[REN #616] News Brief – GDP Down, Rates and Rents Up

Picture of A Man Reading a Paper for Real Estate News for Investors Podcast Episode #616

In this week’s Real Estate News in Brief… single-family rents grow again, a new credit scoring method on steroids, and the latest top ten list for best retirement cities.

Economic News

We begin with economic news from this past week.

The sale of new single-family homes sank in September, to their lowest level since December of 2016. The Commerce Department reported a 5.5% drop from August for a selling pace of 553,000 homes. MarketWatch says that about a third of the builders responding to the survey reported that sales were lower than they expected. Hurricane Michael may have had an impact on those numbers, however.

The latest report on pending home sales show a 0.5% increase. The National Association of Realtors says the West was the winner for contract signings, with an increase of 4.5% compared to August. Home sales also rose in the Midwest but were down in the Northeast and the South, again, likely because of the hurricane.

New GDP numbers came out showing the economy has slowed a bit in the third quarter, but is still growing at a rapid pace. The Commerce Department says the nation’s output of products and services roared along at a 3.5% pace from July through September. That’s down from 4.2% in the previous quarter, but combined, the two quarters represent the strongest growth in four years.

According to MarketWatch, the Fed’s preferred gauge on inflation and economic conditions also shows a slower pace of growth as well. The latest reading for the Personal Consumption Expenditures or PCE shows an annual rate of 1.6% in the third quarter. That’s down from 2% in the second quarter.

The Consumer Price Index or CPI is the more popular reading on inflation. It’s used to adjust social security payments, and is usually the index that grabs headlines. The last CPI reading, for September, was 2.3%, and 2.2% for the Core CPI. The government previously announced that based on the CPI, Social Security payments would increase 2.8% next year.

Consumers are slightly less contented when it comes to the economy. The University of Michigan says its consumer-sentiment index dropped slightly, to 98.6. Researchers claim the discontent is due to a lack of wage growth, but the reading is still relatively high. MarketWatch says other readings on consumer sentiment are higher, but those surveys are focused more on the stock market. (1)

Mortgage Rates

Long-term mortgage rates didn’t move much over the past week, but the average 30-year fixed-rate mortgage was up 1 basis point to 4.86%. Freddie Mac says that rates are expected to increase further. It says that higher rates may keep some people from buying homes, but that will also reduce competition and create opportunities for homebuyers with more financial flexibility.

In other news making headlines…

 

Single-Family Rents Up 3.1%

A new CoreLogic report on Single Family Rentals shows a 3.1% year-over-year increase in August. Cities with the fastest rent growth in August were Orlando, with an increase of 6.1%, and Las Vegas, with an increase of 5.8% They are both considered top vacation spots as well. Other top rent growth cities include Tucson, Atlanta, and Houston.

There has been a slowdown in rent growth, however. It peaked recently at 4.1% in January. The CoreLogic index includes single-family homes and condominiums.

New FICO Score on Steroids

FICO, Experian, and financial data company Finicity unveiled a new credit scoring model called UltraFICO that has the potential to help millions of Americans struggling to qualify for a home loan. The three companies say it could be especially useful to consumers who fall just below the lender’s cut-off score, or those who have very little credit, because it incorporates a way to gauge financial responsibility and add that into the score.

The UltraFICO will start with the basic FICO score and combine that with consumer credit data from Experian and financial information from bank statements, read by Finicity. That financial activity might include the length of time accounts have been open, how often they are accessed, and whether the consumer is saving any money. It’s an “opt in” method so consumers have to grant permission to do this.

Steve Smith of Finicity says, “This approach allows Americans to benefit from positive financial behaviors.” FICO’s executive Vice President Jim Wehmann is calling it a “game changer” because it will help that many people. The UltraFICO will launch as a pilot program early next year, and is expected to be widely available in mid-2019. (2)

Best Off-Beat Places to Retire

If you’re looking for an “off-beat” place to retire, there’s a new list of best places. U.S. News & World Report issued its 2019 report on cities that rank high for housing affordability, desirability, health care, and overall happiness.

So, here’s the top ten:

  1. Lancaster, Pennsylvania
  2. Fort Myers, Florida
  3. Sarasota, Florida
  4. Austin, Texas
  5. Pittsburgh, Pennsylvania
  6. Grand Rapids, Michigan
  7. Nashville, Tennessee
  8. San Antonio, Texas
  9. Dallas-Fort Worth, Texas
  10. Lakeland, Florida

Editor Emily Brandon says, “Deciding where to retire is a big decision.” She hopes the list will help future retirees make a better choice based on what matters most to them. (3)

Links:

(1) MarketWatch Article

(2) PR NewsWire Article

(3) U.S. News & World Report

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