The housing market won’t recover much in the second half of 2019, says Capital Economics.
Mortgage interest rates have fallen this year, but that hasn’t spurred much action in the housing market, and things are unlikely to turn around for the remainder of the year as concerns about the economy continue to grow, the economists say.
“The fact interest rates are declining because of concerns that the economy is slowing argues against a strong rise in home purchase demand,” Capital Economics writes in a recent report. “That is reflected in measures of buyer sentiment. The decline in interest rates earlier this year failed to provide much of a boost to the share of households saying now is a good time to buy.”
That said, the report did indicate that rental demand will be solid thanks to strong wage growth and subdued home sales. And, the drop in rates has helped spur refinance activity, with applications jumping in the first half of June and signals indicating the likelihood of an upward trend for refis.
But purchase demand is less sensitive to changes in mortgage rates, the economists say, and home sales have therefore seen less of a lift from the drop in financing costs.
Also, the drop in rates was somewhat offset by tighter lender standards, the report says, including a recent pullback from the Federal Housing Administration that may make it harder for some riskier borrowers to qualify.
But on the bright side, homes are still affordable, the economists say.
“The fall in mortgage interest rates, slower house price gains and the rise in earnings growth have led to a drop in mortgage payments as a share of income,” the report says. “And, based on our forecasts for those variables, the payment burden is set to stay at around 16% over the next couple years, low by past standards.”
But the housing market is plagued by a lack of inventory, and this will prevent any meaningful rise in existing home sales, the report predicts.
“While the number of existing homes for sale has seen some improvement since reaching a record low at the end of 2017, at 1.8 million in May market conditions are still tight,” the report says. “And with interest rates falling back, we doubt existing inventory levels will see much of an improvement over the next couple of years.”
Mortgage rates have steadily declined with the 30-year fixed-rate bottoming out to 3.82 percent, its lowest level since September 2017, according to the latest figures from Freddie Mac.
Digital Risk co-founder Jeff Taylor told FOX Business’ Neil Cavuto that now is the time for new home buyers to take advantage of the bigger inventory on the market.
“If you’re looking to get into the housing market, i.e., you don’t have a house right now, this is literally the perfect time,” he during an interview on Monday. “Interest rates are about a one percentage point less than it was this time last year … that’s a 10 percent savings on a 30-year mortgage a month.”B
The Federal Reservemight cut the federal funds rate twice this year, a move that could cause the 30-year fixed rate to fall even lower.
“If you get two rate cuts at 50 and if you get to 75, yeah, I think you can be back down to three and a quarter [percent], Taylor said.C
Taylor adds that the lower interest rates allow consumers to reach a little deeper into their pockets and “afford more of a house.”
“People are feeling better about their jobs right now and they’ve been saving. It’s a great time to finally to get into the housing market and make a purchase,” he said.
Housing starts in the US rose 5.7 percent from a month earlier to a seasonally adjusted annual rate of 1,235 thousand units in April 2019, more than an expected 1,205 thousand and following a revised 1.7 percent advance in March.
Single-family homebuilding, which accounts for the largest share of the housing market, rose 6.2 percent to a rate of 854 thousand units in April and starts for the volatile multi-family housing segment advanced 4.7 percent to a rate of 381 thousand units. Increases in housing starts were recorded in the Northeast (84.6 percent to 144 thousand) and Midwest (42 percent to 186 thousand), while declines were seen in the South (-5.7 percent to 581 thousand) and West (-5.5 percent to 324 thousand). Starts for March were revised to 1,168 thousand from 1,139 thousand.
Building permits were up 0.6 percent to a rate of 1,296 thousand units in April, while markets had expected a 0.5 percent gain. Permits for the volatile multi-family housing segment increased 8.9 percent to 514 thousand, while single-family authorizations fell 4.2 percent to 782 thousand. Across regions, permits were higher in the West (5.3 percent to 339 thousand) and Midwest (2.2 percent to 188 thousand), but dropped in the Northeast (-4 percent to 120 thousand) and South (-1.2 percent to 649 thousand).
Year-on-year, housing starts dropped 2.5 percent and building permits decreased 5 percent.
Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing that mortgage rates dropped with the beginning of spring homebuying season.Sam Khater, Freddie Mac’s chief economist, says, “Mortgage rates have dipped quite dramatically since the start of the year and house prices continue to moderate, which should help on the homebuyer affordability front. The combination of improving affordability and more inventory than the last few spring selling seasons should lead to improved home sales demand.”
News Facts30-year fixed-rate mortgage (FRM) averaged 4.28 percent with an average 0.4 point for the week ending March 21, 2019, down from last week when it averaged 4.31 percent. A year ago at this time, the 30-year FRM averaged 4.45 percent. 15-year FRM this week averaged 3.71 percent with an average 0.4 point, down from last week when it averaged 3.76 percent. A year ago at this time, the 15-year FRM averaged 3.91 percent. 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.84 percent with an average 0.3 point, unchanged from last week. A year ago at this time, the 5-year ARM averaged 3.68 percent.Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.
VIEWS41KSHARE221Designed to amplify nature, these cozy, modern cabins invite you to embrace the simple life.
Winter is the perfect time to rally family and friends for a cabin getaway, featuring days in the unspoiled snow and nights spent nursing hot (spiked) cider around the fireplace. If you’re dreaming about your own rustic retreat in the wilderness, look no further for inspiration than these 20 modern winter cabins below that demonstrate a deep respect for their snowy, wooded surrounds.
Described by Seattle–based Olson Kundig Architects as “a steel box on stilts,” this three-story cabin in upstate Washington is fitted with four 10′ x 18′ steel shutters that are rolled over the glass windows, so it can be sealed off from the elements when not in use. In fact, the client requested that Delta Shelter be virtually indestructible: the steel exterior makes it fire-resistant, while its steel-beam legs protect it from flooding.
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Architect Håkon Matre Aasarød, partner at Oslo–based studio Vardehaugen Architects, led the design of Cabin Vindheim—an off-grid cabin deep in the alpine landscape near Lillehammer, Norway, whose spaceship-like appearance gives it an otherworldly presence.
This sleek cabin by Reiulf Ramstad Arkitekter adapts to the slope of the terrain, and divides into two branches of living areas. The same timber cladding of the exterior extends onto the roof, creating a unified expression.
The minimalist cabins of this Norwegian hotel offer elegant shelter, while striking a remarkable communion with the sublime, natural environment. Billed a “landscape hotel,” the lodge features nine separate rooms that offer distinct views of the topography.
International firm Snøhetta created this new addition to Sweden’s Treehotel that’s perfect for stargazing. Barring a fear of heights, you can choose to lay your sleeping bag on the double-layered net that connects the cabin’s two bedrooms and enjoy a night under the stars.
Sam Khater, Freddie Mac’s chief economist, says, “The combination of cooling inflation and slower global economic growth led mortgage rates to drift down to the lowest levels in a year. While housing activity has clearly softened over the last nine months and the lingering effects of higher rates from last year are still being felt, lower mortgage rates and a strong job market should rekindle demand for the spring homebuying season.”
30-year fixed-rate mortgage (FRM) averaged 4.37 percent with an average 0.4 point for the week ending February 14, 2019, down from last week when it averaged 4.41 percent. A year ago at this time, the 30-year FRM averaged 4.38 percent.
15-year FRM this week averaged 3.81 percent with an average 0.4 point, down from last week when it averaged 3.84 percent. A year ago at this time, the 15-year FRM averaged 3.84 percent.
Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.
California home sales close year on downward trend as home prices post mild gains, C.A.R. reports
– Existing, single-family home sales totaled 372,260 in December on a seasonally adjusted annualized rate, down 2.4 percent from November and down 11.6 percent from December 2017.
– December’s statewide median home price was $557,600, down 0.5 percent from November and up 1.5 percent from December 2017.
– Statewide active listings rose for the ninth straight month, increasing 30.6 percent from the previous year.
– The statewide Unsold Inventory Index was 3.5 months in December, down from 3.7 months in November.
– For the year as a whole, sales were down 5.2 percent from 2017.
LOS ANGELES (Jan. 17) – California home sales declined for the eighth straight month in December, and a stagnating market for much of the year pushed sales lower in 2018 for the first time in four years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 372,260 units in December, according to information collected by C.A.R. from more than 90 local REALTOR®associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
December’s sales figure was down 2.4 percent from the revised 381,400 level in November and down 11.6 percent from home sales in December 2017 of 420,960. December marked the fifth month in a row that sales were below 400,000 and the lowest level of sales sold since January 2015.
“The housing market continued to shift in December and drift downward as sales have fallen double digits for the past three out of four months,” said C.A.R. President Jared Martin. “This trend is expected to continue, as buyers remain cautious about the murky housing market outlook due primarily to the volatility in the financial markets and uncertainty in the economic and political arenas.
“Additionally, housing markets in and around the wildfire areas have been exhibiting unusual patterns that could remain unsettled for the next few months. The impact, however, is confined mostly within the region and should not have a noticeable effect in the housing market at the state level.”
The statewide median home price declined to $557,600 in December. The December statewide median price was up 0.5 percent from $554,760 in November and up 1.5 percent from a revised $549,550 in December 2017. The statewide median home price for the year as a whole was $570,010, up 6.0 percent from $537,860 in 2017.
“California’s housing market in 2018 was hindered by endlessly rising home prices and interest rate hikes, which combined to erode housing affordability and hamper home sales,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “As a result, while the statewide median home price surpassed its previous peak and set a new record in 2018, annual home sales fell for the first time in four years to a preliminary 402,750 closed escrows in California, down from 2017’s pace of 424,890.
“In the coming months, we expect a brief hiccup in sales as the government shutdown temporarily delays closings due to interruptions in IRS income verification or the processing of HUD, VA and USDA loans,” said Appleton-Young.
Other key points from C.A.R.’s December 2018 resale housing report include:
On a regionwide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, Central Valley and Southern California regions, with the Central Coast dropping the most at 24.9 percent.
Thirty-nine of the 51 counties reported by C.A.R. posted a sales decline in December with an average year-over-year sales decline of 20 percent. Thirty-four counties recorded double-digit sales drops on an annual basis, and 10 counties experienced an increase in sales from a year ago.
Sales for the San Francisco Bay Area as a whole fell 17.5 percent from a year ago. Eight of nine Bay Area counties recorded annual sales declines of more than 10 percent. Only San Francisco County posted a year-over-year increase, gaining 11.3 percent from December 2017.
The Los Angeles Metro region posted a year-over-year sales drop of 17.8 percent, as home sales fell 16.3 percent in Los Angeles County and 18.3 percent in Orange County.
Home sales in the Inland Empire declined 19.8 percent from a year ago as Riverside and San Bernardino counties posted annual sales declines of 17.7 percent and 23.1 percent, respectively.
The median home price continued to increase in all regions, except in the San Francisco Bay Area. On a year-over-year basis, the Bay Area median price dipped 3.6 percent from December 2017. Home prices in Marin, San Francisco, San Mateo and Santa Clara counties continued to remain above $1 million, but both San Mateo County and Santa Clara counties recorded a year-over-year price decline.
Statewide active listings rose for the ninth consecutive month after nearly three straight years of declines, increasing 30.6 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 65 percent, followed by Southern California (34 percent), Central Valley (24 percent) and the Central Coast (12 percent).
The Unsold Inventory Index, which is a ratio of inventory over sales, increased year-to-year from 2.5 months in December 2017 to 3.5 months in December 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
The median number of days it took to sell a California single-family home rose from 25 days in December 2017 to 32 days in December 2018.
C.A.R.’s statewide sales price-to-list-price ratio* decreased from 98.7 percent in December 2017 to 97.4 percent in December 2018.
The average statewide price per square foot** for an existing, single-family home statewide edged up from $268 in December 2018 to $266 in December 2017.
The 30-year, fixed-mortgage interest rate averaged 4.64 percent in December, up from 3.95 percent in December 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in December to an average of 4.02 percent from 3.39 from December 2017.
Note: The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state and represent statistics of existing single-family detached homes only. County sales data are not adjusted to account for seasonal factors that can influence home sales. Movements in sales prices should not be interpreted as changes in the cost of a standard home. The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold. The change in median prices should not be construed as actual price changes in specific homes.
*Sales-to-list-price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage. A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.
**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property. It is calculated as the sale price of the home divided by the number of finished square feet. C.A.R. currently tracks price-per-square foot statistics for 50 counties.
Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
# # #
December 2018 County Sales and Price Activity (Regional and condo sales data not seasonally adjusted)
Median Sold Price of Existing Single-Family Homes
Price MTM% Chg
Price YTY% Chg
Sales MTM% Chg
Sales YTY% Chg
Calif. Single-family home
Los Angeles Metro Area
San Francisco Bay Area
San Francisco Bay Area
San Luis Obispo
Other Calif. Counties
r = revised NA = not available
December 2018 County Unsold Inventory and Days on Market
(Regional and condo sales data not seasonally adjusted)
Many athletes have been doing it for a long time without even knowing it is now a fitness trend. It’s called plogging, a combination of jogging and picking up. And what is being picked up is trash. The Swedes are credited with starting the trend and now it’s spreading in the United States.
A sunny and breezy day is perfect for plogging. Jeff Horowitz, a personal trainer at Vida Gym in Washington, is plogging with a couple of his friends. To him, nothing is new about this routine.
“This is just my personal ethics, where I would go for a run and if I happen to see a piece of garbage laying around and it’s within my reach,” he says. “It was a kind of a little test for me to see if I can grab it and throw it in a near trash can without stopping. That way I thought it gave me a little bit of exercise, a little focus for my run and helped clean up the neighborhood.”
Now, he knows he’s one of a growing number of people worldwide who are plogging. He often organizes plogging events.
Rules of Plogging
Getting ready to plog is similar to getting ready to jog. You have to warm up by doing weight squats, some calisthenics, some balance exercises. Then, grab a trash bag and you’re ready to go, but not before wearing a pair of gloves.
“Gloves are important,” Horowitz says. “You want to make sure this is going to be healthy for you. Even if you’ve good intentions, you never know what you’ll find. It might be broken glass, medical waste.”
Like any other fitness routine, plogging has rules. The first of these rules one shouldn’t suddenly bend over in front of someone else, which seems like common sense.
“You can’t do that.” Horowitz explains. “It becomes like a three stooges’ event and you’ll end up falling over.” So, when plogging with a group a runner usually calls it out, stops and bends, so other members of the group become aware of his move.
Ploggers also need to cover all different territory.
“People kind of naturally follow that rule,” Horowitz says. “So, if I’m a little bit more to the curb side, I’ll look toward the gutter and someone else a little bit closer to the hedges they’re going to pick up there. So, you get a rhythm going between people without sometimes agreeing to it.”
Running with Purpose
Sports event organizer Dana Allen finds plogging interesting. Like other runners who consider themselves environment custodians, she likes it when streets are trash-free and clean. That’s why she plogs, but admits she doesn’t do it all the time.
“When I’m running seriously, in training for a marathon, I probably wouldn’t be as inclined to stop regularly because I’m focusing on a certain goal,” she says. “But then there are other days, where I’m out and into sort of a more relaxed running that would be a situation where I might do it.”
On other occasions, a group of runners gets together early on a weekend morning, and goes plogging.
“We go for run, pick up some garbage, then we go for brunch. We kind of make a little bit of event of it.”
Plogger Azell Washington says participating in such events makes him feel better. “It would clear a lot of space for me. And I’m rewarded myself.”
Washington DC: Clean and Fit
Encouraging more people to plog helps raise awareness about Washington’s litter problem, says Julie Lawson, who works with the mayor’s Clean City Office.
“When the street looks bad and it’s dirty, you’re going to feel bad about the neighborhood, about the community. You may even feel less safe because of that,” she says. “So if we’re all doing our part and picking it up, it’s very easy to help beautify it, help build those social connection, you get to know your neighbors, you get to feel some social responsibility and community feel, when you do this.”
Plogging also helps advance a city-wide fitness initiative.
“FitDC is Mayor Muriel Bowser’s initiative to get DC back to number one in the country as the fittest city in the nation,” Lawson adds. “And as part of that our Department of Parks and Recreation put up a couple of plogging events combining fitness activities with beautifying the city. We look to continue to support that.”
Plogger Allen hopes one day there won’t be a need for plogging.
“I would just hope people around would think twice before dropping a garbage on the ground,” she says. “We have receptacles, seems like on every block. So, it’s easy to put your garbage in the trash can. So, I just think people should think about it a little bit more and be cognizant of keeping the city as beautiful as possible.”
Super-low inventory and quickly rising prices largely framed this year’s housing market. But a closer look at 2018’s buyers and sellers reveals other intriguing real estate trends, captured by a new report from the National Association of Realtors.
Here are five big takeaways:
Marriage not needed:
The share of married couple buyers hit the lowest point since 2010 at 63 percent. Single females made up the second-largest buyer group at 18 percent, following by single males at 9 percent and unmarried couples at 8 percent.
The decline in married couples reveals that marriage is no longer a prerequisite to buying a home. “You don’t need a ring,” says Jessica Lautz, director of demographics and behavioral insight for the NAR.
Tough for first-timers:
Low inventory for entry-level homes and rapid price increases continue to befuddle first-time homebuyers. This year, the share of first-time buyers fell to 33 percent, down from 34 percent last year and well below the historical norm of 40 percent.
“They didn’t bounce back,” Lautz says.
Almost a quarter of first-time homebuyers (23 percent) moved directly from their parents’ homes before purchasing a house, a new high. Lautz notes that may be how some first-timers can compete in today’s market. “They’re not stuck in a lease and its time frame,” she says. “They can save for a down payment because they’re not paying rent.”
First-time homebuyers contributed a median 7 percent of the sales price to their home purchase, up from 5 percent last year and the highest level since 1997. Overall, buyers put down 13 percent, up from 10 percent in 2017 and the highest since 2005.
Older repeat buyers:
Repeat buyers are getting older. The median age was 55 years, up from 54 last year and an all-time high for the survey.
Lautz says that these younger Boomers are healthier than their counterparts in the past, so they don’t need to move to an assisted-living facility or downsize, which has become less and less common. “Many are purchasing multi-generational homes and taking care of parents, or their children are moving back home,” Lautz says.
Many homeowners who bought their homes eight to 10 years ago at the peak of the previous housing bubble also stalled their home sale as they waited to regain equity. That’s another reason repeat buyers could be older.
Student loan woes:
College debt remains a significant challenge for potential homebuyers. Almost a quarter of all buyers reported having a median of $28,000 in student loan debt, while two in five first-time buyers said they had a median of $30,000 in education debt.
Of the 13 percent of buyers who said saving for a down payment was the hardest part of buying a home, half said their student loan debt had hampered their ability to save for a home purchase or down payment.
“Even with a thriving economy and an abundance of job opportunities in many markets, monthly student loan payments coupled with sky-high rents and rising home prices make it exceedingly difficult for potential buyers to put aside savings for a down payment,” NAR’s chief economist, Lawrence Yun, said in a statement.
The share of homebuyers with children under 18 reached the lowest point in the survey’s 37-year history at 34 percent, mirroring recent low birthrates in the country, says Lautz. “This changes the neighborhoods buyers are looking at. Schools are a reduced preference. Some buyers may be willing to move to up-and-coming neighborhoods more than before.
Additionally, buyers without children may be content with houses with less than three bedrooms, no recreation room or even a townhouse or condo if they don’t see children in their future. Many buyers also are interested in how their homes work for their pets. Fifteen percent of buyers this year said it was important that their home is close to green spaces or a veterinarian for their pets. This is the first time the NAR posed this survey questions.
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.
THE BUBBLE INDEX
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:
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).
A COMING CORRECTION?
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:
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.
CHARTING SPECIFIC MARKETS
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:
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:
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.
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.