal reports in the current economic expansion it has lagged behind, in part because tenants have learned to use space more efficiently.
Situs' Bean says, "One of the keys to lender underwriting is to truly examine forward supply and the various stages of future projects. As this segment of market research has become more transparent via more reporting by municipalities, banks and other lenders have been better at forecasting market dynamics."
Private investors who have paid top prices for office property in recent years might not get the income growth they are seeking. Green Street earlier this year revised its projections for annual rent increases through 2020 to about 3 percent from 4 percent.
Banks and Borrowers Waiting on Washington
Regional banks are seeing both optimism and angst in the American heartland, reporting that their customers are waiting for clues from Washington before taking action.
Slowing loan growth has been a theme as regional banks reported first quarter earnings over the past week. Among a group of seven large regional banks, ranging from around $70 billion to $450 billion of total assets, all but one saw slower growth or an outright decline in average loans outstanding in the first quarter.
Some also issued disappointing guidance for loan growth in 2017. Political uncertainty was consistently among the causes cited.
U.S. Bancorp , a large regional bank based in Minneapolis, lowered its guidance for loan growth for 2017 from 6% to 8% to mid single digits.
“Our large corporate customers tell us that they are optimistic about the future but are awaiting more clarity regarding potential changes in tax and regulatory reform, infrastructure spending and trade policies,” said U.S. Bancorp chief executive Andrew Cecere.
Birmingham, Alabama-based Regions Financial , which operates across southern markets, said it expects basically flat lending in 2017.
“Consumer and small-business sentiment continues to improve,” said chief executive O.B. Grayson Hall. “However, this optimism is yet to translate into the confidence needed to take on additional debt today. For now, customers appear to be in more of a wait-and-see mode.”
Darren King, chief financial officer of Buffalo, New York-based M&T Bank , said the bank’s clients are “just waiting, I think, for more certainty about which direction the administration is going to go and their ability to follow through on some of the promises around managing the costs of employees.” He specifically cited the Affordable Care Act and minimum wage laws.
read more: Wall St Journal
Fannie-Freddie Would be 'Utilities' Under Plan
Fannie Mae and Freddie Mac would be turned into shareholder-owned utilities and face competition from new companies under a trade group’s mortgage-finance overhaul plan that could eventually require about $200 billion in private capital.
The Mortgage Bankers Association proposal calls for the U.S. government to remain involved in the housing market, putting its guarantee behind mortgage-backed securities that the firms issue but no longer backstopping the companies themselves.
The proposal comes as Congress and President Donald Trump’s administration ramp up work on what to do about Fannie and Freddie, which have been in government-managed limbo for more than eight years. What the government decides to do will have huge ramifications for the $10 trillion mortgage market, about half of which is backed by the two companies.
“There are two options here for anybody in the process,” said MBA President David Stevens. “You can kick and scream on how you want the game to be played differently or you can play the game. We’re staying in the game on this one.”
On a call with reporters, Stevens said senior members of the Trump administration had signaled to MBA that they support a legislative process to overhaul Fannie and Freddie. Some investors and others have advocated for the Treasury Department and the companies’ regulator, the Federal Housing Finance Agency, to release them from government control without legislation.
read more: Bloomberg
JPMorgan Tripling Size of New York Technology Hub
JPMorgan Chase & Co., the biggest U.S. lender, is planning to more than triple the size of its technology hub in New York City to increase space for the bank's coders and data engineers, a person with knowledge of the matter said. The firm is in discussions with Brookfield Property Partners LP to lease an additional 300,000 square feet on the upper levels of 5 Manhattan West near Hudson Yards, said the person, who asked not to be identified because the plans aren't public. The bank currently occupies about 125,000 square feet in the building. The talks are ongoing and could still fall apart, the person said. Banks are competing fiercely for technologists as the industry enters a new era of automation, fueled by cheap computing power and fears of losing customers to startups.
read more: Politico
Millennial Men Make Less Now Than Their Counterparts Did in 1975
The United States has enjoyed extraordinary economic progress over the past four decades, but average incomes for today's young workers are lower than they were in 1975.
Over the past four decades, young American workers saw their average incomes decline by 5.5 percent after adjusting for inflation, according to new figures published Wednesday by the U.S. Census Bureau. In 1975, workers aged 25 to 34 had a median personal income of $37,000 in modern dollar terms. In 2016, that number was down to $35,000.
Earnings have declined despite the fact that today's young people are better educated than 40 years ago. Thirty-seven percent of young people had a bachelor's degree last year, compared to 22.8 percent in 1975.
In part, experts say, the decline in average incomes results from new impediments to financial success that confront millennials, but that older Americans did not have to overcome. A more unequal economy presents fewer opportunities for younger workers. Young people today must compete with a well educated labor force, while young people in the past often had an advantage over older workers who were less qualified.
In another sense, the decline represents progress, because it is partly a result of striking gains among young women. Young women have joined the workforce in high numbers, but because they still earn less than young men, their entrance has driven down the average for young workers in general. In 1975, just under half of women aged 25 to 34 were working, and only 18.4 percent had at least a bachelor's degree. In 2016, about 70 percent of women between those ages were employed, and 40 percent had at least a bachelor's degree.
The typical income for a young woman in the labor force increased 28.5 percent since 1975, from $23,000 to $29,000 in 2015 dollars.
read more: Washington Post
These 6 Houses for Sale, Oh Yea the Whole Town is as Well
In the tiny, dying timber town of Tiller, the old cliche is true. If you blink, you might actually miss it.
But these days, this dot on a map in southwestern Oregon is generating big-city buzz for an unlikely reason: Almost the entire town is for sale.
The asking price of $3.5 million brings with it six houses, the shuttered general store and gas station, the land under the post office, undeveloped parcels, water rights and infrastructure that includes sidewalks, fire hydrants and a working power station. Tiller Elementary School, a six-classroom building that closed in 2014, is for sale separately for $350,000.
Potential buyers have come forward but are remaining anonymous, and backup offers are still being accepted.
The listing represents a melancholy crossroads for Tiller, a once-bustling logging outpost that sprang up after the turn of the last century deep in what is now the Umpqua National Forest, about 230 miles south of Portland. The post office opened in 1902, and miners, loggers, ranchers and farmers flocked to the community along a pristine river.
read more: AP
Week Ahead
Spring is in the air and we receive important data in the week ahead to assess the key spring home-buying season. Here’s the schedule, check in with our Collingwood Group News Briefings during the week for the numbers and what they mean to YOUR business.
Tuesday
- FHFA House Price Index 9:00 AM ET
- Case-Shiller Home Price Index 9:00 AM ET
- New Home Sales 10:00 AM ET
Wednesday
- MBA Mortgage Applications 7:00 AM ET
Thursday
- Jobless Claims 8:30 AM ET
- Pending Home Sales Index 10:00 AM ET
- Ten-X Nowcast: Look Ahead to Next Month’s Residential & CRE Data
Friday
- GDP 8:30 AM ET
Have a prosperous week ahead!
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