[REN #834] Real Estate News Brief: House Hunting Jumpstart, Detroit Job Growth, Financial Literacy Courses

Real Estate News Brief: House Hunting Jumpstart, Detroit Job Growth, Financial Literacy Courses, Real Estate News For Investors Podcast Episode #834

In this week’s Real Estate News Brief… a jumpstart on spring house hunting, a job growth win for Detroit, and a call for financial literacy courses in college.

Economic News

We begin with economic news from this past week and a busy November for housing starts. The Commerce Department reported a 3.2% increase from October. They were also up 13.6% from the same time last year. Building permits also spiked higher in November. They were up 1.4%, and were 11.1% higher than a year ago.

Homebuilders are also signaling their enthusiasm in the latest survey. The National Association of Home Builders’ says the monthly confidence index rose 5 points in December to 76. That’s the highest it’s been since June of 1999. Anything above 50 indicates rising optimism among builders.

The sale of existing homes dipped in November because of the ongoing shortage of affordable homes. They were down 1.7% compared with October. The National Association of Realtors says the inventory of lower-priced homes continues to dwindle. There was a 4% drop in the number of homes selling for $100,000 to $250,000, and a 16% drop in the quantity of homes below $100,000. (1)

Consumers were busy spending money in November. The government says spending was up 0.4% for the biggest increase since last July. Consumers spent the most money on new cars and trucks, along with health care. It’s also easier for them to spend the money because of incomes that were up .5% in November. And, they had money left over. The savings rate rose from 7.8 to 7.9%.

The University of Michigan’s consumer sentiment index also shows that consumers are happy. The index rose to 99.3, which is the highest it’s been in seven months.

The government left the third-quarter GDP at 2.1%. We’ve had strong consumer spending, but that’s being offset by weaker business investing. MarketWatch says the main reason the gross domestic product wasn’t revised higher is due to a drop in the value of inventories.

Mortgage Rates

Mortgage rates didn’t go anywhere this last week. Freddie Mac says the average 30-year fixed-rate mortgage remained the same at 3.73%. (2) The mortgage guarantee company says, “While the economy is in a sweet spot, improvements in housing market sales volumes will be modest heading into next year simply due to the lack of available inventory.”

In other news making headlines…

New Year House Hunting

The spring housing hunting season could begin in January for online house hunters. Realtor.com economists analyzed average monthly views per listing from 2015 through 2019. (3) In 2015, buyers hit a peak for average views in April. Last year, the peak happened at the beginning of the year, with just 1% more views in February than in January.

January was sizzling for some markets. In Seattle, the number of views per listing was 32% higher in January than in any other month. Other top markets were McAllen, Texas, south of San Antonio; San Francisco; Atlanta; and San Jose, California.

Realtor.com’s senior economist, George Ratiu, says, “As shoppers modify their strategies for navigating a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier.”

Household Net Worth Hits New High

U.S. household wealth rose another half trillion dollars in the third quarter. The Federal Reserve reports that higher real estate prices drove the total up to $113.8 trillion, up from $113.3 trillion in the second quarter.

Property owners are reaping the benefits of a strong economy thanks to the longest economic expansion in U.S. history. Unemployment also remains at a 50-year low.

3,000 New Jobs for Detroit

The Detroit real estate market is getting a nice Christmas present. Ford announced that it will add 3,000 new jobs in the Detroit area. It also plans to invest almost $1.5 billion into new pickup trucks and SUVs that will include hybrid and electric vehicles, along with autonomous vehicles.

That’s sure to fire up the real estate market in and around the Detroit suburb of Wayne, where Ford’s Michigan Assembly Plant is located. It will invest $750 million in that plant, and add about 2,700 jobs there. Ford plans to get its first autonomous vehicle ready for market at this plant.

Ford’s truck plant in Dearborn will get about $700 million in new funding, and about 300 new jobs. That’s where Ford will develop the latest version of its F-150 truck with both hybrid and electric models. That’s the automaker’s top selling vehicle. 

Ford is also getting a tax incentive from the state worth $35 million. Hiring for all those new positions is planned for next year. (4)

House Kills Property Tax Cap

Democrats in the House of Representatives approved legislation that will eliminate the Federal cap on property tax deductions. The cap on state and local taxes, known as SALT, was limited to just $10,000 as part of the 2017 tax reform package. Homeowners in high-priced states like California, New Jersey, and Massachusetts say it’s unfair because home prices are so high in their states. Those states are also predominantly Democratic.

The House debate over this legislation was highly partisan, and will likely continue, possibly with different results, when the bill goes to the Republican-controlled Senate. The legislation calls for the doubling of the CAP, to $20,000 for this year and its elimination in 2020 and 2021. It also raises the top income tax bracket to 39.6% to pay for the change. That top tier had been reduced to 37% as part of the tax reform package in 2017. (5)

Mandatory Financial-Literacy Courses

The U.S. student debt crisis is prompting a call from U.S. Treasury Department for mandatory financial-literacy classes. Student loan debt is now about $1.5 trillion dollars, and is limiting many graduates financially. It’s one of the big reasons that young people don’t have money to buy their first home.

The Treasury Department says they should be taking a course while they are in college about the cost of their education, and the best ways to pay for it. It also recommends that students receive more information about where their loan money is going, how much debt they are incurring each year, what the payment amounts are likely to be in the future, and how much they might earn in their chosen fields. MarketWatch reports that 12 states already do this.

Links:

(1) MarketWatch Article

(2) Freddie Mac Article

(3) Realtor Magazine Article

(4) CNBC Article

(5) HousingWire Article

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