In this week’s Real Estate News in Brief… lower mortgage rates that begin with a 3, a new kind of trade war, and a new kind of partnership between house flippers and Uber drivers.
We begin with economic news from this past week, and home prices that are going up more slowly. The Case-Shiller 20-city index shows a seasonally-adjusted .1% rise from February to March. The current reading is 2.7% higher than March of 2018. According to MarketWatch, that’s the slowest annual pace of price growth since August 2012.
Pending home sales continue their downward trend. The National Association of Realtors reported a seasonally-adjusted 1.5% slide in April. That’s 2% lower than they were a year ago in 2018. MarketWatch says it’s the 16th-straight month for a decline and a good indication of upcoming home sales.
The government revised the nation’s first-quarter GDP down a notch. According to the latest reading, the economy grew at an annual pace of 3.1%. That’s down from an initial reading of 3.2%. JPMorgan analysts are forecasting a substantial economic slowdown in the second quarter. They said this last week, that they expect the economy to bump along at just 1%. Other financial institutions also lowered their forecasts but not as much.
Consumer prices were up .3% in April. That’s the biggest jump in prices in the last 15 months, but inflation still remains below the 2% target set by the central bank.
Consumer confidence remains strong. The Conference Board reported a jump in consumer confidence to 134.1.
Mortgage rates are doing something they haven’t done in a long time. The average for a 30-year fixed-rate loan dipped below the 4% level to 3.99%. Freddie Mac says that lower rates should help offset other economic issues and give the housing market a boost. (1)
In other news making headlines…
Trump Threatens Tariff on Mexico
President Trump announced a new tariff on Mexico, but it isn’t because of a trade imbalance. He slapped Mexico with a 5% tariff on all goods, claiming that Mexico has not done enough to stop illegal immigration.
The announcement is causing a furor among those who disagree with this plan. As CNBC reported, the U.S. imported $346.5 billion in goods from Mexico last year. A 5% tariff is more than $17 billion dollars. And who pays for that? Not Mexico. U.S. consumers will pay that amount. CNBC says the state that will get hit the hardest will be Texas. Michigan also imports a large quantity of goods from Mexico, as does California. (2)
Mexican president López Obrador responded to the threat with an open letter to Trump. He said in part, “social problems are not resolved with tariffs or coercive measures” and the “Statue of Liberty is not an empty symbol.” He also commented on Trump’s slogan “America First” saying it’s “a fallacy, because until the end of time, beyond national borders, justice and universal brotherhood will prevail.” The tariff goes into effect on June 10th.
Fed on Tariff Impact
U.S. consumers are already dealing with the impact of the trade war on China. A new study by the Federal Reserve Bank of New York says the average U.S. family will pay an additional $800 or more per year because of “those” tariffs.
The Trump administration imposed a 10% tariff on Chinese goods and recently raised that to 25%. A Money and Markets article says, “Studies show that tariffs the U.S. imposed in 2018 have had a complete pass-through into domestic prices of imports, which means that Chinese exporters did not reduce their prices.”
Higher Rents for SFRs
Rents for single-family homes are rising, according to a new study by CoreLogic. It shows that rents rose 2.9% year-over-year in March with rents rising more for lower-priced homes. Lower-end homes are defined as having rents that are 75% of the local median. Those rents are up 3.5% year-over-year. Higher-priced homes, which are rented for more than 125% in that community, are up about 2.4%.
The city seeing the largest rent increase is Phoenix. Those rents are up 7.4%. Las Vegas, Tucson, Houston, and Miami round out the top five. (3)
Title insurance company First American Financial is reporting a huge security breach. It says that some 885 mortgage documents from as far back as 2003 were exposed online. Information that was vulnerable to unauthorized access included bank account numbers, mortgage and tax records, Social Security numbers, and other data.
First American says the breach was quickly resolved once they discovered it. It has also hired an outside company to find out if anyone accessed the data.
Flippers Hiring Uber Drivers
Ride-sharing drivers may have a new way to make money by partnering up with house flippers. According to The Real Deal, flippers are hiring them to scout around for neglected or abandoned homes that property owners may want to sell. Signs of a flipping candidate might include piles of mail, tall grass, abandoned cars in the yard, or other signs of distress.
The Real Deal says that some flippers are paying drivers as much as $1,500 for a referral. Others may offer a percentage.
(1) Mortgage Rates
(2) Tariffs on Mexican Imports: CNBC
(3) Rents on the Rise: CoreLogic
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