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Lumber prices have doubled | Chappaqua Real Estate

North American softwood lumber prices correct down while benchmark WSPF 2x4s continue to stay level

Photo: smereka, Depositphotos

The Canadian Thanksgiving long weekend brought a not-surprising further drop in prices of most benchmark construction framing dimension softwood lumber commodities, as the days got increasingly shorter and the weather turned ever more winter-like. Demand across North America was almost entirely for small fill-in orders, while sawmills were preoccupied with locating shipments long-ago sent to customers but still not arrived, according to Madison’s Lumber Reporter.

The big question on the mind of industry players is, “Where is the price bottom and when will that arrive?” No one yet knows the answer for this, except to say it will be much higher and much later than in usual years. The latest lumber production and sawmill capacity utilization rates data release from the Western Wood Products Association — for July — shows a marked downturn in Canada. In the US, softwood lumber production continued to recover. The all-important wood manufacturing volumes in Canada took a significant tumble downward in July 2020, after recovering nicely in May and June from terrible lows of April. This decrease in lumber available for sale after the supply constraints earlier in the year well explains why prices remained so high even until now.

Prices continued to crash down in the Eastern S-P-F market last week. A large contingent of buyers participated, but the focus was on Less-Than-Truckload orders from the distribution network at wildly varying – but resoundingly lower – numbers. Overall sales volumes were strong but individual orders remained small as customers refused to take long positions in a falling market. Prompt wood became more common with each passing day as sawmills began to run into order files on a number of items, while production of bread and butter items were booked at around two weeks.

For the week ending October 9, 2020 the price of Eastern softwood lumber commodity item Eastern S-P-F KD 2×4 #2&Btr dropped once more, to land at US$920 mfbm, said Madison’s Lumber Reporter. This price is now -$85, or -8%, less than it was one month ago. Compared to one year ago, this price is up a remarkable +$465, or +102%.

Compared to one-year-ago, last week’s Eastern S-P-F KD 2×4 #2&Btr price was +$343, or +59%, higher than the 1-year rolling average price of US$577 mfbm and was up +$416, or +83%, compared to the 2-year rolling average price of US$504 mfbm.

The below table is a comparison of recent highs, in June 2018, and current October 2020 benchmark dimension Softwood Lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of September 2015:

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Chappaqua Residents Flouting Pandemic Rules | Chappaqua Real Estate

NEW CASTLE, NY — After Westchester County officials begged hundreds of New Castle residents exposed to the new coronavirus over Horace Greeley High School’s graduation weekend to self-quarantine and answer contact tracers’ calls, town officials issued a statement — and they didn’t mince words.

“It has come to our attention that despite the continued outreach and education by and from the Town of New Castle, Westchester County and New York State, there are some people who continue to ignore social distancing guidelines and willfully disregard the protocols intended to protect the public health,” they said in a special edition of their e-newsletter.

“Lest it be lost on anyone, your 16-year-old child does not dictate to you that he or she is going to hang out with friends. When your son or daughter is home from college living under your roof, it is your roost to rule. If you just returned from states such as North Carolina, South Carolina, Florida, Arizona or Texas, do not have the arrogance to believe you do not need to self-quarantine for 14 days.”

The outbreak is connected to two local families who returned from trips to Florida bringing the virus. Infected family members attended the ceremony and parties over June 20-21 that drew not only the school’s more than 300 graduates but also family members, other Greeley students and staff, as well as teenagers from nearby communities.

Disregarding pandemic protocols is apparently a pattern in this coronavirus cluster. A photo from the graduation ceremony widely shared on social media shows many students and guests mingling without masks during the ceremony, which was planned as a “drive-in” event at the Chappaqua train station’s south lot.Subscribe

Then during a visit Monday to New Castle, County Executive George Latimer and Health Commissioner Sherlita Amler held a news conference and repeatedly reminded residents that everyone who attended the ceremony or parties must properly quarantine themselves. They also repeatedly implored residents to answer phone calls from contact tracers trying to find and warn everyone who was exposed.

New Castle officials sent out their email later that night.

“We will not tolerate these selfish actions,” they said. “Know that you are potentially and gravely hurting this community and those you presumably love if you do not. Yes, you can have gatherings consistent with the Executive Orders, but whether you are 18 or 81, be neither complicit nor the problem itself. Do not throw parties and forget the social distancing and mask wearing that has kept us safe. Ignorance is not bliss. In fact, getting sick from or passing on COVID-19 is anything but that.

“Show respect to your neighbors, friends, family members and strangers – such as those who were self-quarantined despite adhering to the law and best practices.”

Town officials said the board and Police Department are fully involved in the efforts led by the New York State Department of Health.

“It is our hope that we need not pursue the type of recourse that those who are summoned or charged will undoubtedly regret,” they said. “Whether you are a New Castle resident, a visitor from a neighboring community, or a student in the Chappaqua Central School District, should you flout the very rules that are intended to keep us all safe, the consequences may be quite severe. Know that we have reached out to and spoken with the Governor’s Office and the Westchester County District Attorney’s Office for guidance on how to best enforce social distancing orders whether through civil sanctions and fines or criminal prosecutions.”

New Castle police have reorganized to assign several officers to pandemic protocol enforcement.

If we see a social distancing violation or an actionable one is reported to us, we will investigate and address it,” said Chief James Carroll.

You can be charged with:

  • Violation of Health Law (PBH § 12-B) – criminal misdemeanor; up to $10,000 for a first-time violation and/or up to one-year imprisonment.
  • Violation of Health Law (PBH § 12) – civil violation; up to $2,000 for a first-time violation and $5,000 for repeat violations.
  • 10 NYCRR 66-3.2 Section 66-3.2. – civil violation; maximum fine of $1,000 for each violation.
  • Disorderly Conduct, Penal Law § 240.20 (6) – criminal violation; up to a $250 fine and fifteen days in jail.

Police ask residents who observe a social distancing violation or any other violation of the Governor’s Executive Orders to call (914) 238-4422.

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https://patch.com/new-york/chappaqua/residents-flouting-pandemic-rules-are-arrogant-selfish

How the U.S. residential real estate market could take a major hit from the trade war | Chappaqua Real Estate

Chinese investors have been the biggest purchasers of U.S. residential real estate for six consecutive years, but President Trump’s trade war, and China’s efforts to reduce its national debt and boost economic growth, could change that.

And if the impasse continues, the effects could be even more far-reaching. “The Chinese government could place stricter capital controls about taking money out of China and buying in America,” said Lawrence Yun, chief economist at the National Association of Realtors. China’s government has already put pressure on Chinese nationals to reduce their commercial real-estate investments.Meanwhile, the U.S.-China trade dispute has sent the Chinese yuanUSDCNH, -0.0029%to new lows relative to the dollar. “It’s already making U.S. real estate more expensive” for Chinese buyers, said Michael Fratantoni, chief economist at the Mortgage Bankers Association.

The trade war also adds to U.S. economic uncertainty at a time when real-estate demand is weakening even in some of the country’s hottest housing markets.

China has become the largest foreign buyer of U.S. residential real estate

In 2014, China supplanted Canada as the source of the largest share of foreign buyers of U.S. residential real estate, according to data from the National Association of Realtors.

In 2018 dollars, Chinese buyers accounted for roughly 25% of total foreign investment in U.S. residential real estate. Canada was No. 2 at 9%.

Of the 284,000 properties sold to foreign buyers last year, some 40,400, or 15%, were bought by Chinese nationals. Five years earlier, Chinese nationals had purchased 23,075 homes, representing just 12% of all properties sold to foreign buyers.

Even China’s growing share in recent years represents a small percentage of overall investment in U.S. residential real estate. As of 2018, foreign buyers in aggregate accounted for just 3% of U.S. home sales, the association added. That figure had been rising, but experienced a modest decline between 2017 and 2018. The figures for 2019 are expected to be similar to the 2018 levels.Long before the current trade dispute, the Chinese government had been creating hurdles for its citizens who wanted to invest abroad. The country started restricting outbound investments in 2016, allowing residents to take only the equivalent of $50,000 out of the country, as a means of propping up the country’s currency. This not only made it more difficult to purchase real estate in America but prompted some Chinese investors to sell their U.S. assets.

A Chinese pullback could have serious effects for some West Coast markets

Unlike foreign buyers from other countries who spread their investments more evenly across the U.S., Chinese residential real-estate investment is highly concentrated on the Pacific Coast. Nearly 40% of Chinese buyers have purchased in California, home to a large Asian community.

But California isn’t the only place where a fall in Chinese buyers would make a difference. Chinese nationals represent a significant share of the foreign buyers of residential real estate in the New York City metropolitan area and growing shares of buyers in states including Florida and Texas.

Chinese buyers also play a big role in the residential-real-estate markets of college towns, as more Chinese students have opted to study at American universities, Yun said.

However, a retreat by Chinese buyers could be good news for Americans looking to purchase a home, especially in such costly Golden State markets as San Francisco, Los Angeles and San Diego. These are among the most expensive in the entire country, and their popularity had contributed to double-digit home-price appreciation in recent years.

The rate at which home prices are climbing has recently slowed as buyers have struggled with affordability. The lack of competition from foreign buyers, who typically enter competitive all-cash offers, could provide an opportunity to get a better deal on a home for locals looking to buy.

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Builder confidence drops in December | Chappaqua Real Estate

Builder confidence in the market for newly-built single-family homes fell four points to 56 in December on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) as concerns over housing affordability persist. Although this is the lowest HMI reading since May 2015, builder sentiment remains in positive territory.

Builders report that consumer demand exists, but customers are hesitating to make a purchase because of rising home costs. However, recent declines in mortgage interest rates should help move the market forward in early 2019.  Builder confidence dropped significantly in areas of the country with high home prices, which shows how the growing housing affordability crisis is hurting the market. This housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points.

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All the HMI indices posted declines. The index measuring current sales conditions fell six points to 61, the component gauging expectations in the next six months dropped four points to 61, and the metric charting buyer traffic edged down two points to 43.

Looking at the three-month moving averages for regional HMI scores, the Midwest dropped two points to 55; the West and South both fell three points to 68 and 65, respectively; and the Northeast registered an eight-point drop to 50.

 

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Builder Confidence Drops Four Points Amid Concerns Over Housing Affordability

NYC housing survey | Chappaqua Real Estate

Ask New Yorkers and they’ll tell you that our city is expensive. Housing costs are high. And sometimes it feels like everything is going up but your paycheck.

With that in mind, StreetEasy.com surveyed 1,000 New Yorkers across all five boroughs to get an idea of what people were thinking in terms of their real estate priorities, plans, and preferences.

StreetEasy senior economist Grant Long says half of New Yorkers find the city to be unaffordable, but only 1 in 6 say their own home is unaffordable.

Budget is the No. 1 real estate concern for New Yorkers, followed by space. But they couldn’t care less about modern amenities. The survey found that, at the end of the day, doormen and in-building gyms had no impact on people’s home-buying decisions, Grant says. They’re not concerned about those perks at all.

According to the survey, New York City millennials might finally be ready to settle down: 1 in 3 millennials is considering buying a home in the next 12 months.

Grant says they’re either settling down or starting a family for the first time. A lot of them are building up the savings required to afford a home so it makes sense, he says, that they’re now looking to capitalize on the home-buying trend.

But with home prices so high in the city, renting might not be such a bad idea. Grant says the average home price in Manhattan right now is about $1 million.

With rent growth slowing down and a lot of new rental construction, you can find a lot of deals right now. So that remains a really attractive option for New Yorkers.

 

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http://www.fox5ny.com/news/nyc-housing-priorities-survey

Tax reform ideas | Chappaqua Real Estate

Details leaking out about the Republican tax reform plan hint that while two popular deductions would remain intact, they’d become useless to the majority of taxpayers who now take advantage of them.

GOP lawmakers have signaled they’ll retain the tax breaks for mortgage interest and charitable contributions even as they pursue eliminating others.

Yet given that President Donald Trump today said the plan is to nearly double the standard deduction, “many current itemizers would choose that instead, so a lot less people would use those deductions,” said Joseph Rosenberg, a senior research associate at the Urban-Brookings Tax Policy Center.

Currently, taxpayers choose between the standard deduction or itemized deductions and use whichever amount is greater to reduce their tax bill. For 2017, the standard deduction is $6,350 for individual taxpayers, $9,350 for heads of households and $12,700 for joint filers.

Construction on a new home.

Peter Cade | Getty Images
Construction on a new home.

In other words, if those amounts nearly double as discussed by both Trump and congressional Republicans, a married couple would need deductions to exceed $24,000 to make itemizing worthwhile.

The Tax Policy Center estimates that of the 45 million tax filers who itemize, 38 million, or 84 percent, would opt for the $24,000 standard deduction because it would exceed the combined value of other deductions available to them.

Trump is expected to deliver a speech Wednesday in Indianapolis that will offer more specifics about what plan will emerge in Congress, although it’s unclear how detailed the reveal will be.

Who uses the mortgage interest deduction, by income

Income range*
# of filings
Total amount
0 to $50,0002.32 million$1.11 billion
$50,000 to $100,0009.77 million$9.19 billion
$100,000 to $200,00014.6 million$24.85 billion
$200,000 & up7.18 million$29.78 billion
Totals:33.87 million$64.93 billion
Source: 2016 data from Joint Committee on Taxation report. *Income ranges include AGI plus variety of untaxed items (i.e., employer contributions to health care plan, nontaxable social security benefits, etc.)

The deductions for mortgage interest and charitable contributions have been a political third rail in the past, due largely to the idea that they spur home ownership and charitable giving. Yet of all taxpayers, only about 20 percent take advantage of each deduction for mortgage interest and charitable contributions, according to the tax policy center.

Of the roughly one-third of taxpayers who do itemize, roughly three-quarters use each of the deductions. The biggest benefits tend to go to higher-income taxpayers.

For instance, the 7.18 million filers with incomes of $200,000 or more will reduce their taxable income by $29.78 billion this year from using the mortgage interest deduction, according to tax expenditure estimates from the congressional Joint Committee on Taxation.

Charitable giving deduction use by income

Income range
# of filings
Total amount
0 to $50,0002.38 million$526 million
$50,000 to $100,00010 million$4.37 billion
$100,000 to $200,00015.2 million$11.93 billion
$200,000 $ up8.2 million$40.73 billion
Totals:35.8 million$57.55 billion
Source: 2016 data from Joint Committee on Taxation report. *Income ranges include AGI plus variety of untaxed items (i.e., employer contributions to health care plan, nontaxable social security benefits, etc.)

In comparison, the 14.6 million filers with incomes of $100,000 to $200,000 will save less: $24.85 billion. Filers with incomes below that have even smaller tax savings.

Likewise, the 8.2 million filers with incomes above $200,000 will save a collective $40.7 billion this year by using the charitable deduction. The 15.2 million filers with incomes of $100,000 to $200,000 will reduce their tax bill by $11.9 billion.

Nonprofit groups and the home building industry are concerned about what reduced utilization of those deductions would mean for home ownership and charitable giving.

“It marginalizes the mortgage interest deduction,” said J.P. Delmore, assistant vice president of government affairs for the National Association of Home Builders. “We’d see the effect where a small number of homeowners would benefit, and that’s not the direction anyone is looking to go with tax reform.”

Cost of select tax deductions

Deduction
Cost 2016-2020
Mortgage interest$357 billion
State and local taxes$368.8 billion
Charitable contributions*$230.5 billion
Property taxes$180 billion
Medical & long-term care expenses$56.6 billion
Student loan interest$11.9 billion
Teacher classroom expenses$1.2 billion
Source: Joint Committee on Taxation Jan, 30, 2017 report *Excludes education- and health-related donations

The National Association of Realtors also has expressed concern that home prices would suffer if the mortgage interest deduction were to become useless to most homeowners.

The group released a study in May showing that if elements similar to GOP’s 2016 plan went into effect, home values would fall by more than 10.2 percent on average in the near term.

The study also found that homeowners with income of $50,000 to $200,000 would face an average tax increase of $815 while non-homeowners in that range would get an average tax cut of $516.

“This is an emerging issue [lawmakers] don’t intend to create,” Delmore said. “But we hope there’s an opportunity to find a solution so that homeowners have a meaningful tax incentive that doesn’t involve being marginalized and benefiting only the wealthy.”

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https://www.cnbc.com/2017/09/26/gop-tax-plan-could-trash-the-value-of-two-popular-tax-breaks.html

Age of Housing Stock by State | Chappaqua Real Estate

According to the latest data from the 2015 American Community Survey (ACS), the median age of owner-occupied homes is 37 years. The age of housing stock is not evenly distributed across the United States. Among the states, New York has the oldest homes with a median age of 57 years old, followed by Massachusetts at 53 years. The median age of homes in the District of Columbia, which is entirely urban, is 75 years. The newest homes are in the West. The median age of homes in Nevada is only 20 years, followed by Arizona where half of all owner-occupied homes were built in the last 24 years ago.

The geographic distribution of the age of the owner-occupied housing stock is strongly correlated with population changes from 2000 to 2015. The population changes, including both natural growth and net migration, signal the rising demand for housing. States with faster population growth tend to have newer housing stock.

The age of the housing stock is an important remodeling market indicator. Older houses are less energy-efficient than new construction and ultimately will require remodeling and renovation in the future.

 

 

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http://eyeonhousing.org/2017/01/age-of-housing-stock-by-state/

US Homebuilder Sentiment Slips in July | Chappaqua Real Estate

 

U.S. home builders are feeling slightly less optimistic about their sales prospects this month, though their outlook for the new-home market remains positive overall.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday fell one point to 59.

Readings above 50 indicate more builders view sales conditions as good, rather than poor. The index had mostly held at 58 this year before rising to 60 last month.

Builders’ view of current sales and traffic by prospective buyers slipped one point this month. Their outlook for sales over the next six months slid three points.

The latest survey of builders follows a recent pullback in sales of new U.S. homes.

Sales declined 6 percent in May to a seasonally adjusted annual rate of 551,000 homes. Overall, though, sales are running ahead of last year’s pace through the first five months of this year, aided by job growth and ultra-low mortgage rates.

The average 30-year fixed-rate mortgage ticked up 3.42 percent last week, staying close to its all-time low of 3.31 percent in November 2012. A year ago, the average rate was 4.09 percent.

While new-home sales have rebounded from the depths of the housing bust, the current rate of new home sales lags behind the historical annual average of roughly 650,000 homes. New home sales figures for June are due out next week.

Many builders also continue to grapple with a stubborn dearth of skilled workers and available land parcels cleared for new construction.

Still, the NAHB expects that new-home sales will continue to grow, albeit slowly.

“Job creation is solid, mortgage rates are at historic lows and household formations are rising,” said Robert Dietz, the NAHB’s chief economist. “These factors should help to bring more buyers into the market as the year progresses.”

This month’s builder index was based on 304 respondents.

A measure of current sales conditions for single-family homes slipped one point to 63, while a gauge of traffic by prospective buyers fell one point to 45. Builders’ view of sales over the next six months slid three points to 66.

 

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http://abcnews.go.com/Business/wireStory/us-homebuilder-sentiment-slips-july-40664158

Mortgage rates at 3.71% | Chappaqua Real Estate

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates mixed and largely unchanged from the previous week.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.71 percent with an average 0.5 point for the week ending March 31, 2016, unchanged from last week. A year ago at this time, the 30-year FRM averaged 3.70 percent.
  • 15-year FRM this week averaged 2.98 percent with an average 0.4 point, up from last week when it averaged 2.96 percent. A year ago at this time, the 15-year FRM averaged 2.98 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 theDefinitions. Borrowers may still pay closing costs which are not included in the survey.

Quote
Attributed to Sean Becketti, chief economist, Freddie Mac.

“Dovish comments by Federal Reserve Chair Janet Yellen on Tuesday triggered a rally in Treasury markets and drove the 10-year yield down 13 basis points from last week’s high. Yellen’s comments came too late to affect this week’s mortgage rate survey, and the 30-year mortgage rate remained unchanged at 3.71 percent. However, if the Fed’s cautious tone persists, mortgage rates may register the impact in subsequent weeks.”

 

 

 

 

U.S. housing starts surge | Chappaqua Real Estate

U.S. housing starts in November rebounded from a seven-month low and permits surged to a five-month high, signs of strength in the housing market that could give the Federal Reserve more confidence to raise interest rates on Wednesday.

Groundbreaking jumped 10.5 percent to a seasonally adjusted annual pace of 1.17 million units, the Commerce Department said on Wednesday. October’s starts were largely unchanged at a 1.06 million-unit rate.

The strong report came as Fed officials were due to resume a two-day monetary policy meeting. The U.S. central bank is expected to raise its benchmark overnight interest rate from near zero at the end of the meeting. The first rate hike in nearly a decade is not expected to derail the housing recovery.

November marked the eighth straight month that starts remained above 1 million units, the longest stretch since 2007. Economists expect housing starts to average around 1.1 million units for 2015, which would be the highest since 2007 and up from 1.0 million units in 2014.

Robust household formation as labor market strength encourages young adults to leave their childhood homes is underpinning the housing market recovery.

But the sector remains constrained by a persistent shortage of houses available for sale. This has resulted in home prices rising faster than salaries, pushing more people towards renting.

Economists polled by Reuters had forecast housing starts rising to a 1.135 million-unit pace last month.

Single-family housing starts, the largest segment of the market, increased 7.6 percent to a 768,000-unit pace. That was the highest reading since January 2008. Groundbreaking on single-family projects rose 8.8 percent in the South, where most home building takes place.

 

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Reuters.com