In this week’s Real Estate News in Brief… we have population growth predictions, a big investment in Detroit by Ford, and a reality check on the “new retirement age.”
We begin with economic news from this past week.
The index of Leading Economic Indicators leapt higher in July, suggesting that the U.S. economy will continue surging ahead for the rest of the year. The Conference Board reported a .6% increase in July to 110.7. MarketWatch economists say, “Growth is so robust that the Federal Reserve might even raise interest rates more rapidly than Wall Street had been expecting in order to prevent inflation from rising and the economy from overheating.” 
Consumers have been reaping the benefit of the sizzling economy. The Federal Reserve Bank of New York says that household debt increased by $82 billion in the second quarter, and that total debt now tops $13.29 trillion. HousingWire says, that’s the highest it’s been in nine years, and mortgage debt accounts for most of the increase. But, the other half of that coin is how well consumers are handling that debt. According to MarketWatch, the debt “burden” is the lowest it’s been in 15.5 years. It dropped to 86% in the second quarter. At the peak of the credit bubble, it was 116%.
The slow pace of construction continued in July. The Commerce Department reported a mere 1% increase in housing starts. Permits rose 1.5% which shows more future construction, but those are also lower than they have been in recent months. Construction activity varies in different parts of the country, however. In the South and the Midwest, it was up 10 to 11%. In the Northeast it fell 4% and in the West it fell 11%.
Those feeble numbers are affecting home builders. The National Association of Home builders’ monthly confidence index dropped one point in August to 67. NAHB is still calling that a “solid” reading although it’s lower than the average for last year.
As for consumer sentiment, that dropped to an 11-month low in August. The University of Michigan report says it fell to 95.3, which is less than economists had predicted. Consumer complaints include rising prices for durable goods like furniture, cars, and appliances. The survey’s chief economist, Richard Curtin, says, “The data suggests that consumers have become much more sensitive to even relatively low inflation rates than in past decades.”
Long-term mortgage rates didn’t budget much over the past week. Freddie Mac reports that the 30-year fixed-rate mortgage slid to 4.53%, but says it is showing recent “stability” despite a rising core inflation rate.
In other news making headlines…
Live-at-Home Millennials Create Household Gap
Household formation is lagging in the U.S. The National Association of Home Builders did an analysis that shows we should have 2.5 million more households than we do right now. The association says it’s due to millennials who are living at home with mom and dad. That’s not necessarily by choice, but often because higher housing costs and personal debt keep them from striking out on their own.
The numbers show a dramatic increase in live-at-home millennials — from 15.3% in 2000 to 26.3% in 2016. But, the percentage varies from state to state, depending on housing costs. The five states with the highest number are Hawaii, New Jersey, California, Florida, and Alaska. Those with the lowest number are North Dakota, Iowa, South Dakota, Nebraska, and Kansas.
Population Growth Predictions
Population growth is great for rental markets, and a new report shows where to expect the most growth in the coming months. ATTOM Data Solutions released a report that shows Chicago, Washington, D.C., Orlando, Tampa, and Atlanta will get the largest share of new homeowners in the third quarter. ATTOM’s Daren Blomquist says, “A higher pre-mover index bodes well for local real estate agents, home improvement stores, moving companies, and others that benefit from the halo effect of a home sale.” 
Ford Spending Money on Detroit
Ford is making a big investment in the development of self-driving vehicles, that will also benefit the city of Detroit. The automaker plans to spent about $740 million to repurpose the long-abandoned Michigan Central train station as a center for autonomous driving.
The 18-story property was last used as a train station 30 years ago, and has sat empty and deteriorating since then. Bill Ford told the Chicago Tribune that it always bothered him to see stories about Detroit’s tough times, that were accompanied by photos of the derelict train station.
He’s hoping to turn that story around by restoring the train station, and creating a hub for driverless cars that’s also a gathering place for family and friends. Along with office space for thousands of workers, he wants to put restaurants, coffee shops, pubs, and stores into the old depot.
Ford says, “We couldn’t just do this as a philanthropic endeavor. It really will become a statement for us and a great recruiting tool for the kind of talent we’re going to need to win in the autonomous vehicle war. He hopes to have a self-driving vehicle on the market by 2021. 
Real Estate Ethics in Latin America
The National Association of Realtors is promoting the adoption of ethics rules among real estate professionals in Latin America. The association says a coalition of Central and South American nations signed an accord during a recent real estate conference in San Jose, Costa Rica.
The new Code of Ethics includes things like the encouragement of a nondiscriminatory environment in the real estate industry, a commitment by members to abide by the Code, and the creation of guidelines and training opportunities for real estate professionals. It also calls for the development of a tool to evaluate and certify ethical conduct in the industry.
New Retirement Age
Many young people may be overly optimistic about their retirement. New research from Charles Schwab shows that 16 to 25-year-olds think they will have a better financial future than their parents, and will be able to retire at age 60.
The report points out that age 60 is seven years earlier than full Social Security retirement age for that age bracket. And, with an average of $1,628 in savings and $8,000 in debt, experts at Schwab feel these young people are somewhat unrealistic. Celebrity financial expert Suze Orman believes that “70” is the new retirement age. She says, “…not a month or a year before.”
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