[REN #840] Real Estate News Brief: 2020 Look Ahead, Security Camera Data Breach, Basic Income Experiment

Real Estate News for Investors Podcast Episode #840

In our Real Estate News Brief for the week ending on January 4th, 2020… a look ahead at real estate in 2020, a security camera data breach, and an experiment in basic income.

Economic News

We begin with the start of a new year and some positive economic news for real estate. The National Association of Realtors released a report on pending home sales for November. They were up 1.2% from October and 7.4% from the same time last year. Those contract signings will help boost existing home sales in the next few months. Inventory will remain tight however.

Builders have been busy. The Census Bureau reports that construction spending was up .6% in November, and was 4.1% more than November of 2018. Those numbers include a .4% monthly increase in residential construction. That’s up 1.6% from a year earlier. The National Association of Homebuilders Chairman, Greg Ugalde, says, “Single-family builders are currently reporting ongoing positive conditions.” Other issues continue to be a problem however, such as lot and labor shortages.

A new report on home prices shows they were up in October. The S&P CoreLogic Case-Shiller 20-city index rose .1% in October. That brings the year-over-year increase to 2.2%. The nationwide index shows a 3.3% year-over-year increase with Phoenix seeing the highest home-price appreciation. Prices there were up 5.8% in October. Tampa was next with 4.9% price growth. Charlotte, North Carolina came in third with a 4.8% increase.

Consumers ended the year with more confidence in the economy than the beginning of the year. The Conference Board says the December reading was 126.5. That’s only about 11 points lower than an all-time high of 137.9 in October of 2018. (1)

Mortgage Rates

Mortgage rates went down slightly as we transitioned into the new year. Freddie Mac says, the average thirty-year fixed-rate mortgage dropped two basis points to 3.72%. They’ve been staying around the 3.7% level for almost two months. Freddie Mac says, “The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices. (2)

In other news making headlines…

Realtor.com 2020 Predictions

It’s 2020 and there are lots of housing experts predicting what the new year will bring to the real estate market. Realtor.com issued a few predictions on what we’re likely to see. (3)

According to Realtor.com, home sellers will take a pass in 2020 and inventory will pretty much evaporate. That will make the housing market more competitive, so buyers should expect bidding wars. Millennials may not take “no inventory” for an answer however. Realtor.com says, they will be the big buyers this year. And they will have help from low mortgage rates that remain below 4%.

There seems to be a disagreement about home prices. Some economists predict flattening home prices, while others expect to see prices rise almost 4%. The Sun Belt states will see the most home buying activity thanks to the migration of businesses and workers to more affordable Southern cities. If we do get hit by recession, Realtor.com says that housing won’t be “overly affected.”

Recession Worries Among CEOs

CEOs are still worried about recession, however. They listed recession as their biggest concern for a second year in a Conference Board Survey. Among the things making them nervous are the global trade war, political tensions, and a tight labor market.

Survey authors said, “Just two years ago, global recession was barely on the minds of CEOs in our survey. One real risk of this recession mindset is that it can become a self-fulfilling prophecy.” As CNBC reports, Conference Board officials also expect the global economy to improve and trade tensions to ease up which will improve the outlook for business. (4)

Smart-Home Camera Data Breach

A start-up that makes home security devices including smart home cameras is reporting a data breach. Wyze Labs says hackers had access to a database with information for almost 2.5 million users. The compromised information includes email addresses for camera owners and those given permission to view the cameras. It also includes a list of cameras and tokens used to access them from smartphones and other devices. The company discovered the leaks on December 26th. It says the database was exposed for about three weeks before that.

Wyze says, a second database was also exposed. It’s not clear what data hackers had access to, but the company says the database didn’t include passwords or financial information.

The company, which was founded by three former Amazon employees, makes cameras that cost much less than competitors. Those cameras made it to a list of top tech gifts in 2019 by CNN.

Basic Income Experiment in California City

The California city of Stockton is experimenting with an idea to help bridge the income gap. It has started handing out debit cards worth $500 each to some residents. Stockton hit a low point during the recession with 20% unemployment, a rise in violent crime, and a declaration of bankruptcy by the city. Many residents still face hard times. As reported by the Sacramento Bee, one in four residents lives below the poverty line.

The basic income program, called SEED for Stockton Economic Empowerment Demonstration, is a pilot program to see if it will help lift people out of poverty. 130 adults were chosen to participate in the program. They will get debit cards worth $500 each month for 18 months to spend on whatever they want. Researchers will analyze how that money is spent and whether it has improved their financial situation and quality of life.

Stockton Mayor, Michael Tubbs, says of the program, “I think it will make people work better and smarter and harder.” SEED researchers plan to share stories about some of the recipients beginning in March.

Links:

(1) Consumer Confidence: MarketWatch

(2) Freddie Mac Report

(3) Realtor.com 2020 Predictions

(4) CEOs Worry about Recession

(5) Stockton Income Experiment

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