Mortgage rates above 5% | Mt Kisco Real Estate

While investors are no doubt wringing their hands over what’s going on in the stock market this week, here’s another thing to fret over: rising mortgage rates.

“What many in 2016 thought would never happen again is now reality,” writes Wolf Richter of the Wolf Street blog. “A line in the sand has been breached.”

He explained that the average interest rate for 30-year fixed mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment just passed 5% — the highest since 2010, according to the Mortgage Bankers Association.See Also

This, however, is not quite the “pain threshold” for the housing market, Richter wrote. No, that number is 6%, but that rate is moving ever closer.

“This is still historically low. It would take rates back to December 2008, when the Fed was kicking off its first round of QE to repress long-term rates and inflate asset prices,” he said. “Beyond that are the now unimaginably high rates of 7% and 8%.” Here’s a chart for some perspective:

Mortgage rates loosely follow the path of the 10-year U.S. Treasury noteTMUBMUSD10Y, -0.86%  . The spread between the average 30-year fixed mortgage rate and the 10-year comes in around 1.5 to 2.0 percentage points over time. The yield on the benchmark government bond has soared this month to roughly seven-year highs amid worries that increasing inflation will erode the value of fixed-income assets.

“The 10-year yield has moved in two surges so far in this rate-hike cycle, each of them over 1 percentage point, with some back-tracking in between,” Richter wrote. “It appears to have launched ‘Surge 3.’ If it plays out, this surge would push the 10-year beyond 4%. And this would bring the 30-year fixed rate into the neighborhood of 6%.”

“This new mortgage rate environment is meeting home prices across the U.S. that have surged over the past years,” Richter wrote. “Affordability issues, already tough to deal with at 4% and 4.5% and even tougher to deal with at 5%, are going to be much tougher at 6%.”

Consequently, and unsurprisingly, he said the red-hot housing markets, like Seattle, San Francisco and Denver, are most at risk.

“These price increases came on top of the crazy peaks of Housing Bubble 1,” Richter wrote. “So a 6% average 30-year fixed rate in these inflated markets will likely change the equation a lot more than in some of the less inflated markets.”

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Housing starts up y-o-y | Bedford Hills Real Estate

Total housing starts posted a decline in September due to flat conditions for single-family construction and a pullback for apartment development. Total starts declined 5.3% in September but are 6.4% higher for 2018 on a year-to-date basis, according to the joint data release from the Census Bureau and HUD.

The pace of single-family starts was roughly flat in September, decreasing 0.9% to a seasonally adjusted annual rate of 871,000. Slight gains off the summer soft patch for single-family mirror a minor uptick of the NAHB/Wells Fargo Housing Market Index, now registering a score of 68. While builders are benefitting from recent declines in lumber prices (at least relative to spring and summer’s elevated levels), they continue to report concerns about labor access issues.

On a year-to-date basis, single-family starts are 6% higher as of September relative to the first nine months of 2017. Single-family permits, a useful indicator of future construction activity, were up slightly (2.9%) in September and have registered a 5.6% gain thus far in 2018 compared to last year.

Multifamily starts (2+ unit production) pulled back in September to a 330,000 annual rate. After a strong start to the year, multifamily development is moving closer to our forecast of leveling-off conditions. On a year-to-date basis, multifamily 5+ unit production is 7.3% higher thus far in 2018, while multifamily 5+ unit permitting is trending lower with just a 0.8% year-to-date increase relative to 2017.

With respect to housing’s economic impact, 54% of homes under construction in September were multifamily (607,000). The current count of apartments under construction is down slightly from a year ago. In September, there were 522,000 single-family units under construction, a gain of more than 9% from this time in 2017.

Regional data show – on a year-to-date basis – mixed conditions. Single-family construction is down 1% for the year in the Midwest and flat in the Northeast. Single-family starts are up in the larger building regions of the South (4.9%) and the West (14.6%).

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Single-Family Starts Flat in September

Checking on your flood insurance | South Salem Real Estate

Home insurance will cover damage from a volcano, but not a flood

Homeowners picking up the pieces from Hurricane Michael will quickly learn an important lesson: not all hurricane- related damage is covered by home insurance.

Before making landfall Wednesday, Michael rapidly intensified to an extremely strong storm packing 155 mile-per-hour winds, just shy of Category 5 status. The storm ranked as the third-most intense hurricane to hit the continental United States, according to Accuweather ( intense-hurricane-to-hit-continental-us/70006313), and was the strongest storm to ever hit the Florida Panhandle.

Towns and cities along the Panhandle coast were left in ruins, and damage extended well inland into southern Georgia. The storm’s high winds stripped roofs and caused trees to fall on homes ( storm-surge-damaging-winds-from-michael-to-rip-a-path-of-destruction-across-southeastern-us/70006307) and cars. Coastal communities were walloped by a massive storm surge, which forecasters predicted ( hurricane-michaels-storm-surge-is-so-high/) could reach as high as nine to 13 feet before the storm.

See more:Footage from Florida Panhandle shows the incredible force of Hurricane Michael ( story/footage-from-florida-panhandle-shows-the-incredible-force-of-hurricane-michael-2018-10-10)

For homeowners, what precisely caused the damage to their home will prove important for insurance purposes, because coverage will depend on how the damage was caused. During a hurricane, if high winds cause roof damage that leads to significant water accumulation within the house, insurance will likely cover it. But if a nearby river crests because of the heavy rainfall and then causes flooding, the damage to homes will only be covered if the owners have flood insurance.

That’s why most homeowners in the path of September’s Hurricane Florence’s torrential rains would have been better off if their home had been hit by a wildfire or volcanic eruption — at least from an insurance perspective.

Damage caused by flooding isn’t covered by standard home insurance policies. Only homeowners who bought separate flood insurance for their homes were covered if water from Florence damaged their house. And there weren’t many people in that boat.

Florence caused between $20 billion and $30 billion in losses to both commercial and residential properties across the Southeast due to flood and wind damages, according to estimates ( hurricane-florence-is-estimated-to-have-caused-between-20-billion-and-30-billion-in-flood-and-wind-losses-cor.aspx) from property data firm CoreLogic (CLGX).

Most homeowners affected by Florence will be stuck footing the bill: CoreLogic also estimated that 85% of the losses to residential properties were uninsured. Before the storm hit, actuarial firm Milliman ( 2018/Four-ways-Hurricane-Florence-could-ricochet-across-the-insurance-industry/) estimated that fewer than 10% of households in North Carolinahad flood insurance.

A similar refrain could now play out because of Hurricane Michael. When Hurricane Irma struck Florida last year, only 14% of the 3.3 million households in the nine counties affected by the disaster had flood insurance coverage, according to data from Pew Charitable Trusts ( have-flood-insurance-2017-09-12). That’s in spite of the fact that Florida households comprise 35% of policies under the National Flood Insurance Program.

Don’t miss:How to find a contractor after a hurricane ( after-a-hurricane-2017-09-25)

Even when insurance does cover the damage from a certain catastrophe, deductibles are still at play. Hurricane deductibles vary from policy to policy, but are often assessed as a percentage of the home’s overall value.

Coverage for other disasters operates similarly. In volcanic eruptions, damage caused by lava flows or resulting fires is covered by a standard homeowner’s policy, but if the eruption causes seismic activity, homeowners will not be reimbursed unless they have purchased a separate earthquake policy.

Buying additional insurance policies for disasters like floods and earthquakes might seem like a no-brainer, but it’s an expensive proposition. “They have to do a cost benefit analysis,” said Michael Crowe, co-founder and CEO of Clearsurance (, a site where consumers can review and compare insurance companies.

The average annual premium for a policy through the National Flood Insurance Program was $878 as of April 2017 (https: // 20of%20the%20NFIP%20April%202017%20Program%20Changes%20Final.pdf). But flood insurance premiums can easily cost thousands of dollars in regions that are determined to be at the highest risk of flooding.

But flooding is just one type of natural disaster that isn’t covered by standard home insurance policies. And in the case of disasters like hurricanes, where damage can be caused by a variety of factors including wind, rain and storm surge, it can quickly get confusing–and frustrating– for homeowners who are trying to figure out whether their insurance policy covers certain damage.

Here is what homeowners need to know about insurance and natural disasters:

What is covered under a standard homeowner’s insurance policy

Some natural disasters are always covered by homeowner’s insurance, including wildfires, tornadoes and hail storms. But other natural disasters are never or rarely covered under a standard homeowner’s insurance policy. They generally fall into two categories: floods and “earth movements.”

The first category comprises disasters caused by rising water, which includes everything from floods caused by extensive rainfall and hurricane-induced storm surges to dam failures and tsunamis. “Earth movements” include disasters such as earthquakes, landslides and sinkholes.

Unfortunately, many Americans are unaware that these disasters are not covered by a standard homeowner’s policy, according to the Insurance Information Institute ( final.pdf).

Certain natural disaster typically aren’t covered because of the level of the destruction they create, said Lynne McChristian, a spokeswoman for the Insurance Information Institute and executive director of the Center for Risk Management Education and Research at Florida State University.

With these disasters, “the damage is usually so widespread, and it’s typically a total loss,” McChristian said. ” Insurance companies can’t price it appropriately to make it a viable line of business for them.”Are you covered with a standard homeowner’s insurance policy? Typically covered Sometimes or partially covered Rarely covered Tornado Hurricane Flooding (including storm surge and tsunamis) Wildfire Volcano Earthquakes Hail storm Sinkhole Mud- and landslides Blizzard or ice storm Sewer backup

The government provides flood insurance

In the case of insurance for flooding, the federal government has stepped in. The National Flood Insurance Program was created in 1968 after insurance companies struggled to pay off claims following a slew of floods in the 1950s. Homeowners have the option to buy flood insurance through this program or to get a private insurance policy. In certain cases, homeowners may be required to purchase flood insurance by their mortgage lender if their home is located within a flood zone.

Private flood insurance now accounts for roughly 15% of all flood premiums nationwide, according to a March report from Insurance Journal ( And for many homeowners, a policy from a private insurer rather than through the federal insurance program could be cheaper. A July 2017 briefing from Milliman ( nfip.pdf)found that private flood policies would have lower premiums for 77% of all single-family homes in Florida, 69% in Louisiana and 92% in Texas.

Read more:Congress just dodged hard decisions about flood insurance again ( just-dodged-hard-decisions-about-flood-insurance-again-2018-07-31)


Similarly, homeowners will need to purchase a separate policy or a rider to their standard home insurance policy from a private insurer to be covered for an earthquake. California residents also have the option ( article/earthquake-insurance-for-homeowners) to purchase coverage through the California Earthquake Authority. That said, if an earthquake causes a house fire, some damage might be covered by the standard policy alone.


As for sinkholes, coverage options vary from state to state ( A standard home insurance policy may cover minor damage caused by a sinkhole — but catastrophic damage (generally defined as damage to more than half of the structure) is excluded. People can either get sinkhole insurance in the form of a standalone policy or an endorsement to the standard insurance policy, depending on where they live.

Tennessee and Florida require insurers to offer optional sinkhole coverage. Insurers in Florida are also required to provide insurance for “catastrophic ground cover collapse” through their standard policies.

Read more:Your easy step-by-step guide to paying off all kinds of debt ( step-by-step-guide-to-paying-off-all-kinds-of-debt-2018-09-19)

Did the homeowner take care of the property?

The property’s upkeep can also play a role in whether or not damage caused by a storm or other natural disaster is covered. For instance, if winter storms cause an ice dam to form on the roof of the home and the owner is not proactive about removing it, the insurer may choose to deny coverage for water damage.

You have some options if you skip insurance

If homeowners don’t buy specialized insurance coverage and then get hit by some sort of disaster, they do have some options to offset their losses. They can get a grant from the Federal Emergency Management Agency or a loan from the Small Business Administration.

“Those are not designed to bring you back to a pre-disaster condition — they’re designed just to get you back on your feet,” McChristian said. “Insurance is designed to get you back to where you were before the disaster occurred.”

How to decide whether you need coverage

For starters, homeowners need to consider whether or not they are at risk. They should check government flood zone maps. They are generally available from county governments, or you can search by address on the FEMA website (https:// But they aren’t foolproof because they are only periodically updated.

Other factors to consider include the property’s elevation (if it’s at or just a few feet above sea level it’s more prone to flooding) and whether there has been a lot of construction in the area. This could displace vegetation that would soak up rainfall and prevent flooding.

As for earthquakes, homeowners shouldn’t assume they’re not at risk just because they don’t live on the West Coast. Earthquakes have caused damaged in all 50 states at some point since 1900, according to the Insurance Information Institute( us-is-at-risk-for-both-032311) (a trade group that of course has a vested interest in people getting insurance). And fracking for oil and natural gas has led to seismic activity ( in-texas-quakes-according-to-new-study)in parts of the country that had never before experienced it.

How to get to the front of the line when you need help

Regardless of whether or not a homeowner has insurance coverage for a specific natural disaster, getting their property assessed is critical in beginning the rebuilding process.

Following a natural disaster, a consumer’s first step should be to contact their insurance agent or company immediately. That is critical because insurance claims are handled on a triage basis, McChristian said.

“Those with the most damage get to the front of the line because those people have the most need for recovery assistance,” McChristian said.

By clarifying how to file a claim and conveying the state of their property, homeowners can improve the chances of having their case handled more quickly by their insurer. Homeowners should also learn the ins and outs of how to file their claim, including what information is needed and how long they have to file. Now is also the time to determine what their policy’s deductible is.

Also see:What to do about your home and mortgage if you’re hit by a disaster ( to-do-about-your-home-and-mortgage-if-youre-hit-by-a-disaster-2018-09-17)

Make a head-start on assessing damage

The insurance company will send its own adjuster free of charge to inspect the property and assess the total cost of the damage. Homeowners can take steps to prepare for this by documenting what was damaged or destroyed by the natural disaster, getting bids from contractors and keeping track of receipts for any expenses they incur following the storm. Homeowners shouldn’t hesitate to make temporary repairs to protect their property from further damage.

A pricier option: Hire a third-party insurance adjuster to assess their property. Given the backlog insurers will experience following widespread disasters, it can take a while to receive a payout. To expedite this process, a homeowner can choose to hire an independent or public adjuster to assess their property.

Studies have shown that hiring public adjusters leads to higher insurance settlements. But these professionals don’t come cheap — they generally charge a fee ( that’s anywhere from 10% to 20% of the insurance settlement. And it’s critical to hire a reputable professional. (Check the websites of the National Association of Independent Insurance Adjusters ( and the National Association of Public Insurance Adjusters(

Always have someone look at damaged property

And even if homeowners aren’t covered for flood insurance, they should still have their insurance company assess their property and whatever damage occurred.

Crowe has experienced this firsthand. In 2006, an extended period of rainfall in Newburyport, Mass., where Crowe and his family lived, caused their newly remodeled basement to flood. However, their insurance policy did not include flood coverage. He thought he would have to pay for all the damage.

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Westchester sales and prices down | North Salem Real Estate

Westchester sales down 5.2%

WHITE PLAINS—Home sale prices were up sharply in the third quarter in the four-county market area of the Hudson Gateway Association of Realtors, with the exception of Westchester County where sales prices were relatively flat as compared to a year earlier.

Sales volume was off marginally throughout the region, with overall third quarter sales down 5.2% in Westchester; 1.8% in Orange and 1.2% in Rockland, while Putnam County’s sales numbers were flat with an increase of 0.3%.

Market results were mixed depending on product type and location. Realtors interviewed by Real Estate In-Depth said that while some negative market influences, specifically the cap on SALT deductions, low inventory and higher interest rates, may be impacting some buying decisions, it is way too early to tell just what real impacts they will have on the market going forward.

Westchester County posted a third quarter median sale price for a single-family home of $679,000, which was slightly lower than the third quarter of 2017 ($680,000). The median sale price for a single-family home in Putnam was $360,000, up 5.9% from the third quarter of 2017; the median sale price in Rockland was $475,000, up 6.7% and the Orange County median was $275,000, up 7.8%.

Hudson Valley Home Sales—Third Quarter 2018
County                 Change from 2017
Putnam                +0.3%
Rockland             -1.2%
Orange                -1.8%
Westchester       -5.2%

Editor’s NoteFor further coverage, including region-wide home sales statistics

Paul Breunich, president and CEO of William Pitt and Julia B. Fee Sotheby’s International Real Estate, said in connection with the Westchester County market that the declining sales numbers, while noteworthy, are not a sign of a troubled market. He insisted that the market appears to be in transition and that most market observers expect home sales to fall between 4% to 6% for the year countywide.

“The market is in an adjustment period and is in flux,” Breunich said. “With what is going on in the economy—the stock market, GDP, (low) unemployment and consumer confidence through the roof, that is all pointing to a very strong, healthy real estate market, but that is not being reflected in our marketplace, yet.”

Breunich said that he is concerned about consumer market perceptions of a severe downtown in Westchester home sales based on erroneous sales numbers released recently by a local brokerage firm that garnered national media coverage.

“These news stories have contributed toward an exaggerated negative narrative about the state of the real estate market in Westchester, spreading misinformation and miseducating consumers,” Julia B. Fee Sotheby’s stated in its third quarter market report on Westchester County. “The actual picture is dramatically different, according to our own analysis, and varies greatly by town and price range.”

He noted that the market is seeing a decline in sales, but not double digits as was erroneously reported in the press. He also said that some locations are stronger than others both in terms of home sales volume and pricing.

“You have to look at the reality of it,” Breunich said. “The market is still down five to six percentage points. That is not something to pull the fire alarm on about, but it is something to be aware of.”

He added that the federal tax reform law and the cap on SALT deductions might be having some impact on demand. However, there are other factors that influence demand, such as high consumer confidence and the strong economy, for example, and the market is working through all the factors, both positive and negative.

While bullish on the future of the Westchester County residential market, Breunich said the real estate market is no longer booming, but is in transition. He said it is too early to tell the true impact of federal tax reform and added that the first indications of its effect on the market will likely show up in the next six months or so when people file their taxes in the spring of 2019.

Joseph Rand, managing partner of Better Homes and Gardens Rand Realty, said the federal tax reform might be having a small impact on the very high end of the market where the loss of deductibility for mortgage interest and local taxes hits the hardest.

He noted that price appreciation was more pronounced in the lower‐priced markets.

In terms of the loss of the SALT deductions, he said, “We’re talking about a marginal, not a major, impact. Prices aren’t rising at the rate they are in the lower‐priced markets, they’re basically flat, not falling.”

A plus for the marketplace is that inventory levels are starting to respond to rising prices, noting that for the first time since 2012, inventory levels went up in the third quarter.

Rand noted the what is happening region wide is that after years of decline, single-family inventory was higher in almost every county in the region, stabilizing near that six‐month level that usually signals a balancing market. This market phenomenon occurs when demand is strong, and supply stays steady (or goes down) and prices go up. In response to the rising prices, eventually new inventory comes onto the market, he explained.

“Going forward, we believe that the appetite in the market can handle both the impact of tax reform and this increased inventory while still driving continued price appreciation,” Rand said. “With strong economic conditions, relatively low‐interest rates (and the specter of rate increases on the horizon), and pricing still at attractive 2004‐05 levels, we expect a robust market through the end of the year.”

Brokerage network Westchester Real Estate Inc. in its third quarter market report on Westchester County also discussed the positive and negative economic and regulatory forces affecting the housing market.

The firm concluded that with those forces factored it, it believes, “Westchester properties will always remain in high demand based on our proximity to NYC and fantastic quality of life. While we may see pullbacks or shifts at times, our housing market possesses innate strength and resilience. Prices are not decreasing, home sales are still strong, and Westchester’s real estate market is just fine!”

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Lumber, OSB, and Gypsum Prices Fall | Waccabuc Real Estate

Residential construction goods input prices reversed course in September, increasing 0.2% after declining each of the prior two months, according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. The index for inputs to residential construction has risen 5.2% in 2018 and is 10.2% higher than it was in January 2017.

Gypsum prices also reversed trend in September, falling 0.1% (seasonally adjusted) after a combined increase of 6.1% over the prior two months. Since the start of the year, the price index for gypsum products has increased 1.0% per month, on average.

From January to September of 2017, prices paid for gypsum products rose 7.2%. The index has increased 8.1% over the same period in 2018.

The September PPI release continued to capture decreases in prices paid for softwood lumber that began in mid-June. However, even after accounting for the most recent price movements, the average price paid for softwood lumber in 2018 remains the highest on record according to Random Lengths data—18.7% above the prior record set in 1997.

The index for prices paid for OSB (and waferboard) decreased for the second consecutive month (-5.2%, not seasonally adjusted). Prices are down 16.4% since July and have declined in five of the past 12 months.

The index for ready-mix concrete (RMC) prices increased 0.4% (seasonally adjusted), reversing a four-month trend of price declines. After an uncharacteristically large monthly increase in March—when the index rose 3.3%–the PPI for RMC has fallen back in line with its long-run trend.

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Yardi reports average US rent drops | Cross River Real Estate

September 2018 marked the first time in eight months that U.S. multifamily rents did not increase. The $1,412 national average for the month represented a $1 drop from August and a 3.1% year-to-date increase; year-over-year rent growth remained unchanged at 3%, according to a survey of 127 markets by Yardi® Matrix.

The report presents an overall bright outlook for the multifamily sector. A slight decline in rents is normal at the start of fall, it says, “When rent growth traditionally begins to hibernate for winter.” Strong demand countering the steady wave of new supply is another positive sign. “Long-term demand for rentals is likely to remain high for a variety of demographic and social reasons,” the report notes.

Year-over-year rent growth leaders for September were Orlando, Fla.; Las Vegas; Phoenix; Tampa, Fla.; and California’sInland Empire.

View the full Yardi Matrix Multifamily National Report for September 2018 for additional detail and insight into 127 major U.S. real estate markets.

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The World’s Biggest Real Estate Bubbles in 2018 | Katonah Real Estate

Hong Kong real estate tops the bubble list

With the current stock market bull run reaching nearly 10 years in length, it’s understandable that many investors are nervous about the end of the party coming sooner than later.

However, as UBS notes in its latest report, there is also growing concern about another prominent bubble that’s been in the works since the aftermath of the financial crisis.

Large amounts of easy money have fueled real estate bubbles in the world’s major cities – and the Swiss investment bank now sees the property markets in six global cities as being at risk.


In the 2018 edition of the bank’s Real Estate Bubble Index, here are the major cities around the globe that are in or near bubble territory:

The biggest real estate bubbles

Any city with a score over 1.5 is considered at “Bubble Risk”, and right now those include two cities from Canada, one from Asia, and three from Europe.

Hong Kong (2.03) tops the index this year, leaping past Munich (1.99), Toronto (1.95), and Vancouver (1.92) which all remain at bubble risk themselves. Amsterdam and London are the two other cities that score higher than a 1.5 on the rankings.

It’s also very important to note that there are four cities that score just under the 1.5 threshold: Stockholm (1.45), Paris (1.44), San Francisco (1.44), and Frankfurt (1.43).


Investor and writer Howard Marks has noted in recent months that the wider market is in its “8th inning”, and the same case could be made for real estate.

Historically, investors have had to be alert to rising interest rates, which have served as the main trigger of corrections.

– UBS Report

According to UBS, the cracks are already starting to show at the top end of the market, with housing prices declining in half of last year’s list of bubble cities. Some of the worrying factors include rising interest rates, as well as growing political tensions as the crisis of affordability makes it harder for average people to live in these global financial centers.

Here is annualized growth in percent over the last year, as well for the last five years for cities in the index:

Real estate bubbles and their growth rates

As you can see, some of these cities have had negative growth over the last 12 months, including New York, Toronto, Sydney, London, and Stockholm.


In Hong Kong, you need to work 22 years to afford a 645 sq. ft (60m²) apartment, when that took just 12 years just a decade ago. In recent years, Hong Kong’s ascent to becoming one of the biggest real estate bubbles has become very evident, especially when juxtaposed with Singapore:

Hong Kong

In Canada, the two cities in the index are starting to go in alternate directions, although recent signs also point to a potential slowdown in Vancouver:

Vancouver and Toronto

Finally, the U.S. market – which felt the pain of the housing crash in the late 2000s – is home to zero cities in the bubble risk category, according to UBS.

American cities

Whether it is a bubble or not, many people agree that San Francisco’s housing situation is still a crisis. In the Bay Area hub, 60% of all rental units are in rental-controlled buildings, and the median single-family house price is a hefty $1.7 million.

read more…

The World’s Biggest Real Estate Bubbles in 2018

Framing Lumber Prices Down Year-over-year | Bedford Hills Real Estate

Here is another monthly update on framing lumber prices.   Lumber prices declined further in September from the recent record highs, and are now down year-over-year.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through October 5, 2018 (via NAHB), and 2) CME framing futures.


Lumcber Prices

Click on graph for larger image in graph gallery.

Right now Random Lengths prices are down 12% from a year ago, and CME futures are also down 12% year-over-year.

There is a seasonal pattern for lumber prices. Prices frequently peak around May, and bottom around October or November – although there is quite a bit of seasonal variability.

Read more…

Midterm elections and home builders | Bedford Real Estate

Carolyn Sewell

From the largest publicly traded production firms to small local companies, home builders are at the epicenter of many of today’s most pressing political issues. Across the U.S., residential building pros deal with some of the country’s biggest challenges and opportunities: immigration, taxes, environmental regulations, banking, and Wall Street reform, to name just a few.

Home building’s reach into so many aspects of the nation’s economic health makes the industry a powerful force in U.S. political affairs, and housing issues impact the country in myriad ways, says Jim Tobin, the NAHB’s executive vice president for government affairs and chief lobbyist. “There are home builders in every district in every state. We’re important to the tax base. We offer jobs,” he says. “And our members are community leaders who aren’t just providing shelter, they’re providing stability and community leadership.” (Click here for a list of the top political issues facing builders this year.)

November’s midterm elections will help to shape these issues, and the stakes are high: Up for grabs is the entire House of Representatives, a third of the Senate, and 36 governorships. In what many political insiders consider a bellwether year for U.S. politics, home builders plan to make their voices heard. A recent BUILDER poll found that nearly 99% of respondents said they plan to vote in the upcoming elections, and more than three-quarters of them said home building–related issues will play a large role in their decisionmaking.

Before U.S. builders hit the polls they’ll have to sort through the current political climate, with its rampant party extremism, constantly changing balances of power, robust regulatory environment, and Supreme Court upheaval. In such uncertain times, many will look for guidance from the NAHB, which has long lobbied on behalf of the industry and, in 2016, began to support and endorse political candidates for Congress. (It does not endorse candidates at local or presidential levels).

Tracking the Industry
Founded in 1942, the NAHB’s mission is “to protect the American dream of housing opportunities for all, while working to achieve professional success for its members who build communities, create jobs, and strengthen our economy.” The association’s members construct about 80% of the new homes built in the U.S. every year, and the federation has more than 800 state and local associations throughout the country.

NAHB lobbies on topics from forest management to energy policy, and it issues statements on initiatives from tariffs and codes to Supreme Court justice changes. Staff members also keep tabs on what’s going on in government agencies that deal with housing—a total of 160 federal housing programs administered by 20 different entities at a cost of over $160 million each year, according to independent educational nonprofit Restore Accountability.

The association has a seat at the table at nearly every level of the legislative process, all the way up to the executive office. For instance, when President Donald Trump recently signed an executive order telling the EPA and Army Corps of Engineers to rescind or revise the Waters of the United States (WOTUS) rule, then-NAHB chairman of the board Granger MacDonald was by his side. In fact, it’s said that politicians ignore the home building industry at their peril; one Fox News announcer recently quipped that he’d rather have the NAHB with him than against him.

Tobin and his team of 10 lobbyists and 20 government affairs staffers are the soldiers who navigate the tricky terrain in the nation’s capital, working with regulatory agencies such as HUD and the EPA, the White House, and the judiciary on behalf of NAHB’s members. Keeping track of so many issues is no small task, Tobin says. “So many things impact the ability to develop housing in America,” he says.

Tobin starts his day by absorbing what’s driving the news cycle—sometimes a statement from House Minority Leader Nancy Pelosi, often a presidential tweet. After internal strategy meetings at the NAHB’s National Housing Center in downtown D.C., just a few blocks from the K Street hub where Beltway lobby shops have traditionally clustered, Tobin treks over to Capitol Hill or the White House for meetings with members of Congress who could either sign or block legislation on everything from banking regulations to environmental protection. On any given day, Tobin’s team can be tracking 100 different bills.

Donald Trump addresses NAHB members in Miami Beach, Fla., during his 2016 presidential campaign.
Al Diaz/Miami Herald/TNS via Getty ImagesDonald Trump addresses NAHB members in Miami Beach, Fla., during his 2016 presidential campaign.

“Everything is almost a No. 1 priority when it comes up,” Tobin says. NAHB staff looks at every piece of legislation and change in regulations as soon as it is released and takes immediate action, no matter how unlikely it is to become law. If a bill were introduced to cut the mortgage-interest deduction in half, for example, Tobin’s team would be on it. “There’s no way that bill would make it through Congress, but we will take that bill with one co-sponsor, send a letter, lobby against it, and make sure there are several nails in that coffin so it never sees the light of day,” Tobin explains.

Although many might imagine Tobin having lunch or dinner meetings with members of Congress, those haven’t really been a thing since the 1990s, when a wave of reforms prohibited lobbyists from buying a senator or representative lunch—or anything else, for that matter. Meals at Capitol Hill meeting place Charlie Palmer Steak have been replaced by fundraising events, where Tobin says he can “access members of Congress to talk about current events, what you’re working on, in a smaller setting.”

These days, texts and messages are most congressional staffers’ preferred method of communication, Tobin says, and it better be quick. “You have to boil it down to a page, or a half page. People are busier and attention spans are shorter today,” he says. “Nothing will ever replace shoe-leather lobbying and relationships, but with the fast pace of Capitol Hill and a greater flow of information, Hill staff may not have the time to take a meeting, so you need to know how to get your points across.”

Every two years, Tobin and his staff prepare for shifting sands in Washington, D.C. If Democrats take over the House in the upcoming elections as some predict, Tobin’s staff will need to know the priorities of the new leadership and discern how they fit in with the NAHB’s agenda. “We’re always war gaming what the next two years are going to be based on what the current situation looks like,” he notes.

NAHB works closely with the Mortgage Bankers Association and the National Association of Realtors—a trifecta that Tobin calls “the big three of housing”—and sometimes with the National Multifamily Housing Council, the Associated General Contractors of America, and the U.S. Chamber of Commerce (the latter being the biggest spender on federal lobbying, paying out $22.9 million in the first quarter of 2018, according to Roll Call). “Sometimes we’re opposite them,” Tobin says. “But at the end of the day, if we can find like-minded associations to join the coalition, the more the merrier.”

Grassroots Efforts
NAHB’s lobbying efforts are determined by senior officers who represent the nearly 2,500 members who serve on the association’s board of directors, in turn representing NAHB’s 140,000 members. NAHB relies on its members to provide relationships with elected officials, which is why it created the Bringing Housing Home program to develop opportunities for its members to meet with congressional delegations. Local NAHB leaders are encouraged to schedule meetings with their senators and representatives during congressional recesses. NAHB members held hundreds of these meetings across the nation this spring and summer.

“There’s an old saying that most people don’t approve of Congress, but they approve of their member of Congress,” says Michael Everngam, vice president of BUILD-PAC, NAHB’s political action committee that serves to raise and distribute funds for pro-housing candidates. “I think that saying goes a long way. When we do have major issues come up, members are more likely to get involved and talk to their member of Congress because they’ve been involved along the way.”

Home builder Kevin Woodward (third from left) and other NAHB members meet with Tennessee U.S. Rep. Scott DesJarlais (fifth from right).
Courtesy Kevin WoodwardHome builder Kevin Woodward (third from left) and other NAHB members meet with Tennessee U.S. Rep. Scott DesJarlais (fifth from right).

Home builder Kevin Woodward has seen the importance of one-on-one political involvement. Early in his career, the managing partner for Legacy Homes in Nashvillerealized that laws and regulations could make or break his industry and saw that the only way to have any control over them was to get involved in the political process. For decades, Woodward has been part of lobbying efforts, serving twice as state president of the NAHB in Nebraska and three times in Tennessee. He has also been on numerous NAHB committees and is currently the third vice chair of the NAHB’s BUILD-PAC, meaning he will be chair in two years.

If Woodward has learned anything during his experience, it’s that nurturing relationships in the cities and districts where he lives is his most important contribution. “If we don’t participate at a local level, we’re never going to get anything done at a national level,” Woodward says. “What I have done and encourage others to do is meet with local officials, state legislators, and national legislators. Build relationships that will eventually blossom into the ability to reach out to them, so when you call them, they’ll actually answer.”

NAHB offers an advocacy app with an interactive congressional directory to keep members informed of housing news, statistics, and talking points on key issues, but most use “the old-fashioned way of communication—texts, phone calls, and emails—for our calls to action,” Woodward says. When issues come up, NAHB Board of Trustees members send a directive to state leaders, who disseminate the information and enlist help from members.

“They’re just a phenomenal government affairs staff at NAHB,” Woodward says. “They may send us a directive, and we’ll say, ‘Well, why?’ But they’re the experts in the field, and if they send us down a path, they have a reason. They’re in it 24/7/365. We’re involved much less. My job is to build houses.”

For example, when the NAHB asked local leaders in the spring to recruit members of Congress to sign a letter urging the Trump administration to restart lumber trade talks with Canada, Woodward sprang to action. He called all nine of Tennessee’s U.S. representatives and its two senators, then he called local members around the state who know key legislators, asking them to make calls and report back. If they didn’t, he called again—and his tenacity paid off. Seven of Tennessee’s nine representatives, including politically invaluable House Ways and Means member Diane Black, signed the letter. “Two we knew would not,” Woodward says. “That’s just politics.”

Pro-Housing Outreach
While NAHB’s government affairs office steers the ship in Washington, members back home truly drive the organization, says vice president for intergovernmental affairs Karl Eckhart, who oversees NAHB’s grassroots efforts. When members asked for more ways to support pro-housing candidates aside from BUILD-PAC, the association delivered. In 2016, NAHB made its first endorsements of 139 congressional candidates—94% of whom won their races—and launched the Defender of Housing Award for U.S. senators and representatives who have offered unwavering support for the housing sector. NAHB members have given 268 awards so far.

“We want our endorsements and the award to be meaningful,” Tobin says. “We want members of Congress who don’t get an award or endorsement to come to us and say, ‘What do I have to do to get that award? Let’s find areas where we can work together.’”

The criteria for what constitutes a pro-housing candidate takes many factors into consideration, and the selection process is intense. Woodward and other state leaders spend hours scouring candidates’ records and talking with people about congressional members and candidates before they offer a Defender of Housing award, donation, or endorsement.

“When we examine the housing bona fides of a candidate or a member of Congress we look for people that, first and foremost, are supportive of housing and creating conditions for greater housing affordability,” Tobin explains. “We’re looking for people who have relationships with their local home builders and meet regularly to discuss housing issues back home in their communities. We back candidates that support and promote policies of increasing ownership and rental opportunities, reducing regulatory costs, and creating an economic environment where small businesses can be successful. Housing is a bipartisan, middle-of-the-political-spectrum issue. Candidates that work to advance common-sense, bipartisan solutions to complex issues tend to earn NAHB’s support.”

A candidate’s chance of being elected also comes into play, Woodward says, because you want funding to go to candidates who will be in a position to help advance the association’s agenda. “Our PAC money is not a secret,” he says. “Anybody can find out who we give it to. If you keep throwing money at the wrong place, you’re never going to be able to succeed.”

One politician who has earned NAHB’s support is Rep. Keith Rothfus, a PennsylvaniaRepublican who was recently named a Defender of Housing. In Rothfus’ district, the home building industry employs 130,000 people and drives other industries such as raw materials, design services, and furniture sales, and he’s fierce about making sure home builders can do business unencumbered. He’s a vocal opponent of over-regulation, particularly when it comes to community banks, and as vice chairman of the Subcommittee on Financial Institutions and Consumer Credit and a member of the Financial Services Committee, he has some sway.

Rothfus is constantly in touch with builders, real estate agents, community bankers, and other stakeholders in the home building industry in his district, and he consistently votes the pro-housing party line. “It’s very important that we continue to have feedback from the various players,” he says. “It’s very important for us to stay in touch and hear their pressure points as they continue to offer jobs to people.”

Beyond Party Lines
As influential as the home building industry is in Washington, it’s not immune to the fact that money talks. Completely funded by donations from more than 2,700 members, the association’s BUILD-PAC has more than $3 million to spend this election cycle, and Tobin plans to use every dime. The Center for Responsive Politics, which tracks PAC spending, shows that as of Aug. 21, BUILD-PAC had contributed $979,000 to more than 300 candidates for the House and Senate, 86% of them Republican and 14% Democrat. The PAC has also contributed $240,000 to the national parties and $439,032 to committees, including $60,000 each to the National Republican Congressional Committee, the National Republican Senatorial Committee, the Democratic Congressional Campaign Committee, and the Democratic Senatorial Campaign Committee.

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Why Westchester homes are getting battered by “dramatic price reductions | Pound Ridge Real Estate

(Credit: Daniel Case, Pixabay)

Westchester residents, many trying to avoid the hefty tax bill that 2018 promises, are finding themselves in an unforgiving buyers’ market.

In Scarsdale alone, prices dipped 5 percent in the first six months of 2018, while Mamaroneck saw a 13 percent drop, according to Bloomberg. The number of homes selling in the county fell 18 percent in the second quarter of 2018, with those asking between $1.5 million to $3 million faring the worst.

The major push factor for sellers to plow ahead despite plummeting prices is the GOP’s new tax law which slapped a $10,000 cap on state and local property tax deductions, which means homeowners in areas like Westchester, where property taxes can run up to $50,0000, are feeling a serious crunch.

As a result, the number of homes for sale in Westchester has been increasing: in late June, inventory was up 5 percent compared to last year and, for homes priced between $2-2.5 million, listings were up 26 percent.

Buyers are feeling no sympathy for homeowners who bet on turning a neat profit when they decided to sell off their prestige address. Compass broker Angela Retelny says her clients tell her “‘Look, I’m not going to spend more than $35,000 in taxes.’ … Houses are just being dismissed, even though they’re superior homes, and they have to be reduced — because their taxes are just way too high for the price range.”

With buyers taking a hard line, sellers are being forced to bend, according to her. There are “dramatic price reductions every single day — every hour, pretty much,” she told Bloomberg.

Yorktown Heights property attorney Matthew Roach recalled one client who sold his home of 25 years immediately after the GOP’s tax law was passed. His home had property taxes over $50,000 and he was planning to move to Brooklyn, pay $10,000 in rent and never buy another home.

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Why Westchester homes are getting battered by “dramatic price reductions”