Ugly But Honest News 1-29-2017
Talking about Freddie Mac serious delinquency rate, lenders having trouble getting appraisals, South Carolina's economy and real estate market and more!
Freddie’s Single Family Seriously Delinquent Rate Decreased from 1.32% in December 2015 to 1.00% in December 2016
Great news! Could this tremendous decrease mean that we will see fewer foreclosures from Freddie in 2017?
Highlights from the latest NAR Survey of Mortgage Originators:
Non-QM lending decreased
Lender are predicted to willingness to expand access to prime borrowers over the next 6 months
16.7% of respondents felt that rising rates will weaken demand for purchase mortgages
44.4% think strong employment and income growth will partially offset rising rates
I think the most interesting thing is how lenders are finding it harder to get an appraisal. Buyers and sellers both need to be aware there could be delays due to this.
The South Carolina Leading Index (SCLI) gained 0.01 points last month, ending with a value of 102.03. The indicators were mixed, but combined for a net positive outlook. An increase in the number of initial claims for unemployment insurance (up 49.5 percent) and a decrease in the number of housing permits (down 9.3 percent) were successfully offset by the rising value of housing permits (up 2.9 percent from last month) and a strong stock market (the Dow Jones Composite Average rose 2.7 percent). The Conference Board’s national Leading Economic Index rose 0.5 percent in December, marking four consecutive months of increases.
So it appears that South Carolina’s economy was better according to the S.C. Department of Commerce. But since my focus is real estate, let’s look at what they had to say:
2016 Real Estate Market in South Carolina Outperforms 2015
The median sales price for a single-family home in South Carolina reached $180,000 for 2016 as a whole, an improvement of 4.7 percent versus 2015. Closings were up 7.8 percent compared to 2015 as a whole, with almost 80,000 homes sold in 2016. Total annual foreclosure activity was down as well, having dropped 7.0 percent compared to 2015. Residential permits, despite being down 9.3 percent month-over-month, were issued in greater numbers than 2015 (+2.4 percent). Permit valuation rose 2.9 percent month-over-month, indicating a strong boost to the average value of permits. Construction employment fell by 1,300 jobs in December, but remained up by 2,500 jobs compared to the end of 2015.
Nice to see that the real estate market in South Carolina improved compared to the previous year. Remember this is talking about the entire state and not just the Anderson area.
In 2011, unemployment was at a near crisis level. The jobless rate was stuck around 9 percent nationally, an unusually high number due to the continuing effects of the financial crash.
Behind closed doors at the Federal Reserve however, the conversation struck a different tone.
The Federal Reserve’s mandate is to promote “maximum employment,” which essentially means: print enough money so that everyone who wants one has a job. Yet according to transcripts released this month after the traditional five-year waiting period, Federal Reserve officials in November 2011 were debating whether unemployment was caused by bad work ethics and drug use – rather than by the greatest financial crisis in 80 years. This debate then factored into the argument over setting monetary policy.
Part of the Fed’s mandate is to work for maximum employment. I am no fan of the Fed but the sad truth is some people DO lack a good work ethic.
Laughing about what I consider to be serious issues in America is not acceptable.
The latest update of the Chicago Booth/Kellogg School Financial Trust Index survey shows that anger at the current economic situation has been growing among low-income households since 2014, and that low-income white non-Hispanics are angrier than most other demographics.
Another sign that things need to change before we start seeing violent social unrest. The question is how to improve things for these unhappy low income households without harming other demographics?
For those families who have been saving up to be first time home buyers, some of their financial assets are probably held in equity markets. As the stock market rises, the value of equity holdings increase.
The Dow hitting 20,000 doesn’t really directly affect 54 percent of Americans, as according to a Bankrate.com study that percentage of Americans have no money in the stock market. That means no money in stocks, 401(k)s, IRAs or mutual funds.
However, the rocketing Dow can affect American consumers beyond equity markets in ways more difficult to quantify.
If this leads to more income and jobs being created, then it is great. But if the Dow skyrocketing only means the rich and Wall Street are benefiting, who cares?