In this week’s Real Estate News Brief… home price growth in 2020, the worldwide use of surveillance cameras, and Pantone’s 2020 Color of the Year.
We begin with economic news from this past week, and a spotlight on the job market. The Labor Department reported that U.S. companies added another 266,000 employees in the last month, and that brought the unemployment rate down to a new 50-year low of 3.5%. Wages are also up 3.1% compared to last November. MarketWatch economists say that hiring has been strong despite the ups and downs of the trade war.
The latest report on construction spending shows a .8% decline from September to October. That includes a .5% drop in residential construction spending. Overall spending is still 1.1% higher than it was last year. Homebuilder expectations are also high for the next six months, according to the Housing Market Index by the National Association of Home Builders and Wells Fargo. NAHB chief economist, Robert Dietz, says: “The second half of 2019 has seen steady gains in single-family construction” but he says builders remain cautious.
Consumers are showing more confidence about the economy for the month of December. The University of Michigan consumer sentiment index shows that it rose from 96.8 to 99.2. That’s the highest reading since May. We’ll get a report next week on retail sales for November, which will reflect Black Friday and Cyber Monday sales. (1)
Mortgage rates didn’t budge this last week. According to Freddie Mac, the average 30-year fixed-rate mortgage is 3.68%, the same as it was last week. It says, consumers remain bullish on the real estate market, however, and that homebuyer demand was up 8%.
In other news making headlines…
Home Price Growth in 2020
Home prices will continue to push higher next year, according to CoreLogic economists. They are predicting another 5.4% increase between October of this year and October of 2020. That’s even higher than the 3.5% growth rate for the past year. CoreLogic CEO, Frank Martell, says the steady growth in home prices isn’t discouraging older millennials. He says, “25% of those surveyed anticipate purchasing a home over the next six to eight months.” (2)
It’s also important to note that home price growth varies a lot from city to city. CoreLogic’s chief economist, Frank Nothaft, says that despite the overall price growth this last year, “home prices also declined in 22 metropolitan areas.”
The report warns that some markets are getting too hot. Among the largest U.S. metros, the report says that 35% of them are overvalued, another 27% are undervalued, and 38% are at a fair value level. At the top of the list for overvalued markets is the Denver area. That’s 3.4% overvalued. The Denver metro is followed by Washington, D.C., Miami, Las Vegas, Houston, and New York.
The Inventory Squeeze
The inventory squeeze is expected to continue next year, adding pressure to home prices. Realtor.com says, in its 2020 housing forecast that the lack of for-sale homes will probably get worse and make it more difficult for home buyers. The report predicts that inventory levels will hit a record low for more affordable homes, and that first-time buyers will have a tough time.
Realtor.com economists say that existing home sales could fall almost 2% next year, to 5.23 million. They also say that mortgage rates will remain low and that will help with affordability, but the inventory shortage will cause problems. Realtor.com’s senior economist, George Ratiu, says, “2020 will prove to be the most challenging year for buyers, not because of what they can afford, but rather what they can find.”
Worldwide Growth in Surveillance Cameras
The number of surveillance cameras is growing worldwide, and is forecast to surge another 30% by 2021. A new report by IHS Market says that increase represents hundreds of millions of cameras to a total of more than one billion. It says there are 770 million in use today. As you know, security cameras are everywhere, but the lion’s share of them are in China.
In the U.S., the report says, there were 70 million last year, and that number will grow to 85 million by 2021. It also says that, in the U.S., city surveillance is a very small part of the overall numbers — about 3% in 2018. However, some cities are testing the use of security cameras and facial recognition technology to help fight crime. Detroit, Washington, D.C., and Orlando are among those cities. (3)
Pantone’s 2020 Color of the Year
Interior decorators are probably tweaking their color palette for next year, according to Pantone’s 2020 Color of the Year. The paint company has named “Classic Blue” as the top choice. As Realtor.com points out, it’s a very close match to the Realtor.com blue or what Pantone calls 293 C.
Pantone describes the color as “sky at dusk” and “timeless.” It’s also more subdued than last year’s “Living Coral.” That was a bright orange with gold undertones. Pantone’s Laurie Pressman says of the color choice: “The Pantone Color of the Year highlights the relationship between trends in color and what is taking place in our global culture at the moment in time.” (4)
(2) Home Price Growth: Realtor Magazine
(3) Surveillance Cameras: Wall Street Journal
(4) Pantone’s Color of the Year: Realtor Magazine