Weekly Economic Update

Economic News

Homes: The Hot Commodity

America's housing market has grown so overheated as demand outpaces supply that prices keep hitting record highs — and roughly half of all U.S. houses are now selling above their list price. Two years ago, before the pandemic struck, just a quarter of homes were selling above the sellers' asking price, according to data from the real estate brokerage Redfin.?Recently, new data further illuminated the red-hot nature of the housing market: Prices rose in March at the fastest pace in more than seven years. The S&P CoreLogic Case-Shiller 20-city Home Price Index jumped 13.3% that month compared with a year earlier — the biggest such gain since December 2013. That price surge followed a 12% year-over-year jump in February. Several factors are driving the seemingly relentless rise in home prices.

The pandemic has encouraged more people to seek out the additional space provided by a single-family home. Yet at the same time, COVID-19 discouraged many homeowners from selling and opening up their homes to would-be buyers, thereby shrinking the number of homes for sale. And mortgage rates remain at historically low levels, with the average rate on a 30-year fixed mortgage around 3%. Investors, including individuals buying second houses and wealthy Wall Street firms, are also buying more homes, intensifying the competition. Investors bought 17% of homes in April, up from 10% a year earlier, according to the National Association of Realtors. The large millennial generation is also increasingly turning toward home-buying. Daryl Fairweather, chief economist at Redfin, said that demand had been outstripping supply even before the pandemic as developers struggled to build enough new homes. Builders now say that shortages of workers and lumber are limiting their ability to build. New home construction fell in April after reaching a 15-year high a month earlier. Source: ABC News

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What’s Next?

We have had quite a wild ride across our planet during the last 15 months.?A word-wide pandemic was followed by a sharp recession. As the pandemic wore on and wore many of us down, certain segments of the economy prospered, and others remained stuck in recession. At one of our darkest hours, vaccines were approved and there was a light at the end of the tunnel.

Now, over 50% of the adult population is vaccinated. You can actually walk into an establishment without a mask on if you are vaccinated, which is a very good feeling. The cases of COVID have plummeted and if we continue to protect our citizens, there is good reason to believe that we can win the war against this scourge. And when we do win this war, what comes next? Will things turn back to normal, and if they do—what will normal look like??

Will many still wear masks as protection??Will restaurants continue to keep customers spaced from each other—or will they pack them back in??Will all sectors of the economy recover at a reasonably fast pace? There are a lot of questions still to be answered.?We believe many of the technologies, such as Zoom, will stay with us even after the war is over. And recovery will not take place in a straight-line within all sectors.?Again, some sectors never felt the negative effects of the pandemic, while others have a long way to go.

Real Estate News

Updated FHA Requirements

The Federal Housing Administration (FHA) announced the publication of?Mortgagee Letter 2021-12,?Eligibility Requirements for Certain Non-Permanent Resident Borrowers, that formalizes and updates requirements for certain non-permanent residents seeking to obtain insured mortgage financing under FHA’s mortgage insurance programs. The guidance in this ML may be implemented immediately; however, it must be implemented for mortgages with case numbers assigned on or after July 26, 2021.?A Borrower who is a non-permanent resident may be eligible for FHA insured financing provided: the Property will be the Borrower’s Principal Residence; the Borrower has a valid SSN, except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD; and the Borrower is eligible to work in the United States.?If the Employment Authorization Document (USCIS Form I-766) or evidence of H-1B status will expire within one year and a prior history of residency status renewals exists, the Mortgagee may assume that continuation will be granted. If there are no prior renewals, the Mortgagee must determine the likelihood of renewal based on information from the employer or the USCIS.?The letter also provides clarification of documentation for those residing under official refugee or asylee status. Source: FHA

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